Telecoms offer fails to please

Date: 05/10/1995

By Fiona McHugh

UNITED States trade negotiators are already indicating that the European Union's 'offer' to liberalise telecommunications is likely to fall short of their expectations on a number of counts.

The negotiating document, lodged at the World Trade Organisation (WTO) just prior to a high-level meeting tomorrow (6 October), pledges to open up the EU's telecoms market, but does not eliminate all barriers to foreign ownership of telecoms firms. It also fails to include new competition safeguards to prevent abuse of dominant market positions.

Diane Cornell, Chief of Telecommunications at the Federal Communications Commission in Washington, speaking before the offer was delivered to the Americans, said the US wanted “to see foreign ownership limitations removed and competition safeguards put in place - we will be very disappointed if that is not the case”.

According to EU officials, the document includes restrictions to foreign ownership in France, Greece, Spain and Portugal, but not new measures to ensure free competition between operators.

“We attached a reciprocity clause to our offer which says that until the US removes its restrictions we will not remove ours. Why should we - just because [Commissioner] Brittan says we should?” said one Spanish diplomat. That attitude, say US officials, will most certainly lead to a stalemate. “They seem to have missed the point. The idea is to drop our barriers simultaneously,” said Cornell.

A separate communiqué attached to the EU offer says an independent regulatory body will oversee the granting of licences and equal interconnection rights for all operators. But that is unlikely to satisfy the US.

Its offer gives foreign telecoms companies access to the US market and allows them to own US telecoms companies.

The EU's offer will essentially make its internal liberalisation plan binding under international trade rules. That sets 1 January 1998 as the deadline for liberalisation of infrastructure and services.

The final position is the fruit of protracted negotiations between the member states and the Commission. Several WTO deadlines were missed as the 15 struggled to reach an agreement.

Belgium and Spain, who failed to respond promptly to a questionnaire being used to clarify Europe's negotiating position, were blamed for the delays. Both countries subsequently sought to shift that blame onto the Commission.

Spanish officials say their government replied three days before the last deadline on 18 September. Belgium admits it was late, but argues member states were not given enough time to consider a liberalisation plan which was at best confused.

The WTO talks are aimed at liberalising the world telecoms market. The 42 nations taking part have until April to reach that goal