Global telecommunications services generate $1.5 trillion per year representing an economic force to be reckoned with; and the World Trade Organization (WTO) is at the center of it. The various principles and agreements made under the WTO have contributed to the liberalization and privatization of telecom markets around the world. The lowering of trade barriers among WTO members has greatly benefited the satellite industry. It was perhaps the WTO agreements of the mid-1990s that set things in motion for the eventual privatizations of Intelsat, Inmarsat and Eutelsat at the turn of the millennium.
The WTO and GATS
The WTO was established in 1995 and now has 153 member nations. All WTO members are signatories to the General Agreement on Trade in Services (GATS), a treaty created to extend multilateral trading to the services sector. The GATS is essentially a framework of free trade principles and rules specifically applicable to services. Previous to GATS, only merchandise was subject to trade agreements. The objective of GATS is the progressive liberalization of the international markets in traded services. The idea that telecommunications services are tradable is what made their inclusion in the WTO arena possible.
The Reference Paper
Commitments have been made by 82 WTO members regarding certain telecommunications regulatory principles or best practices. These principles, which provide a guide on domestic regulation, are commonly referred as the “Reference Paper.” Under the Reference Paper, members are committed to: 1) preventing domestic telecom providers from engaging in anti-competitive practices; 2) ensuring interconnection; 3) promoting universal service policies; 4) making licensing criteria publicly available; 5) creating an independent regulator; and 6) making fair and non-discriminatory use of electromagnetic resources. These commitments are credited with the great strides members have made in the liberalization and privatization of their telecom markets.
The Basic Telecom Agreement
The Basic Telecom Agreement (BTA) is an Annex incorporated to GATS in 1997, under which certain members agreed to open their markets for telecommunications equipment suppliers, vendors and service providers. The specific commitments made under the BTA vary by country, but ultimately the objective is a universally open market. In addition, by becoming party to the BTA, each country commits to the principles set out in the Reference Paper. The Basic Telecom Agreement is responsible for satellite landing rights whereby non-U.S. satellites from WTO countries can access the U.S. market. There should also be reciprocity, but it has not always worked as such in practice.
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