TELECOM INDUSTRY SUFFERS AS WTO NEGOTIATIONS FAIL

Now that the conference has ended, “we are further behind on services” than originally, and the achievements turned out to be “less than we hoped for,” Paoletta said. She said she didn’t expect any progress on telecom services to be made at the next WTO Ministerial meeting in Hong Kong in 2004, “unless they fix agriculture issues.”

An industry source said the fact that the negotiations failed led to “a setback on attracting more countries to sign [or expand their commitment] to the basic telecom agreement,” which was “a very important tool for carriers to reach multinational customers.” The source said that would have a negative impact on U.S. telecom service providers as “other countries won’t be opening their markets.” However, the source said, since the Doha Round was only “half-way through,” it wasn’t clear which countries wanted to make commitments to the basic telecom agreement: “Cancun wasn’t the end point, but an important step in the process.” The official said agriculture issues would probably remain at the top of agenda at the next WTO Ministerial meeting in 2004, and “telecom issues will be high on the agenda” if other issues are resolved.

Paoletta said no additional countries submitted their initial offers on services at the Cancun conference. With the deadline for such submissions having been March 31, 2003, only 30 developed and developing countries had joined the U.S. in submitting offers. Sen. Grassley (R-Ia.), chmn. of the Senate Finance Committee, has said “in Cancun and beyond, our trading partners must take concrete steps and recommit themselves to achieving an ambitious agreement on liberalizing services trade. The first step is to table specific offers so the negotiations can move forward.”

Paoletta said the failure also would have an impact on the work of the Friends of Telecom groups, which “continue to meet, but energy goes out of that because agriculture issues are stalled… Friends of Telecom won’t be meeting in 2003 as [frequently] as they did in 2002,” as the deadline for wrapping up the Doha Round discussions, including telecom issues, probably would be moved from Jan. 1, 2005. She said U.S. Trade Representative Robert Zoellick, who represented the U.S. in Cancun, questioned whether the deadline was realistic, but no new deadlines were set. An industry source said “it will be extremely difficult to reach a compromise by 2005. In the best case, [that deadline] will be delayed.” In the worst case, the negotiators would have to start over from scratch, the source said.

Members of the U.S. high-technology community said they were disappointed the conference ended without agreement. In a joint statement, the Information Technology Industry Council (ITI), Semiconductor Industry Assn. (SIA), TIA and Electronics Industries Alliance (EIA) said: “This Ministerial meeting had the potential to yield significant benefits for all members of the WTO, and to create new opportunities for U.S. providers of information and communications goods an services.” They said they hoped that WTO members would be able to “bridge their differences and continue the important work begun at Doha.”

“The fact that the agriculture side didn’t get anywhere means that nothing did,” EIA Senior Mgr.-Govt. Relations Storme Street said. She said EIA had gone to Cancun with a specific proposal on the electronics sector to eliminate tariffs on electronics products. “The real value of going there was networking with delegations from other countries on zero-for-zero tariff proposals,” she said: “We'd like to see tariffs on electronics and high-tech products be eliminated across the board.” However, she said bigger hurdles, such as agriculture issues, prevented EIA from moving forward. “It’s frustrating… that our cooperative efforts [were] hindered by broader issues that” EIA couldn’t control. She said the “fact that we left with nothing moved” forward wouldn’t change anything for the electronics industry.

On the telecom side, Street said, EIA and TIA had a chance to discuss with a Costa Rican congressman that country’s commitment to liberalization of its telecom market. As Costa Rica still hasn’t signed the telecom chapter of the Central America Free Trade Agreement (CAFTA) and wants to be exempt, “we would like them to commit to liberalization of the market… that’s important for manufacturers and service providers.” She said as the WTO negotiations fell apart suddenly, there was “no picture of what is happening next.”

A U.S. Coalition of Service Industries spokesman said it was “not apparent what will happen now,” that the negotiations have failed. He said the services language in the service paragraph of the Draft Cancun Declaration “weren’t controversial,” and the only question was the deadline for countries to come up with improved offers: “We want countries that haven’t come up with improved offers to do that as soon as possible.”