Brief analysis of the Trade in Services Agreement Telecom Annex

1. Telecommunications Policy
Trade in Services Agreement: Telecommunications Services Annex Analysis
Introduction:
The Trade in Services Agreement- TiSA is a trade agreement being negotiated by 24
members of the World Trade Organization, it's goal, as stated by its proponents, is to
further liberalize trade in services between members of the agreement in different areas
such as financial services, e-commerce, telecommunications etc.., the initial draft was
leaked earlier this year and made the headlines primarily because of the secretive nature
of the negotiations, but also because of some articles in different TiSA annexes viewed
by some as controversial.
The Telecommunications Services Annex seems less controversial than other, but still
introduces articles that could change the telecom industry in each member country of the
agreement. First, foreign ownership as introduced by article II, would have signatories
allow full foreign participation in domestic telecom sectors and agree not to impose
limitations on the level of foreign investment allowed (commonly known as Foreign
Direct Investment caps). This at first would be beneficial to the European Union telecom
industry, it would allow a more consolidation in the EU market and eventually lead to an
increase in investments (e.g network upgrades) but also give a push to European telecom
equipment manufacturers such as Swedish firm Ericsson. However, the telecom industry
is a capital-intensive industry, only telecom providers with lot of cash on hand will be
able to perform large-scale acquisitions leaving other telecom operators to either face a
decline in market share or be an acquisition target.

2. Second, telecom regulations rules mentioned in several articles ensures independence of
regulatory authorities from telecom service providers, impartial treatment of different
telecom providers, and adequate resources for regulatory bodies to carry out their task.
All straight from International Telecom Union rules but one notable concept introduced
in article 6, the regulatory forbearance of some telecom services if the following
conditions are met:
Enforcement of the regulation is not necessary to ensure effective competition
between suppliers of public telecommunications services, following analysis of the
market
Enforcement of the regulation is not necessary to prevent unreasonable or
discriminatory practices
Enforcement of the regulation is not necessary for the protection of consumers
Forbearance is consistent with the public interest, promoting and enhancing
competition between suppliers of public telecommunications services
This will exclude selected telecom services from regulatory oversight in favor of market
forces, as mentioned "any supplier of telecommunications services may petition a party's
telecommunications regulatory body to forbear from apply any specific regulation with
respect to that supplier or any telecommunications services offered by that supplier". It is
interesting to mention that the "forbearance" is applied in the United States under section
10 of the Communications Act, one could argue that the United States intend to
normalize telecom regulation with the European Union and other TiSA country member
following its own model.
Finally, the TiSA specifies rules for access to and use of transport networks within each
of the countries that sign the agreement, these rules ensure that each supplier of public
telecommunications services have access to essential elements of telecommunications
infrastructure in order to reach end users, and that there is no condition on access other
than necessary as specified in paragraph 5 and 6 under article 10 of the agreement, the
suppliers choice of technical interfaces including protocols however can be subject to
regulatory choice, and as a result affect the competitiveness of the supplier in this
wholesale model that rely on cost-based access.
In conclusion, the leaked telecom annex of the TiSA, although it is not the fully
negotiated agreement, it does give us a general idea on how TiSA will re-shape the
telecom industry in signatory countries, it might be what the industry need to regain
growth, foreign firms could compete on the same ground with local firms and more
capital flows would be invested, however more broadly, the TiSA specifies trade rules for

3. services instead of goods, countries that already have a surplus of services trade will see
their exports increase substantially as trade barriers are removed, can less competitive
economies adapt to the agreement? Can they maintain a sustainable deficit in trade
services? How would local jobs be affected in all the countries? we will know the
answers to these questions once the agreement enters into force.