Balancing domestic regulation and trade liberalisation under the GATS: universal access issues in South Africa's telecoms sector

Abstract

The service sector increasingly has become the cornerstone of a great number of economies in both the developed and developing world. The main barrier to trade in services is the imposition of domestic regulations which are aimed at ensuring the affordability, availability and efficiency of services. Such domestic regulations are important for services and the General Agreement on Trade in Services (GATS) consequently recognises the right of countries to regulate in order to achieve these goals. The GATS, however, also seeks to discipline such regulations to ensure that they do not hinder trade in services. This article seeks to assess these seemingly competing interests in the context of South Africa's history and its burgeoning telecommunications sector.

Keywords:

• General Agreement on Trade in Services (GATS)
• World Trade Organisation (WTO)
• South Africa, telecommunications
• domestic regulation
• universal access
• services

Notes

1. The list of activities that can be considered as services is enormous. A list published by the WTO includes services that range from medical and dental services, engineering, advertising, postal and courier services, hotels and restaurants, to others as far ranging as voice telephone services, sound recording and software implementation. In addition, GATS defines trade in services to include four modes of supply, namely, cross-border supply, consumption abroad, commercial presence and presence of natural persons.

2. World Trade Organisation (WTO), ‘Services Trade’ <http://www.wto.org/english/tratop_e/serv_e/serv_e.htm> (accessed 14 April 2010).

3. See, for example, Drake W & K Nicolaidis, ‘Ideas interests and institutionalization: “Trade in services” and the Uruguay Round’, International Organisations, 43, 2, 1992, p. 37.

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5. Karmakar S, ‘Services trade liberalisation and domestic regulations: The developing country conundrum’, Global Economy Journal, 7, 1, 2007.

6. United Nations Economic and Social Council, Liberalisation of Trade in Services and Human Rights: Report of the High Commissioner. New York: United Nations’ Economic and Social Council, 2002, p. 10.

7. Mattoo A, & P Sauvé (eds), Domestic Regulation and Services Trade Liberalisation. Washington DC: World Bank, 2003, p. 1.

8. Karmakar S, op. cit., p. 3.

9. Mattoo A & P Sauvé, op. cit., p. 1.

10. Mattoo A & P Sauvé P, op. cit., p. 2.

11. Republic of South Africa, The White Paper on Telecommunications Policy, Government Gazette No. 16995, 13 March 1996, 26 para 2.1.

12. Gillwald A, ‘Good intentions poor outcomes: Telecommunications reform in South Africa’, Telecommunications Policy, 29, 7, 2005, p. 470.

13. Horwitz RB, ‘Telecommunications policy in the new South Africa: Participatory politics and sectoral reform’, Communicatio, 23, 2, 1997, p. 64.

14. Horwitz RB, ‘Telecommunications policy in the new South Africa: Participatory politics and sectoral reform’, Communicatio, 23, 2, 1997, p. 64.

15. Horwitz RB, ‘Telecommunications policy in the new South Africa: Participatory politics and sectoral reform’, Communicatio, 23, 2, 1997, p. 64.

16. Habib A & V Padayachee, ‘Economic power and policy relations in South Africa's transition to democracy’, World Development, 20, 2, 2000, p. 252.

17. Habib A & V Padayachee, ‘Economic power and policy relations in South Africa's transition to democracy’, World Development, 20, 2, 2000, p. 252..

18. Horwitz RB, op. cit., p. 66.

19. Horwitz RB, op. cit., p. 66. According to Horwitz, there was initial resistance to privatisation by the incoming African National Congress government because they saw privatisation as a strategy of the former regime to transfer government held entities to the private sector where they would continue to exercise control over them.

20. Horwitz RB, op. cit., p. 66. According to Horwitz, there was initial resistance to privatisation by the incoming African National Congress government because they saw privatisation as a strategy of the former regime to transfer government held entities to the private sector where they would continue to exercise control over them.

21. Horwitz RB, op. cit., p. 66. According to Horwitz, there was initial resistance to privatisation by the incoming African National Congress government because they saw privatisation as a strategy of the former regime to transfer government held entities to the private sector where they would continue to exercise control over them.

22. Horwitz RB, op. cit., p. 66. According to Horwitz, there was initial resistance to privatisation by the incoming African National Congress government because they saw privatisation as a strategy of the former regime to transfer government held entities to the private sector where they would continue to exercise control over them, p. 67.

23. Horwitz RB, op. cit., p. 66. According to Horwitz, there was initial resistance to privatisation by the incoming African National Congress government because they saw privatisation as a strategy of the former regime to transfer government held entities to the private sector where they would continue to exercise control over them, p. 69.

24. Barendse A, ‘Innovative regulatory and policy initiatives at increasing ICT connectivity in South Africa’, Telematics and Informatics, 21, 1, 2004, p. 53.

25. Republic of South Africa, op. cit., 1996, 26 para 2.6.

26. Republic of South Africa, op. cit., 1996, 26 para 2.6.

27. Republic of South Africa, op. cit., 26 para 1.2.

28. Republic of South Africa, op. cit., 26 para 2.11. A detailed discussion on Universal Service in the context of South Africa will be conducted below.

29. Republic of South Africa, op. cit., 26 para 2.22.

30. Gillwald A, op. cit., p. 470.

31. See, for example, Bowman Gilfillan Attorneys, ‘Broadcasting and Electronic Communications’, Doing Business in South Africa 2009, <http://www.lexmundi.com/images/lexmundi/PDF/GuidesToDoingBusiness/Guide_SouthAfrica.pdf> (accessed 9 June 2010).

32. s1(d) Telecommunications Amendment Act 64 of 2001.

33. ‘Neotel launches as SNO’, Cape Times, 31 August 2006, <http://www.capetimes.co.za/index.php?fSectionId=2892&fArticleId=3419914> (accessed 9 June 2010).

34. The Telecommunications Act (Telecoms Act) recognised the licenses of MTN and Vodacom, which had been issued before its coming into force, and required the concerned authority to conduct an enquiry into the economic feasibility of the provision of two more cellular licenses in the future.

35. In 2008 it was estimated that Vodacom enjoyed approximately 55% of the market share, while MTN controlled 36% and Cell C 10%, <http://www.integrat.co.za/documents/Guide%20to%20Mobile%20Communications.pdf>.

36. Virgin Mobile Press Office, <http://www.virginmobile.co.za/virgin-portal-customer/Press6.do> (accessed 30 October 2008).

37. Section 1 Telecommunications Act 103 of 1996.

38. Gillwald A, op. cit., p. 469.

39. Gillwald A, op. cit., 471.

40. Altech Autopage Cellular (Pty) Ltd v The Chairman of the Council of the Independent Communications Authority of South Africa and Other, Transvaal Provincial Division, Case No 20002/8.

41. Which has now been replaced by the Electronic Communications Act 36 of 2005 Act.

42. Mashile P, ICASA, Annual Report 2009. Sandton, South Africa: ICASA, p. 2.

43. See ICASA Draft Call Termination Regulations 16 April 2010, <http://www.icasa.org.za/Home/tabid/38/ctl/ItemDetails/mid/501/ItemID/282/Default.aspx> (accessed 17 April 2010).

44. Horwitz R & WCurrie, ‘Another instance where privatization trumped liberalization: the politics of telecommunications reform in South Africa — a ten-year retrospective’, Telecommunications Policy, 31, 8–9, 2007, p. 454.

45. Section 3(1) ECA 36 of 2005.

46. Section 2(a)(b) Independent Communication Authority of South Africa Act 13 of 2000 (as amended).

47. Mokgosi L, ‘The telecommunications regulators’, in Thorton L, Y Carrim, P Mtshaulana & P Reburn P (eds), Telecommunications Law in South Africa. Johannesburg: STE Publishers, 2006, p. 111.

48. General obligations and disciplines include MFN (Article II), transparency (Article III), disclosure of confidential Information (Article III bis), economic integration (Article V), domestic regulation (Article VI), recognition (Article VII), security exceptions (Article XIV bis), and subsidies (Article XV).

49. The MFN concept is considered a fundamental cornerstone of the world trading system.

50. Article II:1 GATS.

51. UNCTAD/WTO (ITC), Business Guide to the General Agreement on Trade in Services. London: Commonwealth Secretariat, 2000, p. 35.

52. Wouters J & D Coppens, ‘Domestic regulation within the framework of the GATS’, Institute of International Law Working Paper no 93, 2006, p. 9.

53. Wouters J & D Coppens, ‘Domestic regulation within the framework of the GATS’, Institute of International Law Working Paper no 93, 2006, p. 9. For example, Article VI:1 provides: ‘In sectors where specific commitments are undertaken each member shall ensure …’; Article VI:3 provides: ‘Where authorization is required for the supply of a service on which a specific commitment has been made …’; or Article VI:6: ‘In sectors where specific commitments regarding professional services are undertaken …’ (emphasis added) .

54. Goode W, Dictionary of Trade Policy Terms (4th edn). Cambridge: Center for International Economic Studies/World Trade Organisation & Cambridge University Press, 2003, pp. 222, 242.

55. Delimatsis P, ‘Don't gamble with the GATS — the interaction between Article VI, XVI, XVII, and XVIII GATS in light of the US-gambling case’, Journal of World Trade, 40, 6, 2006, p. 1061.

56. Pauwelyn J, ‘Rien ne Vas Plus? Distinguishing domestic regulation from market access in GATT and GATS’, World Trade Review, 4, 2, 2005, p. 133.

57. Pauwelyn J, ‘Rien ne Vas Plus? Distinguishing domestic regulation from market access in GATT and GATS’, World Trade Review, 4, 2, 2005, p. 133.

58. WTO Appellate Body, United States — Measures Affecting the Cross-Border Supply of Gambling and Betting Services (US-Gambling), WT/DS285/AB/R, April 2005.

59. Disputes in the WTO are adjudicated primarily by two bodies. The Panel acts as a ‘court of first instance’ whereas the AB considers appeals from the Panel.

60. Disputes in the WTO are adjudicated primarily by two bodies. The Panel acts as a ‘court of first instance’ whereas the AB considers appeals from the Panel, para 248.

61. Pauwelyn J, op. cit., p. 161.

62. Krajewski M, National Regulation and Trade Liberalisation in Services: The Legal Impact of the General Agreement on Trade in Services (GATS) on National Regulatory Autonomy. The Hague: Kluwer Law International, 2003, p. 167.

63. Article 5(a) Annex on Telecommunications.

64. Krajewski M, op. cit., p.166.

65. ‘Major supplier’ is defined in the reference paper as: ‘a supplier which has the ability to materially affect the terms of participation (having regard to price and supply) in the relevant market for basic telecommunications services as a result of: (a) control over essential facilities; or (b) use of its position in the market’.

66. WTO, ‘Reference paper on basic telecommunication services’, 24 April 1996.

67. Intven H & M Tetrault, ‘Overview of telecommunication regulation’, in Intven H, J Oliver & E Sepulveda (eds), Telecommunications Regulation Handbook. Washington DC: InfoDev, 2000, chapter 6–1.

68. Chapter II Article 3:1, European Union, Directive of the European parliament and of the Council on universal access and user’ rights relating to electronic communications networks and services (universal service directive), 2000/0183 (emphasis added).

69. Intven H & M Tetrault, ‘Universal service’, in Intven & Tetrault, op. cit.

70. South Center, The Development Dimension of the GATS Domestic Regulation Negotiations, SC/AN/TPD/SV/11, August 2006, p. 23.

71. Tuthill L, Universal Service in Telecom: How Did the Telecom Sector Adopt GATS to Universal Service in a Competitive Environment, UNCTAD Expert Meeting, <http://www.unctad.org/sections/wcmu/docs/c1em30p025_en.pdf> (accessed 3 November 2008).

72. Tuthill L, Universal Service in Telecom: How Did the Telecom Sector Adopt GATS to Universal Service in a Competitive Environment, UNCTAD Expert Meeting, <http://www.unctad.org/sections/wcmu/docs/c1em30p025_en.pdf> (accessed 3 November 2008).

73. Garnham N, ‘Universal service’, in Melody H, Telecom Reform: Principles, Policies, and Regulatory Practices. Washington DC: InfoDev, 1997, p. 200.

74. European Union, Directive of the European parliament and of the Council on universal access and user’ rights relating to electronic communications networks and services (universal service directive), 2000/0183, 2.

75. Msimang, M, ‘Universal Service and Universal Access’, in Thorton L, Carrim Y, Mtshaulana P, Reburn P (eds), Telecommunications Law in South Africa. 2006, p. 218.

76. WTO, Reference Paper on Basic Telecommunication Services, 24 April 1996, para 3.

77. Krajewski M, op. cit., p. 169.

78. Msimang M, op. cit., p. 218. See also, Cohen T, ‘Domestic policy and South Africa's commitments under the WTO's Basic Telecommunications Agreement: Explaining the apparent inertia’, Journal of International Economic Law, 4, 4, 2001, p. 743.

79. Republic of South Africa, 1996, op. cit., 26 para 1.13.

80. Section 2(c) ECA.

81. Section 82(1)-(4) ECA. These goals are a verbatim replication of those that were originally set out in the Telecoms Act. It is also important to note that section 80(1) of the ECA provides that despite the repeal of the Telecoms Act by the ECA, the USA will continue to exist as a juristic person, but under the name USAASA.

82. Republic of South Africa, Government Gazette No 31333, Notice in terms of section 82(3) and section 88(2), 3 and 4, of the Electronic Communication Act, 2005 (Act 36 of 2005) inviting written representations in respect of definitions of universal services, universal access, and underserviced areas and determinations in respect of needy persons, 15 August 2008.

83. Republic of South Africa, Government Gazette No 31333, op. cit., pp. 13, 16.

84. Section 65(1) of the Act

85. Msimang M, op. cit., p. 224.

86. S 40, A(1) Telecommunications Amendment Act.

87. S 40, A(3) Telecommunications Amendment Act.

88. Republic of South Africa, Notice in terms of section 34(2) GN 3458/200, Government Gazette 24204, para 21.1.

89. Working Party on Domestic Regulations, Revised Draft, Disciplines on Domestic Regulation Pursuant to GATS Article VI:4, 23 January 2008.

90. South Center, op. cit., p. 27.

91. See Mortensen J, ‘WTO Vs. BEE: Why trade liberalisation may block South Africa's access to wealth, prosperity, of just a white collar job’, DIIS Working Paper no 2006/30, 2006. It is important to note in this regard that there remains no definitive answer from the WTO regarding whether South Africa's laws that seek to redress past inequalities are WTO compliant or not.