James5

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I’ve been reading this 1999 article by Friedman in the New York Times on globalisation. It’s quite a good read, even if you don’t agree with everything he writes.

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Peter Gallagher points out the new World Bank World Trade Indicators as a good resource for comparing differing levels of openness to trade. For example, even though Australia is (rightly) known as a relatively low-tariff nation when it comes to agriculture, the WTIs show we have hidden barriers equal to up to 36% across the sector. I’m not sure I agree with Gallagher that this means quarantine and other procedures mean we are “paying way over the odds” for environmental protection though, I think people do place a high value on keeping Australia free from pests and disease. Certainly GM has shown that ‘pure food’ demands a premium.

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A large part of the research role given to me as part of my involve in the ELSA WTO Moot was in regards to the Negotiating Group on Basic Telecommunications Reference Paper, specifically Section Three:

3. Universal Service

Any Member has the right to define the kind of universal service obligation it wishes to maintain. Such obligations will not be regarded as anti-competitive per se, provided they are administered in a transparent, non-discriminatory and competitively neutral manner and are not more burdensome than necessary for the kind of universal service defined by the Member.

This section is designed to protect the policy goals of governments, to give access to telecommunications to their citizens, but at the same time ensure that governments do not use their universal service obligations (USO) as an anticompetitive trade barrier.

However, as we found the wording of section three is anything but clear when it comes to working out the precise obligations of Members.

The first stumbling block we found was arguing over the significance of the word administered. That is, a USO will not be regarded as anti-competitive per se provided they are administered in a certain manner. Some writers appear to think that the word administered has almost no meaning in the context of Section Three. They read section three to ban any USO that itself is not transparent, non-discriminatory and competitively neutral.

I can see why this approach is taken - it does seems incongruent that a USO that itself was discriminatory and non-transparent would be allowed by this section as long as it is administered in a transparent and non-discriminatory way. Not to mention the difficulty in finding the dividing line between substance and administration in that instance - one of the team constantly asked if something that was substantively discriminatory could really be administered in a non-discriminatory way.

However, it would appear that “administration” is a central word for this section. Though Section Three has not been considered by any Panel or Appellate Body, previous decisions do give some guidance as to what “administration” might mean.

The Panel in US - Gambling when examining Art VI of the GATS, which contains a variety of provisions in relation to domestic regulatory measures including one relating to their administration, came to the conclusion that:

Article VI:1 “does not apply to measures of general application themselves but, rather, to the administration of these measures.”

Similarly, the Appellate Body when considering Art X:3(a) of the GATS in EC - Bananas found that its requirements do not apply to “laws, regulations, decisions and rulings” themselves, but only to their administration. Also its interpretation of Art 1.3 of the Licensing Agreement similarly held that it did “not require the import licensing rules, as such, to be neutral, fair and equitable” but only their administration.

Thus it would seem more consistent to see Section Three of the Reference Paper as granting Members a very wide right to define the substance of their USO as they wish, and to merely require certain administrative standards to be in place. Indeed, this would be consistent with the historic uses of USOs which often are substantively discriminative in that they redistribute resources to discriminate in favour of consumers who are unable to afford access to telecommunications.

Section Three, therefore, does not wish to challenge these efforts by governments to expand telecommunications access it merely applies minimal standards to its administration. Of course this doesn’t give Members free reign to design USOs to hide trade barriers, the “not more burdensome than necessary” test at the end of section three provides a check to this impulse. Additionally, there is also the question of the divide between administration and substance. While the Panel in Argentina - Hides and Leather has begun to address so-called “administrative provisions”, their scope has yet to be clarified.

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