Domestic Regulation and Cross-border Trade

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					       ICT Global Governance

     Presentation to the Stanhope Centre’s
 2003 ICT Policy Training Seminar in Budapest
                August 27, 2003

               William J. Drake
Director, Project on the Information Revolution
              & Global Governance
Senior Associate, International Centre for Trade
          and Sustainable Development
               wdrake@ictsd.ch
     Session I: The Transformation of the
        Global Communications Order
A. International Institutions & Global Governance

B. Overview of ICT Global Governance

C. The International Telecommunications Regime

D. The International Trade in Services Regime

E. Defining Public Interest Objectives:
   Criteria & Conundrums
      A.   International Institutions and
                Global Governance
1. What Global Governance Isn’t (necessarily)
2. Global Governance as International Collective
   Action
3. International Regimes
4. Governance Mechanisms Vary Greatly in
   Form…
5. …Generic Functions
6. ….Participation
7. …Substance
8. …and Power Dynamics
9. Do These Issues Really Matter?
       1. What Global Governance Isn’t
                (necessarily)
• Not synonymous with government, can be done by
  private actors
• Not necessarily “good,” although that’s desirable
• Not necessarily collective and participatory, can be
  unilateral, although to have legitimacy this often
  necessary. Nevertheless, this is how it is now
  conventionally understood.
• Not necessarily global in the sense of universally
  agreed or applied.
• PS: “Internet Governance” is not synonymous with
  management of Internet identifiers
            2. Global Governance as
         International Collective Action
In practice, common usage=
Systems of collective rules (social institutions) that
    shape actors’ behavior in some realm of global
    interaction

A more expansive view could also entail=
collective programs and projects that significantly
    impact those rules, e.g. by redefining issues,
    capabilities, power relations
            3. International Regimes
• First half of definition really means regimes
• The principles, norms, rules, and decision-making
  procedures around which actors’ expectations
  converge in an international issue-area
• Development Stages: creation, adaptive evolution,
  change (in framework vs. of the framework), decay
• International regimes and organizations are two
  different things; often related, often not. Some
  organizations run projects of value but have no real
  role in rule making and enforcement; ex: UNESCO
       4. Governance Mechanisms Vary
             Greatly in Form…
• Organizational Settings: linked or unlinked to formal
  intergovernmental organizations
• Agreement Type: Treaties, recommendations,
  guidelines, declarations, MOUs, etc.
• Rule Strength: Formal or informal, binding or voluntary
• Domain: Public/private sector, universal/smaller group
• Scope: range of issues covered
• Compliance: Monitoring, enforcement
            5. …Generic Functions
• Constrain actors from doing things they would
  otherwise like to do
• Empower actors to do things with community
  assent that might otherwise be controversial or
  costly to undertake unilaterally
• Reduce transaction costs in devising frameworks
  for international transactions
• Reduce information costs for members
• Facilitate individual and collective learning
• Establish rules of liability and, in some cases,
  mechanisms for sanctioning non-compliance
                 6. ….Participation
•   Intergovernmental Multilateral
•   Intergovernmental Regional & Plurilateral
•   Private Sector “Self Governance”
•   Tri-sectoral
     – Type 1: actors serve on delegations of others
       that control the process
     – Type 2: actors directly participate in processes
       controlled by others
     – Type 3: Nominal/formal equality of actors
                 7. …Substance

•  Guiding social purposes, e.g. facilitate markets
   vs. administrative allocations of resources;
   management of public goods
• Distributional biases: which actors & forms of
   social organization favored, which are not
These & other attributes present design choices
   – Which mechanisms are best suited for which
      issues?
   – Where is it most effective to focus in pursuing
      the global public interest?
          8. …and Power Dynamics

• Some institutional environments give dominant
  actors free reign to set the agenda and control
  negotiations, outcomes, and
  enforcement/implementation
• Other have rules and procedures that empower
  non-dominant actors and increase their influence
• Most lie somewhere between these two poles
        9. Do These Issues Really Matter?

• Institutional characteristics often influence the
  shape of policy outcomes and effects
• By extension, they have strategic and tactical
  implications for public interest advocates---what
  works in one environment may not in another
• “Knowledge is power”---to many policy insiders,
  a clear understanding of institutions distinguishes
  who they will deal seriously with, or not.
• Knowledge of both individual institutions and
  comparative or cross-institutional lessons crucial
   B. Overview of ICT Global Governance
1. Four Additional Functions for the ICT
   Environment
2. The Old NetWorld Order
3. The Information Control Revolution
4. Power Shifts in the Great Transformation
5. Effects on National Policies and International
   Interests
6. Effects on ICT Global Governance
7. The New Global Policy Architecture
8. Criticisms of Intergovernmentalism
9. Criticisms of Industry Self-Governance
    1. Four Additional Functions for the
             ICT Environment
a. Physical interconnection, logical interoperation of
   networks
b. Manage collective resources, natural & logical
c. Terms and conditions for cross-border services
      Non-competitive “joint supply” vs. trade
d. Terms and conditions for cross-border content of
   information exchanged
          2. The Old NetWorld Order
• International Telecommunications Regime (ITU)
   – National sovereignty & mutual consent, joint
     service provision, standardization for connectivity
• International Radio Regime (ITU)
   – Sovereignty, shared resources, non-interference,
     allocation & allotment, assignment notice
• International Satellite Regime (Intelsat)
   Joint near-monopoly provision; technical &
     operational standards; inter-system coordination
• Information Flow Quasi-Regime (UN/ITU/other)
   – Fragmented, weak, contradictory instruments
3. The Information Control Revolution
• Technological change
• Industry’s changing preferences, new interest
  configurations, and demands for policy change
• Market pressures
• New ideas about sector and macro-economic
  governance
• Government institutions and political power
  balances
• At the international level, State power
 4. Power Shifts in the Great Transformation
     (deliberate allusion to Karl Polanyi)

• from the public to the private sector
• From suppliers to users
• from sector-specific regulatory concepts to
  systemic and trade-based thinking
• from Europe to the USA
• from PSTNs & accounting rates to IP networking
  & new modes of operation (resale, VoIP, callback)
     5. Effects on National Policies and
           International Interests
• Domestic realignments of industry, consumer
  interests and dominant ideas
• Intra-state shifts in power, e.g. from
  communications to trade & industry ministries
• Consequent Spread of national liberalization and
  privatization
• In broad terms: US from late 1950s; UK & Japan
  early 1980s; other EU and OECD from mid-
  1980s; developing countries from early 1990s
   6. Effects on ICT Global Governance
• Gradual, asymmetric, and highly contested
  realignments of preferences regarding
  international institutions
• 1850 to 1980s = state-centric models, stable
  cooperation; from 1990s = more market-oriented
  models and conflict
• Old intergovernmental regimes transformed or
  eroded, New intergovernmental/private regimes
  erected
• Move from a limited number of intergovernmental
  organizations to a heterogeneous public/private
  mix of rule-making forums
       7. The New Global Policy Architecture
1. Old intergovernmental multilateral regimes
   – Telecommunications (eroded), satellites (transformed), radio
     (less change)
2. New intergovernmental multilateral regimes
   – International trade in services (WTO), Intellectual property
     (WIPO, WTO), Cyber-crime (COE), e-commerce
     (UNCITRAL), proposed Hague Convention
3. Intergovernmental regional/plurilateral regimes
   – Various in EU, NAFTA, APEC, CITEL, OECD, Wassenaar
4. Self governance regimes for Internet infrastructure
   – Internet identifiers (ICANN); technical standardization
5. Self governance regimes for Internet “content”
   –   privacy, digital contracting, etc. (various)
  8. Criticisms of Intergovernmentalism

• Intergovernmental organizations said to be too
  slow-moving and bureaucratic to formulate rules
  for dynamic global markets
• Too wedded to “old paradigm” models of
  governance inappropriate for the new environment
• Too subject to laborious “UN-style” decision-
  making and “politicization” of “technical” issues
• Clearly some truth to these & related charges; but
  government authority & accountability is still key!
      9. Criticisms of Self-Governance
• Who is the “self ?” Significant problems of
  accountability, transparency, & potential “capture”
  by dominant interests
• Strong incentives for non-compliance when
  monitoring, detection, & sanctioning are weak
• Business anyway has driven the agenda in
  intergovernmental settings in recent years
• Self-governance can be a useful addition to the
  menu of choices, but it is optimal in a narrow
  range of cases (private contracting without
  negative externalities) & often is not a good
  substitute for intergovernmental authority
C. The International Telecommunications Regime

  1.   Instruments
  2.   Historical Evolution
  3.   Guiding Principles
  4.   A Regime in Decline
  5.   Consequences
                  1. Instruments
• Organizational Context: The ITU
• ITU Convention & Constitution (treaties governing the
  ITU organization and establishing broad purposes &
  principles of member behavior)
• International Telecommunication Regulations (treaty
  comprising restrictions on networks & services)
• International Telecommunication Recommendations
  (non-binding rules on networks, services, equipment,
  including both operational/regulatory measures and
  technical standards)
            2. Historical Evolution
• 1850 to 1960s, stable growth & success
• 1970s through 1980s incremental politicization
• late 1980s to mid-1990s, liberalization &
  transformation
• Since then, decline
                3. Guiding Principles

• National Sovereignty & Mutual Consent
   – Convention & Constitution: sovereignty, mutual
   – Convention: stoppage, monitoring, etc for public
     order
   – Recommendations: leased circuits, private networks,
     etc---sovereignty as monopoly control
• Joint Service Provision
   – Convention, Regulations, Recommendations: priority
     of JS parallels mutual consent (recent diversification)
• Interconnection & Interoperation
   – Convention, Recommendations: Technical standards
              4. A Regime in Decline
• Privatization & liberalization = shift from treaties to
  contracts
• Trade agreements & concepts
• The Internet
• “New Modes of Operation,” e.g. Call-back, Refile,
  International Simple Resale, Internet Telephony
• U.S.-led opposition, e.g. accounting rates, bypass,
  proposed revision of the International
  Telecommunication Regulations
                5. Consequences

• Shift toward more competitive, flexible, market-
  driven development of ICTs
• Marginalization of PTT-led Coalition, especially
  in the developing and transitional countries, which
  cannot drive the agenda or use the instruments to
  support their market positions and authority
• Decay in compliance, authority, relevance = a
  “legacy system” in tension with the new NetWorld
  order
• Decay in ICT multilateralism more generally
D. The International Trade in Services Regime

 1.   Instruments
 2.   Historical Evolution
 3.   Guiding Principles
 4.   The Reference Paper
 5.   A Regime on the Rise
 6.   Consequences
              1.   Instruments

• Organizational Context: WTO
• The Framework Agreement (General Obligations
  and Disciplines---GODs)
• The Annexes, including on Telecommunications
• National Schedules of Commitments
           2.   Historical Evolution

• 1986 to 1994 Uruguay Round & the General
  Agreement on Trade in Services (also: creation of
  WTO, TRIPs Agreement, etc.)
• 1994 to 1997 Basic telecom negotiations,
  conclusion of the 4th Protocol including the
  Reference Paper
• 1998 to 2000, pre-negotiations & e-commerce
  work program
• 2001 to present, Doha “Development Round”
               3.     Guiding Principles

• General Obligations and Disciplines: most favored
  nation, transparency, domestic regulation,
  competition, restrictive business practices, general
  exceptions (inc. consumer and privacy protection)
• Specific Commitments: market access, national
  treatment, additional commitments negotiated for each
  of four “modes of supply”
   – Cross-border, movement of the consumer, commercial
     presence, movement of the supplier (natural persons)
• Sectoral Annexes: Telecom Annex on Public telecom
  transport networks and services (user empowerment)
         4.    The Reference Paper
Competitive Safeguards. Major suppliers must not
  engage in anti-competitive cross-subsidization,
  misuse information on competitors accessing their
  networks, etc.
Interconnection. Major suppliers are to provide
  market entrants with interconnection at any
  technically feasible point in the network, at
  nondiscriminatory terms, conditions and rates.
Universal Service. Such obligations are to be
  administered in a transparent, nondiscriminatory,
  and competitively neutral manner that is not more
  burdensome than required to meet the policy
  objectives.
      The Reference Paper (continued)

Public Availability of Licensing Criteria. Where
  licenses are needed, information and decision
  making procedures are to be transparent.
Allocation and Use of Scarce Resources. Procedures
  for allocating and using frequencies, numbers, and
  rights-of-way are to be carried out in an objective,
  timely, transparent, and nondiscriminatory
  manner.
Independent Regulators. Regulatory bodies are to be
  separated from service providers and not
  accountable to them.
               5.    A Regime on the Rise
• Strong support in the industrialized world and global
  business community, mixed feelings in the developing
  and transitional countries; but faces Challenges:
   – Extending and deepening market access
     commitments, especially on cross-border supply
   – Conceptual and boundary issues in e-commerce
     (generally: Adapting to the Internet Age)
   – Domestic regulation, e.g. transparency, necessity
• Policy options in responding to techno-market change:
   – Develop New Disciplines?
   – Revise General Obligations?
   – Legislate through Dispute Settlement Panels?
                6. Consequences

• GATS + TRIPs = WTO could become the most
  important forum in ICT global governance
• Strength & Effectiveness: strong normative
  pressure, variable implementation; dispute
  settlement to be tested in telecom (U.S.-Mexico)
• Over time, progressive re-evaluation of multitude
  of domestic and international policies & rules
  according to anti-trade restriction baseline
       E. Defining Public Interest Objectives:
              Criteria & Conundrums
• What guiding principles and policy models strike the
  right balance in the difficult, non-obvious cases, e.g.:
   –   Call-back, Internet Telephony and PSTN bypass
   –    Accounting and settlements
   –    Interconnection and competitive safeguards
   –   Domestic regulation and Internet-based delivery of goods and
       services (including media) between small and medium-sized
       firms and individual customers
• How should public interest advocates position
  themselves in relation to the key players & debates?
Session II: Governing Networks & Services
          in the New Environment

A. What Works, What Doesn’t?: Some Cross-
   Institutional Lessons Learned

B. Six Overarching Challenges for the Global
   Community

C. Enhancing the Role of Civil Society
   Organizations in ICT Global Governance
 A.    What Works, What Doesn’t?: Some
       Cross-Institutional Lessons Learned
1.   Agenda Setting
2.   Negotiation
3.   Implementation and Compliance
4.   Reactions to Noncompliance

A word on Defining “Works”
---Functionally, Politically, Normatively
              1.    Agenda Setting
• States’ control of the international agenda has
  eroded in the great transformation.
• The information revolution and global liberalization
  have greatly increased private sector influence.
• Skewed private sector participation can preclude
  effective agenda setting.
• Civil Society Organizations can make valuable
  contributions, but special measures are needed to
  facilitate their participation.
• Prior forms of institutionalization can have a
  powerful impact on the paths that new issues follow
  to the international agenda.
                   2.    Negotiation
•   The quality of powerful states’ leadership is important,
    particularly when negotiating changes to the status
    quo.
•   As intergovernmental, hybrid, and private negotiations
    all have strengths and weaknesses, the desirability of
    one model or the other depends on the issues and
    interests involved.
•   Excessive formalization of regime negotiations and
    instruments can diminish their effectiveness and
    impede change.
•   A capacity for innovation is necessary to agreement.
•   Non-binding instruments can be very useful tools with
    which to build international consensus.
        3. Implementation and Compliance
• Technological change and market liberalization
  sometimes can make it difficult to determine whether
  private firms are behaving in accordance with the
  commitments undertaken by their home governments.
• Centralized monitoring systems are more demanding
  but more effective than are decentralized systems.
• Private sector monitoring can help to fill in the gaps of
  decentralized systems (could CSOs help here?).
• The behavior of leading actors can have a significant
  effect on the compliance of other regime members.
• Obtaining the compliance of developing countries
  often requires technical assistance, resource transfers,
  and flexibility.
       4. Reactions to Noncompliance

• The lack of strong enforcement mechanisms in the
  regulatory regimes has made it difficult to deal
  with noncompliance.
• Conversely, the presence of strong enforcement
  mechanisms in the more market-enabling
  communications regimes has promoted
  compliance.
• Some variability in compliance does not
  undermine the overall value of regime
  cooperation.
       B. Six Overarching Challenges
         for the Global Community

1.   Assessing the Global Architecture
2.   Improving Individual Policy Frameworks
3.   Re-Mapping Global Political Space
4.   Enhancing Inter-National Participation
5.   Improving Transparency & Accountability
6.   Getting/Keeping Powerful Actors On-Board
    1. Assessing the Global Architecture
•  Analyze Institutional Design Choices
  – What lessons learned from past experience,
     which substantive and procedural models
     have worked best under which circumstances,
     how well do our institutions work together,
     what gaps and needs remain?
• Analyze and Map the Diversity of Interests
  – On which issues are there what levels of
     (dis)agreement among which parties, what
     space exists for more cooperative solutions?
• These and Related Steps Require Bridge
   Building between Analysts and Practitioners
2.      Improving Individual Policy Frameworks

     Some especially pressing priorities…
     • International Trade in Services and E-Commerce
       in the WTO
     • Intellectual Property (WTO TRIPs, WIPO)
     • Spectrum Management
     • Security (Network and Informational)
     • Internet Identifiers (ICANN)
     • Global Digital Development programs and
       projects
             3. Re-Mapping Global
                 Political Space
Domestic/global interfaces in transition---
• How to avoid the proliferation of extra-territorial
  extensions of national laws?
• Establishing Applicable Jurisdiction for dispute
  resolution, consumer protection, etc.
• Balancing between cross-border transactions and
  governance commitments and national laws and
  regulations, e.g. in the GATS
• Change will come and must be done right
 4. Enhancing Inter-national Participation

Raising the voices of developing and transitional
  countries---
• Balanced and equitable participation is an
  undeniable end in itself and a means to effective
  governance, not a detriment
• Identify and attenuate international
  institutional/procedural barriers where possible
• Build nations’ organizational, analytical, human
  capacities through partnerships
        5. Improving Transparency &
                 Accountability

• Reform Governance Mechanisms
  – Cope with unintended consequences, e.g.
    dispersion
• Overcome Knowledge Gaps to Take Advantage
  – Under-supply by academia, think tanks, NGOs,
    etc.
  – Fragmentation by issue-area, lack of cross-
    sectoral learning, so blind men & the elephant
  – Need to build independent capabilities for
    substantial, accessible public interest analysis
6. Getting/Keeping Powerful Actors On-
                  Board

• Experience demonstrates that effective global
  governance is impossible if the most powerful
  governments and corporations refuse to play
• Examples: U.S. and corporate defections from the
  traditional telecom regime, EU privacy, etc.
• When dissatisfied with “old paradigm” or
  “bureaucratic” approaches, powerful actors have
  withheld compliance and/or moved the real action
  to exclusionary groupings
• So how to co-opt without being co-opted?
C. Enhancing the Role of Civil Society
 Organizations in ICT Global Governance

  1. The Past as Prologue

  2. The Current Scene

  3. Capacity Building: What Are the
     Priorities, How Best to Pursue Them?

  4. Conclusion
            1. The Past as Prologue
• Historically: Unlike some global issue-areas,
  CSOs little participation or influence in ICT.
• Few exceptions: Amateurs and the radio regime,
  the aborted New World Information and
  Communication Order process in UNESCO, etc.
• Different story at the national level; ex: telecom
  and media policy in the USA
           2.    The Current Scene
• What’s Changed: The Internet and globalization
  broadened the menu of issues, raised the stakes,
  and provided new tools for activism
• Growing links with CSOs in other fields
• Inside Players: ICANN Noncommercial Users
  Constituency vs. looser consultations, e.g. OECD
  e-commerce, privacy, current WIPO efforts
• Outside Players: Anti-WTO groups
• World Summit on the Information Society: an
  important opportunity for organizational
  development and coalition building
    3. Capacity Building: What Are the
   Priorities, How Best to Pursue Them?
Beyond the obvious, e.g. Money and Staff---
• Information: Monitoring, analysis, tool kits,
  tactical best practices from both the sites of
  international institutions and national/regional,
  generic and customized to local conditions
• Knowledge: Training and hands-on experience
• Networks: links and partnerships with other CSOs
• Friendlies: Links with key policy insiders
• What Else? What Specifically Would be Most
  Useful to You?
                   4. Conclusion
• Little coherent debate to date on these issues; WSIS
  quite obviously is not enough
• Governments, IGOs, CSOs, businesses, think tanks
  all have roles to play; lessons of DOT Force
• Special attention needed to the interests and views of
  non-dominant actors that have been marginalized in
  the digital “Washington Consensus”
• The substantive objectives and institutional
  architecture of global governance should reflect the
  full diversity of interests, ideas, and activities
  involved in a globalized NetWorld Order

				
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