Does unilateral liberalization promote WTO GATS commitment? Cross-country evidence from the telecommunications sector

Abstract

This paper addresses two questions: (1) does unilateral liberalization in the telecommunications sector promote a country's commitments in the World Trade Organization (WTO) and (2) what are the possible reasons for a disconnection between unilateral liberalized measures and General Agreement on Trade in Services (GATS) commitments? On the basis of interviews with trade and WTO experts and a closer comparison between the GATS commitments and actual policies of the selected WTO members in the telecommunications sector, we argue that unilateral liberalization, in most cases, acts as a push factor and provides the grounds for making multilateral WTO commitments. Apart from unilateral liberalization, a country also requires the achievement of ‘sufficient conditions’ before agreeing to undertake liberalization commitments under GATS. Furthermore, the study suggests that the desire to attract Foreign Direct Investment (FDI) and also to overcome domestic resistance to reform may encourage each WTO member to make higher commitments. Conversely, a countries’ intention to remain unconstrained by WTO commitments may induce them to commit at a lower level than their actual level of openness.