Peter Cowhey and John Richards1
The revolution in communications and information services is high on every analyst's list of factors permitting or propelling the globalization of the world economy. This revolution creates a vastly greater ability to organize work and social, political and cultural networks on a global scale (Cairncross, 1997). But this new technological capability could only emerge after a revolution in the policies for the market in global communications and information services. Competition had to replace monopoly for technological possibilities to become market realities. Capped by the Agreement on Basic Telecommunications Services at the World Trade Organization in 1997 this market has undergone fundamental changes in organizing global competition rules over the past twenty years.
Still, the communications revolution is far from complete from the perspective of globalization of the market. For our purposes the globalization of a market has two dimensions: (1) the increasing global integration of input, factor and final product markets along with the increasing salience of cross-national value-chain networks; (2) the promotion of effective competition in the global market. By these standards the market for communications services is still not effectively globalized. But these dimensions emphasize the links between domestic and cross-border production and distribution, the central role of MNEs in the globalization of telecom markets, and the ability of states to exercise what Spar and Yoffie call "governance from the top" in organizing international services markets. And they underscore the global economic welfare gains made possible by competition inducing efficient pricing and resource allocation decisions.
This chapter examines the 1997 WTO Agreement as a pivotal agreement facilitating globalization by creating new property rights and competition rules in international telephony markets. We focus on the internal constraints driving US and EU policies in the negotiations over new rules for global telecom markets. That is, we highlight the internal constraints facing governments, how these constraints shape their negotiations strategies and the international institutions ultimately created. At the same time, we also highlight the role of external constraints-in this case the Most