FOREIGN TRADE BARRIERS CONTINUE TO INTERFERE WITH U.S. TELCOS
Foreign countries continue to produce serous trade barriers for U.S. telecom carriers, U.S. Trade Representative (USTR) officials said in a news conference Tues. Commenting on the newly released report “National Trade Estimate Report on Foreign Trade Barriers,” the officials expressed particular concerns about significant interconnection rate increase proposed by the Japanese govt. They said the action of the Ministry of Public Management, Home Affairs & Posts & Telecom (MPHPT) was raising “serious questions about [Japan’s] impartiality and commitment to competition.”
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The USTR officials didn’t elaborate on any actions they would take to resolve the issue. “We hope Japan’s government will open this key sector to true competition,” one official said: “We will be continuing to meet with the government of Japan on this issue, asking them to provide us with more information on the basis of this decision, and we'll continue to use our bilateral deregulation talks” to urge Tokyo to lower its interconnection rates and to establish a procompetitive telecom regime open not only to the U.S. but to foreign and other domestic competitive carriers.
“There are opportunities in the coming months” to reach consensus with Japan on interconnection rates, as it’s in the process of reviewing its telecom policies, an official said. “It’s not a question of what we can do, but what Japan is going to do. All options remain on the table.” She said the decision presented a “huge” cost to Japan’s businesses, including its competitive carriers and, “given the domestic support in Japan for lowering of interconnection rates,” the USTR would work cooperatively with Japan “to establish a procompetitive market.”
In its report, the USTR also said Japan should extend unbundling obligations in access to operations support systems to assist new carriers in building their networks more rapidly and efficiently. The USTR also urged MPHPT to eliminate current restrictions on leased lines and allow carriers to freely combine both owned and leased facilities in their network without the need for govt. approval.
The USTR expressed concerns about the Philippines, which it said didn’t provide market access or national treatment for satellite services and made no commitments on the resale of leased circuits. It said the Philippine Constitution limited foreign ownership of telecom companies to 40%. The Manila govt. has yet to ratify the 4th protocol to the World Trade Organization (WTO) General Agreement on Trade in Services (GATS), embodying its proposed obligations under the WTO Basic Telecom Agreement, the report said.
China still hasn’t established an independent regulator in the telecom sector and used regulatory authority “to disadvantage foreign firms” in 2002, the report said. For example, it said, the Chinese telecom regulator (MII) arbitrarily raised settlement rates for international calls terminating there, which “had the effect of artificially boosting the revenues of Chinese telecommunications operators at the expense of foreign firms.” China also has made little progress in opening its market for value-added services such as Internet service and content providers, the report said. It said China’s current telecom regulations, which were issued by the State Council in 2000, were “generally vague and lacking in specific and necessary details.” For example, it said, they didn’t stipulate any transparent methodology for determining cost-based interconnection rates.
However, the report said, China has made some progress since it made WTO commitments. For example, it said, Beijing has separated post and telecom services, developed a telecom law and lowered connection costs, and in May 2002 split China Telecom into northern and southern parts. China’s new Regulations on Foreign-Invested Telecom Enterprises went into effect Jan. 2002 allowing foreign-invested telecom enterprises to undertake either basic or value-added telecom services.
The officials also expressed serious concerns about deficiencies in intellectual property rights protection. “Advances in technology mean that pirates have new ways to undermine IP rights,” an official said. He said USTR was particularly concerned about the increase in piracy in optical media and use of the Internet as a global distribution network of pirated product. For example, he said, Brazil, which represents more than half the market for sound recording in Latin America and is one of the world largest markets for videos, has an “ineffective” enforcement of copyright laws, and U.S. losses from copyright piracy there reached $777 million in 2002.