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The following story is from the April 9 issue of International
Trade Reporter
Current Reports:
Telecommunications
USTR Announces Results of 2009
Section 1377 Telecommunications Review
In announcing the results of the 2009 annual Section 1377 review of telecommunications agreements, U.S. Trade Representative Ron Kirk April 6 said that USTR will seek to reduce the difficulties that American firms and workers currently face in the telecommunications market.
The 2009 review addresses several general themes, including high fixed and mobile calls termination rates in El Salvador, Jamaica, Japan, Peru, and Tonga. USTR said foreign operators in these countries charge U.S. telecommunications operators to deliver long-distance calls into the foreign operators' countries (the “termination rate”), resulting in higher costs for U.S. carriers and higher prices for U.S. consumers.
The rate a foreign carrier charges a U.S. operator to terminate the call on the foreign operator's network and deliver it to a local consumer is one of the major cost components of a call from the United States to a foreign country. U.S. free trade agreements as well as the World Trade Organization's Reference Paper on pro-competitive regulatory principles contain disciplines aimed at ensuring that the termination rate is cost-based.
The review is conducted under Section 1377 of the Omnibus Trade and Competitiveness Act of 1988. The review is based on public comments filed and information developed from ongoing contact with the industry, private sector and foreign governments.
USTR said it has noted the emergence of a “troubling trend” where some foreign operators are increasing termination rates due to government measures that are hurting the ability of U.S. telecommunications operators to provide low-cost services to U.S. consumers.
Competitive telecommunications carriers also experience problems in Australia, Colombia, Germany, India, Mexico, Singapore, and Sweden when trying to lease parts of an incumbent operator's network, the report said.
Transparency Policies
Countries whose independent regulatory agencies need strengthening and whose transparency policies need improvement are mentioned in the report, specifically China, Egypt, Germany, India, Israel, Mexico, and South Africa. “Transparency in rulemaking, licensing and adjudication of disputes is essential to demonstrating and safeguarding [regulatory] impartiality, a key reason for inclusion of extensive obligations on transparency in U.S. FTAs, and to some extent, the WTO,” the report said.
The report also addresses the equipment standards and conformity assessment (including testing requirements) imposed by Brazil, China, India, Israel, Mexico, South Korea, and Thailand that act as barriers to entry for U.S. telecommunications equipment.
“Equipment standards and conformity assessment requirements … that help ensure safety and interoperability are integral to the telecommunications industry. Unfortunately these measures can also be used by governments as a barrier to entry for foreign suppliers,” the report said.
The report also pointed to Thailand for failure to update its WTO schedule of commitments.
The report also underscored progress with Oman, which is it said eliminated unreasonably high licensing fees prior to entry into force of the U.S.-Oman Free Trade Agreement.
“Barriers to telecommunications services and equipment make it harder for the U.S. to compete in the global marketplace, and harder for us to evolve efficient and innovative communications infrastructure here at home,” Kirk said in a press release. “In these difficult times, it is more important than ever to make sure this engine of investment and growth is running strong. So whether the barriers are to U.S. operators offering telecommunications services across borders or in foreign markets, U.S. consumers calling abroad or U.S. companies needing access to a high-quality global network, we will seek to reduce the difficulties that American companies and workers currently face.”
The report identifies the most effective fora to seek to resolve these issues, with discussions advanced in many cases. USTR will evaluate the best way to ensure the most expeditious and effective means of addressing the problem for newer concerns, USTR said.
By Rossella Brevetti
The report can be accessed at http://www.ustr.gov
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