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U.S. Telecom Firms Facing Barriers to Trade, USTR Report Says

Wednesday, April 9, 2014

By Len Bracken  

April 4 --U.S. telecommunications service and equipment suppliers face longstanding and emerging barriers to trade, according to an annual report released April 4 by the Office of the U.S. Trade Representative.

In addition to localization requirements on servers and problematic equipment standards in many countries, specific examples of the barriers to trade cited in the report include:

• Pakistan not fully addressing efforts by local participants to create a cartel for the provision of international calls, which the USTR says limits opportunities for U.S. telecommunication companies to provide this service in Pakistan;

• Turkey blocking numerous Internet-enabled services that affect legitimate U.S. businesses;

• China and India restricting the provision of voice-over the Internet (VoIP) services and imposing restrictions on the ability of U.S. satellite service suppliers to provide satellite transmission capacity to customers in those countries; and

• Brazilian and Indonesian conformity assessment procedures, including testing requirements, that act as barriers to entry for U.S. telecommunications equipment.

 

The lack of an independent and effective telecommunications regulator in China limits meaningful market access for companies in China, and foreign investment limits distort trade and limit opportunities for U.S. telecommunication companies in China, the USTR report said.

The report also cited efforts by Pakistan, Fiji, Tonga and Uganda to increase the rates U.S. telecommunications operators must pay in order to connect long-distance calls from the U.S. in foreign countries--the so-called termination rate--that resulted in higher costs for U.S. carriers and higher prices for U.S. consumers.

U.S. Suppliers Disproportionately Affected

U.S. Trade Representative Michael Froman said in a press release accompanying the report that barriers to trade in telecommunications-related goods and services disproportionately affect U.S. suppliers, given their strong competitive position in these sectors.

“We have made important progress this year in advancing market liberalization in this sector, though we continue to see the emergence of new barriers [to] data flows and other localization requirements,” Froman said.

Over the past year, the USTR said that it has achieved progress on key issues in several countries, including

• in Mexico, where new legislation looks to promote much-needed competition in both the telecommunications and video services markets;

• in Colombia, where the 2012 entry into force of the U.S.-Colombia Trade Promotion Agreement has resulted in significant U.S. investment in the mobile wireless service sector (the USTR said that it welcomes action by the government of Colombia to enforce competition-related rules to ensure that new entrants have a chance to prosper); and

• in India, where U.S. telecommunications suppliers have advanced their ability to obtain competitive access to facilities through submarine cables connected to the Indian terrestrial network.

 

The USTR report, which is prepared annually and entitled Report of the 1377 Review, details the operation and effectiveness of telecommunications trade agreements pursuant to Section 1377 of the Omnibus Trade and Competitiveness Act of 1988.

“The 1377 Review and the follow-up work we do each year are aimed at addressing these barriers and opening markets for U.S. telecommunications goods and services,” Froman said.

To contact the reporter on this story: Len Bracken in Washington at lbracken@bna.com

To contact the editor responsible for this story: Jerome Ashton at jashton@bna.com


The USTR report can be found at http://www.ustr.gov/sites/default/files/2013-14%20-1377Report-final.pdf. The office's press release can be found at http://www.ustr.gov/about-us/press-office/press-releases/2014/March/USTR-Targets-Telecommunications-Trade-Barriers.

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