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Ambassador Kirk Announces Results of Annual 1377 Review

Washington, D.C. – Today, United States Trade Representative Ron Kirk announced the results of the 2011 annual review of the operation and effectiveness of telecommunications trade agreements under Section 1377 of the Omnibus Trade and Competitiveness Act of 1988 (1377 Review). The results of the review, concluded on March 31, 2011, are detailed in a public report released today. The report of the 1377 Review identifies barriers facing U.S. telecommunications service and equipment suppliers, and identifies specific telecommunications-related issues on which USTR will focus its monitoring and enforcement efforts this year.

“As evidenced by the innovative devices and services now helping drive U.S. economic recovery, a vibrant telecom sector with access to global markets will contribute to our prosperity, and that of companies both big and small,” said Ambassador Kirk. “To ensure that U.S. service and equipment suppliers can excel and contribute to the competitiveness of the U.S. economy, we must continue to focus our efforts on identifying all barriers and encouraging our trading partners to remove them.”

This year’s report of the 1377 Review focuses on a broad range of concerns, including:

Fixed and Mobile Call Termination Rates: The report again highlights concern that U.S trading partners are seeking ways to increase the rates U.S. telecommunications operators must pay in order 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. This year’s report focuses on problems in Tonga, Ghana and Jamaica.

Issues with Access to Major Supplier Networks: The report highlights problems that competitive telecommunications carriers encounter in Chile, Germany, India and Mexico trying to lease parts of an incumbent operator’s network, or compete against the dominant satellite services company. This year’s report includes a detailed discussion on a broad range of issues our companies are facing in Mexico.

Issues Affecting Telecommunications Equipment Trade: The report discusses framework regulations imposed by China relating to information security; restrictions on encryption in India, as well as concerns regarding guidelines governing the importation of telecommunications network equipment in India. The report also addresses general concerns with equipment standards and conformity assessment procedures (including testing requirements) imposed by Brazil, Costa Rica, China, India and Mexico.

Problems with Licensing, Transparency and Regulatory Requirements: The report also discusses issues relating to licensing of internet via satellite services and auctioning of mobile spectrum in Costa Rica, classification of value added services in China, and regulatory barriers to providing satellite services in China and India, as well as general problems with providing Voice over IP services in multiple jurisdictions.

Follow-up action: In the review, USTR identifies the most effective bilateral or multilateral fora to monitor, engage, and seek to resolve these issues, and describes the discussions that in many cases are already underway.

BACKGROUND

Section 1377 of the Omnibus Trade and Competitiveness Act of 1988 requires USTR to review compliance by trade partners with trade agreements regarding telecommunications products and services (mainly, WTO and free trade agreement (FTA) commitments) by March 31 of each year. International trade agreements, including the WTO’s General Agreement on Trade in Services and U.S. FTAs, provide rules designed to ensure that companies have reasonable access to telecommunications networks, that competitive conditions are maintained, and that regulators act in a transparent and effective manner. These agreements also address conditions affecting the competitive supply of telecommunications equipment in foreign markets. USTR will continue to use these tools to assist in opening markets to give U.S. companies the ability to supply new and innovative products and services abroad.

The full report is available here.