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USTR Targets Telecommunications Trade Barriers

April 04, 2014

Annual Report Highlights Cross-border Data Flows, Competition Issues,
Legal Restrictions on Foreign Access, and Local Content Requirements,
Other Roadblocks Faced by U.S. Telecom Suppliers and Exporters

Washington, D.C. – United States Trade Representative Michael Froman today outlined barriers faced by U.S. telecommunications service and equipment suppliers, and identified specific telecommunications-related issues on which USTR will focus its monitoring and enforcement efforts this year.  The annual Report of the 1377 Review, which U.S. Trade Representative Froman released today, details the operation and effectiveness of telecommunications trade agreements pursuant to Section 1377 of the Omnibus Trade and Competitiveness Act of 1988 (“1377 Review”).  The 1377 Review highlights both longstanding and emerging barriers to U.S. telecommunications services and equipment exports, which – when unimpeded – are a significant source of jobs here at home.  The full report is available here.

“Barriers to trade in telecommunications-related goods and services disproportionately affect U.S. suppliers, given our 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 data flows and other localization requirements,” said Ambassador Froman, “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.  USTR will continue to use these tools to support U.S. jobs and ensure that U.S. companies have a level playing field to supply new and innovative products and services abroad.”
Since the release of last year’s 1377 Review, USTR has achieved progress on key issues 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.-Columbia Trade Promotion Agreement has resulted in significant U.S. investment in the mobile wireless service sector, we welcome action by the government of Colombia to enforce competition-related rules to ensure that new entrants have a chance to prosper.  
At the same time, we note the emergence of troubling new and  potential barriers to trade including the following measures: 

- The government of Pakistan has not fully addressed efforts by local participants to create a cartel for the provision of international calls, limiting opportunities for U.S. telecommunication companies to provide this service in Pakistan;

- The European Union has proposed to create an Europe-only cloud computing network; and

- Turkey has blocked numerous Internet-enabled services, affecting legitimate U.S. businesses

Other issues in this year’s 1377 Review focus on a broad range of concerns, including:  

- Ongoing restrictions on the provision of voice-over the Internet (VOIP) services in China and India.
- Lack of an independent and effective telecommunications regulator in China which limits meaningful market access for companies in China.
- Foreign investment limits that distort trade and limit opportunities for U.S. telecommunication companies in foreign markets, in particular China.
- Efforts to increase the rates U.S. telecommunications operators must pay in order to connect long-distance calls from the United States in foreign countries (the “termination rate”), resulting in higher costs for U.S. carriers and higher prices for U.S. consumers, in particular in Pakistan, Fiji, Tonga and Uganda.
- Concerns about undue restrictions on the ability of U.S. satellite service suppliers to provide satellite transmission capacity to customers in both China and India.
- Progress in U.S. telecommunications suppliers’ ability to obtain competitive access to facilities in India where submarine cables connect to the Indian terrestrial network.
- Ongoing concerns with localization requirements, equipment standards, and in Brazil and Indonesia, conformity assessment procedures (including testing requirements) that act as barriers to entry for U.S. telecommunications equipment
Section 1377 of the Omnibus Trade and Competitiveness Act of 1988 requires USTR to review the operation and effectiveness of U.S trade agreements regarding telecommunications products and services by March 31 of each year.  International trade agreements, including the World Trade Organization’s General Agreement on Trade in Services (GATS) and U.S. free trade agreements, provide rules designed to ensure that companies have reasonable access to telecommunications networks in trading partners’ markets, that trading partners maintain competitive conditions for the supply of telecommunications services, and that regulators act in a transparent and effective manner.  International trade agreements also address conditions affecting the competitive supply of telecommunications equipment in foreign markets.  USTR will continue to use these tools to open markets to give U.S. companies the ability to supply new and innovative products and services abroad and support to U.S. jobs.
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.