USTR - USTR Issues 2006 Review of Telecommunications Trade Agreements
Office of the United States Trade Representative


USTR Issues 2006 Review of Telecommunications Trade Agreements

WASHINGTON – US Trade Representative Rob Portman today announced the results of its 2006 annual review of the operation and effectiveness of telecommunications trade agreements, the "Section 1377 Review." The report identifies barriers facing U.S. telecommunications services and equipment providers, evaluates progress towards resolving ongoing problems, and lays out the specific telecommunications-related issues on which USTR will focus its efforts this year.

"Barriers in foreign telecommunications markets negatively impact U.S. telecommunications manufacturers and operators, as well as US consumers and any US company that does business abroad," said Ambassador Portman. "They also hurt our trading partners’ ability to reap the benefits of competition, integrate into efficient global networks, and promote economic growth and development. The 1377 review identifies practices that interfere with these goals that we will focus on over the coming year to modify or eliminate."

"One issue that is particularly troubling to us is the emergence of new regulations around the world that are being billed as universal-service related, that may, in fact, limit competition or create barriers for foreign telecom operators," added Portman. "USTR will continue to monitor these programs to ensure that they conform, where applicable, to WTO commitments on universal service."

The main problems identified in this year’s review include existing practices or prospective concerns relating to: 1) excessively high mobile termination rates in Germany, Japan, Mexico and Switzerland; 2) restrictions on access to and use of leased lines in Germany, India, and Singapore; and 3) concerns associated with universal service related programs in Jamaica and Japan.

Countries requiring particular attention this year include : China which has yet to address the long-standing problem of excessive capitalization requirements ($240 million) for a license in the basic telecom sector (typically less than $1 million in other markets) despite US engagement with China in the JCCT); and Jamaica, which has instituted a universal-service related program that lacks transparency and places the burden of funding the program entirely on foreign operators; and Mexico, where an unresolved interconnection dispute has the potential to result in the imposition of high mobile termination rates on U.S. operators to the detriment of U.S. consumers, businesses, and operators.

In addition, USTR will pay particular attention to developments in two additional markets. In Egypt, USTR will closely monitor whether all U.S. operators are offered the opportunity to interconnect with Egypt’s dominant carrier and whether Egypt is prepared to take additional steps if further progress is not evident. Further, USTR will seek to work with India to find a reasonable solution to international operators' concerns regarding India’s new international and long-distance licensing conditions.

In addition to the problems identified in this year’s 1377 Review, USTR also marked significant progress on issues identified in past years in several key markets, including Peru’s resolution to lower rates for access to its mobile market and Japan’s decision to open its mobile market to new entrants.


USTR will continue its efforts to open markets and expand trade opportunities in telecommunications through a range of activities including: engaging bilaterally and multilaterally with trading partners to ensure they fully implement their existing commitments; negotiating and adopting strong disciplines to eliminate or prevent the emergence of trade distorting barriers; and where warranted, initiating dispute settlement action.

WTO rules provide pro-competitive guidelines for regulators to follow in ensuring reasonable access to networks and impartiality of regulatory processes. To bolster WTO disciplines in these areas, USTR has negotiated strong provisions in U.S. Free Trade Agreements (FTAs). All recent FTAs concluded by the United States, including with Singapore, Chile, Australia, Bahrain, Morocco, Oman, and several Central American and Andean countries, contain specific prohibitions against the use of exclusionary standards in the telecommunications sector, ensure reasonable and non-discriminatory access to public networks and interconnection among public network operators, and provide strong provisions on independent regulators, including powers to enforce rules in a transparent and meaningful way. To the extent that these agreements are in force, USTR will continue to use them to assist in opening markets to give U.S. companies the ability to supply new and innovative services abroad.

The full results of the 2006 Section 1377 Review, click here.


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