01-555. Request for Comments Concerning Compliance with Telecommunications Trade Agreements

AGENCY:

Office of the United States Trade Representative.

ACTION:

Notice of request for public comment.

SUMMARY:

Pursuant to section 1377 of the Omnibus Trade and Competitiveness Act of 1988 (19 U.S.C. 3106) (“section 1377”), the Office of the United States Trade Representative (“USTR”) is reviewing, and requests comments on: the operation and effectiveness of and the implementation of and compliance with the World Trade Organization (“WTO”) Basic Telecommunications Agreement; other WTO agreements affecting market opportunities for telecommunications products and services of the United States; the telecommunications provisions of the North American Free Trade Agreement (“NAFTA”); and, other telecommunications trade agreements with the Asia Pacific Economic Cooperation (“APEC”) members, the European Union (“EU”), the Inter-American Telecommunications Commission (“CITEL”), Japan, Korea, Mexico and Taiwan. The USTR will conclude the review on March 31, 2001.

DATES:

Comments are due by noon on Friday, January 26, 2001.

ADDRESS:

Comments must be submitted to Gloria Blue, Executive Secretary, Trade Policy Staff Committee, ATTN: Section 1377 Comments, Office of the United States Trade Representative, 600 17th Street, NW, Washington, DC 20508.

FOR FURTHER INFORMATION CONTACT:

Harry Sullivan, Office of Industry [phone]; or Demetrios Marantis, Office of the General Counsel [phone].

SUPPLEMENTARY INFORMATION:

Section 1377 requires the USTR to review annually the operation and effectiveness of all U.S. trade agreements regarding telecommunications products and services of the United States that are in force with respect to the United States. The purpose of the review is to determine whether any act, policy, or practice of a country that has entered into a telecommunications trade agreement with the United States is inconsistent with the terms of such agreement, or otherwise denies to U.S. firms, within the context of the terms of such agreements, mutually advantageous market opportunities. For the current review, the USTR seeks comments on:

(1) Whether any WTO member is acting in a manner that is inconsistent with its commitments under the WTO Basic Telecommunications Agreement or with other WTO obligations, e.g., the WTO General Agreement on Trade in Services (“GATS”), including the Annex on Telecommunications and the Reference Paper on Pro-Competitive Regulatory Principles, that affect market opportunities for U.S. telecommunications products and services;

(2) What steps to take regarding out-of-cycle reviews initiated in 2000 under Section 1377 regarding compliance by Germany, Mexico, South Africa, and the United Kingdom with telecommunications trade agreements;

(3) Whether Canada or Mexico has failed to comply with their telecommunications commitments under NAFTA;

(4) Whether APEC or CITEL members, the EU, Japan, Korea, Mexico or Taiwan have failed to comply with their commitments under additional telecommunications agreements with the United States.

See 63 FR 1140 (January 8, 1998) for further information concerning the agreements listed below and USTR Press Releases 00-22 (March 30, 2000), 00-25 (April 4, 2000), 00-46 (June 16, 2000), 00-55 (July 18, 2000), 00-57 (July 28, 2000), 00-66 (October 2, 2000), 00-78 (November 8, 2000), and 00-93 (December 21, 2000) available at www.ustr.gov,, for the results of the 1999-2000 section 1377 review concerning these agreements.

WTO Agreements

The GATS contains general obligations that apply to all WTO members and services, and specific obligations that apply only to services listed in a WTO member's schedule of commitments. As part of the GATS, WTO members have made both basic and value-added telecommunications commitments. Specifically, the Fourth Protocol to the GATS—generally referred to as the WTO Basic Telecommunications Agreement—is the legal instrument embodying seventy WTO members' basic telecommunications services commitments under the GATS. The agreement entered into force on February 6, 1998, and since that time, an additional nine WTO members have made telecommunications services commitments, some upon their accession to the WTO. Many members also took separate commitments in the area of value-added telecommunications services as part of the GATS, which entered into force on January 1, 1995. A description of each member's specific commitments is available on the Internet at www.wto.org.

Under the WTO Basic Telecommunications Agreement, members have made full or qualified commitments in three specific areas: market access, national treatment, and pro-competitive regulatory principles. Members that have made full market access commitments have agreed to permit local, long-distance and international service through any means of network technology, either on a facilities basis or through resale of existing network capacity. Members making full national treatment commitments have agreed to ensure treatment no less favorable to U.S. services or service suppliers than that accorded to their own services or service suppliers. And many members have also adopted pro-competitive regulatory principles—set forth in a Reference Paper and incorporated in the members' schedules—which commit members to establish independent regulatory bodies, ensure interconnection with networks in foreign countries at cost-oriented rates, maintain appropriate measures to prevent anti-competitive practices such as cross-subsidization, and ensure transparency of government regulations and licensing.

The USTR seeks comment on whether any WTO member that has undertaken telecommunications services commitments under the GATS has failed to make the necessary legislative or regulatory changes to implement its commitments, or permits acts, policies, or practices in its markets that run counter to that member's commitments. In addition, the USTR seeks comments on whether any WTO member permits acts, policies, or practices that are inconsistent with other WTO obligations and that affect market opportunities for telecommunications products and services of the United States.

Out of Cycle Reviews Regarding Germany, Mexico, South Africa, and the United Kingdom

The USTR seeks comments on what steps to take regarding out-of-cycle reviews initiated under Section 1377 in 2000 regarding compliance by Germany, Mexico, South Africa, and the United Kingdom with telecommunications trade.

Germany—out-of-cycle review: On June 16, 2000, USTR announced the extension of an out-of-cycle review under section 1377 of Germany's compliance with its WTO telecommunications commitments, notably its Reference Paper commitments to ensure interconnection under non-discriminatory terms and conditions that are transparent and reasonable. The review, initiated on March 30, 2000, focused on: (1) Continued excessive delays by Deutsche Telekom (“DT”) in providing interconnection to competing carriers; (2) excessive license fees charged by the German government, ranging from $1.4 to $6.0 million; (3) non-transparent DT cost data filed with the German regulator to support DT's position on interconnection fees and other matters; and (4) refusal by DT to perform billing and collection services for new entrants absent a regulatory mandate that DT continue to perform this function. Germany has taken positive steps on most of these issues, pledging to reduce license fees and interconnection backlogs. It has also required DT to bill competitors' customers for long distance service. The USTR seeks comments on whether Germany continues to address these issues in a meaningful fashion.

Mexico—out-of-cycle review: On November 8, 2000, USTR announced that the United States will request the establishment of a WTO dispute settlement panel to examine Mexico's compliance its telecommunications commitments. The U.S. panel request outlines the specific measures which the United States believes are inconsistent with Mexico's WTO commitments, including Mexico's failure to ensure (1) timely, non-discriminatory interconnection for local competitors, which remain unable to interconnect with Telmex at the local level; (2) cost-oriented interconnection for all calls into and within Mexico, including for calls to remote regions where competitive suppliers lack facilities; and (3) competitive alternatives for terminating international calls into Mexico, currently set at a rate of 19 cents per minute, or up to 15 cents per minute higher than cost. The United States has also requested WTO consultations on measures adopted after the initial U.S. consultation request concerning newly issued rules to (1) regulate the anti-competitive practices of Telmex (Mexico's major telecommunications supplier) and (2) establish long-distance interconnection rates for 2001.

South Africa—out-of-cycle review: On June 16, 2000, USTR announced the extension of an out-of-cycle review under Section 1377 of South Africa's compliance with its WTO telecommunications commitments. Specifically, the United States is concerned that South Africa is failing to ensure—consistent with the GATS Annex on Telecommunications—that its dominant telecommunications supplier (“Telkom”) provide access to and use of the private lines needed for the competitive supply of value-added network services (“VANS”). The newly-created regulator, the Independent Communications Authority of South Africa (“ICASA”), has mandated that Telkom provide private lines to Telkom's competitors, but Telkom has contested these decisions in South African courts. ICASA is currently holding public consultation procedures to determine the definition of VANS and Virtual Private Networks (“VPNs”). The USTR seeks comments on whether South Africa is addressing these issues satisfactorily.

United Kingdom—out-of-cycle review: On December 21, 2000, USTR announced the extension of an out-of-cycle review under Section 1377 of the United Kingdom's compliance with its WTO Reference Paper commitments to provide ensure interconnection on terms, conditions, and cost-oriented rates that are sufficiently unbundled. The UK telecommunications regulator (“OFTEL”) is currently carrying out a regulatory proceeding to determine the price at which competitors can gain access to the telephone infrastructure of British Telecom (“BT”) to provide advanced data services (unbundling of the local loop). On August 8, OFTEL announced the new license conditions for BT, which require BT to provide unbundled local loops to other telecom operators. On November 23, OFTEL found in favor of competitors' complaints that BT's proposed contract for local loop access “was not reasonable” and published its own terms and conditions for such a contract. USTR requests comments concerning whether UK is properly implementing its WTO Reference Paper obligations.

NAFTA and Other Trade Agreements

The USTR seeks comments on the operation and effectiveness of certain trade agreements regarding telecommunications products and services, including the NAFTA. Chapter 13 of the NAFTA includes market access and national treatment commitments for value-added telecommunications services; and, it includes a national treatment commitment for conformity assessment in relation to telecommunications equipment standards.

Bilateral agreements include, on a country-by-country basis:

Japan: The 1999 Nippon Telegraph and Telephone (NTT) agreement; the 1994 U.S.-Japan Public Sector Procurement Agreement on Telecommunications Products and Services; and, additional telecommunications trade agreements with Japan, including a series of agreements on: international value-added network services (IVANS) (1990-91); open government procurement of all satellites, except for government research and development satellites (1990); network channel terminating equipment (NCTE) (1990); and cellular and third-party radio systems (1989) and cellular radio systems (1994).

Korea: Agreements regarding protection of intellectual property rights (“IPR”)(1996), type approval of telecommunications equipment (1992/1996), transparent standard-setting processes, (1992/1997) and non-discriminatory access to Korea Telecommunications' procurement of telecommunications products. (1992/1996)

Mexico: The 1997 understanding regarding test data acceptance agreements between product safety testing laboratories.

Mutual Recognition Agreements For Conformity Assessment of Telecommunications Equipment: Mutual Recognition Agreements (“MRAs”) regarding telecommunications equipment trade with the European Union (1997), APEC countries (1998), and CITEL countries (1999).

Taiwan: The February 1998 agreement on interconnection pricing for provision of wireless services in Taiwan; and, the July 1996 agreement on the licensing and provision of wireless services through the establishment of a competitive, transparent and fair wireless market in Taiwan. USTR also seeks comments on telecommunications commitments made by Taiwan to the United States in October 1999 and February 1998 as part of its accession to the WTO.

Public Comment: Requirements for Submissions

USTR requests comments on: the operation and effectiveness of—including implementation of and compliance with—the WTO Basic Telecommunications Agreement; other WTO agreements affecting market opportunities for telecommunications products and services of the United States; the NAFTA; and other telecommunications trade agreements with APEC members, CITEL members, the EU, Japan, Korea, Mexico and Taiwan. All comments must be in English, identify on the first page of the comments the telecommunications trade agreement(s) discussed therein, be addressed to Gloria Blue, Executive Secretary, TPSC, ATTN: Section 1377 Comments, Office of the U.S. Trade Representative, and be submitted in 15 copies by noon on Friday, January 26, 2001.

All comments will be placed in the USTR Reading Room for inspection shortly after the filing deadline, except business confidential information exempt from public inspection in accordance with 15 CFR 2003.6. Confidential information submitted in accordance with 15 CFR 2003.6, must be clearly marked “BUSINESS CONFIDENTIAL” in a contrasting color ink at the top of each page on each of 15 copies, and must be accompanied by 15 copies of a nonconfidential summary of the confidential information. The nonconfidential summary will be placed in the USTR Public Reading Room.

An appointment to review the comments may be made by calling Brenda Webb at [phone]. The USTR Reading Room is open to the public from 9:30 a.m. to 12 noon, and from 1 p.m. to 4 p.m., Monday through Friday, and is located in Room 101.

Carmen Suro-Bredie,

Chairman, Trade Policy Staff Committee.