[Federal Register Volume 61, Number 242 (Monday, December 16, 1996)]
[Notices]
[Pages 66068-66070]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-31762]
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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Trade Policy Staff Committee (TPSC); Request for Comments
Concerning Compliance With Telecommunications Trade Agreements
AGENCY: Office of the United States Trade Representative.
ACTION: Notice of request for public comments.
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SUMMARY: This notice seeks advice on the operation and effectiveness of
the telecommunications trade agreements with Japan, Korea, Taiwan,
Mexico, and Canada through written submissions due January 24, 1997.
The review will conclude March 31, 1997. The review, conducted pursuant
to Section 1377 of the Omnibus Trade and Competitiveness Act of 1988,
must determine whether the above countries are not in compliance with
the terms of such agreements or otherwise deny ``mutually advantageous
market opportunities'' to U.S. products and services within the context
of those agreements.
Specifically, USTR seeks information on:
Whether Japan, Korea, Taiwan, Canada, and Mexico have carried out
their commitments under telecommunications agreements with the United
States;
Whether levels of trade conform with the levels that would be
expected based on these agreements; and
The underlying competitiveness of U.S. providers of telecom
products or services.
DATES: Submissions must be received on or before January 24, 1997.
ADDRESSES: Comments must be submitted to the Executive Secretary, Trade
Policy Staff Committee, Office of the United States Trade
Representative, 600 17th Street, N.W., Washington, D.C. 20506.
FOR FURTHER INFORMATION CONTACT: Jim McGlinchey (202-395-5656), Office
of Industry or Laura Sherman (202-395-3150), Office of the General
Counsel, Office of the U.S. Trade Representative, 600 17th Street, NW,
Washington, D.C. 20508.
SUPPLEMENTARY INFORMATION: Section 1377 of the Omnibus Trade and
Competitiveness Act of 1988 requires the USTR to review annually the
operation and effectiveness of all U.S. trade agreements regarding
telecommunications products and services. The United States has
telecommunications agreements with Japan, Canada, Mexico, Korea and
Taiwan.
Japan
The United States has two telecommunications procurement agreements
with the Government of Japan. The first, the Nippon Telegraph and
Telephone (NTT) agreement, is designed to ensure that the government-
owned, major telecommunications provider in Japan employs open, non-
discriminatory and transparent procedures in procuring
telecommunications products. In 1994, as part of the Framework
discussions with Japan, NTT agreed to improve its procurement
procedures to provide greater transparency and more timely notice to
foreign suppliers. The improved measures are intended to increase
reliance on international standards and to improve the impartiality of
the process by requiring transparent and non-discriminatory selection
criteria and by reducing single-tender sourcing.
The second procurement agreement is the 1994 U.S.-Japan Public
Sector Procurement Agreement on Telecommunications Products and
Services. Under this agreement, Japan introduced procedures addressing:
enhanced participation by foreign suppliers in pre-solicitation
development and specification-drafting for large-scale
telecommunications procurements; transparent and non-discriminatory
award criteria that include greatest overall value for procurement
decisions; decreased sole sourcing; and the establishing of an
effective bid protest mechanism.
The U.S. recently met with Japan to review implementation of the
two procurement agreements. Under both agreements, foreign share
increased slightly, but in both cases there may have been an evasion or
disregard of the
[[Page 66069]]
procurement procedures and a consequent lack of bidding opportunities
for U.S. suppliers in the Japanese telecom market. In both segments of
the Japanese public sector (NTT and non-NTT), market share of foreign
suppliers continues to be lower than expected, given the
competitiveness of the U.S. telecommunications industry in the global
market. NTT and the Government of Japan do not appear to be procuring
telecom equipment and services with the degree of openness and non-
discrimination contemplated in the improved measures.
Specifically, NTT may be applying a non-transparent and
discriminatory selection criteria for its procurement; not covering the
more lucrative contracts under the open procedures but instead treating
such equipment as follow-on procurement to prior contracts; and not
relying on de facto international standards as envisioned in the
agreement.
With respect to the non-NTT public sector procurement agreement,
the U.S. Trade Representative is concerned that Ministries in Japan and
other covered entities may not be following the procedures. Data
supplied by the Government of Japan for the recent implementation
review show that only 16 Ministries, or 14% of covered entities,
reported any telecom purchases for Japan's fiscal year 1995. Only 4
entities from the whole Japanese central and provincial government
reported purchasing telecom products or services from foreign
suppliers. In addition, the Ministry of Post and Telecommunications,
the largest public purchaser of telecom equipment other than NTT,
actually increased its reliance on single-tendering.
The above facts raise concerns about the operation and
effectiveness of these procurement agreements. Accordingly, the U.S.
Trade Representative seeks information regarding any concrete
difficulties that U.S. telecommunications product suppliers and service
providers are encountering in Japan generally and specifically under
the terms of the two Framework telecom procurement agreements.
Specifically, we seek any evidence of problems with purchasing
procedures of NTT and the Government of Japan, sales efforts firms
would undertake if such problems were removed, and any other relevant
information.
Additional U.S.-Japan Telecommunications Trade Agreements: The
United States has a number of additional telecommunications trade
agreements with Japan, including a series of agreements on:
international value-added network services (IVANS) (1990-91); open
procurement of all satellites, except for government research and
development (R&D) satellites (1990); network channel terminating
equipment (NCTE) (1990); cellular and third-party radio systems (1989)
and cellular radio systems (1995).
Mexico and Canada
Several chapters of the North American Free Trade Agreement (NAFTA)
contain market liberalization commitments on telecommunications. In
addition to general principles in the services and investment chapters,
Chapter 13 on telecommunications contains provisions applicable to
equipment approval processes and associated telecommunications
standards issues as well as private networks and enhanced or value-
added telecommunications services. NAFTA also requires tariff
reductions for telecommunications equipment.
As a result of the March 31, 1996 review, the U.S. Trade
Representative determined that Mexico was not in compliance with its
NAFTA telecom obligations, due to Mexico's delay in implementing
procedures for acceptance of test data for product safety requirements
for telecom terminals. Through the Telecommunications Standards
Subcommittee, Canada and the United State obtained Mexican agreement on
the procedures Mexico would adopt to conform to its NAFTA obligations.
But these procedures are not yet in effect.
Korea
The United States has agreements with Korea to address barriers to
U.S. telecom goods and services suppliers in the areas of protection of
intellectual property rights (IPR), type approval of telecom equipment,
transparent standard-setting processes and non-discriminatory access to
the government-owned Korea Telecom's procurement of telecom network and
commodity products.
In 1990, Korea agreed to an MOU on the liberalization of government
procurement practices for telecommunications. In 1991, Korea committed
to permit value-added services to be provided by international value-
added network service operators. In February 1992 as a result of
market-opening trade negotiations with the United States initiated
under the 1988 Trade Act, Korea broadened these commitments to include
non-discriminatory access to the telecom procurement of the government-
owned Korea Telecom; open and transparent standards-setting processes
and mutual recognition of test data for equipment attached to the
public network; equipment approval based on the minimal network harm
standard; accelerated tariff reductions on imported telecommunications
equipment; commitments to liberalize the provision of value-added
services between the U.S. and Korea; and reduced and streamlined
regulation of intracorporate communications.
As a result of the 1993 and 1995 reviews, the United States reached
agreement with Korea on improved access to the procurement by the
government-owned Korea Telecom (KT), particularly with respect to its
procurements of network and commodity products. The 1995 agreement also
contained commitments limiting type approval of telecom equipment to
the network harm standard. In April of 1996, Korea agreed to elaborate
on the 1992 provisions on non-discriminatory access to KT's procurement
and non-discriminatory equipment approval, particularly with respect to
enhanced intellectual property protection and non-discriminatory
technical specifications.
The 1996 review revealed, however, a number of additional market
access barriers in Korea. Due to restrictive Korean Government policies
and practices, the U.S. Trade Representative determined that there was
a lack of mutually advantageous market opportunities for foreign
suppliers of telecom products and services to Korea. Market access
barriers include Korean Government interference with procurement by
private telecommunications services suppliers, lack of liberalization
of foreign investment in telecom service providers, discriminatory and
non-transparent licensing and regulation of telecom service providers,
ineffective competition policies for service providers, high tariffs on
telecommunications and information technology products and
discriminatory customs procedures for such products.
As a result, in July 1996, the U.S. Trade Representative identified
Korea as a ``Priority Foreign Country'' under Section 1374 of the
Omnibus Trade and Competitiveness Act of 1988. The U.S. Trade
Representative announced at that time that she did not intend to use
the maximum one-year period provided under the statute to address U.S.
concerns. Under the statute, the U.S. Trade Representative is
authorized to take appropriate steps, including trade action, if U.S.
concerns are not addressed within the statutory time frame.
[[Page 66070]]
Taiwan
In July 1996, the Office of the U.S. Trade Representative and the
American Institute in Taiwan concluded with their Taiwanese
counterparts an agreement on the licensing and provision of wireless
services through the establishment of a competitive, transparent and
fair wireless market in Taiwan.
Specifically, the Directorate General of Telecommunications (DGT)
and the Taipei Economic and Cultural Representative Office confirmed
that: the telecommunication regulatory function and telecommunications
service provider function have been entirely separated; DGT would
initiate procures to remove the profit cap and draft a new formula for
tariff schedules; interconnection agreements between wireless operators
and Chunghwa Telecom Co. (``CHT'') would be cost-based, transparent,
unbundled and non-discriminatory and the terms of such agreements
publicly available; DGT would not permit cross-subsidization between
CHT's fixed-line and wireless operations; DGT would relax the debt/
equity ratio for wireless bidders and not restrict a bidder from
obtaining all three regional licenses, subject to the policy that an
island-wide licensee is not eligible for a regional license; and DGT
would remove unauthorized spectrum users. DGT also agreed to review
foreign ownership limitations.
Public Comment: Requirements for Submissions
Interested persons are invited to submit written comments on the
operation and effectiveness of the telecommunications trade agreements
with Japan, Korea, Taiwan, Mexico, and Canada.
Comments must be filed on or before January 24, 1997. Comments must
be in English and provided in 15 copies to: Gloria Blue, Executive
Secretary, Trade Policy Staff Committee, Office of the U.S. Trade
Representative, 600 17th Street, NW, Washington, D.C. 20508.
Comments will be open to public inspection, except confidential
business information exempt from public inspection. Confidential
business information 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 a nonconfidential summary of the
confidential information. The nonconfidential summary shall be placed
in the file that is open to public inspection.
Federick L. Montgomery,
Chairman, Trade Policy Staff Committee.
[FR Doc. 96-31762 Filed 12-13-96; 8:45 am]
BILLING CODE 3910-01-M
