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Results Of Annual US Review Of Telecommunications Trade Agreements

by Leroy Baker, Tax-News.com, New York

10 April 2012


United States Trade Representative (USTR) Ron Kirk has announced the results of the 2012 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).

Section 1377 requires the USTR to review compliance by trade partners with free trade agreements (FTAs) regarding telecommunications products and services, by March 31 of each year.

The list of trade agreements containing requirements relevant to telecommunications and technology includes the General Agreement on Tariffs and Trade and the General Agreement on Trade in Services; the NAFTA with Canada and Mexico; the Dominican Republic-Central America-United States FTA with Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic; and the bilateral FTAs with Australia, Bahrain, Chile, Israel, Jordan, South Korea, Morocco, Oman, Peru and Singapore.

Such 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. The USTR uses these tools to assist in opening markets to give US companies the ability to supply new and innovative products and services abroad.

The 1377 Review is based on public comments filed by interested parties and information developed from ongoing contacts with industry, the private sector and foreign government representatives in various countries. It therefore identifies barriers facing US telecommunications service and equipment suppliers, as well as specific telecommunications-related issues, on which USTR will focus its monitoring and enforcement efforts during the next year.

This 2012 Review addresses several general themes: cross-border data flows and internet enabled trade in services, including Voice over Internet Protocol services; issues concerning independent and effective regulators; limits on foreign investment; access to major supplier networks; increases in fixed and mobile call termination rates; issues concerning satellites and submarine cable systems; and issues affecting the telecommunications equipment trade.

For example, this year’s report identifies the concern that US equipment manufacturers may be disadvantaged by the growing use of local content requirements in countries, such as Brazil, India, and Indonesia, as well as the use of equipment standards and conformity assessment procedures (including testing requirements) that act as barriers to entry in, for example, China, India, Brazil and Costa Rica.

The report also highlights concerns with restrictions on data access and transfers, focusing on issues in China and Vietnam, while foreign investment limits, typically in the form of limits on the percentage of equity a foreign firm can control, were widely cited as a trade-distortive barrier, focusing on Thailand, Canada and Mexico.

In addition, problems are being encountered by telecommunications carriers in Germany and Mexico in trying to access an incumbent operator’s network, and concerns are expressed that US trading partners are seeking ways to increase the rates US telecommunications operators must pay in order to deliver long-distance calls into the foreign operators’ countries, resulting in higher costs for US carriers and higher prices for US consumers.

Kirk noted progress in addressing issues outlined in the 2011 report. “Since the release of last year’s 1377 Review, we have seen progress on key issues in Mexico and Canada,” he said. “In Mexico providers have resolved several disputes with a US-affiliated competitor and agreed to work on long-term solutions to pricing and access. In Canada, the government has recently proposed lifting investment limits on companies comprising less than 10% of the market.”

Furthermore, the US and Mexico have successfully concluded a Telecommunication Mutual Recognition Agreement that will permit recognized US laboratories to test telecommunications products for conformity with Mexican technical requirements, and vice versa. The agreement covers equipment subject to telecommunications regulation, including wire and wireless equipment, and terrestrial and satellite equipment.

TAGS: Morocco | compliance | tax | business | free trade agreement (FTA) | Chile | India | Nicaragua | law | Australia | Bahrain | China | Israel | Mexico | Singapore | Thailand | enforcement | agreements | internet | Brazil | Canada | Costa Rica | Dominica | Dominican Republic | Germany | Guatemala | Indonesia | Jordan | Korea, South | Peru | United States | standards | trade | telecoms | El Salvador | Honduras | Oman | Vietnam

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