[Congressional Record Volume 145, Number 148 (Wednesday, October 27, 1999)]
[Senate]
[Pages S13288-S13289]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  SENATE RESOLUTION 207--EXPRESSING THE SENSE OF THE SENATE REGARDING 
   FAIR ACCESS TO JAPANESE TELECOMMUNICATIONS FACILITIES AND SERVICES

  Mr. BAUCUS (for himself and Mr. Grassley) submitted the following 
resolution; which was referred to the Committee on Foreign Relations:

                              S. Res. 207

       Whereas the United States has a deep and sustained interest 
     in the promotion of deregulation, competition, and regulatory 
     reform in Japan;
       Whereas new and bold measures by the Government of Japan 
     regarding regulatory reform will help remove the regulatory 
     and structural impediments to the effective functioning of 
     market forces in the Japanese economy;
       Whereas regulatory reform will increase the efficient 
     allocation of resources of Japan, which is critical to 
     returning Japan to a long-term growth path powered by 
     domestic demand;
       Whereas regulatory reform will not only improve market 
     access for United States business and other foreign firms, 
     but will also enhance consumer choice and economic prosperity 
     in Japan;
       Whereas a sustained recovery of the Japanese economy is 
     vital to a sustained recovery of Asian economies;
       Whereas the Japanese economy must serve as one of the main 
     engines of growth for Asia and for the global economy;
       Whereas the Governments of the United States and Japan 
     reconfirmed the critical importance of deregulation, 
     competition, and regulatory reform when the two governments 
     established the Enhanced Initiative on Deregulation and 
     Competition Policy in 1997;
       Whereas telecommunications is a critical sector requiring 
     reform in Japan, where the market is hampered by a history of 
     laws, regulations, and monopolistic practices that do not 
     meet the needs of a competitive market;
       Whereas as the result of Japan's laws, regulations, and 
     monopolistic practices, Japanese consumers and Japanese 
     industry have been denied the broad benefits of innovative 
     telecommunications services, cutting edge technology, and 
     lower prices that competition would bring to the market;
       Whereas Japan's significant lag in developing broadband and 
     Internet services, and Japan's lag in the entire area of 
     electronic commerce, is a direct result of a noncompetitive 
     telecommunications regulatory structure;
       Whereas Japan's lag in developing broadband and Internet 
     services is evidenced by the following: (1) Japan has only 
     17,000,000 Internet users, while the United States has 
     80,000,000 Internet users; (2) Japan hosts fewer than 
     2,000,000 web sites, while the United States hosts over 
     30,000,000 web sites; (3) electronic commerce in Japan is 
     valued at less than $1,000,000,000, while in the United 
     States electronic commerce is valued at over $30,000,000,000; 
     and (4) 19 percent Japan's schools are connected to the 
     Internet, while in the United States 89 percent of schools 
     are connected; and
       Whereas leading edge foreign telecommunications companies, 
     because of their high level of technology and innovation, are 
     the key to building the necessary telecommunications 
     infrastructure in Japan, which will only be able to serve 
     Japanese consumers and industry if there is a fundamental 
     change in Japan's regulatory approach to telecommunications: 
     Now, therefore, be it
       Resolved; That it is the sense of the Senate that--
       (1) the appropriate officials in the executive branch 
     should implement vigorously the call for Japan to undertake a 
     major regulatory reform in the telecommunications sector, the 
     so called ``Telecommunications Big Bang'';
       (2) a ``Telecommunications Big Bang'' must address 
     fundamental legislative and regulatory issues within a 
     strictly defined timeframe;
       (3) the new telecommunications regulatory framework should 
     put competition first in order to encourage new and 
     innovative businesses to enter the telecommunications market 
     in Japan;
       (4) the Government of Japan should ensure that Nippen 
     Telegraph and Telephone Corporation (NTT) and its affiliates 
     (the NTT Group) are prevented from using their dominant 
     position in the wired and wireless market in an 
     anticompetitive manner; and
       (5) the Government of Japan should take credible steps to 
     ensure that competitive carriers have reasonable, cost-based, 
     and nondiscriminatory access to the rights-of-way, 
     facilities, and services controlled by NTT, the NTT Group, 
     other utilities, and the Government of Japan, including--
       (A) access to interconnection at market-based rates;
       (B) unrestricted access to unbundled elements of the 
     network belonging to NTT and the NTT Group; and
       (C) access to public roads for the installation of 
     facilities.

  Mr. BAUCUS. Mr. President, the history of our Government's effort to 
promote deregulation and openness in the Japanese telecommunications 
sector goes back over 20 years. Back to the days when Bob Strauss was 
the U.S. Trade Representative.
  The first agreement involved significant changes in the procurement 
policies of Nippon Telegraph and Telephone. Known as NTT, it was then 
the government owned, monopoly, domestic telecommunications provider. 
This agreement has been revised and renewed seven times--most recently 
earlier this year.
  There has been a plethora of other bilateral telecommunications 
agreements with Japan over the years. On

[[Page S13289]]

interconnection. On cellular phones. And on international value added 
networks.
  We have used Section 301 to pry open the Japanese telecommunications 
market. We created Section 1377 in the 1988 Omnibus Trade Act to deal 
with Japanese telecommunications practices. We have had the MOSS talks 
with Japan in the 1980s. And we have also pursued multilateral efforts 
through the GATT, the WTO, and the Information Technology Agreement--
the ITA.
  I don't think the United States has negotiated more in one sector 
with any nation than we have done with Japan over telecommunications.
  And we have made progress, from virtually zero sales by Americans to 
Japan in this sector twenty years ago to several billion dollars today.
  But there is still a long way to go. Japan is the second largest 
economy in the world. It is at the cutting edge of most high 
technology. Yet its consumption of telecommunications goods and 
services fits more closely the model of a second tier economy.
  It is true that penetration of cellular phones in Japan is among the 
highest in the world. But, Japan has only 17 million Internet users, 
while the United States has almost five times as many--80 million 
users. Japan hosts fewer than two million web sites, while the United 
States hosts over 30 million. Electronic commerce in Japan is valued at 
less than one billion dollars, versus at least thirty times as much in 
the United States. And only 19 percent of Japan's schools are connected 
to the Internet, versus in the United States where 89 percent of 
schools are connected.
  Why is this?
  The answer is simple. Japan maintains a non-competitive regulatory 
system that prevents market forces from fully operating in the 
telecommunications sector. American telecom service and equipment 
providers are still limited in their ability to do business in Japan.
  But the system also hurts the Japanese consumer. They can't obtain 
the highest quality telecommunications technology at the lowest price. 
They are not able to choose from the incredible array of services and 
products available around the world. And they pay higher prices than 
they should.
  Japanese firms also suffer for the same reasons in their 
telecommunications purchases. They cannot get the best. And they 
overpay for what they can buy. Many modern services are simply 
unavailable in Japan.
  Earlier this month, the United States Government presented Japan with 
its annual deregulation requests in a number of sectors. If the 
Japanese government implemented this whole list, they would be on a 
path leading to economic growth. To better choice and lower prices for 
its consumers. And to increased efficiency for its industry.
  I an not naive enough to think that will happen. However, I do know 
that Japan's adoption of the USTR requests, a so-called 
``Telecommunications Big Bang'', would open the telecommunications 
sector to global competition with all the attendant benefits.
  Senator Grassley and I are submitting a sense-of-the-Senate 
resolution. It simply stresses the need for this significant regulatory 
reform in Japan. It calls on USTR vigorously to implement their call 
for this change. And it sends the message to Japan that the Senate is 
strongly behind this effort.
  Such deregulation serves American and International business. It 
serves the Japanese economy. It serves the Japanese consumer. It serves 
Japanese industry. And it serves the original and global economy which 
need so desperately a growing Japan. In the long-run, everyone would 
win.
  I urge my colleagues to support this resolution when it is called up.
  Mr. GRASSLEY. Mr. President, this resolution I am offering with 
Senator Baucus calls for fair access to Japan's $35 billion 
telecommunications equipment market. Telecommunications is one of our 
most important exports and one of our most significant areas for future 
export growth.
  Recently, the United States and Japan reached a new 
telecommunications procurement agreement covering procurement by the 
successor companies of the Nippon Telegraph and Telephone Company. This 
agreement replaced the 1997 agreement that expired when the Nippon 
Telegraph and Telephone Company was restructured.
  We have had many difficulties gaining access to Japan's 
telecommunicates market in the past, probably not too different from a 
lot of sectors as we try to enter our products into Japan. It may be 
nothing new in that respect, but this is a new agreement that will be 
in effect for 2 years, and we should give it a chance to work. But 
history shows we have not made much progress when it comes to 
implementing fair bilateral market access agreements with Japan.
  You know the usual story: We are always overjoyed, after several 
months or even years of negotiating an agreement with the Japanese, 
that it has been some major breakthrough; and then down the road a few 
months or years, when you expect the agreement to be carried out--not 
only according to its word but also according to its spirit--you find 
the victory you anticipated and were thankful for at the time it was 
signed comes out to be a half a loaf or a quarter of a loaf in 
practice. I think that is what we are finding out here a little bit 
with this telecommunications agreement.
  The Nippon Telegraph and Telephone Company and the government in 
Japan, which owns 65 percent of the telecommunications group, have 
traditionally maintained that Nippon Telegraph and Telephone is a 
private company which should not be subject to government interference 
but be allowed to make its own procurement decisions.
  Our concern is that we need effective bilateral government oversight 
so Japan's telecommunications industry does not revert to its 
traditional reliance upon domestic suppliers and consequently 
circumvent this agreement. That is because Nippon Telegraph and 
Telephone's procurement history shows that even nearly two decades 
after the first bilateral agreement on this company's procurement, 
Japan still tends to make a large portion of its procurement from the 
``NTT family'' of Japanese equipment makers; thus, not opening their 
markets to products from overseas, including U.S. products. Often, NTT 
over-engineers specifications, which in the past were very Japan-
specific or company-specific--another nontariff trade barrier to keep 
out products from the United States and other countries.
  World telecommunications trade is growing very rapidly, but global 
market access is not keeping pace with the fast pace of technology 
development. The Baucus-Grassley resolution expresses the sense of the 
Senate that the only effective way for the United States to achieve 
significant market access in Japan is through Japan staying with 
serious and sustained deregulation and consequently having market 
opportunities for imports from other countries, including the United 
States.
  This resolution carriers a message that ought to be heard loud and 
clear in the runup to the World Trade Organization Ministerial 
Conference that will take place in Seattle at the end of November. So I 
strongly urge my colleagues to approve this resolution.

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