[Congressional Record Volume 146, Number 31 (Monday, March 20, 2000)]
[Senate]
[Pages S1468-S1470]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  SENATE RESOLUTION 275--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 Finance.

                              S. Res. 275

       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 in 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 2 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 websites, while the United States hosts over 
     30,000,000 websites; (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 of Japan's schools are connected to the 
     Internet, while in the United States 89 percent of schools 
     are connected;
       Whereas the disparity between the United States and Japan 
     is largely caused by the failure of Japan to ensure 
     conditions that allow for the development of competitive 
     networks which would stimulate the use of the Internet and 
     electronic commerce;
       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; 
     and
       Whereas deregulating the monopoly power of Nippon Telegraph 
     and Telephone Corporation would help liberate Japan's economy 
     and allow Japan to take full advantage of information 
     technology: 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 Nippon 
     Telegraph and Telephone Corporation (NTT) and its affiliates 
     (the NTT

[[Page S1469]]

     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, I would like to make two sets of comments 
on Japan today. The first relates to Japanese telecommunications 
deregulation. The second involves a recently issued report about the 
lack of compliance by Japan with the trade agreements it has signed 
with the United States.
  I am introducing today, along with Senator Grassley, a sense-of-the-
Senate resolution designed to encourage the Japanese Government to 
deregulate and open the Japanese telecommunications sector. Intense 
negotiations are going on between our government and Japanese 
authorities, and I hope that the Senate, by speaking out forcefully, 
will give support to the progressive elements in Japan as they do 
battle with the eternal forces of protection.
  The United States has worked tirelessly to promote deregulation and 
openness in the Japanese telecommunications sector over the past 20 
years. These efforts have led to significant changes in the procurement 
policies of Nippon Telegraph and Telephone, or NTT, which used to be 
the government owned, monopoly domestic telecommunications provider, 
and is still the 800-pound gorilla in the sector. The efforts included 
agreements on devices for interconnection, cellular phones, and 
international value added networks. It involved use of U.S. laws like 
section 301 and section 1377, the MOSS talks, the GATT, the WTO, and 
the Information Technology Agreement.
  The United States has probably negotiated more on Japanese 
telecommunications than we have with any other nation over one specific 
sector. We have made a lot of progress, going from almost no sales by 
Americans in this sector in Japan two decades ago to several billion 
dollars today.
  But considerable work remains, and the focus now is under the rubric 
of the Enhanced Initiative on Deregulation. Japan, despite a decade of 
stagnation, is still the world's second largest economy with incredible 
cutting edge technology. Nevertheless, its pattern of consumption of 
high tech telecommunications goods and services makes it look more like 
a second tier economy. While Japan's penetration of cellular phones is 
among the highest in the world, it falls far behind in many other 
measures of high tech telecommunications usage. For example, Japan has 
only 20 million Internet users, compared to 80 million in the United 
States. Japan hosts 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 30 times as much in the 
United States. And only 19 percent of Japan's schools are connected to 
the Internet, while in the United States 89 percent of schools are:
  The explanation is that Japan has a non-competitive regulatory system 
in telecommunications that prevents market forces from fully operating. 
Foreign telecommunications service and equipment providers are limited 
in their ability to do business in Japan. This means that Japanese 
consumers are prevented from obtaining the highest quality 
telecommunications technology at the lowest price. They are not allowed 
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 procurement of 
telecommunications goods and services. They cannot get the best, and 
they overpay for what they can buy. Many modern services are simply 
unavailable in Japan.

  If the Japanese Government wanted to follow a path that would lead to 
higher economic growth, greater choice and lower prices for its 
consumers, and increased efficiency for its industry, it would 
deregulate this sector immediately.
  The sense-of-the-Senate resolution I am introducing today simply 
stresses the need for significant regulatory reform in Japan, supports 
USTR in vigorously pursuing this, and sends the message to Japan that 
the Senate is strongly behind such an effort. Deregulation serves 
American and international business. It serves the Japanese economy. It 
serves the Japanese consumer. It serves Japanese industry. And it 
serves the regional and global economy which needs a growing Japan. In 
the long run, everyone would be a winner if Japan let market forces 
operate.
  The second issue I want to address today is a report issued earlier 
this month by the American Chamber of Commerce in Japan, the ACCJ, on 
Japan's compliance, or, rather, insufficient compliance, with trade 
agreements. The study, ``Making Trade Talks Work 2000: An On-the-Ground 
Analysis of US-Japan Trade Agreements by American Businesses,'' looked 
at 58 major United States/Japan trade agreements reached between 1980 
and 1999. The ACCJ rates 51 of them on a numerical basis, using four 
measures. Their astounding conclusion was that 53 percent were fully or 
mostly successful, while 47 percent were rated as partially successful, 
successful in only one or two ways, or unsuccessful.
  This rating, performed by American companies and industry 
associations on the ground in Japan, working every day in the trenches 
to penetrate the Japanese market, should be a wake-up call to all of 
us. Despite all the attention spent on opening the Japanese market 
during the Reagan, Bush, and Clinton administrations, barely half of 
the agreements signed actually worked. This is an utterly unacceptable 
result. I commend this report to my colleagues. Not only is its 
analysis excellent, but the ACCJ offers a range of recommendations for 
future action.
  Compliance by other nations with trade agreements is a serious 
problem for our country, and it will likely get worse. Many of the easy 
trade barriers around the world, such as tariffs and quotas, have been 
significantly reduced or eliminated. Now, we face the tougher trade 
barriers, such as anti-competitive practices and internal regulations 
and standards designed to keep out foreign goods and services. These 
barriers are harder to identify, harder to get agreement on, and it is 
harder to measure the results.
  I am very worried about our government's system of monitoring trade 
agreements and ensuring that our trading partners will comply with 
their commitments. The GAO has told us that there is not even a place 
in the government where you can go to get a list of all trade 
agreements. When the ACCJ did its earlier study in 1997, they spent 
months just assembling all United States-Japan bilateral trade 
agreements. If you don't know what agreements exist, how can you 
enforce them?
  In its most recent report on this subject, the GAO concluded that the 
Executive Branch needed a more integrated approach to monitoring and 
enforcing trade agreements and should pursue a process of comprehensive 
and sustained strategic planning. GAO also concluded that declining 
staff levels have limited agencies' monitoring and enforcement 
activities. Some of the special skills needed to deal with the new 
complex trade agreements is also lacking.
  I deeply appreciate the ACCJ's diligence in presenting us with an 
objective analysis of the Japanese market situation. But, as GAO 
indicates, this may be just the tip of the iceberg internationally. The 
problem is pervasive, and I don't see any trends that will make it 
better.
  That is why, among other reasons, I recently introduced the China WTO 
compliance bill to make sure that, once China enters the WTO, we won't 
have this massive violation of our trade agreements as has happened 
with Japan. That is why I recently introduced a bill to establish a 
Congressional Trade Office to provide the Congress with precisely the 
type of objective information that the American Chamber of Commerce in 
Japan has provided, and to help those of us in the Congress ensure that 
trade agreements reached are trade agreements implemented. I call on my 
colleagues to work with me to develop a system that will ensure that 
American workers,

[[Page S1470]]

farmers, and businesses will benefit from the trade agreements that our 
trade officials so diligently negotiate.

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