[Federal Register Volume 63, Number 5 (Thursday, January 8, 1998)]
[Notices]
[Pages 1139-1141]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-206]


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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: Pursuant to Section 1377 of the Omnibus Trade and 
Competitiveness Act of 1988, (19 U.S.C. Sec. 3107), the Office of the 
United States Trade Representative (USTR) seeks comments on the 
operation and effectiveness of telecommunications trade agreements with 
Japan, Canada, Mexico, Korea, and Taiwan and on implementation of the 
World Trade Organization (WTO) Basic Telecommunications Agreement (the 
Fourth Protocol to the WTO General Agreement on Trade in Services). 
Section 1377 requires USTR to conduct an annual review of 
telecommunications trade agreements and to determine whether any 
country is not in compliance with the terms of such agreements or 
otherwise denies ``mutually advantageous market opportunities'' to U.S. 
telecommunications products and services. The USTR will conclude the 
review on March 31, 1997.

DATES: Submissions must be received on or before February 6, 1997 with 
respect to telecommunications trade agreements with Japan, Canada, 
Mexico, Korea, and Taiwan, and on or before February 16, 1997 with 
respect to the WTO Basic Telecommunications Agreement.

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. 20508.

FOR FURTHER INFORMATION CONTACT:
Jonathan McHale (202-395-5656), Office of Industry or Joanna McIntosh 
(202-395-7203), 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, (19 U.S.C. Sec. 3107), requires USTR to 
review annually the operation and effectiveness of all trade agreements 
regarding telecommunications products and services 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 is not in compliance 
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.
    Specifically, for the current review, USTR seeks information on 
whether:

[[Page 1140]]

    (1) Japan, Canada, Mexico, Korea, and Taiwan have failed to comply 
with their commitments under bilateral agreements or the North American 
Free Trade Agreement (NAFTA);
    (2) Any WTO member countries that have accepted the WTO Basic 
Telecommunications Agreement have failed to take steps to ensure 
compliance with commitments that will take effect when this agreement 
enters into force;
    (3) Any of these countries otherwise have denied, within the 
context of the terms of these agreements, mutually advantageous market 
opportunities to U.S. firms; and
    (4) Levels of trade conform with the levels that would be expected 
based on these agreements.
    In addition, the USTR seeks relevant information on the underlying 
competitiveness of U.S. providers of telecommunications products and 
services.

Japan--Bilateral Procurement Agreement

    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 majority 
government-owned, dominant telecommunications provider in Japan employs 
open, non-discriminatory and transparent procedures in procuring 
telecommunications products. On September 30, 1997 this agreement was 
extended and improved. NTT agreed to improve its procurement procedures 
by providing greater transparency, additional procurement data, better 
access to technical information, and a stronger commitment to 
international standards.
    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 establishment of an 
effective bid protest mechanism. Based on provisions of the Public 
Sector Procurement agreement, Japan agreed in March 1997 to issue a new 
tender for a major telecommunications system being procured by the 
National Police Agency. This procurement, which has not yet been 
awarded, is being monitored closely to ensure that it is transparent 
and non-discriminatory.
    The USTR seeks information regarding any difficulties that U.S. 
telecommunications product and service providers are encountering 
selling in Japan under the terms of these two telecommunications 
procurement agreements. Specifically, we seek evidence of practices 
such as: favoring traditional suppliers despite competitive foreign 
alternatives; failing to provide adequate access to necessary technical 
information; using non-transparent criteria to evaluate proposals and 
bids and award procurements; and relying on proprietary standards where 
international standards exist.

Japan--Additional Telecommunications Trade Agreements

    The United States has a number of additional telecommunications 
trade agreements with Japan, including commitments made under the 
Market Opening Sector Specific (MOSS) process from 1985 to 1988, and 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 (R&D) satellites (1990); 
network channel terminating equipment (NCTE) (1990); and cellular and 
third-party radio systems (1989).
    The USTR seeks information regarding any difficulties that U.S. 
telecommunications product and service providers are encountering 
selling in Japan based on non-compliance with these agreements.

Canada and Mexico

    Several chapters of the NAFTA include market liberalization 
commitments that benefit trade in the telecommunications sector: 
Chapter 11--investment; Chapter 12--services; and Chapter 13--
telecommunication. Chapter 13 includes commitments relating to access 
to and use of public telecommunications networks, conditions for 
providing enhanced services, equipment approval processes and 
associated telecommunications standards issues, and general competitive 
safeguards. The NAFTA also requires tariff reductions for 
telecommunications equipment.
    The USTR's March 31, 1996 review found Mexico to be in non-
compliance regarding its obligation to accept test data for product 
safety of telecommunications products. On April 18, 1997, the U.S. and 
Mexico concluded an agreement to permit U.S. laboratories to establish 
relationships with counterpart Mexican laboratories for the purpose of 
testing telecommunications products to Mexican product safety 
requirements. From January 1, 1998, broader conformity assessment 
obligations under the NAFTA will come into effect and U.S. laboratories 
and certification bodies will be eligible to apply for accreditation to 
test (and in some cases certify) telecommunications equipment to 
Mexican standards--for product safety, terminal attachment, and other 
mandatory and voluntary standards.
    The USTR seeks information regarding any difficulties that U.S. 
telecommunications product and service providers are encountering 
selling in Canada or Mexico based on noncompliance with the NAFTA, and, 
in particular, any difficulties with Mexico relating to testing and 
certification of telecommunications products and accreditation of test 
labs and certification bodies.

Korea

    The United States has agreements with Korea to address barriers to 
U.S. telecommunications product and services providers in the areas of 
protection of intellectual property rights (IPR), type approval of 
telecommunications equipment, transparent standard-setting processes 
and non-discriminatory access to the government-owned Korea 
Telecommunications's procurement of telecommunications products.
    On August 11, 1997, the USTR revoked Korea's identification as a 
priority foreign country under Section 1374 of the Omnibus Trade and 
Competitiveness Act of 1998, which had been in place since July 1996. 
USTR concluded that Korea had taken adequate steps to address market 
access barriers, which included Korean Government interference with 
procurement by private telecommunications service providers, lack of 
liberalization of foreign investment in telecommunications service 
providers, discriminatory and non-transparent licensing and regulation 
of telecommunications service providers, ineffective competition 
policies for telecommunications service providers, high tariffs on 
telecommunications and information technology products, and 
discriminatory customs procedures for such products.
    The USTR seeks information regarding any difficulties that U.S. 
telecommunications product and service providers are encountering 
selling in Korea based on

[[Page 1141]]

noncompliance with these commitments.

Taiwan

    In July 1996, the American Institute in Taiwan, on behalf of the 
Office of the United States Trade Representative, concluded an 
agreement with the Taiwan authorities 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 Telecommunication (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 procedures to remove the profit cap and draft a new formula 
for tariff schedules; interconnection agreements between wireless 
operators and Chunghwa Telecommunications Co. (CUT) would be cost-
based, transparent, unbundled and non-discriminatory and that the terms 
of such agreements publicly available; DGT would not permit cross-
subsidization between CUT'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.
    The USTR seeks information regarding any difficulties the U.S. 
telecommunications service providers are encountering to provide 
wireless services in Taiwan based on noncompliance with these 
commitments.

WTO Basic Telecommunications Agreement

    On February 15, 1997, seventy parties--69 territorial entities and 
the EU--committed to opening up their markets for basic 
telecommunications services by concluding the WTO Basic 
Telecommunications Agreement. So far, 55 WTO member countries which are 
parties to the agreement have accepted the agreement and the remaining 
fifteen have given their assurances that they intend to complete their 
acceptances of the agreement as soon as possible.
    The agreement encompasses commitments in three main areas: market 
access, investment, and pro-competitive regulatory principles. For 
countries making full commitments, market access commitments open the 
local, long-distance and international service markets through any 
means of network technology, either on a facilities basis or through 
resale of existing network capacity. Investment commitments ensure that 
companies can acquire, establish or hold a significant stake in 
telecommunications companies. The pro-competitive regulatory 
principles, incorporated in WTO Members' schedules, commit members to 
establish a regulatory body independent of any carrier; to guarantee 
that former monopolies will provide interconnection to their networks 
at non-discriminatory, cost-oriented prices; to maintain measures to 
prevent anti-competitive practices such as cross-subsidization; and to 
mandate transparency of government regulations and licensing. Some 
members have staged implementation of these commitments over several 
years. Summaries of each member's commitments are available on the WTO 
web site, at www.wto.org.
    The Basic Telecom Agreement was to enter into force on January 1, 
1998. However, since fifteen signatories to the agreement have not yet 
offered their final acceptances, WTO members will meet in January to 
decide on the date of entry into force of this agreement.
    The USTR seeks information on whether any parties to this agreement 
have not made the necessary legislative or regulatory changes to 
satisfy the commitments that will come into effect in 1998 under the 
agreement, or are permitting practices in their markets inconsistent 
with these commitments.

Public Comment: Requirements for Submissions

    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, except for business confidential information, will be 
available for public inspection by appointment in the USTR Reading 
Room, Room 101, Monday through Friday, 10:00 a.m. to 12:00 noon and 
1:00 p.m. to 4:00 p.m. For an appointment, call Brenda Webb at 202-395-
6186.
    Business confidential information will be subject to the 
requirements of 15 CFR 2003.6. Any business confidential information 
must be clearly marked as such on the cover letter or page and each 
succeeding page, and must be accompanied by a non-confidential summary 
thereof. The nonconfidential summary will be placed in the file that is 
open to public inspection.
Gordana Earp,
Acting Assistant United States Trade Representative for Industry.
[FR Doc. 98-206 Filed 1-7-98; 8:45 am]
BILLING CODE 3190-01-M