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Some Telecom Charges Might Violate WTO Commitments, USTR Says

USTR annual review identifies problems in China, Mexico, Jamaica, Egypt, India

China's imposition of excessively high entry costs on foreign telecommunications companies could be viewed as violating World Trade Organization (WTO) commitments, the Office of the U.S. Trade Representative (USTR) says.

In its annual review of foreign compliance with telecom agreements released April 6, USTR said China has taken no action to lower its $240 million capitalization requirement for each company seeking to offer inter-regional services.

According to USTR, the cost of a license in the basic telecom sector amounts to less than $1 million in other markets.

"The United States will continue to work with China to eliminate this condition for entry, which raises questions regarding China's compliance with its WTO obligations," the report said. "If progress appears unlikely, USTR will consider what further actions it may undertake to encourage China to eliminate this barrier."

Chinese President Hu Jintao is scheduled to meet President Bush in the White House April 20.

The annual telecom trade agreement review, required under Section 1377 of the 1988 Trade Act, identifies what USTR considers unfair practices in several foreign markets.

Many of the complaints from U.S. companies concern high rates foreign regulators impose for terminating mobile phone calls. According to USTR, Mexican regulator COFETEL has for more than a year failed to arbitrate complaints from U.S. and other companies about those rates as its own rules require.

"The impact of the new long distance fixed-to-mobile termination rates on U.S. companies supplying cross-border calls to Mexico is likely to be enormous," possibly more than $400 million a year, the report says.

Other countries charging excessively high rates for terminating mobile calls include Germany, Japan, Peru and Switzerland, USTR says.

The report says India, Singapore and Germany impose unfair restrictions on foreign telecom companies that are trying to get access to leased lines and submarine cables. Among the complaints from U.S. providers are excessive waiting times for leases and excessively high prices.

Jamaica is identified in the review for imposing an "extraordinarily large surcharge" on all incoming international calls, supposedly to pay for a program to provide broadband access for schools and libraries in the country.

Because most of the money comes from the United States, the review says, Jamaica should account for how much money this universal service program actually costs and whether the surcharge fees are actually going for the intended use.

"Since the program appears to be designed mainly for Jamaican users," USTR says, "levying charges primarily on Jamaican operators and users may be a more equitable approach, and one that would ensure that burdens of the program are not disproportionately imposed on unrelated users."

The report says also USTR will give additional scrutiny to alleged discrimination by government-owned Telecom Egypt in awarding to foreign companies interconnections with its network and to India's international and long-distance licensing conditions.

Source: U.S. Department of State

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