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New and Potential Barriers to Telecom Trade Identified in Annual USTR Report

Tuesday, April 07, 2015
Sandler, Travis & Rosenberg Trade Report

An annual review of the operation and effectiveness of telecommunications trade agreements released April 1 by the Office of the U.S. Trade Representative identifies the latest major barriers faced by U.S. telecom service and equipment suppliers in the global economy and illustrates the specific telecom-related issues to which USTR will allocate monitoring and enforcement efforts over the coming year.

According to the report, over the past year USTR has achieved progress on issues affecting U.S. exporters. For example, Pakistan is now withdrawing a policy that increased the fees U.S. telecom exporters had to pay for long-distance phone calls to over 400 percent of the market rate.

However, the report also identifies new and potential barriers to U.S. telecom trade. China has proposed to require information communications technology suppliers serving financial institutions to divulge the source codes of their products to the government and use indigenous technology. China has also proposed onerous encryption approval and in-country data storage requirements on ICT products. Vietnam has established a minimum wholesale rate for international mobile roaming services, which increases the cost of U.S. operators providing data services in that market. Vietnam has also proposed to regulate certain over-the-top services (i.e., Internet-based voice and text services supplied through mobile terrestrial telecommunications and fixed terrestrial telecommunications networks) by requiring their suppliers to sign commercial agreements with existing licensed telecom suppliers.

Other issues covered in this year’s report include the following. While some of these have been discussed in past reviews, USTR considers it appropriate to continue to raise them and encourage U.S. trading partners to implement appropriate solutions.

- ongoing restrictions on cross-border movement of information in Russia, Nigeria and Indonesia and voice over Internet protocol services in China

- the lack of an independent and effective telecom regulator in China

- foreign investment limits in China, typically in the form of limits on the percentage of equity a foreign firm can control

- anti-competitive policies that foreign telecom suppliers are encountering in Vietnam, the Dominican Republic and China

- policies and schemes that increase the rates U.S. telecom operators must pay to deliver long-distance calls into foreign operators’ countries

- undue restrictions and opaque licensing requirements imposed on U.S. satellite service suppliers to reach customers in China and India

- ongoing localization concerns in Brazil and Indonesia and the use of equipment standards and conformity assessment procedures (including testing requirements) as barriers to entry for U.S. telecom equipment, including policies in China (banking/ICT measures), India (license amendments), Brazil (acceptance of test results), Indonesia (domestic manufacturing requirements) and Nigeria (local content requirements)

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