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Ambassador Kirk Announces Results of Annual 1377 Review

Washington, DC – United States Trade Representative Ron Kirk today announced the results of the 2009 annual review of the operation and effectiveness of telecommunications trade agreements under Section 1377 of the Omnibus Trade and Competitiveness Act of 1988 (“1377 Review”). The results of the review, concluded on March 31, 2009, are set out in a Report of the 1377 Review released today. The Report of the 1377 Review identifies barriers facing U.S. telecommunications service and equipment suppliers, evaluates progress toward resolving ongoing problems, and lays out specific telecommunications-related issues on which USTR will focus its monitoring and enforcement efforts this year. 

“Barriers to telecommunications services and equipment make it harder for the U.S. to compete in the in the global marketplace, and harder for us to evolve efficient and innovative communications infrastructure here at home,” said Ambassador Kirk. “In these difficult times, it is more important than ever to make sure this engine of investment and growth is running strong.  So whether the barriers are to U.S operators offering telecommunications services across borders or in foreign markets, U.S. consumers calling abroad or U.S. companies needing access to a high-quality global network, we will seek to reduce the difficulties that American companies and workers currently face.”  

This year’s Report of the 1377 Review focuses on a broad range of concerns, including:   

Issues with Major Suppliers:  The Report highlights issues that competitive telecommunications carriers experience in Australia, Colombia, Germany, India, Mexico, Singapore, and Sweden when trying to lease parts of an incumbent operator’s network. 

Fixed and Mobile Call Termination Rates:  The Report highlights the high rates or surcharges foreign operators in El Salvador, Jamaica, Japan, Peru, and Tonga charge U.S. telecommunications operators to deliver long-distance calls into the foreign operators’ countries (the “termination rate”), resulting in higher costs for U.S. carriers and higher prices for U.S. consumers.   

Transparency and Regulatory Independence:  The Report highlights countries whose independent regulatory agencies need strengthening and whose transparency policies need improvement.  Countries included in this section are China, Egypt, Germany, India, Israel, Mexico and South Africa.

Issues Affecting Telecommunications Equipment Trade:  The Report discusses the equipment standards and conformity assessment (including testing requirements) imposed by Brazil, China, India, Israel, Mexico, South Korea, and Thailand that act as barriers to entry for U.S. telecommunications equipment.   

Follow-up action:  In the review, USTR identifies the most effective bilateral or multilateral fora to monitor, engage, and seek to resolve these issues, with discussions already advanced in many cases.  For newer concerns, USTR will evaluate the best way forward to ensure the most expeditious and effective means of addressing the problem.  The Report identifies the most effective bilateral or multilateral fora to monitor, engage, and seek to resolve these issues, with discussions already advanced in many cases.  For newer concerns, USTR will evaluate the best way forward to ensure the most expeditious and effective means of addressing the problem.   

In addition to the problems identified in this year’s Report, USTR also marks progress with Oman, which eliminated unreasonably high licensing fees prior to entry into force of the United States-Oman Free Trade Agreement. 

BACKGROUND 

Section 1377 of the Omnibus Trade and Competitiveness Act of 1988 requires USTR to review compliance by trade partners with trade agreements regarding telecommunications products and services (mainly, WTO and FTA commitments) by March 31 of each year.  International trade agreements, including the WTO’s General Agreement on Trade in Services (GATS) and U.S. free trade agreements, provide rules designed to ensure that companies have reasonable access to telecommunications networks, that competitive conditions are maintained, and that regulators act in a transparent and effective manner.  These agreements also address conditions affecting the competitive supply of telecommunications equipment in foreign markets.  USTR will continue to use these tools to assist in opening markets to give U.S. companies the ability to supply new and innovative products and services abroad.

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