Motohiro, Tsuchiya., Thierer, Adam. "Is America Exporting Misguided Telecommunications Policy? The U.S.-Japan Telcom Trade Negations and Beyond." Cato Institute Briefing Papers. No. 79. January 7, 2003

Keywords: broadband, WTO, 1996, policy


This article analyzes the 1996 Telecommunications Act and its influence on the World Trade Organizations (WTO) Basic Telecommunications agreement (BTA).

During recent World Trade Organization negations, the Federal Communications Commission (FCC) strongly supported and aided in the crafting of a new global framework for worldwide telecommunications markets. Called the Basic Telecommunications agreement, the primary intention was to construct a multilateral framework that would open telecommunications markets to foreign trade and investment. Unfortunately, the outcome of the agreement resulted in an ambiguous accord which is prone to pro-regulatory interpretations.

The danger lurking from such ambiguity is that the primary intention of the WTO’s Basic Telecommunications agreement can be manipulated and abused to benefit some members. The ambiguous nature of the WTO’s Basic Telecommunications agreement (BTA) is due in part by the fact that some of the rules written into the agreement were taken directly form the U.S Telecommunications Act of 1996. This is an unfortunate circumstance considering the 1996 Telecommunications Act remains controversial and continues to be the subject of intense debate and interpretation within the U.S. In addition the 1996 Act has failed to promote the competitive environment American policy makers had hoped for. There is strong evidence suggesting that the 1996 Act has discouraged industry investment and innovation making it an economically questionable model. The provisions for network sharing mandated under the 1996 Act has not produced a viable business model or investment strategy. For all these reasons, the FCC is actively reviewing and in some cases relaxing regulations. Given these circumstances the 1996 Act is probably not an appropriate model for which to have ground an international telecommunications trade policy upon. Nor is it appropriate for the United States to demand that other nations enact policy that is contrary to its own domestic communications policy.

Nevertheless, what is done is done and the U.S. has begun imposing American telecommunications regulation policies – such as those mandated in the U.S. Telecommunications Act of 1996 - on other nations. The American effort to dictate terms of foreign telecommunications policies during free trade negotiations has angered some countries. This paper examines in detail the U.S.- Japan talks on open-market policies in telecommunications and the conflicts that have resulted. Briefly - what the U.S. wants is access to the Japanese telecommunications service market. The Japanese telecommunications market is progressive, open and accommodating to new entrants who are exporting appropriate and desirable products and services. Like many other nations, the Japanese are focused on new communications and broadband technologies and services. However, U.S. insistence that Japan adopt American Telecommunication policy - and the regulatory paradigm that is attached – as well as its continued focus on declining wireline services, limits U.S. participation and competitiveness in the Japanese (and worldwide) telecommunications market.

The authors contend that the BTA is flawed but is the best opportunity to implement comprehensive liberalization of telecommunications worldwide. Negotiators need focus on removing traditional barriers to investment and limit their efforts to the most serious barriers to foreign direct investment. The authors suggest that the U.S. and Japan should lead a multinational effort to encourage and facilitate the growth of emerging telecommunication markets worldwide.