WASHINGTON-Sen. Ernest Hollings (R-S.C.), in what amounts to a showdown with the Clinton administration, is mounting a campaign to condition Senate confirmation of U.S. Trade Representative-designate Charlene Barshefsky on passage of an amendment requiring legislation to implement the new global telecom pact and future trade agreements that conflict with U.S. law.
Hollings, whose support was crucial to approval of the GOP-crafted telecommunications reform bill Clinton signed last February, tried-but failed-to stop the United States from signing the telecom trade accord by the Feb. 15 deadline in Geneva.
But he may now be in position to get his amendment, introduced Feb. 6, attached to a waiver of a relatively new law that considers foreign lobbying a disqualifier for U.S. trade representative eligibility.
Barshefsky represented a Canadian logging firm as a lawyer several years ago.
Despite the controversy, the telecom trade pact appears to be a boon for the wireless industry both in terms of creating new opportunities for exporting services and equipment to Europe, Asia, Africa and Latin America and importing foreign capital for high risk, capital intensive auction-license ventures.
Indeed, NextWave Telecom Inc. relied heavily on foreign funding, particularly from South Korea, in winning 63 personal communications services licenses that cost nearly $5 billion.
The immediate beneficiaries of the global telecom deal could be U.S. satellite firms-like Iridium Inc., Globalstar, TRW, Orbcomm and others-licensed to offer pocket telephone and portable data communications services around the world. To date, convincing countries to open their markets to next-generation digital mobile satellite services has proved difficult.
The trade pact, which will begin to open markets beginning in 2000, covers wireless/wireline common carriers. Terrestrial broadcasting was kept off limits.
Hollings, ranking Democrat on the Senate Commerce Committee, and a handful of other lawmakers, argue legislation is necessary because the global telecom accord, negotiated a week ago among 68 nations under the auspices of the World Trade Organization, is at odds with the 25 percent foreign ownership cap and accompanying public interest considerations enforced by the Federal Communications Commission.
Reed Hundt, chairman of the FCC, was quoted last week as saying the agency will abandon the ECO (effective competition opportunities) test in favor of a broad public interest standard. ECO looks at whether the country of a foreign firm seeking to acquire more than 25 interest in a U.S. wireless/wireline common carrier is in position to reciprocate.
Indeed, downplayed in the fanfare is the fact the United States failed to persuade Japan, Canada, Mexico, South Korea and other nations to fully open their telecom markets. The United States is expected to pursue bilateral talks with Canada and Mexico to accomplish what it couldn’t on the international stage.
Moreover, it won’t be clear for weeks or months what stipulations, exceptions and side deals will be added to an agreement that many policymakers and industry leaders are lavishly praising without having even seen it.
“Does Congress want to give USTR a blank check to do whatever it wants?” asked a Senate aide close to Hollings. The aide called the historic trade agreement a “back-door amendment to the Communications Act.”
Hollings faces an uphill battle, but it may not be insurmountable. The global telecom trade accord has support from key lawmakers. Nevertheless, according to the Senate aide, the Hollings camp believes it can win if lawmakers are persuaded to separate their enthusiasm over the telecom pact from the broader policy issue of Congress’ role in international trade agreements.
“A fundamental issue is involved,” said Hollings in a Feb. 11 letter to fellow lawmakers. “If laws are changed, it should be by the way the Constitution designates.”
The Clinton administration indicated it does not believe implementing legislation is necessary, but it may be forced to make concessions to Hollings in exchange for his backing.
Senate confirmation of Barshefsky still seems virtually assured.
And while it does not appear her previous lobbying work has undercut strong support on Capitol Hill and in the industry-owing to success in reaching international agreements to remove trade barriers for telecom services and to phase out telecom equipment tariffs-Hollings has too much prestige and influence to be ignored.
“The agreement represents a change of profound importance,” said Barshefsky. “A 60-year tradition of telecommunications monopolies and closed markets has been replace by market opening, deregulation and competition-the principles championed here and embodied in the 1996 Telecommunications Act.” The cost of international calls could be reduced by 80 percent, she predicted.
The United States, particularly the wireless industry, has the most to gain because of its technological edge in telecommunications. The global telecom services market is valued at $600 billion. Because telecommunications infrastructure is antiquated particularly in many developing nations, governments and the private sector may opt for wireless technology to save money and time in getting homes and businesses connected.
“We hope this has benefits for companies seeking to provide services in other countries and are interested in what impact it has on generating investment in U.S. wireless companies,” said Brian Fontes, senior vice president for policy at the Cellular Telecommunications Administration and head of U.S. delegation to the 1995 World Radiocommunication Conference.
Rob Hoggarth, a regulatory policy specialist at the Personal Communications Industry Association, said the WTO telecom pact “is a recognition by our foreign counterparts that competition should be encouraged.”
Alan Shark, president of the American Mobile Telecommunications Association, said the trade agreement will further the growth of commercial trunking radio around the world.
