WASHINGTON-The Bush administration last week said China agreed to further open its massive telecom market and to refrain from favoring its homegrown third-generation wireless standard over other technologies, progress U.S. trade officials highlighted even as they pressured other trading partners to lower excessive mobile termination rates.
At last Tuesday’s 17th session of the U.S.-China Joint Commission on Commerce and Trade, the Chinese government consented to making modifications to equity capital requirements in a Chinese telecom sector boasting the largest (400 million subscribers) and fastest-growing mobile-phone market in the world. Senior officials from the United States and China intend to meet to discuss implementation of China’s new telecom market access commitment.
China’s plans for 3G-particularly its strong interest in pursuing the TD-SCDMA standard-is a subject of intense interest and suspicion among wireless manufacturers here and abroad. The USTR released the following statement on China’s intentions on this front: “The Chinese government restated its 2004 JCCT commitment to technology neutrality for 3G standards. It agreed to ensure that telecommunications service providers will be allowed to make their own choices as to which standard to adopt, and to issue licenses for all 3G standards in a technologically neutral manner that does not advantage one standard over others.”
China also vowed to improve enforcement of intellectual property rights and to crack down on IPR piracy. U.S. and industry officials remain cautious about whether China will follow through on its latest promises to allow foreign vendors and service providers to compete in its telecom market.
“The real outcome of this meeting, of course, will be known when we see the results. We will both be looking for results before the next annual meeting to bring additional equity and balance to the U.S.-China trade relationship,” said Commerce Secretary Carlos Gutierrez.
The U.S.’ $200 billion trade deficit with China lingers as a hot-button issue for members of Congress, particularly those in states where jobs have been lost to overseas producers. The U.S.-China trade imbalance is one of the top issues expected to be addressed when Chinese President Hu Jintao’s arrives here this week.
Motorola Inc., Lucent Technologies Inc. and Qualcomm Inc., three leading American wireless technology firms, have made significant inroads into China in recent years. At last week’s U.S.-China meeting, officials announced a sales framework agreement between Motorola and China National Postal and Telecommunications Appliances Corp. The deal to have PTAC sell Motorola GSM phones in China reportedly is valued at more than $300 million.
What habitually worries U.S. trade officials and industry on U.S.-China trade is the level of seriousness China attaches to the trade deficit and other issues associated with global commerce in a nation of more than 1 billion people-most without basic communications.
Chinese Vice Premier Wu Yi played down any notion that her country’s market is not as open as it could be.
“I don’t believe that we are in the position to say that the Chinese market is unfair toward American companies or the Chinese market is not open enough for American companies, because as a matter of fact, the Chinese market is open,” said Wu. “Of course, we are very much willing to increase our imports from the United States. However, in this regard, there is a fairly important element; that is, we look forward to seeing the relaxation of high-tech export controls practiced by the U.S. against China.”
The U.S. and China last week agreed to establish a U.S.-China High Technology and Strategic Trade Working Group under the JCCT to review export control cooperation and facilitate high-tech trade.
Meantime, USTR is again sounding the alarm over high call termination rates charged by foreign wireless operators.
“Lack of effective competitive pressure on mobile termination rates in certain markets continues to be of concern, since U.S. operators and consumer are forced to absorb such costs when calling foreign mobile networks,” USTR said in a new report. “These rates are often very high; they can be up to 20 times the rates fixed network providers charge to access their networks. …While [foreign] regulators have the discretion to choose the mobile termination rate system that best fits their country’s needs, the United States has an interest in ensuring that this choice does not result in excessive interconnection rates.”
USTR said mobile termination fees are problematic in Germany, Japan, Mexico, Peru and Switzerland, chiding Germany and Japan specifically for failure to regulate termination rates.
“Barriers in foreign telecommunications markets negatively impact U.S. telecommunications manufacturers and operators, as well as U.S. consumers and any U.S. company that does business abroad,” said USTR’s Portman. “They also hurt our trading partners’ ability to reap the benefits of competition, integrate into efficient global networks, and promote economic growth and development. The review identifies practices that interfere with these goals that we will focus on over the coming year to modify or eliminate.”
