WASHINGTON-As the unlikely union of labor and business leaders ratcheted up pressure last week to kill legislation that would nix Deutsche Telekom AG’s $50.7 billion purchase of VoiceStream Wireless Corp., it appeared the controversy could get dragged into a bigger fight between European Union and the United States.
All of a sudden, a handful of transAtlantic trade issues have collided and given rise to an awkward situation for both the Clinton administration and the EU.
Of key interest to the wireless industry is legislation sponsored by Sen. Ernest Hollings (D-S.C.)-and supported by 29 other senators-that would prohibit any firm more than 25-percent owned by a foreign government from acquiring American telecom firms. Deutsche Telekom is 46-percent owned by the German government, which recently told the Clinton administration it will fully privatize the German telecom giant.
As Hollings makes his last grand stand of the 106th Congress, two Senate colleagues who support his foreign-ownership legislation wrote the EU last week and accused it of making antitrust judgments on U.S. telecom mergers based “in part by pan-European protectionism rather than sound competition policy.”
“We are quite concerned about reports that the EC’s (European Commission) merger deliberations have been influenced by protectionist sentiments,” stated Senate Judiciary antitrust committee Chairman Mike DeWine (R-Ohio) and Sen. Herb Kohl (D-Wis.) in a letter last Thursday to EC competition Commissioner Mario Monti.
The German government, in its Sept. 26 letter to National Security Adviser Sandy Berger, did not lay out a time frame for diluting its interest in Deutsche Telekom.
In a July letter to U.S. Trade Representative Charlene Barshefsky, European Commissioner Pascal Lamy said the Hollings legislation would violate global trade commitments made by the United States and was a “serious and immediate concern to the EU.”
A little more than a week ago, the White House and the EU reached an agreement to postpone possibly $4 billion in economic penalties against the United States, stemming from a World Trade Organization ruling against the U.S. involving tax breaks for American exports.
For its part, the Clinton administration opposes the Hollings measure as do the Communications Workers of America, U.S. Chamber of Commerce and the AFL-CIO.
“Deutsche Telekom, an apparent focus of this provision, is a good employer and a good corporate citizen,” said CWA President Morton Bahr at a press conference last Thursday.
Asked about the implications of the CWA-Verizon Communications labor agreement-which included management’s agreement for streamlined organizing of wireless workers with the nation’s top mobile-phone operator-Bahr replied, “We have not made this a quid pro quo.” At the same time, Bahr predicted there would not be any antagonism toward unionization of VoiceStream’s wireless workers if Deutsche Telekom merger is approved.
The deal must still be approved by the FCC and a Treasury Department-led government panel that analyzes foreign acquisitions for national security risks.
FCC Chairman William Kennard, who has received two letters from Hollings and his supporters urging him to carefully scrutinize foreign investment in U.S. telecom firms. Kennard promised he would do so.
While FCC rules prohibit firms more than 25-percent owned by foreign governments from holding U.S. wireless licenses, the agency has the discretion to waive the rule under its public-interest standard.
Tom Donohue, president of the U.S. Chamber of Commerce, said the Hollings legislation will make it more difficult for U.S. businesses to press for open markets around the world if Congress erects trade barriers.
“This proposal is a misguided effort that will have adverse impacts on American consumers and workers,” said AFL-CIO President John Sweeney.
Just a few weeks ago, organized labor and the U.S. Chamber of Commerce ended a long-running and expensive battle over whether a bill to extend permanent normal trade relations status to China. Congress approved the trade measure, but has yet to send it to the White House for President Clinton’s signature.
Lobbyists for VoiceStream and Deutsche Telekom have been working around the clock for weeks to get one of the two Hollings measures stripped from the Commerce appropriations bill. That spending bill, under one scenario, is one of several being negotiated with the White House that could go to the House and Senate for votes as early as this week as part of an omnibus spending package. It is still possible the Commerce appropriations measure could go to the Senate floor as a free-standing bill at the end of the session.
Opponents of the Hollings’ foreign-ownership legislation said they have made progress in convincing lawmakers to reconsider their support for the measure and may now have momentum on their side to kill it. Senate Majority Leader Trent Lott (R-Miss.) recently said he wanted the provision dropped.
However, there are no signs Hollings, the only Senate member to vote last week against increasing high-tech visas and regarded generally as a protectionist, was ready give up.
“They should be ashamed of themselves. We did not deregulate the U.S. telecommunications market to put it under German control,” said Hollings.
