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U.S., Europe Focus On Tech Trade and Business
Europe and the United States are in a huddle over how to tackle the global aspects of high-tech trade and business.
European Union antitrust chief Mario Monti wrapped up a round of talks with Clinton administration officials this week. In meeting last Thursday and Friday, Monti met with his American counterpart, Joel Klein, Justice Department antitrust chief, and Attorney General Janet Reno, among others. Monti outlined major problems that the European Union has with the proposed acquisition of Time Warner by online services giant America Online.
"One is that we fear that the operation will lead to the creation of a dominant position in the market for downloading music over the Internet and the related software markets," Monti said. "And the other concern is that AOL's market position on the U.S. Internet service provider market may be leveraged into Europe by virtue of access to Time Warner and Bertelsmann content."
European Commission officials contend that a merged Time Warner/AOL would give AOL preferential access to a catalogue of music and distribution rights from Time Warner's entertainment division. In addition, a previous agreement for distribution and promotion that AOL Europe has with German music recording giant Bertelsmann raises fears that AOL would dictate standards of downloading media files because it would have a monopoly on Internet music content in Europe.
Monti also told reporters that he would seek to have the European Commission, a regulatory arm of the European Union, block the Sprint/WorldCom deal. Just one day after Monti’s departure, the U.S. Justice Department announced that it would file a lawsuit to block the telecommunications deal, saying that the merged company would have too much control over the Internet's backbone. Subsequently, Sprint and WorldCom withdrew their bid to unite, but that didn’t stop the EC from formally announcing Wednesday that it opposed the merger. Monti indicated that he was pleased with the high level of cooperation between U.S. and EU regulatory groups.
Developing a "culture of competition" for the new economy was a main focus of the EU/U.S. meetings as Monti urged more international cooperation on antitrust issues in talks with House Judiciary Committee Chairman Henry Hyde, R-IL, and Sens. Mike DeWine, R-OH, and Herbert Kohl, D-WI, who are taking the lead on antitrust issues in the Senate. He also called for an extension of bilateral cooperation agreements between the European Union and United States to a multinational level. "It will not be easy to bring about, but I intend to work on this," Monti said. Such agreements would be based on principles such as greater transparency and prohibition of nationalism in competition policy.
This type of framework could be highly beneficial "if it works to help U.S. companies eliminate market barriers abroad," said Sherman Katz, the Scholl Chair in International Business at the Centers for Strategic and International Affairs, and trade counsel to Kelley, Brye and Warren. Katz also noted that such a framework of sharing confidential information might give foreign competitors an undue advantage by releasing such sensitive information.
Monti was not the only European official touting policy initiatives. British Cabinet member and "e-Envoy" Alex Allen visited Washington this week. He warned that the fundamental differences on the regulatory policies of the United States and Europe could present major barriers in international commerce. With the less stringent rules on privacy in the United States, Allen warned that some Europeans might be wary of entering the U.S. market. But Allen also said that agreements reached between the trading zones, such as the "safe harbor" language included in the EU's privacy directive, will alleviate some trade barriers.
Lack of online privacy law in the United States "is not going to be a decisive factor in U.K. companies deciding to do business with American companies," Katz noted. "Obviously, some companies are more exposed, but the deal goes a long way to letting the people on both sides of the pond know what the rules of game are and calculating what the risks and the exposure are. Uncertainty is the worst thing business."
Increasing High Tech Exports
Just how much money does the telecom industry stand to make on the efforts to "globalize?" It is hard to calculate, but some organizations, such as the Telecommunications Industry Association (TIA) estimate those sales are rising rapidly. In statistics released last week by TIA, telecom equipment sales topped $24.6 million for the first quarter, an increase of almost 26 percent from one year ago. U.S. exports of telecom equipment totaled nearly $6.2 billion, which is an 18 percent increase from last year.
Countries eager to catch up with American preeminence in technology are scurrying to attract investment dollars and buy into a new gold rush. Argentine Communications Secretary Henoch Aguiar announced last week that he expects at least two dozen new companies to enter the country’s market in November. Under a deregulation package, Aguiar said 20 new telecommunication licenses have been awarded and more are expect in the coming months, sending the Argentine market soaring from the currently $10 billion to nearly $17 billion in the next three years.
China Eyes E-commerce Regulation
This week, China announced that it would begin work on a regulatory framework to support the growth of e-commerce. With the number Internet users growing exponentially, Chinese officials said new rules for online advertising, Internet taxation and business principles are among the top priorities for building a regulatory system. By some estimates, users could rise to 60 million by 2005 from 10 million now. Li Ying, deputy head of the Center of Computer and Microelectronics Industry Development, told Reuters it would take a "long time" for China to build a legal framework on e-commerce, but the regulations were becoming imperative given China's impending entry to the World Trade Organization.
- by Maureen Sirhal
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