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The Worries Of U.S. High-Tech Firms Abroad
By William New
U.S. high-tech firms face a minefield of regulatory woes and pitfalls when doing business abroad, according to the Office of the U.S. Trade Representative (USTR).
The USTR disclosed that view in two large annual reports issued last Friday. The 2001 National Trade Estimates (NTE) Report on Foreign Trade Barriers identifies the problems in each country, while the 2001 Trade Policy Agenda and 2000 Annual Report outlines how the office will approach the problems.
The NTE report reveals that even major U.S. trading partners have problematic practices when it comes to high-tech areas such as e-commerce, intellectual property rights, telecommunications and services.
Perhaps most significant was the long list of high-tech problems with China, which was party to a bilateral agreement with the United States last year. Most of the issues are being targeted in China's bid to join the World Trade Organization, a U.S. trade official said last Friday, but some are not.
The report said the Chinese government has discouraged the use of imported telecommunications components or equipment. It also mandates safety inspections for imports of electronic products, including personal computers, monitors and printers. And USTR cited discrimination in government procurement and extensive problems with intellectual property protection in China.
China has seen noticeable growth in e-commerce, the report noted, and Chinese has become the second-most popular language on the Internet, but lack of a comprehensive regulatory framework has inhibited growth. Other barriers are a strong tendency by some Chinese agencies to regulate the Internet, high interconnection rates for Internet service providers, slow connection speeds and the lack of a safe and secure online payment system, it said.
The report also includes a sizeable section on the European Union's many regulatory efforts. Europe is developing a draft directive to regulate the product design of electrical and electronics equipment that could hurt U.S. competitiveness, USTR said. The agency also complained about some European countries' lack of enforcement of intellectual property rights, as well as a lack of progress on patent-processing costs and on an EU software patent.
USTR cited some individual European countries for poor practices - software piracy in Spain and Greece, for instance. In addition, the report extensively detailed ongoing problems in European telecommunications markets. USTR also had lengthy concerns about e-commerce initiatives, with revisions to existing regional conventions leading the way. And the data-privacy directive also stirred comment.
USTR urged Japan, the second-largest world economy and second-largest electronics industry, to abide by larger plans to deregulate its telecom market and move itself to the forefront in information technology within five years.
The agency also said India must change an 1885 law preventing encrypted information from being transmitted over telephones lines in developing an e-commerce policy this year. And it cited the country for continued violations of intellectual property rights, which USTR also expressed as a concern in Korea and Brazil, which still suffers from rampant copyright piracy.
USTR also noted that Brazil retains some limits on the level of foreign ownership of its telecommunications market.
Argentina's "lack of adequate and effective" patent protection has been "a longstanding irritant" in the bilateral trade relationship, USTR said. Argentina has improved on copyrights, but enforcement on recorded music, books and computer software "remains spotty."
Despite having achieved progress on e-commerce, the trade agency said, the country needs to take several measures, such as allowing electronic customs processing and removing an article in legislation that blocks cross-border transfers of personal data that do not meet a certain level of privacy protection.
Chile, with whom the United States is negotiating a free-trade agreement, was recognized for its strong awareness of the importance of e-commerce issues. But the country also was cited for shortcomings in its copyright law. For instance, it fails to clearly protect computer software as a "literary work," does not provide clear rental and importation rights, has inadequate penalties and is weak on searches and legal tools to stop copyright violators. Piracy of computer software also remains a problem, according to USTR.
Trade Deal With Egypt
In another trade-related move, USTR on Tuesday announced a bilateral agreement with Egypt on measures to strengthen economic cooperation. The agreement arose from talks in Washington between USTR Robert Zoellick and Yousef Boutros Ghali, Egypt's minister of economy and foreign trade, which occurred alongside the visit of Egyptian President Hosni Mubarak.
The bilateral measures will provide the basis for a free-trade framework between the two countries as talks for a trade and investment framework agreement will be revived, a joint paper said. Egypt committed to modernize its intellectual property rights system, and privatize its telecommunications and services sectors.
The statement also recognized Egypt's decision to implement the WTO Customs Valuation Agreement and to take "the first steps" to adhere to the WTO Basic Telecommunications Agreement and the WTO Information Technology Agreement.
Canada Readies For Summit Protests
The Summit of the Americas involving the leaders of the 34 democratic nations of the Western hemisphere will be held in Quebec City, Quebec, from April 20-22 and will focus on the broad goal of strengthening democracy, according to Canadian Foreign Minister John Manley.
Canada is assembling a sizeable police force in anticipation of tens of thousands of protestors expected to express their opposition to globalization, the Toronto Star reported. Hemispheric activists are setting the Internet abuzz with plans and politics in the weeks before the summit, the Montreal Gazette reported.
Baucus Criticizes EU Trade Policies
Senate Finance Committee ranking Democrat Max Baucus, Mont., spoke on U.S.-European Union relations Tuesday, highlighting the list of trade disputes between the two trading partners who account for nearly 40 percent of the world's trade and 57 percent of the world's gross national product.
Baucus told the European-American Business Council that after agricultural disputes, the battle over the foreign sales corporation (FSC) system remains the most questionable. The European Union says the FSC system gives unfair tax breaks to large U.S. companies like Microsoft and Boeing that sell goods abroad.
In his speech, Baucus proposed a 12-month "non-aggression pact" between the United States and the European Union, with a standstill on new cases from both sides. He also urged increased emphasis on the Transatlantic Business Dialogue to lower trade and investment barriers, and to focus on standards, convergence and mutual-recognition agreements.
EU Telecom Ministers To Meet
In a meeting Wednesday in Luxembourg, the EU Telecommunications Council of Ministers will work on the adoption of the EU telecom package aimed at increasing competition in the market and further harmonizing rules between EU countries.
Specifically, the council will consider three directives in the new regulatory framework for electronic communications, networks and services. The recent EU summit in Stockholm, Sweden, resulted in recommendations to adopt the telecom package "as soon as possible this year."
Top executives from 24 European telecom operators sent a letter to ministers at the outset of the meeting expressing deep concern about a plan for rapid deployment of third-generation wireless networks, which they said would require "massive" private-sector investment.
EU-Russia Trade Relations Grow
Meanwhile, European Trade Commissioner Pascal Lamy visited Russia last week, meeting with government officials and private-sector representatives, and reiterating support for Russia's accession to the WTO. But he noted that the accession should be a "gradual process."
In another development, European Commissioner for External Relations Chris Patten last week was in Chile discussing hurdles for Latin American development, including education, the "digital divide" and good governance. Patten made the comments in a speech to the ministerial of the Rio Group, a South American government group with close ties to the European Union.
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