USTR Report Criticizes Japan Telecom Deregulation

TOKYO (04/03/2000) - The United States Trade Representative's (USTR) annual report on foreign trade barriers has once again taken Japan to task for what the U.S. perceives as a lack of openness in several key information technology-related markets.

The report outlined a series of complaints regarding the local telecommunications market over three and a half pages -- almost double the space used last year.

In what has become a series of familiar complaints, the USTR led its report with attacks on Japan's telecommunications market and the Ministry of Posts and Telecommunications (MPT). The government ministry, the USTR says, only compounds problems regarding market access because it holds simultaneously the positions of both market regulator and promoter of the local telecommunications industry.

"Ensuring effective competition, especially in the local telecommunications markets, will require Japan to demonstrate that it can allow for the operation of an independent regulation more attuned to providing equitable opportunities to new entrants and less biased towards the financial interests of an operator still majority-owned by the Government of Japan," the report said in a reference to Nippon Telegraph and Telephone Corp. (NTT), the de facto local loop provider in Japan.

The contentious issue of interconnection -- the rates competing carriers pay to NTT for use of its local circuits to complete calls -- came under heavy criticism as usual, although it wasn't just NTT's local carrier units that came in for criticism. New this year was a complaint targeted at NTT DoCoMo Inc., the mobile telecommunications arm of the carrier and Japan's leading cellular operator with an almost 60 percent market share.

The USTR expressed concern over NTT DoCoMo's "extremely high and non-transparent interconnection rates" and said, "There is no explanation how these exorbitant rates are calculated." The USTR took the MPT to task over a lack of progress in improving transparency of NTT DoCoMo's rates despite an April 1999 commitment to do so.

It promised "heavy scrutiny" of Japan in the area of telecommunications because several of its key complaints, notably those regarding interconnection pricing, discriminatory pricing, unbundling and the use of leased capacity, relate to Japan's World Trade Organization (WTO) commitments.

Along with the increasing popularity of the Internet and online shopping, the electronic commerce sector got its first mention in the USTR's annual report on Japan. There was no specific criticism of the Japanese government, for few policies have yet to be made into laws, although the USTR said it would closely monitor moves in the e-commerce sector to ensure Japan lives up to previous promises to keep the market open and government regulation at a minimum.

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