The U.S. Chamber of Commerce and two of the largest labor unions in the U.S. found themselves on the same side of an argument on Thursday when both expressed opposition to proposed legislation that would place new restrictions on foreign investment in U.S. telecommunications companies.
The presidents of the Chamber of Commerce, which represents American business interests, the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) and the Communications Workers of America held a news conference to voice their concern about the bill, proposed by Sen. Fritz Hollings, a Democrat from South Carolina.
Hollings says the bill, supported by 17 other senators and several members of the House of Representatives, is needed to clarify the rules governing the takeover of a U.S. telecommunications company. The bill would prohibit foreign companies with more than 25 percent government ownership from obtaining a Federal Communications Commission (FCC) license. Hollings believes the bill is needed to prevent telecommunications mergers from violating a section of U.S. telecommunications law that places limitations on foreign-government purchases of U.S. telecommunications entities.
Deutsche Telekom AG's proposed purchase of VoiceStream Wireless Corp. is at the center of the issue because the German government holds a 58 percent stake in DT. Hollings told a House committee last month that substantial foreign government-ownership of U.S. telecommunications properties is troubling because it contradicts the trend toward privatization. [See "Congress Frets over Foreign Telecom Ownership," Sept. 7.] Thomas Donohue, president of the Chamber of Commerce, said the chamber and the unions oppose the bill because it puts up walls to foreign investment at a time when the U.S. is working to lower trade barriers and open markets around the world.
"It will be difficult for American businesses to press for open markets around the globe when Congress is talking about erecting new barriers here at home," Donohue said.
Donohue argued that Hollings' bill is unnecessary because the FCC already has the authority to refuse a license if there is chance it would compromise national security. In addition, Donohue said all substantial foreign investment in U.S. firms currently is reviewed by the interagency Committee on Foreign Investment and can be prohibited based on national security concerns.
"Legislation mandating new, arbitrary restrictions on investments would have a chilling effect throughout the U.S. telecommunications industry," Donohue said. "If telecom firms cannot raise needed investment capital, the engine of our record economic expansion could find itself out of gas."
Donohue also warned that denying FCC licenses to corporations with substantial foreign investment could violate World Trade Organization rules concerning anti-competitive behavior and subject the U.S. to sanctions.
John Sweeney, president of the AFL-CIO, said U.S. lawmakers should focus on making sure that consumers, business and workers get the best from competition. He said the proposed legislation does not take into account many criteria for mergers that are more important to working people than the percentage of foreign government ownership. These include how the company treats its workers and what the impact of the merger would be on consumers and on competition.
Deutsche Telekom, for example, enjoys a very positive relationship with its workers and its union, Sweeney said.
Hollings' office issued a short statement after the news conference in which he said the Chamber of Commerce and the unions should be ashamed of themselves.
"We did not deregulate the U.S. telecommunications market to put it under German government control," Hollings said in the statement.
The U.S. Chamber of Commerce, in Washington, can be reached at +1-202-659-6000 or found on the Web at http//:www.uschamber.com/. The AFL-CIO, in Washington, can be reached at +1-202-637-5000 or found on the Web at http://www.aflcio.org.