BRUSSELS (07/24/2000) - The European Commission downplayed Monday its concerns over draft U.S. legislation that would prohibit the takeover of U.S. firms by any foreign company in which the foreign government owned more than 25 per cent of the shares.
"It is not yet certain that the bill (put forward by South Carolina Congressman Ernest Hollings will get Congressional approval, but if it were to be adopted, it would have international trade implications," a European Commission spokesman said in response to questions.
The Commission has however started talks with U.S. officials to prevent adoption of the bill, but it is still too early to say whether the European Union will eventually complain to the World Trade Organization (WTO), the spokesman said.
"We are not there yet," he stressed.
Just what the trade implications would be remain to be seen. Under the Basic Telecoms Service Agreement of the WTO, the U.S. maintained the right to restrict ownership of U.S. telecommunications firms by a foreign carrier in which a foreign government owns more than 20 percent of the capital stock, a well-informed trade official who asked not to be identified told the IDG News Service.
Current U.S. legislation reflects this position, but it gives the U.S. Federal Communications Commission (FCC) considerable discretion to ignore it.
"There is no unconditional access," the trade official said.
The measures proposed by Congressman Hollings were tacked on to a bill setting out the budget for the FCC and would prohibit the FCC from spending any money on the processing of a request by any non-U.S. telecom carrier with over 25 percent government ownership from taking control of a U.S. carrier.
The Hollings amendment reflects growing concern in Washington over foreign takeovers of U.S. firms in which a foreign government owns significant shares.
If Congress were to adopt the FCC's appropriations bill as amended by Congressman Hollings, it is not clear what impact it would have over the plans by Germany's Deutsche Telekom AG to buy VoiceStream Wireless Corp. The German government currently owns 59 percent of Deutsche Telecom.
The European Commission in Brussels can be reached at +32-2-299-1111 or at http://europa.eu.int/.
Deutsche Telekom, in Bonn can be reached at +49-228-181-4949 or at http://www.dtag.de/.