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					   TRADE POLICY REVIEW OF THE UNITED STATES OF AMERICA
                      JUNE 9-11, 2008

                   ADDITIONAL RESPONSES TO QUESTIONS

Argentina

Could the US provide statistics on the number of containers for which departure from a port was
prohibited following a CSI inspection?

ANSWER: There have been few incidents where a container was delayed for further
verification of contents. No containers have been totally prevented from being loaded.

Could the U.S. specify the requirements that must be met in order for a country to obtain access
to an agreement whereby C-TPAT benefits would be accorded to persons exporting to the United
States?

ANSWER: C-TPAT is a voluntary government-business initiative to build cooperative
relationships that strengthen and improve overall international supply chain and U.S. border
security. Through this initiative, CBP is asking businesses to ensure the integrity of their
security practices and communicate and verify the security guidelines of their business partners
within the supply chain. C-TPAT offers trade-related businesses an opportunity to play an active
role in the war against terrorism and does not involve agreements with trading partners.


Brazil

Page 66, paragraph 216

The document states that "a number of statutes provide for limited immunity from antitrust laws
in specified cases. Immunity applies, for example, to specified aspects of agriculture, fishing,
insurance, and export activities. The Webb-Pomerene Act grants limited immunity from antitrust
laws to associations of competing businesses solely for the purpose of engaging in collective
exports of goods, provided this does not result in conduct that has anti-competitive effects in the
United States or injure domestic competitors. In 2007, seven associations were registered with
the FTC under the Act. The Export Trading Company Act of 1982, 15 U.S.C. 4011-4021,
created a procedure by which, under certain circumstances, persons engaged in export trade may
obtain an export trade certificate of review which provides, inter alia, for limited antitrust
immunity. International ocean carriers are allowed to engage in conferences (price-fixing
arrangements) by the Shipping Act of 1984 if they are not contested by the Federal Maritime
Commission." On page 64, paragraph 209, on the other hand, it is also stressed that the OECD
considers United States as owner of one of the least restrictive regulatory systems.




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Questions: Could the US identify what are the specific exempted sectors? Do DOJ and (or) FTC
have an updated and transparent list of exc1usions? Regarding the mentioned Export Trading
Company Act, how do US domestic laws deal with foreign export cartels?

ANSWER: The exempted sectors and activities can indeed be identified, but there is no single
“master” list of them. A quite good recent compilation may be found in Annex A of Chapter IV
(B) of the Antitrust Modernization Commission‟s 2007 Report.1 Previous Secretariat TPR
reports on the United States have contained similar lists.2

Neither the Webb-Pomerene Act nor the Export Trading Company Act provide for immunity
from enforcement actions under foreign antitrust laws. Similarly, U.S. antitrust laws apply to
foreign export cartels, provided that the criteria for jurisdiction under the antitrust laws are met.
See Para. 211 of the Secretariat Report.



Canada

IV. Trade Policies by Sector; (5) Services; (ii) Telecommunications, page 100, paragraphs
100-102:

The Secretariat Report discusses access to unbundled telecommunications network elements in
paragraphs 100 to 102. The report does not address the regulatory framework that would apply
to a new facilities-based telecommunications entrant to acquire rights-of-way, gain access to
support structures of existing carriers and gain access to customers in buildings.

51.    Could the United States provide a description of the federal and other regulatory
provisions that would apply to such access issues for a market entrant?

ANSWER: There is an extensive record of FCC rulemaking addressing the issues Canada has
raised, the goal (and general outcome) of which has been to ensure the ability of competitive
common carriers to obtain access to utilities‟ poles, ducts, rights-of-way and to common-tenant
buildings on reasonable rates and non-discriminatory terms and conditions.

Relevant Orders include:

March 21 Order addressing competitive access to multi-tenant buildings, available at:

http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-87A1.doc



1
 Antitrust Modernization Commission Report, at 398; located at
http://govinfo.library.unt.edu/amc/report_recommendation/chapter4.pdf
2
 See, e.g., the 1999 Secretariat TPR Report on the United States, at 147 – 149 (Box III.4 – Selected Statutory
Antitrust Immunities).


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June 8, 2007 Order addressing competitive access to inside wiring in multi-tenant buildings,
available at:

http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-07-111A1.doc

Background on access to poles, ducts, conduits and rights of way, including recent Orders, is
available at:

http://www.fcc.gov/eb/mdrd/PoleAtt.html

The FCC also has a pending notice of proposed rulemaking regarding the need to revise its pole
attachment rules, available at:

http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-07-187A1.doc

Note that access to public rights-of-way typically are regulated at the state or local level. To the
extent that a state or local government‟s regulation of rights-of-way “prohibit[s] or ha[s] the
effect of prohibiting the ability of any entity to provide any intestate or intrastate
telecommunications service” the affected party could file a petition with the FCC to preempt that
decision pursuant to section 253(a) of the Communications Act. However, pursuant to section
253(c) of the Act, “[n]othing in [section 253] affects the authority of a State or local government
to manage the public rights-of-way or to require fair and reasonable compensation from
telecommunications providers, on a competitively neutral and nondiscriminatory basis, for use of
public rights-of-way on a nondiscriminatory basis, if the compensation required is publicly
disclosed by such government.”



Chile
Question 7

Paragraph 209 mentions an OECD report, which suggests that the competition policy could be
improved by applying measures such as termination of anti-monopolistic immunity for
government companies and elimination of exemptions. Has the United States considered
decreasing anti-monopolistic immunity for government companies and reducing or eliminating
exemptions to the anti-monopoly law?

ANSWER: The vast bulk of the U.S. economy is subject to standard antitrust enforcement.
Any exceptions to the application of the antitrust laws are narrowly and strictly construed. In
addition, in some cases specialized regulatory agencies with sector-specific responsibilities apply
competition rules analogous to the federal antitrust laws, and the antitrust agencies retain an
advisory, competition advocacy role. The Justice Department and the FTC monitor the scope of
antitrust exemptions closely pursuant to their competition advocacy roles in the U.S.
Government. There is a wealth of public information available relating to U.S. antitrust
exemptions. See, e.g., ABA Section of Antitrust Law, Antitrust Law Developments (6th ed.
2007). The Antitrust Modernization Commission (AMC) established by the U.S. Congress in


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2002 studied the advisability of modifying or dropping specific antitrust exemptions. The FTC‟s
Chairman and its Associate Director for Policy and Coordination for the Bureau of Competition
provided testimony to the AMC on this issue, supporting a critical review of exemptions to assist
in the promotion of vigorous competition and the health of the U.S. economy. The AMC
completed its work in 2007 and issued certain recommendations regarding antitrust exemptions
and immunities. See Chapter IV.B. of the Commission‟s Report and Recommendations for
details. With regard to the OECD document cited at ¶209 of the Secretariat Report, Chile is
invited to examine its specific recommendations directly.

Question 8
Paragraph 216 indicates that the Webb-Pomerene Law grants a limited exemption from anti-
monopoly laws to associations of competing companies for the exclusive purpose of joint
exportation of goods, provided that this does not lead to anti-competitive behavior in the United
States or prejudice national competitors. Have the possible negative effects of this exemption on
third-party markets been taken into account? Have the possible prejudices to specific companies
facing unfair competition been studied?

ANSWER: The United States has not formally studied such effects. Such effects are outside
the jurisdiction of U.S. antitrust law. See Paragraph 211 of the Secretariat‟s Report.

Questions 19
Paragraph 93: With regard to most favored nations, the United States indicates that its law
provides for reciprocity for direct-to-home television services, direct satellite television
broadcast services, and digital audio services. We would like to know how they are applied.
With regard to countries that also provide for reciprocity in their legislation, how is this
reciprocity applied? If this scenario exists, is it already being applied? Or must the other
country apply it first?

ANSWER: Under the FCC‟s rules, if a foreign-licensed satellite seeks to offer direct-to-home,
direct satellite broadcasting, or digital audio services, then the FCC determines on whether the
home market of the foreign applicant provides effective competitive opportunities (ECO) for
these particular services to U.S.-licensed satellite operators. The burden is on the foreign
applicant to show such opportunities exist in the home market for U.S. satellite operators. The
determination is not contingent upon a U.S.-licensed operator actually serving the applicant‟s
home market, only that the opportunities exist to do so.


China

(ii) Telecommunications and related services
85. Page 99 paragraph 96 mentions “public interest analysis” conducted to entities from WTO
members of common carrier wireless licenses.

Please describe how “public interest analysis” is carried out.




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ANSWER: If an application is submitted for a common carrier wireless license, the FCC
conducts a review of the application to determine whether granting that license to the applicant is
in the public interest. Under the FCC‟s Order, known as the Foreign Participation Order, the
FCC concluded that the public interest would be served by permitting greater investment by
individuals and entities from WTO Member countries in U.S. common carrier radio licensees.
Accordingly, those individuals or entities are afforded a rebuttable presumption by which the
FCC presumes that foreign investment from a WTO Member country does not pose competitive
concerns in the U.S. market. Where there is a showing of a risk to competition in the U.S.
market from such investments, the FCC may impose specific conditions on the licensee to
address those risks to competition.

86. For a long time, U.S. has cited national security reasons for prohibiting China for providing
commercial satellite lunching services to U.S. satellites or satellites made in U.S. for other
countries, while allowing other countries to provide such services to U.S. customers. China‟s
view is that commercial satellite lunching services is a commercial activity that poses no threat
to the national security, and China has a significant commercial interest in the fast growing
commercial satellite lunching service market.

Please explain, so far, which countries’ commercial satellite lunching services have been used
by U.S.? To which countries has U.S. provided commercial satellite lunching services?

ANSWER: Given the close relationship between satellite launch services and the development
of missile technology, there are important security and non-proliferation issues to consider
relating to this sector. Markets where commercial launch services are provided by a state-owned
enterprise that is also involved in developing military technology pose particular concerns.

U.S. commercial entities are allowed to use satellite launch services of companies from a number
of countries that have appropriate safeguards related to the launching of sensitive technology.
U.S. companies involved in satellite launch services have provided such services to several
foreign companies and/or governments, including from Europe and Asia.

87. Page 102 paragraph 106 states that in order to promote competition, diversity and localism
in media productions, the U.S. maintains several media ownership restrictions.

a. Please describe the U.S. approach to achieve diversity and localism at the same time?

ANSWER: The FCC‟s media ownership rules seek to encourage competition, diversity and
localism as longstanding goals. The broadcast ownership regulations limit the number of
broadcast stations that a single firm can own. This ensures that there are a sufficient number of
independently owned broadcast stations to promote a diverse array of content selection decisions
and viewpoints. The FCC‟s localism goals seek to ensure that local television and radio stations
are responsive to the needs and interests of their local communities. The FCC continues to
examine its localism rules and policies

b. Please explain in detail the radio/television cross-ownership rule and the rationale behind it.



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ANSWER: The radio/television cross-ownership rule limits the number of commercial radio
and television stations an entity may own in the same market, with the degree of common
ownership permitted varying depending on the size of the relevant market, as determined by the
number of independently owned media "voices" that would remain post-merger. The rule strikes
a balance between the protection of diverse viewpoints and the operational efficiencies and
other benefits that can result from joint ownership of both television and radio stations in the
same market.

c. Please explain the reason why the newspaper/broadcast cross-ownership rule bans a company
from owning a daily newspaper and a broadcast station in the same market.

ANSWER: Originally adopted in 1975, the newspaper/broadcast cross-ownership rule serves
the public interest because it furthers ownership and viewpoint diversity. The rule was modified
in 2007 to adopt a presumption, in the top 20 Designated Market Areas (“DMAs”), that it is not
inconsistent with the public interest for one entity to own a daily newspaper and a radio station
or a daily newspaper and a television station, if (1) the television station is not ranked among the
top four stations in the DMA and (2) at least eight independent “major media voices” remain in
the DMA. The FCC will consider newspaper/broadcast combinations in markets ranked 21 and
below if the station is a failed or failing station; or if the newspaper/broadcast combination
results in a new source of a significant amount of local news in a market.

88. The United States maintains ownership restrictions on foreign companies supplying common
carrier radio services. A license will not be granted to or held by (a) foreign government or the
representative thereof or (b) U.S. corporation of which more than 20% of the capital stock is
owned or voted by a foreign government or its representative or a corporation not organized
under the laws of the United States.

Could the United States clarify what “foreign government or the representative thereof means”?
Does the United States have any plan to remove this restriction as well as the 20% ownership
restriction?

ANSWER: A representative of a foreign government in this context means an entity who acts
“on behalf of” or “in connection with” the foreign government. There are no plans to remove
these limitations. As a policy matter, the United States encourages other WTO members to
eliminate government ownership in telecommunications service providers, which can affect the
independence of the regulatory body.


Colombia

As per paragraph 29, with what other WTO member countries, in addition to New Zealand, the
EC, and Jordan, would the United States be interested in entering into security agreements in the
supply chain?




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ANSWER: CBP is also conducting mutual recognition projects with Australia, Canada, Japan
and Singapore.

Telecommunications and related services

According to paragraph 97, the FCC has established a general authorization regarding
applications to provide national long-distance services based on the use of installations or on
resale. Later paragraph 102 states that telecommunications public services companies that have
transmission installations and provide “enhanced services” must allow other providers of
enhanced services to use their transmission installations in a non-discriminatory manner, and
paragraph 100 makes references to network access tariffs. However, there is no explanation of
the obligations of service provides in resale and of whether tariffs for resellers are regulated.
Therefore, an explanation is requested of the conditions and tariffs for providers acting within
the resale system.

ANSWER: Operators seeking to offer resale-based local service can use regulated wholesale
tariffs offered by incumbent local exchange carriers. Operators seeking to resell domestic or
international long-distance, or wireless service, negotiate rates, terms and conditions with
facility-based suppliers of such services. Resellers of local services are generally required by
state-level public utility commissions to file tariffs, but there is no tariffing requirement (rather, a
prohibition on tariffs) for long-distance or wireless services.



Costa Rica

Competition Policy

1.      As indicated in paragraph 210 of the Report by the Secretariat, federal antitrust laws
cover all sectors of the economy and trade between States, as well as the country‟s international
trade, with some exemptions and exceptions. Could you indicate the exceptions to the
application of antitrust law? Are there companies with special or exclusive rights to which
antitrust legislation does not apply?

ANSWER: Please see Paragraph 216 of the Report as well as our contemporaneous answers to
Brazil‟s question on this same topic for a general discussion of our immunities and exemptions.
With regard to the last question, concerning antitrust immunities for “companies with special or
exclusive rights,” the United States does not have immunities based on that criteria.



EC
WTO Secretariat's Report, page 52, paras. 151-152

The Report describes the new Fruit and Vegetables Import Regulation, outlining how the new
procedures will be applied. The EC welcomes the initiative aimed at streamlining the import


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approval process. However, the EC notes that, unfortunately, it has not delivered so far positive
results to our pending applications. The EC would like to invite and encourage APHIS to
broaden the list of products to be eligible for this streamline process with a view to facilitating
trade. When does the United States intend to respond to pending applications?

ANSWER: Given the nature of the analysis, and the fact that every application is different, it is
not possible to give an exact estimate of when APHIS will respond to specific applications
except to say that APHIS processes each application as expeditiously as possible.

Hong Kong China

Telecommunications services

(WT/TPR/S/200, P. 99, Para. 96)
We note that the Federal Communications Commission (FCC) has adopted an „open entry‟
standard with respect to WTO Members‟ ownership of common carrier wireless licenses. In the
US‟ previous trade policy reviews, several WTO Members have urged the US to explicitly
incorporate the open entry standard into the US legislation in order to enhance the legal certainty.
We would like to know the US’ latest plan in this respect.

ANSWER: Currently, there are no plans to incorporate the open entry standard into U.S.
legislation, nor do we believe it necessary. We are unaware of any Member that includes such a
standard in its legislation.

(WT/TPR/S/200, P. 99-100, Paras. 98-99)

We note that the FCC recognized that certain requirements of the international settlements policy
are not conducive to the meaningful economic competition between telecommunications service
providers and has recommended the initiation of a proceeding to consider the petition from some
operators in this respect. Could the US provide an update on its consideration of this petition?

ANSWER: The FCC is currently considering this issue but has not formally acted on it.

(WT/TPR/S/200, P. 102-103, Para. 108; & P. 103-104, Paras. 111-112)

6.      We are pleased to note that the FCC approved the relaxation of the newspaper/
broadcast cross-ownership rule in December 2007 and would like to know whether and how this
relaxation would be reflected in the US’ coming offer on telecommunications services.

ANSWER: It is premature to comment directly on any new offer coming from the US.

   7.      We note the FCC‟s efforts to improve the local franchising process for cable services
           to remove these trade restricting regulations. We also note from the Secretariat
           Report that eight states had already taken action to remove the local licensing



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           requirement. We would like to know if there is any plan to make this a nation wide
           policy and the timeframe for its implementation.

ANSWER: The FCC established nationwide standards for the franchising process which
establish reasonable procedural schedules and limit burdens on applicants. As noted, several
states have taken additional steps to raise the franchising process to the state level and limit the
local process. The number of states doing so has increased from the eight states cited to 21 states
as of May 15, 2008. There are no plans for further FCC action in this area.



India

The Secretariat in Summary Observations paragraph 19 observes: "A review of competition
policy procedures presented to Congress in 2007 recommended, among other things, simplifying
and unifying merger clearing procedures and harmonizing the work of state and federal antitrust
agencies, particularly with respect to mergers." To what extent have these recommendations been
accepted and implemented?

ANSWER: The antitrust enforcement agencies observed the AMC's proceedings with interest,
and they continue to consider appropriate follow-up actions, as do Members of Congress.

Telecommunications

13. To ensure that misinformation on India or Indian companies is not being forwarded to or
collected by the US government, India would be happy to work with the concerned government
agencies to promote transparency in the drafting of the US government issued reports. The fear
is that U.S. government reports -- even those intended only to convey unverified concerns from
private industry -- are regarded as fact and if the conclusions reached by the report are based on
misinformation, they could have a detrimental impact, especially for publicly listed companies.
Moreover, it would make it difficult for the impacted companies to respond. For example, the
U.S. Trade Representative‟s reports on Telecom are not required to cite their sources. Therefore,
it is unclear how the USTR came to its findings or what information it based its finding on.
Transparency will ensure that US government issued reports are based on facts as well as
provide Indian companies the opportunity to fairly and accurately respond. Will US consider
citing the sources used in preparation of the government reports?

ANSWER: As some information used in this report is provided on a confidential basis, not all
can be cited publicly. We do not believe any report to date has resulted in inaccurate
conclusions, but we agree that it is useful to provide target Members an opportunity to address
allegations prior to finalizing conclusions in such a report.

37. Foreign-owned firms are faced with substantial barriers to access the U.S. Communication
Services market. These include for example restrictions to investment, lengthy proceedings,
conditionality of market access and reciprocity-based procedures. Market access barriers also




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exist for digital terrestrial television services. By when would the US consider easing these
restrictions?

ANSWER: These are very general statements which are difficult to evaluate and respond to. As
a general response, since the United States has more foreign investment in these sectors than any
other market we aware of, we are not convinced that these aspects cited represent significant
impediments to market access. We are always open, however, to discussing how specific
regulations result in demonstrable impediments to foreign participation in the U.S. market.

45. The Indian broadcasters are facing various entry barriers in the US market. The restrictions
on an alien being granted an operating license in the USA, under Section 310 of the US
Telecommunications Act, effectively prohibit any foreign broadcaster from being granted license
in the USA for cable, terrestrial or DTH systems. The citizenship conditions effectively place a
restriction due to which Indians can only invest in companies owned by the US Citizens. Thus,
even if FDI is permitted in Terrestrial Free-to-Air Broadcast (non-subscription) which can be a
total of up to 45% (20% direct and 25% indirect) the owner of the company needs to be a US
Citizen as per Section 310. Similar is the position in DTH/DBS platforms as it is a universal
practice to provide triple play services (i.e. two way connections) with Voice, Video and internet
on the DTH platforms. This effectively requires the operator to obtain a common carrier license
which attracts the provisions of Article 310(b). Further, spectrum cannot be obtained for wireless
extensions by non-US citizens. Thus in practice, operating license cannot be granted to Non-US
citizens even for DTH services. In the cable networks too, the provisions of Section 310 come as
a barrier in market access of this sector by a foreigner. How can the US explain the highly
restrictive and closed state of the markets in the DTH, cable or satellite services?

ANSWER: These assertions are factually incorrect. We have had several cases of foreign-
affiliated operators participating in our broadcast, cable, terrestrial wireless, and direct-to-home
markets. While foreign participation in terrestrial broadcasting is rare, there is no reason to
presume that participants in either cable or direct-to-home services would be precluded from
participation due to restrictions under Section 310.


Japan

Telecommunications and related services

(Question 18: page 98-99, paragraph 95)
Under Section 310 (b) of the Communications Act, no licenses may be granted to U.S.
corporations of which more than 20% of the capital stock is owned of record or voted by non-
U.S. citizens, their representatives, corporations not organized under U.S. laws, or foreign
governments, whilst at the same time, under Section 310(b)(4), licenses may be granted to
companies organized in the U.S. that are controlled by holding companies organized in the U.S.
and in which foreign individuals, corporations, or governments own of record or vote more than
25% of the capital stock, unless the FCC finds that such ownership is inconsistent with the public
interest. Japan has maintained its position that the United States should eliminate its foreign



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ownership rule applicable to all radio licenses for the purpose of operating telecommunications
businesses stipulated in Section 310 of the Communications Act of 1934, as amended.

Please explain specific reason why the U.S. Government maintains an upper limit of 20% to
direct foreign ownership in FCC radio licenses for common carriers, while at the same time,
allowing up to 100% to indirect foreign ownership in FCC radio licenses for common carriers
(unless the FCC finds that such ownership is inconsistent with the public interest).

ANSWER: The requirement to hold a license through a U.S. subsidiary ensures adequate
jurisdiction over companies using radio spectrum. This is a statutory limitation, which is,
however, not inconsistent with permitting 100% foreign participation in our market.

(Question 19: page 99, paragraph 97 (Expediting Processing Time for Section 310
Authorization))
The Secretariat report notes that the processing time for applications takes from 14 days for
routine authorizations to one year or longer depending on the complexity of each case. Japan
believes that grasping the length of the processing time in advance is a critical element of the
management strategy for operators wishing to enter the U.S. market.

What measures can be taken by the U.S. to expedite the aforementioned process?

ANSWER: Considering the number, value, and complexity of transactions processed, current
procedures appear to be working well, consistent with the U.S. policy of promoting an open
investment regime.

(Question 20: page 99-100, paragraph 98-99 (Consideration on the International Settlements
Policy (ISP)))
The Secretariat report notes that the FCC is reviewing certain requirements of the ISP to be
removed.

Japan would welcome detailed explanations on such considerations, if any.

ANSWER: The FCC is currently considering this issue, and has developed a public record, but
has not formally acted on it.



Korea

Other Measures Affecting Production and Trade - Competition Policy

11. The Secretariat Report (paragraph 216, page 65) notes that the Webb-Pomerene Act grants
limited immunities from antitrust laws to associations of competing business solely for the
purpose of engaging in collective exports of goods, provided this does not result in conduct that
has anti-competitive effects in the United States or injure domestic competitors. It is our
understanding that there is a possibility of business enterprises engaged in export cartels being



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involved in collaborative behavior which would impact domestic competition in the US. Also,
overseas consumers in markets where the US government grants export cartels will be negatively
affected by the immunized export cartels, consequently harming the welfare of consumers.
Korea would like to know the US Government's opinion on these matters.

ANSWER: As noted by Korea, the Webb-Pomerene Act of 1916 provides a limited antitrust
exemption. That exemption only applies to the export of “goods, wares or merchandise.” As
also noted in Korea‟s question, the exemption does not apply to conduct that has an
anticompetitive effect in the United States or that injures domestic competitors of the members
of an export association. It does not provide any immunity from enforcement actions under
foreign antitrust laws should a foreign government believe that its consumers or businesses are
adversely affected by a Webb association‟s conduct in its markets.

12. The Secretariat Report (paragraph 216, page 65) also notes that international ocean carriers
are allowed to engage in conferences (price-fixing arrangements) pursuant to the Shipping Act of
1984 if they are not contested by the Federal Maritime Commission. However, in order to
enhance competition among international maritime carriers, the OECD has been discussing the
mandatory elimination of maritime transportation cartels for every country.     Korea would like
to know the US Government's position on the maritime transportation cartels issue.

ANSWER: Regarding the ability of ocean common carriers to form conferences with authority
to discuss and agree upon prices under the Shipping Act, the number of rate-making conferences
has gone from 35 conference agreements on file with the Commission in 1998 to eight
conference agreements currently on file. The emergence of global markets, the improved service
of non-conference carriers, and the deregulatory nature of OSRA are catalysts that have
contributed to the restructuring of the liner shipping industry. This has led to the virtual
elimination of traditional conferences and a dramatic increase in efficiency-enhancing
operational types of agreements, such as vessel-sharing and space charter agreements.

Significantly, the European Union decided to eliminate a longstanding bloc exemption which has
permitted rate-making agreements in foreign trades of the European Union. The repeal of the
bloc exemption is set to expire in October of this year, and such repeal will directly affect
transportation services currently offered in trades between the EU and the United States.
Nonetheless, we estimate that only six agreements currently filed with the Federal Maritime
Commission will need to be restructured or eliminated to ensure compliance with EU guidelines.
The Commission expects to monitor the transition from the bloc exemption environment and the
Commission‟s Bureau of Trade Analysis (“BTA”) will study the effects of the repeal of the
exemption on the U.S. trades. This examination will be conducted as an adjunct to BTA‟s on-
going program that monitors competitive and economic conditions within the U.S. ocean liner
trades and the activities of liner carriers operating under agreements. This study will include a
before-and-after comparison of market conditions within the U.S. trades that would be most
affected by the bloc exemption repeal.




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Services - Telecommunications and Related Services

13. The Secretariat Report (paragraph 95, page 98) notes that under the Section 310(b)(3) of the
Communication Act, no broadcast, common carrier, aeronautical en route or aeronautical fixed
radio station license shall be granted to or held by U.S. corporations of which more than 20% of
the capital stock is owned of record or voted by foreign investors. These restrictions act as a
barrier to foreign direct investment in these sectors. Please elaborate the US Government's
plans to ease these restrictions.

ANSWER: There are no plans to eliminate the direct foreign ownership restriction. As a
practical matter, allowing 100% indirect ownership has not proven to act as a restriction on
market entry by foreign operators.



Mexico

Telecommunications and related services

GATS commitments and legal framework Paragraph 93 states that “The United States reserves
the right to an exemption under GATS Article II (MFN) to discriminate between WTO Members
„due to application of reciprocity measures or through international agreements guaranteeing
market access or national treatment‟ for direct-to-home (DTH), digital broadcast satellite (DBS),
and digital audio services (DARS).” Mexico would like to know if the United States plans to
eliminate this exemption.

ANSWER: The United States has submitted a conditional offer with respect to DTH, DBS and
DARS as part of the DDA GATS negotiations, with the goal of eliciting similar offers from other
Members. So far, no Member has offered to include similar commitments for those services in
their own offers. No final decision has been made on whether, in fact, the United States will
eliminate the exemption.

This same paragraph states that “The United States also reserved the right to „allow the
deduction for expenses of an advertisement carried by a foreign broadcast undertaking and
directed primarily to a U.S. market only where the broadcast undertaking is located in a foreign
country that allows a similar deduction for an advertisement placed with a U.S. broadcast
undertaking.” Mexico would like to know which countries allow a similar deduction for an
advertisement placed with a U.S. broadcast undertaking.

ANSWER: Most countries allow for similar deductions. Canada, for one, does not.

Paragraph 96 states that “the Federal Communications Commission (FCC) reserves the right to
attach conditions to or deny authorization to exceed the 25% foreign ownership benchmark if, as
a result of its public interest analysis, it finds that such authorization would threaten competition
in the U.S. market.” Mexico would like to know in what cases the FCC has found that the




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authorization to exceed the 25% foreign ownership benchmark would threaten competition in the
U.S. market.

ANSWER: None.

Paragraph 97 states that “In the context of its open entry standard, the FCC has instituted a
blanket authorization with respect to applications to supply domestic long-distance services on a
facilities or resale basis. To supply international services, an individual authorization is required,
but according to the U.S. authorities, the authorization process is generally pro forma, with most
authorization granted automatically.” Mexico would like to know what criteria are used to grant
this authorization.

ANSWER: Guidelines for applying for international services are available at
http://www.fcc.gov/ib/pd/pf/214guide.html, which also includes a sample application. The main
criterion for authorization is completion of this short application form, which generally results in
an automatic grant on the 14th day after public notice. If law enforcement, national security or
related concerns are raised, the process can take longer to allow Executive Branch agencies an
opportunity to contact the applicant and complete their review.

Paragraph 108 states that “The FCC launched a comprehensive review of [media ownership]
rules in June 2006, and adopted an order in December 2007 (not yet in effect). In that order the
FCC approved a relaxation of the newspaper/broadcast cross-ownership rule, leaving all other
media ownership restrictions unchanged.” Mexico would like to know in what way the
newspaper/broadcast cross-ownership rule has been relaxed.

ANSWER: As Mexico notes, those rules are not in effect, and are currently under review by the
U.S. Congress.

Paragraph 109 states that “Section 621 of the Communications Act prohibits a cable operator
from providing „cable service‟ in a particular area without obtaining an authorization or
„franchise.’ Mexico would like to know what the requirements are for obtaining an authorization
or franchise.

ANSWER: Requirements vary by state. As one example, requirements for Texas, can be found
here: http://www.puc.state.tx.us/rules/subrules/cable/28.6/28.6.doc As a general matter, local
authorities may not grant an exclusive franchise and may not unreasonably refuse to award an
additional competitive franchise.



Switzerland
(4) Other Measures Affecting Production and Trade
(iii) Competition policy




                                                 14
In para. 210, the Secretariat's report suggests that there are antitrust legislations in nearly all
states in addition to U.S. Federal antitrust laws. Could the U.S. authorities explain why many
states deem it necessary to also have their own antitrust legislation given the existence of
comprehensive Federal antitrust laws, all the more that some other states have apparently
decided not to introduce such legislations? Given that presumably Federal laws are superseding
state laws, in what main areas are these state laws applicable that might not be covered by
Federal legislations?

ANSWER: State antitrust enforcement is rooted in principles of federalism, a system – as in
Switzerland – in which both federal and state governments strive to protect and enhance the
public welfare in their respective territories. Each level of government determines, within
bounds, what is necessary to the achievement of public goals. States may challenge
anticompetitive conduct under the federal antitrust laws – either on their own behalf as an injured
consumer or on behalf of their residents as parens patriae – or under their own state antitrust
laws. Federal antitrust law does not usually supercede state laws, but coexists with them. We
are unaware of any instance, moreover, where the states have discriminated against foreign
parties in their enforcement of the federal or state antitrust laws.

Although almost all states have their own antitrust laws; as a practical matter, most of these
statutes are similar in substance to the federal antitrust laws. Moreover, even where the state
statutes differ, they are generally interpreted by state courts consistently with federal law.
Federal and state antitrust enforcers also work closely together to ensure maximum consistency
in antitrust enforcement and to minimize any unnecessary burden on private parties. There are
certain instances where the enforcers decide that investigation and enforcement are more
appropriate solely at the federal level or at the state level; there are other instances where each
enforcer has its own separate interest in participating. In the latter situation, the federal and state
antitrust enforcement agencies have devoted substantial efforts to ensure effective coordination
of parallel federal-state investigations, and generally the process works well.

       The Antitrust Modernization Commission, which was created by the U.S. Congress to
examine whether the need exists to modernize antitrust laws, studied the role of state antitrust
enforcement in a federal system and determined last year that no legislative changes were
required. The Commission recommended, inter alia, that “state non-merger enforcement should
focus primarily on matters involving localized conduct or competitive effects.”3

Para. 216: Could the U.S authorities explain what is understood by “limited immunity from
antitrust laws” for export activities as mentioned in the Secretariat’s report? Which export
activities are covered by this measure? Also, the Secretariat's report indicates that international
ocean carriers are allowed to engage in conferences (price-fixing arrangements) by the Shipping
Act of 1984. Could the U.S. authorities explain the reasons behind such an exception to antitrust
legislations ?

ANSWER: Regarding the ability of ocean common carriers to form conferences with authority
to discuss and agree upon prices under the Shipping Act, the number of rate-making conferences
has gone from 35 conference agreements on file with the Commission in 1998 to eight
3
    Antitrust Modernization Commission, Report and Recommendations (2007), Recommendation Number 33.


                                                     15
conference agreements currently on file. The emergence of global markets, the improved service
of non-conference carriers, and the deregulatory nature of OSRA are catalysts that have
contributed to the restructuring of the liner shipping industry. This has led to the virtual
elimination of traditional conferences and a dramatic increase in efficiency-enhancing
operational types of agreements, such as vessel-sharing and space charter agreements.

Significantly, the European Union decided to eliminate a longstanding bloc exemption which has
permitted rate-making agreements in foreign trades of the European Union. The repeal of the
bloc exemption is set to expire in October of this year, and such repeal will directly affect
transportation services currently offered in trades between the EU and the United States.
Nonetheless, we estimate that only six agreements currently filed with the Federal Maritime
Commission will need to be restructured or eliminated to ensure compliance with EU guidelines.
The Commission expects to monitor the transition from the bloc exemption environment and the
Commission‟s Bureau of Trade Analysis (“BTA”) will study the effects of the repeal of the
exemption on the U.S. trades. This examination will be conducted as an adjunct to BTA‟s on-
going program that monitors competitive and economic conditions within the U.S. ocean liner
trades and the activities of liner carriers operating under agreements. This study will include a
before-and-after comparison of market conditions within the U.S. trades that would be most
affected by the bloc exemption repeal.




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