U.S. Trade Representative Ron Kirk announced on 6 April the results of the USTR's 2009 review of the operation and effectiveness of telecommunications trade agreements (the Section 1377 review). The report, which is based on public comments filed by interested parties and information gathered in contacts with industry and foreign government officials, identifies barriers facing U.S. telecom services and equipment suppliers, evaluates progress toward resolving on-going problems and lays out the specific telecom-related issues on which the USTR will focus its efforts in 2009.
Among other things, the report complains about the general lack of transparency and regulatory independence of mainland Chinese telecom authorities. One issue that has been raised in the past is mainland China's alleged lack of transparency and pursuit of policies designed to favour domestic technology as part of on-going efforts to licence 3G wireless networks. China has issued these 3G wireless licences but the report claims that there are still questions about how additional spectrum will be assigned and how policies to promote this domestic technology will be developed as well as a lack of clarity on whether new competing technologies and services will be authorised.
The United States is also concerned about proposed technical regulations relating to information technology security for various IT products, including routers, smart cards, and secure databases and operating systems. U.S. officials are of the view that these regulations go beyond global standards by mandating testing and certification of security functions for commercial users of IT products, whereas in other countries mandatory testing and certification is only required for products used in sensitive government and national security applications. China has delayed publication of the final regulations while mainland Chinese and foreign experts continue to discuss the best way forward. The USTR has said that it plans to participate in these discussions.
Another issue of contention is China's unwritten prohibition on offering wireless local area network technologies such as Wi-Fi on mobile handsets, which the U.S. alleges has seriously hampered foreign suppliers. The report notes that while mainland Chinese regulations do not appear to address this issue equipment approvals for this type of technology continue to be denied. U.S. officials have therefore vowed to continue to press China on this matter until mobile phones with WLAN capability are allowed to be marketed in the mainland.
U.S. companies have also identified conformity assessment procedures relating to information and communications technology equipment as a significant barrier to trade, focusing in particular on electromagnetic compatibility testing and certification. Areas of specific concern include mandatory certification requirements and requirements that equipment be tested domestically, which the report states can lead to redundant testing, particularly where a product is required to undergo testing to the same standard in both the exporting and importing country.
On a more positive note, the report acknowledges China's willingness to negotiate a mutual recognition agreement with the United States on information and communications technology and other telecom equipment, which could help address restrictions and eventually permit certification by foreign bodies.
