FCC May Be the Key to Opening Japan for U.S. Telecommunications
Sitting around a breakfast table with Japanese officials in Tokyo last June, Federal Communications Commission Chairman Mark S. Fowler bluntly raised his concerns that Japan was flooding America with telecommunications equipment while U.S.-made products were denied equal access to the Japanese market.
At that time it seemed a minor irritant among the trade frictions facing the United States and Japan, its major ally in the Pacific, hardly on a level with more pressing problems involving steel and auto imports.
But with new regulations due April 1 that could either open Japan’s market for America’s highly competitive telecommunications equipment or slam it shut even tighter than it is now, Fowler’s concerns and the power of the FCC to deal with them has skyrocketed in importance.
Top Priority
The ability of American firms to sell to Japan’s telecommunications sector, recently converted from a government monopoly to a competitive privately owned system, was given top priority by President Reagan in his Jan. 2 talks with Prime Minister Yasuhiro Nakasone. It is being viewed by American business as a litmus test of Nakasone’s market-opening pledges in other sectors.
And for the first time in its 51-year history, the FCC, through its powers to certify telecommunications equipment for use in America, is being viewed by some business executives and Reagan Administration officials as a possible enforcer in international trade affairs--an instrument of retaliatory action if Japan fails to open its door satisfactorily to American products.
Fowler took the lead last month, under pressure from Congress and a nod from Reagan Administration trade officials, when he directed the FCC staff to study the possibility of imposing strict technical certification procedures on Japanese equipment if American manufacturers face continued restrictions in Japan.
Trade negotiators, growing increasingly frustrated with what they see as Japanese resistance to market-opening proposals, generally have supported Fowler’s efforts.
“As we saw negotiations going on we, from our standpoint, reminded him of his interest in that avenue,” said David J. Markey, assistant secretary of Commerce for communications and information.
“There is a universal feeling that Mark’s involvement is supportive and instructive” to Reagan Administration efforts to open Japan’s telecommunications market, added a senior FCC staff member.
Harmed Own Cause
“There’s no indication any agency would like to see us uninvolved. It’s fair to say we’ve gotten a very positive feedback from Congress,” said the official, who asked not to be identified.
At least one of the five FCC commissioners, who would not allow his name to be used, indicated he is unlikely to support Fowler’s proposal unless he is convinced American jobs and production will not be affected. Trade experts, moreover, said Fowler harmed his own cause by describing possible FCC action in terms of trade retaliation. He might, instead, have simply said that the regulatory agency was concerned that imports were not compatible technologically with the nation’s telecommunications network--an area clearly within his purview.
Fowler’s proposal caught Japan’s attention, although U.S. trade negotiators said it is difficult to determine if Tokyo is taking the possibility of FCC retaliatory action seriously. Nonetheless, the FCC was one of the stops on Vice Minister of Post and Telegraph Moriya Koyama’s whirlwind temperature-taking recent trip to Washington.
Fowler’s proposal, however, ran into criticism from free-trade advocates. And some congressional staff members and telecommunications consultants warn that trade restrictions could raise the price of telecommunications equipment in this country and actually cost some American jobs. Still others fear it could start a trade war if other countries follow the FCC’s lead.
In a larger context, the Fowler proposal illustrates the problems the United States faces in trying to fashion retaliatory actions against unfair trade practices without shooting itself in the foot.
There are, for instance, joint ventures between foreign and American companies to make telecommunications equipment here that could be jeopardized and cost U.S. jobs. Likewise, many American-made products depend on components made in other countries, and without them, the cost of equipment would precipitously rise.
Restrict Imports
Other countries, including European allies, also restrict U.S. telecommunications imports for use by their state-run post and telegraph units; thus a broad-brush FCC action could affect them.
“The FCC is moving into territory which is fraught with major policy ramifications and major consequences that go far beyond the FCC’s jurisdiction,” said Arthur A. Bushkin, president of Telemation Associates Inc., a consulting firm specializing in international issues.
He added it could raise prices in the American market by decreasing the supply of equipment and could hurt American manufacturers trying to crack a market other than Japan.
“That is why it is essential that all trade policy be coordinated by the executive branch of government, ultimately the U.S. trade representative (William E. Brock). The danger in the FCC investigation is that it could move outside that gambit,” Bushkin said.
Capitol Hill trade experts, however, downplayed the importance of those problems, saying that little-noted provisions of last year’s trade bill gives the president--Brock’s boss--”flexibility” in using regulatory agencies such as the FCC as instruments of trade retaliation.
“The president can say that any equipment produced in Japan should be restricted, or any equipment produced by nationals of a Japanese corporation no matter where it is made, or anything. He has a lot of flexibility to hit the products he wants hit,” said an aide to Sen. John C. Danforth (R-Mo.), chairman of the Senate Finance Committee’s trade panel.
Use of Retaliation
“The process is based on using retaliation that hits hardest. The object is not to close the U.S. market, but to gain access,” continued the Danforth aide.
Danforth next month plans to introduce legislation requiring reciprocity from Japan in telecommunications sales that would make it easier for the FCC to initiate trade retaliation.
FCC officials appear aware of many of the problems, saying they realize that a regulatory agency alone should not make trade policy. But they recognize the FCC’s unique ability, through its power to certify telecommunications equipment, to act as a gatekeeper for foreign products in trade disputes--much as Japan uses standards and certification procedures as a barrier to imports.
“We would allow the executive branch to indicate protectionism in an individual country before the FCC would impose certification procedures” that would bar imports, a high FCC staff member said.
