Caught in the middle of the rumbling European Community-US trade skirmishes, which threaten to deteriorate into all-out trade war that would benefit nobody apart from posturing politicians with abnormally over-developed egos, British Telecommunications Plc has launched a judicial review to try and escape Community legislation that restricts its ability to purchase US telecommunications equipment. The company argues that since it is neither government-owned nor a sole supplier, it should be free to make any purchasing decisions it sees fit, without having to pay the Commission’s 3% tariff penalty against telecommunications equipment from outside the Community. Mercury Communications Ltd and the UK’s cable television companies are not bound by the legislation, Article 29 of the Utilities Directive, and British Telecom feels that it should be allowed the same freedom. If the company does prove its case, it is still not clear whether it would escape the sanctions threatened by the US against European telecommunications products and services – mainly because the US has not firmed up on what action it will take. The fate of UK telecommunications equipment manufacturers may also hang on the decision: if the UK market deemed to be open to US suppliers, the US government could decide to waive its penalties against UK suppliers. British Telecom currently has to comply with the featherbedding European directive for essentially historical reasons, both because of its past as a state-owned company, and as a result of its previous status as a dominant carrier, which arguably it still is. The ruling will also have implications for the company’s on-going war of attrition with AT&T Co. Since the argument between the two centres on how open each country’s market and regulatory climate are, an increase in Telecom’s ability to buy from US suppliers could be used as evidence of the openness of the UK market.
