The office of the US Trade Representative is demanding Japan abolish a 20% limit on foreign holdings in Nippon Telegraph and Telephone Corp (NTT) and Kokusai Denshin Denwa Co (KDD) by the end of the year before the two would be allowed to begin offering international services from within the US (CI No 3,119). The news was made public last Thursday through a Japanese government statement issued last Thursday. The US is also looking to extend a pact – due to expire in September – that sets quotas for foreign suppliers of NTT’s equipment and would like to increase the quota by about $1.22bn. In an effort to pressure Japan into compliance, The Federal Communications Commission (FCC) last week abruptly put applications from NTT and KDD to operate international services via the US in a bureaucratic holding pattern. The applications had previously been in what the FCC calls streamlined processing, a quick route to automatic approval. The FCC, it turns out, had received a joint letter from the US Department of Commerce, the Department of State and the office of the US Trade Representative requesting a delay of any action on the applications, as they may raise trade policy concerns. The request was not one that the FCC could deny. A spokesperson for the FCC said that the agency was simply following orders. An NTT executive admitted being baffled by the situation, but said it was a government problem and there was little the two companies could do but wait it out. Japan’s Posts and Telecommunications Ministry has said the action violates the spirit of an agreement reached at the World Trade Organization telecommunications meeting in February when it was agreed that Japan would maintain a 20% limit on foreign ownership of the two companies in question, while lifting similar restrictions for other telecommunications companies. On March 10 the US Trade Representative Office requested the ceiling be abolished by the end of the year.
