Government officials yesterday denied claims that it had imposed "serious limitations" on foreign competitiveness in the telecom sector, as claimed by the US, and downplayed threats of retaliatory action.
In an annual report by the Office of the US Trade Representative (USTR) on compliance by foreign signatories to telecom agreements with the US, Taiwan was named among four other countries as not living up to its word.
In a statement, the USTR said "Taiwan's telecommunications regulations impose serious limitations on the competitive offering of telecommunications services and undermine the ability of new entrants to compete in Taiwan's market."
Unnamed Ministry of Transportation and Communications officials were quoted by local media as saying the "liberalization is actually ahead of schedule and the US has no reason to criticize."
The officials were further quoted as saying that "Taiwan has fulfilled its commitment to liberalize the telecommunications market as part of our bid to enter the WTO."
The USTR said, however, that the "restrictions also appear to be inconsistent with the commitments undertaken by Taiwan as part of its bilateral WTO accession negotiations with the US to liberalize its telecommunications market by July 1, 2001 ... If Taiwan does not appear to be taking the necessary steps to liberalize its market consistent with Taiwan's commitments, USTR will consider appropriate action."
The "appropriate action" would involve a review of the complaints followed by possible trade sanctions under a 1988 law.
But an official from Taiwan's Board of Foreign Trade said that sanctions would be unlikely as the review would take around one year, during which time a settlement could be reached.
The official also pointed out that the Ministry of Transportation and Communications has formed a telecom liberalization task force to asses progress and would deliver its findings at the end of June, just prior to when the market is slated to be fully liberalized.
The US report identified four areas in which regulations were considered unfair. These were capitalization requirements for fixed-line licenses and build-out requirements; limitations on building "backhaul" links to urban centers from submarine cable landing stations; restrictions on selling capacity directly to end-users; and prohibitions on building more than one international gateway.
Responding to criticism of the NT$40 billion capitalization threshold for fixed-line businesses, ministry officials said that Chunghwa Telecom Co (
If new entrants were to have a chance at competing with the state-run goliath, required capital of NT$40 billion shouldn't be considered too high, officials said.
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