• Kyodo

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Deputy U.S. Trade Representative Richard Fisher on Wednesday blasted Japan for trying to settle its long-standing dispute with Washington over interconnection fees charged by Nippon Telegraph and Telephone Corp. through revisions to a law governing NTT’s business operations.

In an interview, Fisher said NTT’s proposal to revise the law in exchange for accepting a cut in the interconnection fees would not infuse competition into Japan’s telecommunications sector. “I think it’s very important not to confuse the issues,” Fisher said.

The proposal, made recently by NTT President Junichiro Miyazu and also backed by Prime Minister Yoshiro Mori, would relax the law that limits the scope of business operations by NTT and its regional subsidiaries.

Under the proposal, the two regional subsidiaries would be allowed to enter new fields such as Internet or cellular phone services, which could lead to NTT further monopolizing Japan’s telecom sector.

“The key is competition. To use that as an excuse not to provide cost-based connection is not acceptable to the United States or any other country that has discussed the matter with Japan,” Fisher said.

Japan’s proposal is something like “mixing apples and oranges,” he said.

Fisher was speaking three weeks ahead of final talks set in Tokyo before the July 28 deadline imposed by the U.S. to decide whether it will file a complaint with the World Trade Organization.

The U.S. has rejected Tokyo’s offer, which proposes for cutting the fees by 22.5 percent over four years.

In May 1988, then Prime Minister Ryutaro Hashimoto pledged to introduce a new phone access charge system within 2000 to reflect market-based costs when he met with U.S. President Bill Clinton in Birmingham, England.

The proposed cut is short of that commitment, Fisher said, noting interconnection fees in the U.S. are one-fifth what they are in Japan.

Fisher dismissed Japan’s argument that a cut of 40 percent, as demanded by the U.S., would have a negative impact on NTT’s financial standing.

“We now know NTT is not in bad financial shape,” he said, referring to better-than-expected earnings results for the two regional carriers for fiscal 1999.

He described an NTT subsidiary’s plan to acquire a major U.S. Internet firm as “quite audacious.”

“A Japanese official came to me saying NTT is in terrible financial shape. In one week, they announced the acquisition.”

Fisher said electronic commerce in Japan has lagged far behind other advanced countries, partly due to what he views as high interconnection rates in the country.

In a list prepared by a private research firm to evaluate conditions for e-commerce in 60 countries, Japan, the second-largest economy in the world, ranked 21st, behind Italy, ranked 19th, and Israel, at 20th, Fisher said.

The situation hampers sustainable economic recovery in Japan, he said. “One of our concerns is the Japanese economy now is locked in a very low growth trajectory.”

Fisher said Washington wants to see a 40 percent cut in the connection fees, but it is ready to be somewhat flexible.

He said Japan has not budged an inch from its original proposal.

“We are willing to be somewhat flexible. But so far we have not heard any proposals that we find acceptable,” Fisher said.

If no breakthrough is achieved before the July 21-23 summit of the Group of Eight major powers in Okinawa, Japan, as chair of the summit, will be placed in a “very awkward” position, he said.

“It would be very awkward for Japan to be hosting the summit, which is supposed to be an IT (information technology) summit,” he said.