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Japan says doing its best on NTT connect rates

TOKYO: Japan, reacting to a US threat to go to the World Trade Organisation (WTO) over a telecoms spat, said on Friday it was doing its best to cut telecoms rates and insisted its proposals were consistent with world trade rules.

In the latest twist in the two-way feud, now the touchiest between the two countries, Washington said on Thursday that NTT (Nippon Telegraph and Telephone Corp) had failed to implement "cost-oriented interconnection rates", calling into question whether Tokyo's huge telecoms market was being handled in an impartial manner.

The United States will decide by the end of July whether additional action, including in the WTO, was appropriate, US Trade Representative Charlene Barshefsky said in a statement.

Japanese officials said the unilateral US move, including the setting of a deadline at the end of July that could mean the feud clouding a Group of Eight (G8) summit in July, was regrettable but gave no sign Tokyo would change its stance.

"Japan's commitment, as for the rest of the world, under the WTO is that proposals must be cost-oriented and our proposal completely follows that principle," Shinichiro Sakata, director of the international policy division at the telecoms ministry, told Reuters.

"This unilateral announcement by the United States is regrettable. The negotiations are continuing and we will keep trying to obtain US understanding for our position," Sakata added.

GAP STILL WIDE

The United States wants an immediate 41 percent cut in the charges, saying this would benefit not only US firms seeking access to Japan's telecoms market, but provide a much-needed lift to the Japanese economy by stimulating faster growth of the communications industry and spread of Internet-driven technology.

Tokyo has offered a 22.5 percent cut implemented over four years, insisting that bigger cuts would jeopardise NTT's profits and threaten its workers' jobs.

Talks in Tokyo last week failed to narrow the gap, and on Thursday the United States stepped up the pressure in a meeting between US ambassador Thomas Foley and Japan's Telecommunications Minister Eita Yashiro.

Foreign Ministry spokesman Ryu Yamazaki echoed the stance of telecoms officials, adding that Japan was fully aware of the importance of lower telecommunications rates.

BEST EFFORTS

"What we have been showing to the US side is something we have really tried to do our best on, and in that context it is unfortunate that we could not get American understanding on that," Yamazaki said. He said Japan would have to fully study the US announcement before deciding its own response.

In an updated plan for deregulation steps approved by Japan's cabinet on Friday, the government merely reiterated that it would "speedily consider" the issue of NTT connection rates.

NTT, which is 59 percent government-owned, controls more than 90 percent of local lines into Japanese homes, giving it an iron grip on the domestic telecoms market, the world's second-largest.

The United States says Japan's connection costs are triple what they would be under open competition. Analysts agree the rates are higher than in the United States, but many question US methods of calculation.

Several major domestic companies, including Sony Corp, have complained about the costs and called for more competition.

Japanese officials admit the feud could cloud the G8 summit on the southern island of Okinawa in July if it is not resolved before US President Clinton arrives for the leaders' gathering.

Tokyo has blamed the US side for the impasse. But a tough stance creates a dilemma for Prime Minister Keizo Obuchi, who has tipped information technology as a top agenda item for the G8 summit and is touting the Internet revolution as a way to ensure Japan's future growth. -Reuters