CONGRESSIONAL QUATERLY: TRADE PACT LOBBYING BY TECHNOLOGY FIRMS HAS A CONTINENTAL APPROACH

Congressional Quarterly
October 26, 2007
Trade Pact Lobbying by Technology Firms Has a Continental Approach
By Adrianne Kroepsch, CQ Staff

With its eye on a potentially historic trade deal with South Korea next year, the U.S. technology industry is lobbying hard for precedent-setting votes on Latin American free-trade pacts.

Proposed trade agreements with Peru, Colombia and Panama include significant provisions that would benefit U.S. technology and telecommunications companies, which do much of their business abroad. The industry hopes those pacts, which are awaiting congressional approval, will set the stage for an agreement with South Korea, which would open a tightly protected technology and telecommunications market to more U.S. trade.

Trade groups representing major technology companies, including such industry giants as Microsoft Corp. and Verizon Wireless, have been making their support for the trade deals known on Capitol Hill. Their efforts are escalating as the Peru agreement's vote deadline nears.

The U.S. High Tech Trade Coalition convened a meeting with congressional aides earlier this month to educate Senate offices about the technology components of the agreements. A forum for House offices was held in July, and meetings with members and leadership are ongoing.

Provisions in the pacts would liberalize trade of high-tech goods and services by cutting tariffs in Latin America and reducing other regulatory barriers in South Korea. A key provision in the Korean agreement would prevent the government from unreasonably mandating the use of technologies that favor Korean companies.

More than half of U.S. technology and telecommunications industry revenue comes from overseas markets, lobbyists say. For those industries -- part of the economy seen as a beacon of U.S. competitiveness -- international trade is vital.

"We're coming in full force as an industry to push passage," said Brian Peters, director of government relations for the Information Technology Industry Council. The council is a member of the larger High Tech Trade Coalition, along with several other technology and telecommunications trade organizations.

South Korea is one of the most wired countries in the world, and a top 10 market for U.S. export and import of telecommunications equipment. But that trade is lopsided. U.S. imports of Korean telecommunications and information technology equipment vastly outstrip U.S. exports, according to Commerce Department data and 2007 estimates by the Telecommunications Industry Association (TIA).

Supporters of the trade pact say the imbalance is largely the result of protectionist technology policies that favor such Korean companies as Samsung and Korean technologies as WiBro, a mobile version of WiMax, which transmits wireless data over long distances.

U.S. companies hope the agreement that U.S. trade negotiators have reached withKorea could change things.

"The Korea agreement goes well beyond what has been achieved in any other free-trade agreement," said Michael Nunes, director of international and government affairs at TIA, which took a leading role in the trade negotiations.

Language in the Korea deal would prevent the Korean government from mandating national use of specific technologies without reason, he said.

"Until now, we've generally had limited language on tech neutrality, which wouldn't have been effective with South Korea, where we've had historical and documented difficulties entering the market," said Nunes. The trade pact would also reduce limitations on foreign investment in telecom networks, he said.

The South Korea agreement would be historic, the industry says, and would set a promising precedent for opening up larger Asian markets, including China. But between now and an anticipated 2008 vote on the pact stand decisions by Congress on the agreements with Peru, Colombia and Panama. Those deals will set the precedent for the South Korea agreement and build or bruise momentum toward ratifying it.

"Korea is kind of the crown jewel here," Peters said. "Passing Peru and having a successful vote there is a big step toward that."

The Latin American pacts are also important on their own merit, Nunes said. All three countries import U.S. technology goods and are home to growing mobile phone and broadband industries, as well as government procurement opportunities. Provisions negotiated with Peru and Columbia would require they sign the World Trade Organization's Information Technology Agreement, which would eliminate tariffs on information technology products sold in those countries.

The technology and telecommunications lobby is working to marshal support for the agreements by touting the technology provisions. But politics and fights over labor provisions and other issues could trump their work, they say, although the industry expects the Peru agreement to win approval next month.

The technology and telecommunications industry should continue to focus its lobbying efforts on the large and influential delegation from California, a House aide said. "That state will benefit hugely from the increased technology trade," the aide said.

But before a South Korea vote, specifically, tangles over automobile and beef provisions will have to be worked out.

Industry already has its sights set further ahead, internationally.

"Ultimately we would like to see talks move forward at the [World Trade Organization] and we'd like to see more countries adopt the Information Technology Agreement," Nunes said. "But we've got to work with what we have, which is four completed FTAs [free-trade agreements], signed by the president, that benefit the U.S. tech industry."