Originally published in the Chicago Tribune, April 28, 1985. Used with permission of Michael R. Czinkota and the Chicago Tribune.
Mark S. Fowler, chairman of the Federal Communications Commission (FCC) has announced that the commission is considering steps to restrict access to U.S. markets by imposing strict technical certification procedures on Japanese manufactured telecommunications equipment.
Offhand, it might seem like a good idea to use the commission as another tool in developing a trade policy stance toward Japan. Given our 1984 trade deficit of $123 billion, with $33 billion of that accounted for by Japan, it appears that we should pull all registers to reduce the deficits. Because the telecommunications trade imbalance between the U.S. and Japan alone was about $2 billion last year, this industrial sector just might be a good one to start with.
But there are several issues to consider in following such an approach. Is an industry-specific retaliatory policy viable? An industry-specific focus permits us to address narrowly defined, specific problems, and perhaps resolve them quickly. We can tailor retaliatory action to focus only on the telecommunications industry, leaving other activities unaffected.
But this approach completely disregards the stated goal of increasing trade. Our trade policy should not harm the U.S. firm using foreign tele-communications components or the U.S. consumer buying them, nor should we keep our domestic producers free from foreign competition. What we rightfully ask for is increased market access for competitive U.S. telecommunications, their domestic markets and other foreign markets. The retaliatory approach not only totally negates the recognition of comparative advantage and further deteriorates the flow of trade, but it makes the initial objective of market access even more difficult to attain.
A second, even larger issue emanating from the FCC considerations is that of the locus of control of trade policy. By involving regulatory agencies, we run the very real danger that U.S. commercial policy will be determined by a new and growing chorus of discordant voices. This is particularly the case since regulatory agencies see themselves mainly responsible to Congress or to specific constituencies rather than to the administration. We also need to keep in mind that FCC regulatory action designed to exert trade retaliation does not narrowly focus on our bilateral relations with Japan.
Telecommunications is a multilateral issue since virtually every country has a regulated communications system which restricts the market access of imports. Involving the FCC in international trade policy is a poor idea. It would jeopardize the delicate fiber of free trade developments which we have begun to weave domestically through our negotiations for free trade zones and our attempts to create a more cohesive and unified trade policy stance, and which we strive for internationally with our calls for a new round of trade negotiations. FCC involvement would increase rather than reduce the role of big government and would give impetus to building up nontariff barriers rather than tearing them down.