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APEC DEREGULATION REPORT 2000 - UNITED STATES OF AMERICA

APEC Deregulation Report 2000

United States of America

OBJECTIVE


APEC economies will:


  1. promote the transparency of their respective regulatory regimes; and
  2. eliminate trade and investment distortion arising from domestic regulations which

not only impede free and open trade and investment in the Asia-Pacific region but also

are more trade and/or investment restricting than necessary to fulfill a legitimate

objective.


Recent Actions


Electronic Commerce


The United States sees electronic commerce as a revolutionary new enabling technology that can create economic activity within and across borders. For

this reason, the United States is committed to ensuring that its regulation is minimal. Its activity in APEC has been undertaken not only in this light, but also with a view to raising awareness among APEC members about how

governments and business can stimulate economic activity at home and across borders by reaching global markets efficiently and effectively with intelligent technologies, and without creating obstacles to growth.


Issues concerning regulation and taxation of the Internet have been, and will continue to be, actively considered in the United States Congress and

Executive Branch. In addition there are ongoing initiatives to promote use of the

technology, such as project programs to provide export assistance to under- served rural manufacturers and small businesses, and to provide notification of international procurement opportunities.


Telecommunications


On February 8, 1996 President Clinton signed into law the Telecommunications Act of 1996. This important legislation spurs competition in all communications services by, among other steps, opening local phone markets to competition, setting conditions for regional phone companies to enter new markets,

gradually eliminating price controls on large and mid-size cable systems, and reforming other aspects of cable system regulation.


Recent FCC efforts strive to foster increased competition in local and long distance telephone services by addressing issues related to infrastructure sharing, universal service, and access charge reform. The FCC and the Department of Justice have reviewed and will continue to review a number of


Bell Operating Company petitions to provide in-region long distance services and will evaluate several major mergers and acquisitions as the industry continues to restructure itself following the Act. The FCC has also been

actively revamping its regulation of the radio spectrum, auctioning licenses for a wide range of new services and establishing rules for a new generation of

digital television.


A sunset clause went into effect on April 2, 1999 for one of the provisions in the landmark 1996 Telecommunications Act. The provision, legislating price

controls on cable television, was not renewed thereby ending price controls on

cable television.


In 1998, a Foreign Carrier Entry Order was issued, liberalizing foreign ownership in the US telecom industry. The FCC adopted new rules that will allow an open entry policy for carriers from WTO members and expand competition in the US domestic telecom market. The new rules replace the effective competition test (ECO test) for WTO members and streamline applications for authorization for a variety of activities including exceeding the

25% indirect foreign ownership benchmark for wireless licenses.


A Foreign Satellite Entry Order was issued in November, 1997, liberalizing procedures for provision of satellite services by non-U.S. licensed satellite systems. The FCC established a presumption in favor of access to satellite systems licensed by WTO members.


In 1999, the Federal Communications Commission waived the requirements of its international settlements policy for country routes considered to be

competitive because the accounting rates are at least 25 percent below

benchmark levels, and also for arrangements between U.S. carriers and foreign carriers that lack market power in their home markets.


Costs and Benefits of Federal Government Regulation


After a study lasting several months, the Office of Management and Budget

(OMB) released in September, 1997, a report on the costs and benefits of current regulation. The report was required by the Treasury postal bill passed

in September 1996 (Senate Appropriations Bill, sec. 645a). The report represents the first step in a comprehensive review and reassessment of regulation in the United States. It covers estimates of the total annual costs and benefits of Federal Regulatory programs, including quantitative and non-

quantitative measures of regulatory costs and benefits, estimates of the costs

and benefits (including quantitative and non-quantitative measures) of each

rule that is likely to have a gross annual effect on the economy of $100,000,000

or more in increased costs, an assessment of the direct and indirect impacts of

Federal rules on the private sector, State and local government, and the

Federal Government; and includes recommendations from and a description of

significant public comments to reform or eliminate any Federal regulatory program or program element that is inefficient, ineffective, or is not a sound use

of the Nation's resources. The report can be found at www.whitehouse.gov/WH/EOP/OMB/html/intro.htm.


Agriculture


Omnibus Farm Bill Implementation. The Department of Agriculture (USDA) has implemented major provisions of the Agricultural Market Transition Act (AMTA) and other key elements of the Federal Agriculture Improvement and Reform

Act of 1996 (P.L. 104-127) which was signed into law on April 4, 1996. AMTA removes Government authority to require producers to idle some of their land in order to qualify for Government payments. It provides for fixed payments in

lieu of “deficiency payments” for several basic commodities. Only peanuts and tobacco remain subject to Government regulation of production or marketing

and prices; however, price support levels for peanuts have been reduced. Both tobacco and peanut programs operate on a no-net-cost to the Government

basis. Marketing allotment provisions which restricted domestic marketing of sugar under certain conditions have been eliminated, and other adjustments have been made in the sugar price support program including utilization of a more transparent formula to determine tariff rate quota (TRQ) levels for sugar

imports based on forecast stocks to use ratios. Dairy price support levels have

also been reduced, and will be eliminated by 2001. The USDA has also implemented new rules for the Conservation Reserve Program to emphasize

the environmental benefits from the land retied under long-term contracts in this

program and to shift productive cropland out of the program back into crop production where it is economically justified.


APHIS Deregulation. Over the past year the Animal and Plant Health Inspection Service has concentrated on updating its import regulations to comply with the principles of transparency and equivalency contained in the World Trade Organization (WTO) agreement. APHIS has also revised its

regulations to enhance trade opportunities by allowing additional articles to be imported into the United States. Particular examples from the past year include final rules that allow importation of Has avocados from Michoacan, Mexico;

pork from Sonora, Mexico, and beef from Argentina. APHIS is also working on

a final rule that will align its regulatory and decisionmaking structure for cattle

and swine and beef and pork product imports with WTO principles.


Export Administration


The Bureau of Export Administration (BXA) administers and enforces U.S. export controls on goods and technology that have both civilian and military uses. In 1999, the value of U.S.-licensed exports accounted for only 3-4 percent of total U.S. exports. In all areas of export controls--nuclear, missile, chemical, biological, and dual-use--multilateral cooperation remains an important part of U.S. policy and U.S. activity. In the last seven years, the United States has implemented several revisions to its regulations in key sectors. In 1999, the United States liberalized export controls on high

performance computers (HPCs). The President also committed the executive branch to reviewing HPC export control policy every six months in order to ensure that U.S. controls keep pace with changing technical realities. In a

similar vein, in January 2000, the United States greatly expanded the ability of

U.S. manufacturers to export encryption products. BXA has also streamlined


the licensing process and implemented an electronic application system. Since implementation of electronic filing in January, 50 percent of applications have been submitted online.


Food and Drug Administration


The FDA has announced 36 reforms in the past year that will significantly cut drug approval times and streamline the pre-market clearance process for certain devices, including: eliminating prior approval of certain manufacturing

changes for drug manufacturers; eliminating most environmental assessments that must now accompany drug applications; and, increasing the number of

medical devices that do not need pre-market clearance. In addition, FDA is eliminating its lot release requirements for well-characterized drugs, which will generate significant cost savings and speed the development of drugs created through biotechnology without sacrificing safety.


Transportation

The Ocean Shipping Reform Act of 1998 went into effect May 1, 1999. This

Act provides for reduced economic regulation in the transport of U.S. ocean- borne foreign trade by permitting ocean carriers and shippers greater freedom

to negotiate freight contracts.


Previous Actions:

The interstate deregulation effort was extended to interstate trucking on August

26, 1994 in PL 103-305. The regulatory barriers that are dismantled by this law will save shippers and consumers anywhere from $3 billion to $8 billion.

As part of the Reinventing Government effort, the Department of Transportation

(DOT) has in recent months made over 50 substantive revisions to text in the

CFR to reduce burden or duplication, or to streamline requirements. In addition, DOT has made major efforts to harmonize regulations with those of

other countries, particularly European Community member countries. Both the

Federal Aviation Administration and the U.S. Coast Guard have efforts underway to harmonize safety standards. These will achieve common standards that reduce unnecessary costs on airplane manufacturers without lowering the level of safety provided by existing regulations. The FAA is also working on harmonization of various regulations, ranging from rotorcraft regulation to structural load requirements, with European Joint Aviation Requirements.


Commerce


In an effort to bring greater competition into the electric utility market, many states have began to deregulate their electric utilities in 1998, including California. The deregulation led to substantially greater competition for the industry. The federal government is also interested in this endeavor. The Senate is considering a bill sponsored by the United States Department of

Energy entitled, The Electric Utility Empowerment and Competitiveness Act of

1999, which is meant to facilitate states’ efforts to deregulate the electric

utilities.


Procurement


The Federal Acquisition and Streamlining Act of 1994, simplifies procedures for

Federal purchase of commercially available goods, promotes the development

of computer networks for conducting procurement electronically, and provides more flexibility in awarding and financing government contracts. It will provide

billions of dollars in savings for both the private and public sector by increasing the efficiency and transparency of the government’s procurement process.


Securities


Rule 144A, adopted in 1990, allows issuers to sell securities in the US markets

to certain without registering the offering with the SEC. Operating in this less

structured environment, the market for rule 144A offerings by foreign issuers from 43 countries used the rule to sell the securities. In fact, in those three years 300 foreign issuers have used rule 144A to sell over $25 billion of securities.


In April 1994, the SEC amended its rules so that more foreign issuers are eligible to use short form prospectuses and the shelf registration process. In

addition, the SEC made significant changes to its rules on reconciling financial

statements. By the end of 1994, over 100 foreign issuers took advantage of

these regulatory enhancements and entered the US capital markets for the first

time -- this was a record of new listings.


Additional deregulation measures were reported in the October 1995 report on

U.S. deregulation initiatives.


Updated 5/00


Inputs from: DOC (new paragraph on Bureau of Export Administration) DOJ:Maureen Casey (new final paragraph re FCC under Telecomm)




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