CHAPTER THIRTEEN (TELECOMMUNICATIONS)

OF THE

NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA)

What is Chapter Thirteen of the NAFTA and what does it do?

Who benefits from Chapter Thirteen of the NAFTA?

How can Chapter Thirteen of the NAFTA help my company?

Can the U.S. Government help me if I have a problem?

How can I get more information?

What is Chapter Thirteen of the NAFTA and what does it do?

Chapter Thirteen of the North American Free Trade Agreement (NAFTA) sets forth agreed ground rules for: 1) access to telecommunications networks, 2) the provision of enhanced or value-added services, and 3) the adoption of telecommunications standards. Along with other NAFTA Chapters relating to tariff elimination, freedom of investment and cross-border trade in services, Chapter Thirteen has significantly increased opportunities for telecommunications companies in each NAFTA country to sell equipment and services to the other two.

The three parties to the NAFTA are Canada, Mexico and the United States.

The NAFTA entered into force on January 1, 1994. It has no expiration date.

Who benefits from Chapter Thirteen of the NAFTA?

Any telecommunications company in a NAFTA country wishing to sell equipment or services, including enhanced or value-added telecommunications services, in another NAFTA country can benefit from the market-opening opportunities of Chapter Thirteen.

How can Chapter Thirteen of the NAFTA help my company?

Telecommunications Equipment

The provisions of Chapter Thirteen that address non-tariff barriers enable U.S. companies to sell telecommunications equipment more easily at a lower total cost to Mexico and Canada. Before the NAFTA, for example, cumbersome customs procedures and standards served as non-tariff barriers that made Mexico a very difficult market to enter. The NAFTA provides a framework under which these trade irritants can be addressed. In late 1996, the question of terminal attachment standards was settled, and U.S. companies can now freely attach their terminal equipment to the public telephone network in Mexico. Under NAFTA, a single lab can now be recognized to test a telecommunications product for sale in any of the three NAFTA countries.

By eliminating tariffs on telecommunications equipment, Chapter Three (Market Access) of the NAFTA has also significantly lowered the cost of U.S. equipment exports. When the NAFTA entered into force in 1994, tariffs on 80 percent of the telecommunications equipment being sold into Mexico were eliminated immediately, with the remaining tariffs to be phased out by 2004. Canadian tariffs had already been eliminated under the previously-negotiated Canada-U.S. Free Trade Agreement. (For more information on the Market Access Chapter of the NAFTA, see the Exporter's Guide to Chapter Three.)

Enhanced or Value Added Services

Enhanced or value-added services are telecommunications services that employ computer processing applications. Examples are: electronic mail, electronic data interchange (EDI), enhanced facsimile, on-line database access, packet-switched and public data services, videotext and voicemail.

Providers of enhanced or value-added services benefit from provisions of the NAFTA that require that they have access to telecommunications networks on reasonable and non-discriminatory terms. The NAFTA also guarantees the availability of private leased lines on the public telephone network and allows firms to purchase or lease their own telecommunications equipment -- such as phones, faxes and computers -- and freely attach it to the public phone system.

Providers of basic and enhanced or value-added services can also benefit from the investment protection guaranteed under other Chapters of the NAFTA, including: the ability to transfer funds freely, freedom from performance requirements, protections against expropriation and the right to arbitrate certain investment disputes with the host government.

Can the U.S. Government help me if I have a problem?

Yes. If you encounter difficulties selling telecommunications equipment or services because the Canadian or Mexican government has failed to comply with Chapter Thirteen of the NAFTA, contact the Trade Compliance Center's hotline at the U.S. Department of Commerce. The Center can help you understand your rights under Chapter Thirteen and can alert the appropriate U.S. Government officials to help you resolve your problem. The U.S. Government can, if appropriate, raise the particular facts of your situation with the government of the other country involved and ask officials of that government to review the matter.

How can I get more information?

The complete text of Chapter Thirteen (Telecommunications) of the NAFTA is available on the Trade Compliance Center's web site.

If you have questions about Chapter Thirteen or how to use it, you can e-mail the Trade Compliance Center (TCC), which will forward your message to the Commerce Department's Designated Monitoring Officer for this NAFTA Chapter. You can also contact the Designated Monitoring Officer at the following address:

Designated Monitoring Officer -

NAFTA Chapter 13 - Telecommunications

Office of Technology and Electronic Commerce (OTEC)

U.S. Department of Commerce

14th Street & Constitution Avenue, N.W.

Washington, D.C. 20230

Phone: (202) 482 - 0399

Fax: (202) 482 - 5834

The Designated Monitoring Officer can also provide you with useful trade leads and contacts.

Further information about the telecommunications regulatory environment in Mexico is available from the Commision Federal de Telecommunicaciones (offsite link) (COFETEL) and the Secretary of Communications and Transportation (offsite link).

You can obtain additional information by visiting the following web site in the International Trade Administration of the Department of Commerce:

The Office of Technology and Electronic Commerce (OTEC)

Located in the International Trade Administration, the Office of Technology and Electronic Commerce (OTEC) helps U.S. companies increase international sales and overseas business opportunities in the information technology sectors of computers, networking, software, microelectronics, telecommunications, instrumentation, and Internet and e-commerce technologies by conducting market research, providing trade-related information, and promoting fair international trade.