|Bryant Trick, First Secretary for Economic Affairs Embassy of the United States of America, Seoul|
The United States considers information and communication technology (ICT) to be one of the fundamental drivers of the prosperity of all nations. The United States' own prosperity certainly owes much to the strength of our ICT sector. In direct terms, around 30 percent of U.S. exports are related to ICT. Of course, the more dramatic effect is indirect: U.S. companies' strong investment in ICT infrastructure over the past 15 years became the bedrock for the explosive growth in productivity witnessed in the United States since the mid-1990s.
As is well known, the United States does not pursue top-down industrial policies. We try to stay away from the "picking winners" game, since market participants are in a much better position than governments to know what the market needs at any given point in time. Nevertheless, we do have an "ICT policy," particularly with respect to foreign economic policy. It rests on three pillars: support for private entrepreneurship and liberalized markets, technology neutrality, and protection of intellectual property rights.
Primacy of Private Markets
While not a major concern here in Korea, when we look around the world, one of the main handicaps holding countries back from fully realizing the potential gains from ICT or developing a strong ICT sector is over-regulation and excessive economic decision-making authority in state hands. Therefore, one of the fundamental considerations of U.S. ICT policy is urging other nations to enact domestic policies that encourage investment in research and innovation. This means supporting privatization, competition, and liberalization. Private investment is by far the largest source of funds for the world's communications and information networks, but its power cannot be realized in the absence of a stable business environment. The private sector needs to be in the driver's seat.
When the private sector is in the driver's seat, it means that the private sector individuals not governments should decide which technologies will have a chance to succeed in the market. ICT businesses and their consumers should fundamentally have the freedom to buy and sell any technology they choose. Therefore, the United States in principle opposes all government mandates of technology standards. If a standard is necessary for limited, specific reasons such as public safety or spectrum interference issues, we believe the standard should be performance-based, not design-based. In other words, while governments have the right in limited circumstances to mandate that a technology meet a certain set of performance criteria, governments should not try to mandate a certain technology, as such mandates close the market to competition.
Limiting competition between technologies reduces options for local businesses, makes economies inflexible, reduces investment and innovation, and raises prices for consumers: a very high price to pay for the questionable claim of additional "consumer convenience" from having a mandatory single standard. Technology neutrality is fast becoming an important aspect of international trade. A steadily increasing ratio of trade is in intangible "technology:" the ideas programming, algorithms, solutions that make everything work. This is especially true in trade between countries with strong ICT sectors. When a country mandates a single technology standard, it essentially closes this important market, shutting out foreign competition and ideas. It also shuts out investment: who wants to invest in a market where there is good reason to think you may not be able to sell the technology you are developing
Finally, consumers, innovators, and content producers must have confidence that their work will not be in vain. ICT products tools, networks, media content must be protected to the maximum possible extent. Thus, respect for intellectual property is perhaps the most indispensable part of any country's ICT policy, and the U.S. government seeks to strengthen IPR protection around the world. IPR protection is particularly relevant for Korea, whose highly developed Internet infrastructure makes it especially vulnerable to online piracy of all kinds. The United States has been working closely with Korea to ensure that the new Copyright Act is modernized sufficiently to protect innovation in the new technological environment.
U.S.-Korea ICT Relationship
Two-way trade in ICT goods and services between the United States and Korea is strong and dynamic. Semiconductors, computer and network equipment and technology licenses are sizable components of U.S. exports to Korea. Korea, meanwhile, is a major supplier of semiconductors, computer equipment, and handsets to the U.S. market. Korea has also emerged as one of the most important "test beds" in the entire world for new U.S. technologies especially in the telecommunications and Internet fields, where Korea's pace of services innovation and consumers' adoption of new technology is second to none. That is one reason why the Korean government's policy decisions have such a major impact on U.S. businesses, and why the U.S. government becomes concerned whenever Korea appears to be taking steps like mandating certain technology standards that could close this essential market to U.S. suppliers.
Working cooperatively, the United States and Korea have been able to resolve most, though not all, of our differences, most of which have centered on what the United States views as overly restrictive technology mandates. Within the APEC framework, we are in the advanced stages of negotiating mutual recognition agreements for telecom equipment. Together with the European Union and Japan, we have reached agreement in principle to mutually eliminate tariffs on multi-chip integrated circuits.
Looking forward, we are hopeful that Korea will further open its telecommunications services market perhaps in its next offer in the WTO services negotiations so that foreign enterprises can exert management control in facility-based operators. Opening the market in this way could attract infusions of additional capital into the sector, thereby increasing innovation even further. It could also play a useful competition policy role, by adding additional competition to the communications sector and strengthening challenges to the dominance of market leaders like KT and SK Telecom to the benefit of consumers. We also look to Korea to strengthen its commitment to technology neutrality. Finally, continually improving Korea's IPR system will also remain a focus of our efforts.
As recent technology and research investments in Korea by Intel, IBM, and Hewlett-Packard demonstrate, there are strong synergies between the U.S. and Korean ICT sectors, and strong U.S. corporate interest in this market. We expect that this will continue to be the case, especially if Korea continues to implement market-driven, open policies and protect innovation.
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