September 30, 1997
Dear Ambassador Barshefsky:
I refer to the arrangements on procurement by Nippon Telegraph and Telephone Corporation (NTT), which were set forth in the exchange of letters between Dr. Saburo Okita and Ambassador Reubin O'D. Askew on December 19, 1980, then supplemented and extended by the subsequent exchanges of letters between the Government of Japan and the Government of the United States, the last of which being the exchange of letters between Foreign Minister Yohei Kono and Ambassador Michael Kantor on November 1, 1994 (hereinafter referred to as the "arrangements").
I also refer to the recent consultations between the representatives of the Government of Japan and the Government of the United States regarding the arrangements. As part of the consultations, the representatives of the two Governments discussed the areas in which the arrangements have been and can be improved. In this connection, the Government of Japan is pleased that NTT has decided to introduce improvement measures to its procurement procedures set forth in "Improvement Measures of NTT Procurement Procedures," (hereinafter referred to as the "Improvement Measures"), attached to this letter. We are of the view that these Improvement Measures will further promote the purpose of the arrangements of achieving an open, transparent and competitive telecommunications market in Japan, and providing increased non-discriminatory competitive opportunities to both domestic and foreign suppliers.
The Government of Japan recognizes and welcomes that NTT believes that the improvement in NTT's procurement procedures will increase access to its procurement opportunities and can lead to an increase in the foreign value and share of its procurement over the medium term. This, of course, presupposes outstanding capabilities and sales efforts on the part of many foreign firms to provide competitive products and technologies that NTT needs.
Considering that the annual meetings to review the operationof the arrangements have been useful, the Government of Japan will continue to meet annually with the Government of the United States to review the operation of the arrangements, as supplemented by the Improvement Measures. In the annual meeting, it would be appropriate to consider, inter alia, (i) implementation of NTT's improved procurement procedures and the extent of access of foreign suppliers to NTT's procurement opportunities, (ii) efforts of foreign suppliers to utilize these procurement opportunities, and (iii) changes in the value and share of NTT's procurement from foreign suppliers.
As you are aware, pursuant to Law No. 98 of June 20, 1997, amending, in part, the NTT Law, NTT will be restructured, and as a result there will be a holding company (NTT) which will hold and maintain the total share of two regional communications companies (NTT East and NTT West), and which will initially hold the total share of a long-distance telecommunications company (to be established under Japanese Commercial Law). Such restructuring will take effect on a date to be determined by Cabinet Ordinance to be adopted in accordance with Law No. 98. In this connection, the Government of Japan confirms that the arrangements, as supplemented by the Improvement Measures, continue in effect and will remain in force until the restructuring of NTT, which will take effect on the date referred to above. The Government of Japan anticipates that there will be a review in 1999 concerning the treatment of the present arrangements beyond the restructuring.
I confirm that my Government stands ready to enter into expeditious consultations with the Government of the United States with respect to the operation of the arrangements.
Sincerely,
Kunihiko Saito
Ambassador of Japan
I. Provision of Information Regarding Major Procurements
A. In its annual announcements regarding major projected procurements of public telecommunications equipment, including integrated software, for the fiscal year, NTT will provide anticipated procurement quantities in specified units instead of value for the following products:
1. Digital switches, including ATM, by number of lines:
a. Digital local switches
b. Digital transit switches
c. ISM
d. LXM
2. Fiber optic cable in fiber kilometers:
a. Trunk optical cables
b. Subscriber optical cables
3. Terminals in sets:
a. ISDN terminals
b. Analog terminals
B. NTT will provide, upon request, the fiber kilometers of optical cables procured by NTT by the following types:
1. Long-distance trunk cable
2. Underground trunk cable
3. Underground subscriber cable
4. Aerial subscriber cable
II. Announcements
Starting from November 1, 1997, NTT will make procurement announcements through NTT's Internet web site instead of the Kampo, except for procurements subject to Track I procedures specified in the arrangements. NTT will take appropriate steps to advise interested parties of this change in NTT's procurement procedures, including publishing a notice in the Kampo advising interested parties of the effective date of this change and identifying NTT's Internet web site.
III. Request for Information (RFI)
Starting from November 1, 1997, NTT will no longer conduct RFIs under Track II procedures. NTT will take appropriate steps to advise interested parties of this change in NTT's procurement procedures, including publishing an advance notice in the Kampo and through NTT's Internet web site advising interested parties of the effective date of this change.
IV. Subcontracting
NTT will no longer publish invitations for suppliers to express an interest in subcontracts involved in a procurement for which Request for Comments are published.
V. Technical Specifications
In order to increase access to and transparency of technical information, NTT will:
A. Specify a centralized contact point for suppliers which will assist suppliers who seek relevant technical information for sale of products to NTT;
B. Upon request, provide necessary technical information, including performance requirements, network interfaces, and protocols; and
C. Where appropriate, arrange for suppliers to conduct consultations with NTT's technical experts, including those related to improvement of quality management systems.
VI. Standardization
In order to promote standardization, NTT will:
A. Participate in standardization efforts, including contribution to those related to new or revised network interfaces, in the appropriate fora, such as the TTC and the ATM Forum;
B. Work in cooperation with interested parties to address the diversity of network interfaces;
C. Provide, through NTT's Internet web site, the names of such fora referred to above;
D. Provide, through NTT's Internet web site, information on NTT's important activities in such fora; and
E. Provide information on standardization efforts made by NTT through such publications as NTT Technical Journal, NTT R&D, and NTT REVIEW.
VII. Evaluation
In cases where more than one supplier is selected, allocation of the volume of the procurement will be based upon price, quality, delivery and other commercial factors.
His Excellency Kunihiko Saito
Ambassador of Japan
2520 Massachusetts Avenue, N.W.
Washington, D.C. 20008
Dear Ambassador Saito:
I acknowledge receipt of your letter of today's date and its attachment on the subject of procurement procedures by Nippon Telegraph and Telephone Corporation (NTT).
I confirm, on behalf of my Government, that the "Improvement Measures of NTT Procurement Procedures," (hereinafter referred to as "Improvement Measures"), are acceptable to the United States. I also confirm that the Government of the United States will maintain the views and pursue the policies mentioned in paragraphs 3 and 4 of Ambassador Askew's letter to Dr. Okita dated December 19, 1980, in particular, bearing in mind its commitment and the commitment of the Federal Communications Commission in particular, to the openness and transparency of the U.S. telecommunications market.
The Government of the United States recognizes that it is the primary goal of procurement of NTT to enhance its competitive strength in the increasingly competitive business environment. The Government of the United States welcomes that the arrangements (as defined in your letter) have contributed to an increase in non-discriminatory competitive opportunities for NTT's procurement and to an increase in NTT's procurement from foreign suppliers from 135 billion yen in JFY 1994 to 173 billion yen in JFY 1996. The Government of the United States expects that the improvement in NTT's procurement procedures will increase access to its procurement opportunities and can lead to an increase in the foreign value and share of its procurement over the medium term. This, of course, presupposes outstanding capabilities and sales efforts on the part of many foreign firms to provide competitive products and technologies that NTT needs.
Considering that the annual meetings to review the operation of the arrangements have been useful, the Government of the United States will continue to meet annually with the Government of Japan to review the operation of the arrangements, as supplemented by the Improvement Measures. In the annual meeting, it would be appropriate to consider, inter alia, (i) implementation of NTT's improved procurement procedures and the extent of access of foreign suppliers to NTT's procurement opportunities, (ii) efforts of foreign suppliers to utilize these procurement opportunities, and (iii) changes in the value and share of procurement from foreign suppliers.
Bearing in mind that NTT will be restructured on the date indicated in your letter, the Government of the United States anticipates that there will be a review in 1999 concerning the treatment of the present arrangements beyond the restructuring.
I confirm that my Government stands ready to enter into expeditious consultations with the Government of Japan with respect to the operation of the arrangements.
Sincerely,
Charlene Barshefsky
United States Trade Representative
The Honorable Shozaburo Jimi
Minister of Posts and Telecommunications
3-2, Kasumigaseki, 1-chome,
Chiyoda-ku, Tokyo, 100-90 Japan
Dear Mr. Minister:
I refer to the procurement procedures of Nippon Telegraph and Telephone Corporation (NTT). It is the primary goal of procurement of NTT to enhance its competitive strength in the increasingly competitive business environment. NTT has sought to increase its access to the best products and technologies through the introduction of procurement procedures designed to provide non-discriminatory competitive opportunities to both domestic and foreign manufacturers since 1981. In order to increase such opportunities, NTT has improved its procurement procedures and their operations several times during the intervening years. In the meantime NTT's procurement from foreign suppliers increased from 135 billion yen in JFY 1994 to 173 billion yen in JFY 1996.
Because of NTT's continuing need for the most competitive products and technologies in the rapidly changing telecommunications industry, NTT has decided to introduce further improvement measures to its procurement procedures as set forth in the Attachment to this letter titled "Improvement Measures of NTT Procurement Procedures."
NTT believes that the improvement in NTT's procurement procedures will increase access to its procurement opportunities and can lead to an increase in the foreign value and share of its procurement over the medium term. This, of course, presupposes outstanding capabilities and sales efforts on the part of many foreign firms to provide competitive products and technologies that NTT needs.
Sincerely,
Junichiro Miyazu
President
Nippon Telegraph and
Telephone Corporation
I. Provision of Information Regarding Major Procurements
A. In its annual announcements regarding major projected procurements of public telecommunications equipment, including integrated software, for the fiscal year, NTT will provide anticipated procurement quantities in specified units instead of value for the following products:
1. Digital switches, including ATM, by number of lines:
a. Digital local switches
b. Digital transit switches
c. ISM
d. LXM
2. Fiber optic cable in fiber kilometers:
a. Trunk optical cables
b. Subscriber optical cables
3. Terminals in sets:
a. ISDN terminals
b. Analog terminals
B. NTT will provide, upon request, the fiber kilometers of optical cables procured by NTT by the following types:
1. Long-distance trunk cable
2. Underground trunk cable
3. Underground subscriber cable
4. Aerial subscriber cable
II. Announcements
Starting from November 1, 1997, NTT will make procurement announcements through NTT's Internet web site instead of the Kampo, except for procurements subject to Track I procedures specified in the arrangements. NTT will take appropriate steps to advise interested parties of this change in NTT's procurement procedures, including publishing a notice in the Kampo advising interested parties of the effective date of this change and identifying NTT's Internet web site.
III. Request for Information (RFI)
Starting from November 1, 1997, NTT will no longer conduct RFIs under Track II procedures. NTT will take appropriate steps to advise interested parties of this change in NTT's procurement procedures, including publishing an advance notice in the Kampo and through NTT's Internet web site advising interested parties of the effective date of this change.
IV. Subcontracting
NTT will no longer publish invitations for suppliers to express an interest in subcontracts involved in a procurement for which Request for Comments are published.
V. Technical Specifications
In order to increase access to and transparency of technical information, NTT will:
A. Specify a centralized contact point for suppliers which will assist suppliers who seek relevant technical information for sale of products to NTT;
B. Upon request, provide necessary technical information, including performance requirements, network interfaces, and protocols; and
C. Where appropriate, arrange for suppliers to conduct consultations with NTT's technical experts, including those related to improvement of quality management systems.
VI. Standardization
In order to promote standardization, NTT will:
A. Participate in standardization efforts, including contribution to those related to new or revised network interfaces, in the appropriate fora, such as the TTC and the ATM Forum;
B. Work in cooperation with interested parties to address the diversity of network interfaces;
C. Provide, through NTT's Internet web site, the names of such fora referred to above;
D. Provide, through NTT's Internet web site, information on NTT's important activities in such fora; and
E. Provide information on standardization efforts made by NTT through such publications as NTT Technical Journal, NTT R&D, and NTT REVIEW.
VII. Evaluation
In cases where more than one supplier is selected, allocation of the volume of the procurement will be based upon price, quality, delivery and other commercial factors.