Trump targets Canada’s telecoms in NAFTA pitch

Reignited fight over sector, financial services could signal lengthy discussions with U.S.

Donald Trump is targeting the rules that guard Canada’s telecom industry, pressing for “reasonable” access for U.S. carriers to the domestic market dominated by Bell, Rogers and Telus.

Still, it’s unclear from the summary of North American Free Trade Agreement negotiation goals the U.S. president and Trade Representative Robert Lighthizer released Monday if the Americans want a loosening of foreign ownership restrictions in the sector, or simply better wholesale terms for reselling incumbents’ services.

The U.S. is the first member of the Mexico, Canada and U.S. agreement to outline its objectives for negotia- tions scheduled to start next month and wrap up by the end of the year. However, a reignited fight over telecom and financial services, another scared cow targeted by the U.S., could stretch discussions out over a number of years.

“From the way it’s worded, it looks like they are talking about wholesale terms,” said telecom consultant Iain Grant of the SeaBoard Group.

He said there is scant appetite on the part of U.S. giants for ownership of a Canadian telecom, given Canada’s regulations, small population and vast geography, as well as the strength of its incumbent players.

Industry officials said they are parsing the wording in the summary and readying a response. Grant said he’s sure the carriers will flex their lobbying muscle in Ottawa in the months ahead in an effort to block any U.S. incursion.

Canadian telecommunications revenues reached $47.8 billion in 2015, according to government data that also showed 61 per cent of that total controlled by major providers. Grant said incumbents have a motivation for resisting new foreign competition.

He noted that Bell, Rogers and Telus in 2013 launched a public relations blitz after rumours surfaced that New York-based Verizon was set to acquire an upstart wireless company north of the border, arguing in the campaign that Canadian rules would favour the new arrival.

Verizon ultimately called the takeover speculation overblown and instead entered a deal to buy the stake in Verizon Wireless held by Vodafone.

The U.S. trade office in its NAFTA negotiation goals summary said the U.S. aims to open up the competitive supply of telecommunications services “by facilitating market entry through transparent regulation and an independent regulator.”

It also wants “secure commitments to provide reasonable network access for telecommunications suppliers through interconnection and access to physical facilities and scarce resources.”

The U.S. calls Canada’s telecom rules, which maintain a 46.7-percent limit on foreign ownership of major suppliers, the most restrictive regime in the developed world.

Canada’s ambassador in Washington, meanwhile, is refusing to say whether the finance and telecom sectors are off-limits.

“We’re at the beginning of the negotiations and I think it would be pretty unwise for me to talk about what we’re prepared to put on the table and what we’re not prepared to put on the table,” David MacNaughton told reporters in Edmonton on Tuesday.

“I think drawing lines in the sand right now is not helpful to having a constructive negotiation.”