New Zealand's chances of building a free trade agreement (FTA) with the US could go begging unless the government rejects the Telecommunications Commissioner's recommendation on unbundling.
The US has signed several FTAs in the past decade and all of them carry a lengthy section on telecommunications that insists on the local loop being unbundled.
Agreements signed with Singapore, Chile and Australia all carry the clause which covers unbundling, co-location, number portability, interconnection and several other sections.
On unbundling, the US agreement with both Singapore and Chile reads:
"Each Party shall provide its competent body the authority to require that major suppliers in its territory provide suppliers of public telecommunications services of the other Party access to network elements on an unbundled basis for the supply of those services on terms and conditions and at cost-oriented rates that are reasonable and non-discriminatory".
A spokesman for the US Embassy in Wellington says the US has signed six free trade agreements and generally would demand unbundling of telecommunications be included in any future FTA.
"We approach these agreements seeking to put as many things on the table as possible, but this would be one of those we would strongly insist upon."
The willingness to unbundle the local loop is currently the major stumbling block in any agreement between the US and several central American countries, including Venezuela, Guatemala and El Salvador.
Pressure on the commissioner's position is also possible from another international flank - the World Trade Organisation. New Zealand is a signatory to the WTO General Agreement on Trade in Services (GATS) that also states signatory countries should unbundle their telecommunications infrastructure.
US-based trade association CompTel/ASCENT Alliance is urging the US Trade Representative's office (USTR) to raise the issue with the New Zealand government.
"The [Commerce Commission's] recommendation fails to enforce New Zealand’s Reference Paper Section 2.2 commitments, and the USTR should encourage the New Zealand Government, an important trading partner, to reject these recommendations."
The association says the Commerce Commission's recommendation on unbundling falls short of the WTO requirements on many levels.
"Specifically, [the Commerce Commission] declined to require cost-oriented unbundling of the local loop, declined to require cost-oriented bitstream access to the incumbent’s DSL services, and finally, declined to require cost-oriented pricing and non-discriminatory access to local leased circuits".
Minister for Trade Negotiations Jim Sutton is overseas at the moment but his press secretary Cathy Bell says none of New Zealand's current trade agreements have called for a ruling on telecommunications.
"We have agreements with Australia, Singapore, Chile, Mexico and Thailand and none of those have anything about it."
TUANZ chief executive Ernie Newman did not wish to comment on the issue.