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By Suzanna Kerridge, 3 August 2000 00:20

NEWS US authorities have come under fire for restricting the ability of European companies to export high-tech goods and services to the country. A European Commission report released yesterday accuses the US of breaking universally recognised World Trade Organisation (WTO) rules. In the sixteenth annual report on Barriers to Trade and Investment, Commissioner Pascal Lamy claims the stance the US has on encryption, satellite, telecoms and patenting issues will have a negative impact on European companies. The country's stance on spectrum auctions comes under particular scrutiny. The report states: "The proceedings by the FCC [Federal Communications Commission] on spectrum allocation and licensing are not always carried out in an objective, transparent, timely or non-discriminatory manner which raises concerns as to the US WTO commitments." The report also criticises the way in which some technologies are treated under US law. For example, satellites are categorised as part of the country's national defence infrastructure and are, as such, free from normal commercial rules. Encryption technology has been defined in the same way, which consequently imposes strict controls on the import of strong encryption products - to the detriment of European companies. Mike Pullen, EU specialist lawyer at DLA, said: "The US controls most of the satellites launched by NASA, which are no longer used for defence purposes. However, they are not categorised as a commercial offering, so [non-US companies] need special permission to use them, which is very limiting and takes time." A spokesman for Commissioner Lamy said: "It's a question of introducing obstacles which can put people off, and highlights the problems encountered when they do business with the US." The report comes at a time when US legislators are trying to block any foreign organisations from holding a controlling stake in an American company. Deutsche Telekom's planned acquisition of VoiceStream is under investigation by regulators for this reason. The EU has not ruled out taking action against the US. The report concludes that these "discriminatory rulings" are "a clear violation of the US commitments in the WTO on foreign investment and it would affect the interests of European companies which intend to invest in the US. The EU reserves its right to take any appropriate course of action should such provisions become law, and would oppose any action, through legislation or otherwise, that would undermine these US WTO commitments."