Telecommunications Market in Canada

Pursuant to a congressional request, GAO reviewed reported restrictions on the marketing of U.S. telecommunications equipment in Canada, focusing on the preferred supplier arrangement between Canada's largest telephone company and its affiliated telecommunications equipment manufacturer. GAO noted that: (1) from 1987 through 1993, the U.S. Trade Representative identified the preferred supplier contract as a trade barrier affecting U.S. exports of telecommunications equipment to Canada; (2) Canadian regulators viewed the contract as an internal agreement between the affiliated companies and believed that the telephone company did not give preference to Canadian suppliers; (3) telephone company officials stated that despite its preferred relationship with the equipment manufacturer, the company purchased a significant amount of equipment from U.S. and other firms; (4) in 1992, the company placed 85 percent of its purchases with the preferred supplier; (5) the Canadian government and the supplier believed the contract was unjustly listed as a trade barrier, which precluded the supplier from receiving U.S. export advocacy assistance; and (6) although the supplier agreed to terminate its contract as of March 31, 1994, U.S. firms believed there were other issues that still needed to be resolved.