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U.S. prevails in WTO telecommunications dispute with Mexico over interconnection charges.

The U.S. has prevailed before the WTO in the dispute with Mexico over telecommunications services.

In 1997, Mexico ended the monopoly of the company Telmex for Mexican telecommunications services. Mexico's telecommunications rules require U.S. carriers to connect with Mexican telecommunications providers to complete calls from the U.S. to Mexico ("interconnection"). Under the Mexican Federal Telecommunications Law, however, the largest carrier for a particular international market has the exclusive right to negotiate the rates. Telmex is still the largest carrier for all markets in Mexico and thus has the exclusive authority to negotiate the rates for such connecting calls to Mexico.

The U.S. argued that Mexico has thus maintained the interconnection charges artificially high in violation of the General Agreement on Trade in Services (GATS), costing U.S. carriers and consumers approximate $1 billion unnecessarily since the year 2000.

The Panel finds, in particular, that Mexico failed to meet its GATS commitments under:

(1) Section 2.2(b) of its Reference Paper by not ensuring that a major supplier provides interconnection at cost-oriented rates to U.S. suppliers for the cross-border supply, on a facilities basis in Mexico, of the basic telecommunications services at issue;

(2) Section 1.1 of its Reference Paper to maintain "appropriate measures" to prevent anti-competitive practices, because its measures in fact require anti-competitive practices among competing suppliers.

(3) Section 5(a) of the GATS Annex on Telecommunications by not ensuring access to and use of public telecommunication transport networks and services on reasonable terms to U.S. suppliers.

(4) Section 5(b) of the GATS Annex on Telecommunications by not ensuring that U.S. commercial agencies, whose presence is allowed by Mexico, have access to and use of private leased circuits within or across the border of Mexico and are permitted to interconnect these circuits to public telecommunications transport networks and services or with circuits of other suppliers.

The Panel therefore recommends that Mexico bring its measures into conformity with its GATS obligations.

Citation: Mexico - Measures affecting telecommunications services (WT/DS204/R) (April 2, 2004); U.S. Trade Representative press release 04-17 (March 12, 2004).

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Publication:International Law Update
Date:Apr 1, 2004
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