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DISPUTE SETTLEMENT: DISPUTE DS204

Mexico — Measures Affecting Telecommunications Services

This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.

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See also: One-page summary of key findings of this dispute

Appellate Body and Panel Reports Adopted

Complaint by the United States.

On 17 August 2000, the US requested consultations with Mexico in respect of Mexico’s commitments and obligations under the GATS with respect to basic and value-added telecommunications services. According to the United States, since the entry into force of the GATS, Mexico has adopted or maintained anti-competitive and discriminatory regulatory measures, tolerated certain privately-established market access barriers, and failed to take needed regulatory action in Mexico’s basic and value-added telecommunications sectors. The US claimed that Mexico had, for example:

• enacted and maintained laws, regulations, rules, and other measures that deny or limit market access, national treatment, and additional commitments for service suppliers seeking to provide basic and value-added telecommunications services into and within Mexico;
   
• failed to issue and enact regulations, permits, or other measures to ensure implementation of Mexico’s market access, national treatment, and additional commitments for service suppliers seeking to provide basic and value-added telecommunications services into and within Mexico;
   
• failed to enforce regulations and other measures to ensure compliance with Mexico’s market access, national treatment, and additional commitments for service suppliers seeking to provide basic and value-added telecommunications services into and within Mexico;
   
• failed to regulate, control and prevent its major supplier, Teléfonos de México (“Telmex”), from engaging in activity that denies or limits Mexico’s market access, national treatment, and additional commitments for service suppliers seeking to provide basic and value-added telecommunications services into and within Mexico; and
   
• failed to administer measures of general application governing basic and value-added telecommunications services in a reasonable, objective, and impartial manner, ensure that decisions and procedures used by Mexico’s telecommunications regulator are impartial with respect to all market participants, and ensure access to and use of public telecommunications transport networks and services on reasonable and non-discriminatory terms and conditions for the supply of basic and value-added telecommunications services.

The United States considered that the alleged action and inaction on the part of Mexico may be inconsistent with Mexico’s GATS commitments and obligations, including Articles VI, XVI, and XVII; Mexico’s additional commitments under Article XVIII as set forth in the Reference Paper inscribed in Mexico’s Schedule of Specific Commitments, including Sections 1, 2, 3, and 5; and the GATS Annex on Telecommunications, including Sections 4 and 5.

On 10 November 2000, the United States requested the establishment of a panel. On the same date, the United States notified to the DSB a request for consultations concerning several recent measures adopted by Mexico affecting trade in telecommunication services. At its meeting on 12 December 2000, the DSB deferred establishment of a panel. On 13 February 2002, the United States requested the establishment of a panel. In particular, the United States claimed that Mexico’s measures had:

• failed to ensure that Telmex provides interconnection to US cross-border basic telecom suppliers on reasonable rates, terms and conditions;
   
• failed to ensure US basic telecom suppliers reasonable and non-discriminatory access to and use of public telecom networks and services;
   
• did not provide national treatment to US-owned commercial agencies; and
   
• did not prevent Telmex from engaging in anti-competitive practices.

At its meeting on 8 March 2002, the DSB deferred the establishment of a panel. Further to a second request by the US, the DSB established a panel at its meeting on 17 April 2002. Canada, Cuba, the EC, Guatemala, Japan and Nicaragua reserved their third-party rights to participate in the proceedings. On 18 April 2002, India joined as a third party to the dispute. On 19 April 2002, Honduras joined as a third party to the dispute. On 23 April 2002, Australia joined as a third party. On 24 April 2002, Brazil joined as a third party. On 16 August 2002, the US requested the Director General to determine the composition of the panel. On 26 August 2002, the panel was composed.

On 13 March 2003, the Chairman of the Panel informed the DSB that it would not be possible to complete its work in six months due to the time needed for translation into Spanish and English of all relevant documents and the complexity of the issues involved. The Panel expected to complete its work in August 2003. On 6 August 2003, the Chairman of the Panel informed the DSB that the Panel expected to complete its work in December 2003.

On 2 April 2004, the Panel report was circulated to Members. The Panel ruled that Mexico violated its GATS commitments because:

• Mexico failed to ensure interconnection at cost-oriented rates for the cross-border supply of facilities-based basic telecom services, contrary to Article 2.2(b) of its Reference Paper;
   
• Mexico failed to maintain appropriate measures to prevent anti-competitive practices by firms that are a major telecom supplier, contrary to Article 1.1 of its Reference Paper; and
   
• Mexico failed to ensure reasonable and non-discriminatory access to and use of telecommunications networks, contrary to Article 5(a) and (b) of the GATS Annex on Telecommunications.

In respect of cross-border telecom services supplied on a non-facilities basis in Mexico, however, the Panel ruled that Mexico did not violate its obligations because it had not taken commitments for these services.

On 1 June 2004, the DSB adopted the Panel Report.

Implementation Status of Adopted Reports

On 1 June 2004, Mexico and the United Stated reached an agreement on the former’s compliance with the recommendations of the panel report. The agreement states that a reasonable period of time to comply with the recommendations of the Report is 13 months. At the DSB meeting on 31 August 2005, Mexico announced that on 12 August 2005, it had published its new resale regulations allowing for the commercial resale of long distance and international long distance services originating in Mexico and thus, with these changes, it had fully complied with the DSB’s recommendations.  The United States expressed its satisfaction with the changes introduced by Mexico.

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