World Trade Organization

• Author: International Law Group

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...