USTR TAKES COMPLAINT OVER MEXICAN TELECOM RULES TO WTO
U.S. Trade Representative Robert Zoellick said Wed. he was asking World Trade Organization (WTO) for dispute settlement panel on complaint that Mexico hadn’t opened its cross-border telecom market to competitors. Bush Administration has said in last year that Mexico has made some progress in areas such as ensuring that competitors obtain local interconnection from incumbent Telmex. But serious concerns on international interconnection issues have remained unresolved. Request marks first time USTR under Zoellick has made such request to WTO. In Nov. 2000, U.S. asked WTO to convene dispute settlement panel on complaints about Mexico, process that wasn’t pursued when some progress was made. But USTR said its latest WTO request was focused on unresolved issue of U.S. carriers’ paying inflated charges because “Mexico has still not begun to dismantle its anticompetitive cross-border telecommunications regime.” Panel request is expected to be brought up at March 8 meeting of WTO’s dispute settlement body.
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“Mexico’s international telecommunications market remains dominated by a single company with a government mandate to set high wholesale prices for calls to Mexico and prevent competitive alternatives,” Zoellick said. “The result is steep telephone charges that penalize American and Mexican families seeking to maintain cross-border ties, raise the price of doing business across the border and burden U.S. telecom firms with unnecessary costs.” Under existing system, USTR said U.S. carriers didn’t have access to alternative channels for carrying calls into Mexico. Zoellick said: “We have tried to settle our differences with the government of Mexico and we still hope to do so. However, the lack of action by appropriate Mexican authorities leaves us no choice but to pursue our rights through the WTO.”
Rules approved by Mexican govt. “create a price-fixing mechanism led by Mexico’s dominant phone company,” USTR said, referring to Telefonos de Mexico (Telmex). Under country’s telecom rules, Mexican carriers can’t compete with one another to carry calls into Mexico, USTR said; instead, they must charge their U.S. counterparts “the same high wholesale rate for connecting their calls to Mexico.” That current govt.-approved rate is 13.5 cents per min. compared with govt.-approved wholesale rates of 4 cents per min. Mexican carriers can charge each other for comparable calls within that country, USTR said. U.S. carriers estimate those international rates cost American customers $500 million in excess payments each year. Nearly 80% of cross-border calls between U.S. and Mexico originate in U.S.
Four grounds on which U.S. is challenging Mexico’s international telecom rules are to: (1) Ensure that U.S. carriers can connect calls to Mexico on reasonable terms, rates and conditions. (2) Ensure U.S. companies have reasonable, nondiscriminatory access to Mexico’s telecom network. (3) Provide national treatment to U.S.-owned telecom resellers. (4) Bar dominant carrier from engaging in anticompetitive practices.
AT&T lauded U.S. move to take telecom disputes to WTO. “USTR has given Mexico 4 years to get things right. That’s plenty of time,” AT&T Gen. Counsel James Cicconi said. AT&T said it hoped that step would “cause Mexico to reassess its position.” USTR decision means that “the U.S. government is serving notice to Mexico -- and other trading partners -- that ignoring procompetitive trade commitments won’t be tolerated,” he said.
Renewed U.S. pursuit at WTO of allegations that Mexico still hadn’t opened its international long distance market to competition was being watched closely. It would mark first time that complaint on implementation of 1997 WTO basic telecom agreement had made its way through entire dispute process at WTO, industry source said. In Feb. 2001, USTR had let pass opportunity to seek WTO dispute settlement panel on Mexican telecom concerns. When U.S. first sought such panel in fall of 2000, Mexico blocked request as was its right under WTO process. Because some progress had been made after that time on local network interconnection, U.S. made preliminary decision to not make 2nd request for dispute panel, although it didn’t formally drop complaint and said at time that some concerns remained. Mexico is expected to have another chance to block U.S. request, although USTR could initiate full-blown settlement dispute process upon 2nd request.