WORLD TRADE
ORGANIZATION
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WT/DS204/R
2 April 2004
(04-1211)
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Original: English |
MEXICO � MEASURES AFFECTING
TELECOMMUNICATIONS SERVICES
Report of the Panel
This report of the Panel on Mexico � Measures affecting
Telecommunications Services is being circulated to all Members, pursuant to the
DSU. The report is being circulated as an unrestricted document from 2 April
2004 pursuant to the Procedures for the Circulation and Derestriction of WTO
Documents (WT/L/452).
Note by the Secretariat:
This Panel Report shall be adopted by the Dispute Settlement Body
(DSB) within 60 days after the date of its circulation unless a party to the
dispute decides to appeal or the DSB decides by consensus not to adopt the
report. If the Panel Report is appealed to the Appellate Body, it shall not be
considered for adoption by the DSB until after the completion of the appeal.
Information on the current status of the Panel Report is available from the WTO
Secretariat.
TABLE OF CONTENTS
I. INTRODUCTION II. FACTUAL ASPECTS
III. PARTIES' REQUESTS FOR FINDINGS AND
RECOMMENDATIONS IV. MAIN ARGUMENTS OF THE PARTIES
A. SECTION 2 OF THE REFERENCE PAPER |
1. Scope of application of the Reference Paper
2. The scope of "interconnection" within Mexico's Reference Paper
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(a) The concept of interconnection (b) The meaning of interconnection within the Reference Paper (i) Interpretation of the term "interconnection" in its context
(ii) Subsequent practice (iii) Supplementary means of interpretation aa) Negotiating history bb) The international scope and bilateral nature of the accounting rate regime
cc) Circumstances of the conclusion of the treaty:
Mexican legislation at the time of negotiations
(c) Whether the Reference Paper obligations extend to accounting rate regimes
(i) Concept of "accounting rate" (ii) Domestic
interconnection v. accounting rates
aa) Differences from a commercial point of view bb) Differences from a contractual point of view cc) Differences from a technical point of view dd)
Differences from a regulatory point of view
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3. Specific Commitments of Mexico
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(a) Definition of the service and mode of supply
(i) Definition of services aa) Half-circuit v. full-circuit regimes
(b) Mexico's commitment on cross-border supply (c) Meaning of the limitations inscribed(i) Concession
requirement (ii) Routing requirement (iii) Commercial agency permit requirement |
4. Whether Telmex is a major supplier within the meaning of the Reference Paper
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(a) The relevant market (b) Whether Telmex has market power
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5. Whether Telmex' interconnection rates are "basadas en costos"
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(a) Whether Telmex interconnection rates are "based in cost"(i) The meaning of "based in cost" (ii) Whether Telmex
interconnection rates are "based in cost" aa) Costs based on maximum rates charged for network components bb) "Grey market" rates for calls between the
United States and Mexico cc) International proxies dd) Financial compensation among Mexican operators relating to international calls
(b) Whether Telmex interconnection rates are "reasonable" (i) The meaning of "reasonable" (ii) Whether Telmex interconnection rates are "reasonable"
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B. SECTION 1.1 OF THE REFERENCE PAPER: PREVENTION OF ANTI-COMPETITIVE PRACTICES IN TELECOMMUNICATIONS |
1. Panel's standard of review
2. Section 1.1 of Mexico's Reference Paper
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(a) Purpose of Section 1.1 (b) Extent of the requirement under Section 1.1 (i) "Appropriate measures"
aa) Whether the ILD Rules are "appropriate measures" under Section 1.1 bb) Whether a proportionate return system could be an anti-competitive measure
(ii) "Major supplier" (iii) "Anti-competitive practices" aa) Definition of anti-competitive practices
bb) Government intervention cc) Price fixing as an anti-competitive practice
(c) Relationship between Section 1.1 and Section 2.2(b) of the Reference Paper
(d) Relationship between Sections 1.1 and 3 of Mexico's Reference Paper
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C. SECTION 5 OF THE GATS ANNEX ON TELECOMMUNICATIONS
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1. Application of the Annex
2. Application of Sections 5(a) and 5(b) of the Annex
(a) Claims under Section 5(a) of the Annex (b) Claims under Section 5(b) of the Annex
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3. Application of Sections 5(e), 5(f) and 5(g) of the Annex
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V. ARGUMENTS OF THE THIRD PARTIES
VI. INTERIM REVIEW VII. FINDINGS
A. INTRODUCTION |
1. Telecommunications in the WTO
2. Measures at issue in this dispute
3. Mexico's legal framework for the regulation of telecommunications services
4. Rules of interpretation
5. Order of analysis of the claims
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B. WHETHER MEXICO HAS FULFILLED ITS COMMITMENTS UNDER SECTIONS 2.1 AND 2.2 OF THE REFERENCE PAPER
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1. Whether Mexico has undertaken an interconnection commitment, in Section 2 of its Reference Paper, with respect to the telecommunications services at issue
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(a) What are the services at issue? (b) Are the services at issue supplied cross-border? (c) Has Mexico undertaken commitments on the cross-border supply of the services at issue?
(i) Cross-border services in Mexico's Schedule aa) Service sectors inscribed in Mexico's Schedule bb) Introductory heading cc) Supplementary documents used to schedule commitments
i) Description of the supplementary documents � Draft Model Schedule � The Note by the Chairman � Scheduling Guidelines
ii) Interpretative value of the supplementary documents dd) Mexico's cross-border telecommunications commitments
(ii) Market access and national treatment commitments for cross-border supply (iii) Mexico's "routing restriction" aa) "International traffic"
bb) "Routed through the facilities" cc) "Enterprise that has a concession"
(d) Do Mexico's specific commitments provide "the basis" for its additional commitment on interconnection? (e) Do Mexico's additional commitments on interconnection apply to suppliers of cross-border services? (i) Ordinary meaning
(ii) Context provided by the term "interconnection" (iii) Other contextual elements (iv) Object and purpose (v) Supplementary means � the "Understanding" (vi) Supplementary means � other
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2. Whether Mexico has fulfilled its interconnection commitment, in Section 2.2(b) of its Reference Paper, with respect to the services at issue
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(a) Is Telmex a "major supplier"? (i) What is the "relevant market for basic telecommunications services"?
(ii) Does Telmex have "the ability to materially affect the terms of participation (having regard to price and supply)" in that market? (iii) If Telmex has the ability to materially affect the terms of participation in that market, does it result from "control over essential facilities", or "use of its position in the market"?
(b) Are the Telmex interconnection rates "cost-oriented"? (i) Meaning of "cost-oriented" rates (ii) Does Telmex interconnect United States suppliers at cost-oriented rates?
aa) Comparison with domestic prices in Mexico for the same network components i) Relevant network components ii) Prices for the relevant network components
� Termination in Zone 1 (large cities) � Termination in Zone 2 (medium cities) � Termination in Zone 3 (other cities) iii) Difference between component prices and Telmex rates
bb) Comparison with "grey market" prices on the Mexico-United States route cc) Comparison with termination rates on other international routes dd) "Proportionate return" procedures among Mexican operators
(iii) Are the Telmex interconnection terms and conditions "reasonable"?
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C. WHETHER MEXICO HAS MET ITS COMMITMENT UNDER SECTION 1 OF ITS REFERENCE PAPER
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1. Is Telmex a "major supplier"?
2. What are "anti-competitive practices"?
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(a) Meaning of "anti-competitive practices" (b) Whether practices required under a Member's law can be "anti-competitive practices"
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3. Do the ILD Rules require a major supplier to engage in "anti-competitive practices"?
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(a) What acts do the ILD Rules require of Telmex and other Mexican operators? (i) Uniform settlement rate (ii) Proportionate return
(b) Are the acts required of Telmex and other Mexican operators "anti-competitive practices"? (i) Uniform settlement rate (ii) Proportionate return
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4. Has Mexico maintained "appropriate measures" to prevent anti-competitive practices by a major supplier?
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D. WHETHER MEXICO HAS MET ITS OBLIGATION UNDER SECTION 5 OF THE GATS ANNEX ON TELECOMMUNICATIONS
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1. Whether the Annex imposes obligations on Mexico to ensure access to and use of public telecommunications transport networks and services for the supply of the basic
telecommunications services scheduled by Mexico
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(a) Does the Annex apply to access to and use of public telecommunications transport networks and services for the supply of basic telecommunications services? (b) Does Section 5 of the Annex apply to the basic telecommunications commitments scheduled by Mexico?
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2. Whether Mexico has fulfilled its obligations under Section 5 of the Annex
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(a) Structure of Section 5 (b) Claim under Section 5(a) (i) "Any service supplier of any other Member" (ii) With respect to "public telecommunications transport networks and services" (iii) "For the supply of a service included in its schedule" (iv) "On reasonable � terms and conditions"
aa) Rates charged for access and use bb) Underlying ILD Rules
(c) Claim under Section 5(b) of the Annex
(i) Whether Mexico has a commitment in effect to allow commercial agencies to supply the services at issue through commercial presence (mode 3) (ii) Whether Mexico's commitments on the supply of the services at issue by commercial agencies through commercial presence include the supply of international telecommunications services (from
Mexico to the United States) through mode 3 (iii) Access to and use of private leased circuits (iv) Interconnection of private leased circuits (v) Subject to paragraphs (e) and (f)
(d) Invocation of Section 5(g)
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VIII. CONCLUSIONS AND RECOMMENDATION IX. ANNEXES
A. ABBREVIATIONS USED FOR DISPUTE SETTLEMENT CASES REFERRED TO IN THE REPORT
B. MEXICO: SCHEDULE OF SPECIFIC COMMITMENTS, SUPPLEMENT 2
C. ILD RULES |
I. INTRODUCTION
1.1 On 17 August 2000, the United States requested
consultations with Mexico pursuant to Article 4 of the Understanding on Rules
and Procedures Governing the Settlement of Disputes (the "DSU") and
Article XXIII of the General Agreement on Trade in Services (the "GATS").1 This
request concerned Mexico's GATS commitments and obligations on basic and
value-added telecommunications services.
1.2 The consultations took place on 10 October 2000, but the
parties failed to reach a mutually satisfactory resolution. On 10 November 2000,
the United States requested the Dispute Settlement Body (the "DSB") to establish
a panel, in accordance with Articles 4 and 6 of the DSU, in order to examine
Mexico's measures with respect to trade in basic and value-added
telecommunications services.2 On the same date, the United States requested
additional consultations with Mexico, pursuant to Article 4 of the DSU and
Article XXIII of the GATS, regarding Mexico's measures affecting trade in
telecommunications services.3 The additional consultations took place on
16 January 2001, but the parties failed again to reach a mutually satisfactory
resolution. On 13 February 2002, the United States again requested the DSB to
establish a panel, in accordance with Articles 4 and 6 of the DSU in order to
examine Mexico's measures affecting telecommunications services.4
1.3 At its meeting on 17 April 2002, the DSB established a
Panel in accordance with Article 6 of the DSU.5 At that meeting, the parties
agreed that the Panel should have standard terms of reference as follows:
"To examine, in the light of the relevant provisions of
the covered agreements cited by the United States in document WT/DS204/3,
the matter referred to the DSB by the United States in that document, and to
make such findings as will assist the DSB in making the recommendations or
in giving the rulings provided for in those agreements."6
1.4 On 16 August 2002, the United States requested the
Director-General to determine the composition of the Panel pursuant to
Article 8.7 of the DSU, which provides:
"If there is no agreement on the panelists within 20 days
after the date of the establishment of a panel, at the request of either
party, the Director-General, in consultation with the Chairman of the DSB
and the Chairman of the relevant Council or Committee, shall determine the
composition of the panel by appointing the panelists whom the
Director-General considers most appropriate in accordance with any relevant
special or additional rules or procedures of the covered agreement or
covered agreements which are at issue in the dispute, after consulting with
the parties to the dispute. The Chairman of the DSB shall inform the Members
of the composition of the panel thus formed no later than 10 days after the
date the Chairman receives such a request."
1.5 On 26 August 2002, the Director-General composed the
Panel as follows:7
Chairman: |
Mr Ernst-Ulrich Petersmann
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Members:
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Mr Raymond Tam
Mr Bj�rn Wellenius
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1.6 Australia, Brazil, Canada, Cuba, the European
Communities, Guatemala, Honduras, India, Japan and Nicaragua reserved their
rights to participate in the Panel proceedings as third parties.
1.7 The Panel met with the parties on 17 and 18 December 2002
and on 12 and 13 March 2003. The Panel met with the third parties on 18 December
2002.
1.8 The Panel submitted its Interim Report to the parties on
21 November 2003. The Panel submitted its final report to the parties on 12
March 2004.
II. FACTUAL ASPECTS
2.1 This dispute concerns provisions in Mexico's domestic
laws and regulations on telecommunications which govern the supply of
telecommunication services.
A. MEXICO'S TELECOMMUNICATION MARKET 2.2 Prior to 1997, long-distance and international
telecommunications services in Mexico were supplied on a monopoly basis by
Tel�fonos de M�xico, S.A. de C.V. ("Telmex"). Since that date, Mexico has
authorized multiple Mexican carriers to provide international services over
their networks. Under Mexican laws, the largest carrier of outgoing calls to a
particular international market, has the exclusive right to negotiate the terms
and conditions for the termination of international calls in Mexico that apply
to any carrier between Mexico and that international market.8 Telmex is presently
the largest carrier of outgoing calls for all markets. Currently, there are
27 carriers ("concesionarios" or "concessionaires") allowed to provide long
distance services, including two United States-affiliated carriers � Avantel
(WorldCom) and Alestra (AT/T).9 Of these 27 long-distance concessionaries 11 are
authorized to operate international gateways, allowing them to carry incoming
and outgoing international calls.10 Telmex remains the largest supplier of basic
telecommunications services in Mexico, including international outbound traffic.
B. MEXICO'S TELECOMMUNICATIONS LAWS AND REGULATIONS 1. Federal Telecommunications Law
2.3 The Federal Telecommunications Law (the "FTL") of Mexico
provides the legal framework for the regulation of telecommunications activities
in Mexico.11 Its purpose is "to govern the use, utilization and exploitation of
the radio-electrical spectrum, of the telecommunications networks, and of
satellite communication".12 More broadly, it is intended to "promote efficient
development of telecommunications; exercise the authority of the State on these
matters to ensure national sovereignty; to promote a healthy competition among
the different telecommunications service providers in order to offer better
services, diversity and quality for the benefit of the users and to promote an
adequate social coverage".13
2.4 The FTL establishes a Secretariat of Communications and
Transportation ("Secretar�a de Comunicaciones y Transportes" or
"Secretariat"), which is authorized, inter alia, to grant concessions
required for "installing, operating or exploiting public telecommunications
networks".14 A concession may only be granted to a Mexican individual or company,
and any foreign investment therein may not exceed 49 per cent15, except for
cellular telephone services.16
2.5 Special rules apply to "comercializadoras"
("commercial agencies").17 A commercial agency is any entity which, "without being
the owner or possessor of any transmission media, provides telecommunication
services to third parties using the capacity of a public telecommunications
network concessionaire."18 A concessionaire of a public telecommunications network
may not, without permission of the Secretariat, have "any direct or indirect
interest in the capital" of a commercial agency.19 The establishment and operation
of commercial agencies is "subject, without exception, to the respective
regulatory provisions".20 The Secretariat has issued regulations for commercial
agencies to provide pay public telephone public telephony services (pay phones).21
2.6 The "interconnection" of public telecommunications
networks with foreign networks is carried out through agreements entered into by
the interested parties.22 Should these require agreement with a foreign
government, the concessionaire must request the Secretariat to enter into the
appropriate agreement.23
2.7 Several fundamental technical terms are defined in the
FTL. These are:
2.8
Telecommunications: "every broadcast, transmission or
reception of signs, signals, written data, images, voice, sound or data of
whatever nature carried out through wires, radio-electricity, optic or physical
means or any other electromagnetic systems";
2.9 Telecommunications network: "systems integrated by
means of transmission such as channels or circuits using frequency bands of the
radio-electrical spectrum, satellite links, wiring, electric transmission
networks or any other transmission means, as well as when applicable, exchanges,
switching devices or any other equipment required";
2.10
Private telecommunications network: "the
telecommunications network used to meet specific requirements for
telecommunications services of certain people not implying commercial
exploitation of services or capacity of said network";
2.11
Public telecommunications network: "the
telecommunications network through which telecommunications services are
commercially exploited. The network does not include users' terminal
telecommunications equipment nor telecommunications networks located beyond the
terminal connection point".24
2. International Long-distance Rules
2.12 The International Long Distance Rules ("ILD Rules") are
issued by the Federal Telecommunications Commission ("Comisi�n Federal de
Telecomunicaciones" or "Commission"), an agency of the Secretariat of
Communications and Transportation.25 They serve "to regulate the provision of
international long-distance service and establish the terms to be included in
agreements for the interconnection of public telecommunications networks with
foreign networks."26 International long-distance service is defined as the service
whereby all international switched traffic is carried through long-distance
exchanges authorized as international gateways.27
2.13 Direct interconnection with foreign public
telecommunications networks in order to carry international traffic may only be
done by "international gateway operators".28 These are long-distance service
licensees authorized by the Commission "to operate a switching exchange as an
international gateway"29, that is, the exchange is "interconnected to
international incoming and outgoing circuits authorised by the Commission to
carry international traffic".30 Traffic is "switched" when it is "carried by means
of a temporary connection between two or more circuits between two or more
users, allowing the users the full and exclusive use of the connection until it
is released."31
2.14 Each international gateway operator must apply the same
"uniform settlement rate" to every long-distance call to or from a given
country, regardless of which operator originates or terminates the call.32 The
uniform settlement rate for each country is established, through negotiations
with the operators of that country, by the long-distance service licensee having
the greatest percentage of outgoing long-distance market share for that country
in the previous six months.33
2.15 Each international gateway operator must also apply the
principle of "proportionate return". Under this principle, incoming calls
(or associated revenues) from a foreign country must be distributed among
international gateway operators in proportion to each international gateway
operator's market share in outgoing calls to that country.34
2.16 Private cross-border networks must lease capacity from a
long-distance licensee (concessionaire).35 Any cross-border traffic carried
through dedicated infrastructure that forms part of a private network must be
originated and terminated within the same private network.36
C. THE COMPETITION LAWS OF MEXICO 1. Federal Law of Economic Competition 37
2.17 The Federal Law of Economic Competition ("Ley Federal
de Competencia Econ�mica" or "FLEC") is intended "to protect the
process of competition and free market participation, through the prevention and
elimination of monopolies, monopolistic practices and other restrictions that
deter the efficient operation of the market for goods and services."38
2.18 Under the law, the "relevant market" is determined by
considering, inter alia, "the possibilities of substituting the goods or
services in question, with others of domestic or foreign origin, bearing
technological possibilities, and the extent to which substitutes are available
to consumers and the time required for such substitution".39 Whether an economic
agent has "substantial power" in the relevant market is determined, inter
alia, on "the share of such agent in the relevant market and the possibility
to fix prices unilaterally or to restrict supply in the relevant market, without
competitive agents being able, presently or potentially, to offset such power".40
2. Code of Regulations (to Federal Law on Economic
Competition)41
2.19 The Code of Regulations to the FLEC sets out in detail
the rules, inter alia, for the analysis of the relevant market and
substantial power.
2.20 For the relevant market analysis, the Code states that
the Commission shall "identify the goods or services which make up the relevant
market, whether produced, marketed or supplied by the economic agents, and those
that are or may be substituted for them, whether domestic or foreign, as well as
the time required for such substitution to take place." The Commission is also
to take into account "economic and normative restrictions of a local, federal or
international nature which prevent access to the said substitute goods or
services, or which prevent the access of users or consumers to alternative
sources of supply, or the access of the suppliers to alternative customers".42
2.21 With respect to substantial power, the Code requires the
authorities to take into account the "degree of positioning of the goods or
services in the relevant market"; the "lack of access to imports or the
existence of high importation costs"; and the "existence of high cost
differentials which could face consumers on turning to other suppliers."43
D. MEXICO'S COMMITMENTS UNDER THE GENERAL AGREEMENT ON TRADE IN SERVICES (GATS) 2.22 Mexico has undertaken specific commitments for
telecommunications services under Articles XVI (Market Access), XVII (National
Treatment), and Article XVIII (Additional Commitments). Its additional
commitments consist of undertakings known as the "reference paper". These
commitments are reproduced in Annex B.
III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS 3.1 The United States requests the Panel to find that:44
(a) Mexico's failure to ensure that Telmex provides
interconnection to United States basic telecom suppliers on a
cross‑border basis on cost‑oriented, reasonable rates, terms and
conditions is inconsistent with its obligations under Sections 2.1 and
2.2 of the Reference Paper, as inscribed in Mexico's GATS Schedule of
Commitments, GATS/SC/56/Suppl.2; in particular, that:
(i) Mexico's Reference Paper obligations apply to
the terms and conditions of interconnection between Telmex and
United States suppliers of basic telecommunications services on a
cross-border basis;
(ii) Telmex is a "major supplier" of basic
telecommunications services in Mexico, as that term is used in
Mexico's Reference Paper obligations;
(iii) Mexico has failed to ensure that Telmex
provides interconnection to United States suppliers at rates that
are "basadas en costos" and terms and conditions that are razonables because:
- Mexico has allowed Telmex to charge an
interconnection rate that substantially exceeds cost,
- Mexico allows Telmex to restrict the supply of
scheduled basic telecommunications services; and
- Mexico prohibits the use of any alternative to
the Telmex negotiated interconnection rate through Mexico's ILD
rules, specifically Rule 13 along with Rules 3, 6, 10, 22 and 23.
(iv) Mexico's ILD Rules (specifically Rule 13
along with Rules 3, 6, 10, 22 and 23) fail to ensure that Telmex
provides cross‑border interconnection in accordance with Section 2.2
of the Reference Paper.
(b) Mexico's failure to maintain measures to prevent
Telmex from engaging in anti-competitive practices is inconsistent with
its obligations under Section 1.1 of the Reference Paper; as inscribed
in Mexico's GATS Schedule of Commitments, GATS/SC/56/Suppl.2; and in
particular, that Mexico's ILD Rules (specifically Rule 13 along with
Rules 3, 6, 10, 22 and 23) empower Telmex to operate a cartel dominated
by itself to fix rates for international interconnection and restrict
the supply of scheduled basic telecommunications services;
(c) Mexico's failure to ensure United States basic
telecom suppliers reasonable and non‑discriminatory access to, and use
of, public telecom networks and services is inconsistent with its
obligations under Sections 5(a) and (b) of the GATS Annex on
Telecommunications; and in particular, Mexico failed to ensure that
United States service suppliers may access and use public
telecommunications networks and services through:
(i) interconnection at reasonable terms and
conditions for the supply of scheduled services by facilities‑based
operators and commercial agencies; and
(ii) private leased circuits for the supply of
scheduled services by facilities‑based operators and commercial
agencies.
3.2 The United States also requests that the Panel recommend
that Mexico bring its measures into conformity with its obligations under the
GATS.
3.3 Mexico requests that the Panel reject all of the claims
of the United States, and find that:
(a) The measures being challenged by the United
States are not inconsistent with Sections 2.1 and 2.2 of the Reference
Paper, inscribed in Mexico's GATS Schedule of Specific Commitments;
(b) Mexico has not acted inconsistently with its
obligations under Section 1.1 of the Reference Paper, inscribed in
Mexico's GATS Schedule of Specific Commitments; and
(c) The measures being challenged by the United
States are not inconsistent with Section 5 of the GATS Annex on
Telecommunications.45
IV. MAIN ARGUMENTS OF THE PARTIES
A. SECTION 2 OF THE REFERENCE PAPER 4.1 The United States claims that Mexico's ILD Rules
fail to ensure that Telmex provides interconnection to United States basic
telecom suppliers on a cross-border basis with cost-oriented, reasonable rates,
terms and conditions and that this is inconsistent with its obligations under
Sections 2.1 and 2.2 of the Reference Paper, as inscribed in Mexico's GATS
Schedule of Commitments.46 The United States argues that the interconnection
obligations in Section 2 of the Reference Paper apply: (i) as legally binding
GATS commitments; (ii) because of the specific commitments Mexico has undertaken
in its GATS Schedule; and (iii) to the circumstances at issue in this case,
namely the interconnection between United States service suppliers and Telmex
for the purpose of delivering their basic telecom services from the United
States into Mexico.47
4.2
Mexico argues that the claims of the United States
must fail because Mexico's Reference Paper obligations do not apply to the
measures at issue in this dispute, namely the accounting rates set by bilateral
agreements between the United States and Mexican basic telecommunications
carriers.48 In the alternative, Mexico argues, if Section 2 of the Reference Paper
is found to apply to the accounting rate regime as implemented between the
United States and Mexico, the United States has nevertheless failed to establish
a prima facie case that the accounting rates negotiated between United States
and Mexican carriers are not "basadas en costos" ("cost-oriented") and "razonables"
("reasonable") pursuant to Section 2.2(b) of Mexico's Reference Paper.49 Moreover,
Mexico argues, the United States has failed to establish that the ILD Rules are
inconsistent with Section 2.2 of the Reference Paper.50
1. Scope of application of the Reference Paper
4.3 The United States argues that Mexico undertook the
interconnection obligations of Section 2 of the Reference Paper as additional
binding commitments under Article XVIII of the GATS. According to the United
States, Mexico inscribed the entire text of the Reference Paper into its
Schedule as an additional commitment.51 Therefore, the United States argues,
pursuant to Article XVIII of the GATS, Mexico committed to the United States
(and all other WTO Members) that it would abide by the strict terms and
conditions contained in Section 2 of the Reference Paper. In particular, the
United States argues, Mexico committed that it would ensure that its major
supplier of basic telecom services Telmex provides interconnection at rates that
are based in cost and are reasonable.52
4.4
Mexico submits that its Reference Paper does not
apply to the accounting rates set by bilateral agreements between United States
and Mexican basic telecommunications carriers53 since it governs matters relating
to domestic regulation.54 Mexico argues that the United States fails to recognize
that the Reference Paper is a statement of "definitions and principles" that
have the objective of guiding domestic regulators in dealing with major
telecommunications suppliers.55 According to Mexico, the Reference Paper was
intended to accommodate different political and legal regimes in WTO Members,
and is sufficiently flexible to accommodate differences in market structures and
regulatory philosophies.56 In Mexico's view, this means that the principles and
definitions in the Reference Paper must be interpreted in the light of the
domestic regulatory system of the WTO Member in question.57 Mexico considers that
in this case, because its domestic regulatory regime distinguishes between: (i)
the accounting rate regime applicable to traffic exchange between foreign
carriers and Mexican concessionaires; and (ii) the regime that is applicable to
carriers within Mexico's borders, the United States' challenge under Section 2
of the Reference Paper must fail.58
4.5
Mexico notes that Section 2 of the Reference Paper
contains a number of requirements as to how a major supplier must provide
interconnection, with the goal of promoting competition within domestic markets;
that is, preventing a major supplier from using its position to prevent new
entrant competitors from participating in the domestic market. In contrast,
Mexico argues, because carriers from different countries that enter into
accounting rate arrangements are not competing with each other, the requirements
of the Reference Paper have no meaning for those arrangements.59
4.6 The United States contends that there is nothing
in the Reference Paper to suggest that its only goal was to promote domestic
competition. In its view, there is no textual basis for concluding that the
Reference Paper is limited to one mode of supply of the service, i.e. that which
is solely within its territory. Instead, the United States notes, Article I of
the GATS states that the Agreement covers all measures affecting trade in
services, including the cross-border supply of services. While the United States
asserts that it is undoubtedly true that the Reference Paper "governs matters
relating to domestic regulation", it further submits that this does not mean
that foreign service suppliers are "outside the scope of application of" the
Reference Paper, or that the Reference Paper governs only matters relating to
domestic regulation.60
4.7
Mexico argues that the mere fact that Article I of
the GATS ascribes a broad application of the general obligations of the GATS to
all measures by Members affecting trade in services does not mean that Mexico's
Reference Paper has a similarly broad application. Mexico submits that it is an
"additional commitment" that it inscribed in its Schedule pursuant to
Article XVIII of the GATS and, as such, its terms must be interpreted in
accordance with the rules of treaty interpretation in Articles 31 and 32 of the
Vienna Convention on the Law of the Treaties of 1969 ("Vienna
Convention").61 According to Mexico, the Model Reference Paper, upon which
Mexico's Reference Paper is based, develops further the principles and
obligations found in Article VI of the GATS on domestic regulation and
Article VIII of the GATS on monopolies and exclusive service suppliers, both of
which focus on activities within the territory of the Member in question. Thus,
Mexico concludes, these Articles deal with matters relating to domestic
regulation, and not "the supply of a service from the territory of one Member
into the territory of any other Member", which is the focus of the United
States' claims in this dispute.62
4.8 The United States contends that Section 2 applies
to this case because United States suppliers of basic switched telecom services
seek to link with Telmex to connect calls by their users originating in the
United States to Telmex's users in Mexico. According to the United States,
Telmex and United States basic telecom suppliers are proveedores de redes
p�blicas de telecomunicaciones de transporte o de servicios ("suppliers
providing public telecommunications transport networks or services") ("PTTNS")
because they provide basic telecommunications services, which, pursuant to the
Decision on Negotiations on Basic Telecommunications by the WTO Trade
Negotiations Committee, is synonymous with "telecommunications transport
networks and services"; also, it adds, such services are "public" because the
Central Product Classification (CPC) codes that Mexico used to describe its
commitments refer to "public" services. The United States further argues that
supply on a cross-border basis of basic telecom services between the United
States and Mexico requires "linking" (conexi�n) between United States
suppliers (e.g., AT&T) and Mexican suppliers (e.g., Telmex) in order to allow
users of the United States supplier to communicate with users of the Mexican
supplier and to access services provided by the Mexican supplier.63 According to
the United States, this is because under Mexican law, United States basic
telecom suppliers may not own telecommunications facilities in Mexico and
thereby extend their public telecommunications networks from the United States
into Mexico. Therefore, the United States argues, when a United States basic
telecom supplier provides telecommunications services from the territory of the
United States into the territory of Mexico, it must link its network or a leased
line to the network of a Mexican service supplier (such as Telmex) and pay that
Mexican service supplier to "terminate" (i.e., deliver) the phone call to the
end-user in Mexico.64 This conexi�n, in turn, allows the consumers of the
United States basic telecom supplier ("users of one supplier") to communicate
with Telmex's consumers in Mexico ("users of another supplier"), as well as the
United States service supplier ("user") to access services provided by Telmex
("another supplier"), namely the services involved in delivering a call that
originated in the United States to its final destination in Mexico.65
4.9
Mexico argues that the apparently broad technical
definition of "interconnection" in Section 2.1 of Mexico's Reference Paper66 is
not determinative of the scope of application of Section 2 as a whole. In
Mexico's view, this definition must be interpreted in its context, which
substantially narrows the scope of application of Section 2. Mexico explains
that interconnection occurs between two entities. With respect to one entity,
the wording of Section 2.2 restricts the scope of Section 2 to interconnection
with a "major supplier". With respect to both entities, the definition in
Section 2.1 refers to "suppliers providing public telecommunications transport
networks or services". Mexico contends that, although suppliers in Mexico
provide PTTNS in Mexico, i.e. Alestra and Avantel, thus enabling both suppliers
in an interconnection arrangement to meet this definition, United States-based
suppliers such as AT&T and WorldCom do not provide such services in Mexico.
Thus, Mexico argues, meaning must be given to the fact that Section 2.1 does not
refer to "service suppliers of any other Member", a phrase which is used
elsewhere in the GATS and which would have made it clear that Section 2 applies
to cross-border (i.e., international) interconnection. Mexico also submits that
the phrase "respecto de los cuales se contraigan compromisos espec�ficos"
in Section 2.1 of Mexico's Reference Paper further narrows the scope of
application of Section 2 to the bounds of the market access inscribed in
Mexico's Schedule. Thus, it argues, Section 2 applies only to services supplied
in Mexico through mode 3 (commercial presence) by concessionaires with foreign
direct ownership up to 49 per cent. In other words, Mexico concludes, it applies
only to interconnection within Mexico.67
4.10 The United States submits that, if Mexico had
meant to limit the applicability of Section 2 to interconnection of "some"
suppliers with a major supplier, it would have adopted language to that effect.
In the absence of any such limitation, the United States contends, Section 2
applies to interconnection of "all" suppliers with a major supplier. For
context, the United States refers to the definition in Article XXVIII(g) of the
GATS, which states that "'service supplier' means any person that supplies a
service." According to the United States, there is no limitation on whether the
service supplier is domestic or foreign.68
2. The scope of "interconnection" within Mexico's
Reference Paper
(a) The concept of interconnection
4.11 The United States submits that interconnection
consists of the linking of the networks of two different suppliers of
telecommunications services for the purpose of exchanging traffic. According to
the United States, interconnection is the necessary intermediary step that
enables a phone call to travel from the network used by the person placing the
call (the "calling party") to the network used by the person receiving the call
(the "receiving party").69 The United States explains that, because no telecom
supplier has a worldwide ubiquitous network, all telecommunications service
suppliers rely on another service supplier to deliver (or "terminate") the phone
call to the receiving party when the receiving party is not on the network of
the calling party's supplier. To do so, it argues, the calling party's service
supplier must link to the network of the receiving party's service supplier and
hand-off the call for delivery to the receiving party. In other words, the
United States submits, the calling party's service supplier interconnects its
network with that of the receiving party's service supplier to enable users of
both networks to communicate with each other.70
4.12 The United States submits that, whether for the
purpose of origination or termination, interconnection is generally understood
as the linking between the networks of different basic telecom suppliers for the
purpose of allowing users of one supplier to communicate with users of another.
In support of its view, the United States refers to Section 2.1 of the Reference
Paper, which defines interconnection as "linking with suppliers providing public
telecommunications transport networks or services in order to allow the users of
one supplier to communicate with users of another supplier and to access
services provided by another supplier". The United States also notes that in its
domestic regulation, Mexico defines interconnection similarly as "[p]hysical and
logical connection between two public telecommunications networks, that allows
the exchange of switched public traffic between the switching central offices of
both networks. The interconnection allows the users of one of the networks to
interconnect and exchange public switched traffic with the users of the other
network and vice versa, or to use the services provided by the other network."71
4.13 The United States also refers to the definition
of "interconnection" in the European Communities' Interconnection Directive as
"the physical and logical linking of telecommunications networks used by the
same or a different organization in order to allow the users of one organization
to communicate with users of the same or another organization, or to access
services provided by another organization."72 The United States submits that the
European Commission has explained that "[t]he most basic interconnection service
provided is that of call termination (i.e. delivering a call which
originates on one network to its destination on another network)."73
4.14 In Mexico's view, the term "interconnection" is a
broad concept that can have different meanings in different contexts. Generally,
it explains, interconnection rates are charges for physically and technically
linking two domestic networks for purposes of exchanging traffic. In some
contexts, it indicates, interconnection is treated as distinct from commercial
arrangements � such as settlement, peering, and reciprocal compensation
arrangements � that involve charges for use of a network for transport and
termination of traffic that originates on another network. Mexico contends that,
for example, United States law makes a clear distinction between interconnection
and transport and termination services: interconnection is the physical linking
of two networks, while transport and termination is when one carrier routes
traffic over the network of another carrier. According to Mexico, the regulation
of interconnection rates is a significant issue in domestic markets for
telephone service where carriers need access to other carriers' networks to
provide service in competition with each other. As a result, countries seeking
to encourage domestic competition must have strict requirements for incumbent
providers with market power. Mexico claims that these rules generally require
incumbent carriers to provide all of their competitors interconnection with
rates, terms and conditions that are reasonable and non-discriminatory. Mexico
argues that interconnection must be permitted at any technically feasible point
within the carrier's network and at least equal in quality to that provided by
the incumbent provider to itself or to its subsidiaries, affiliates, or any
other competitor. Mexico adds that competitors must also have a process to
resolve disputes with incumbent carriers that arise during and after the
negotiation process.74
4.15 The United States considers that Mexico's
argument that United States law makes a "clear distinction" between
interconnection and call termination is irrelevant. It submits that in the
United States, as in the European Communities, a key purpose of the regulation
of interconnection is to ensure that carriers may terminate calls on other
carriers' networks at cost-oriented rates. The United States submits that the
FCC (Federal Communications Commission) has made clear that "[t]he
interconnection obligation of Section 251(c)(2) ... allows competing carriers to
choose the most efficient points at which to exchange traffic with incumbent
LECs, thereby lowering the competing carriers costs of, among other things,
transport and termination of traffic.75 The United States explains that United
States law defines "transport and termination" separately from interconnection
because United States local exchange carriers have additional obligations
with respect to the transport and termination of calls, including the
requirement to establish "reciprocal compensation arrangements" for the
termination of calls originated on other local networks.76 77 (b) The meaning of interconnection within the Reference
Paper
4.16 According to Mexico, the term "interconnection"
in Section 2 of the Reference Paper is capable of many meanings including:
domestic local interconnection, domestic long-distance interconnection and
international interconnection.78 However, Mexico contends, when properly
interpreted, "interconnection" in Section 2 of the Reference Paper does not
include arrangements under the accounting rate regime.79 In Mexico's view, the
term "interconnection" does not encompass the accounting rate regime.80 Mexico
understands that, in the context of the Reference Paper, "interconnection" must
be interpreted to refer to interconnection within a WTO Member's borders, for
example, interconnection to a local exchange carrier by a domestic long-distance
carrier, or by a competitive local carrier and the incumbent local carrier.81
Mexico thus submits that the United States incorrectly defines the rates for the
transportation and termination of international calls as "interconnection
rates".82
4.17
Mexico further contends that this interpretation
does not render the Reference Paper meaningless in the context of international
trade in services as implied by the EC in its third party submission. Mexico
explains that, for example, where permitted under a WTO Member's Schedule, if a
foreign company establishes a commercial presence in that Member's territory, it
would have to interconnect with other carriers within the domestic network.
Mexico submits that this interconnection would be governed by the provisions of
the Reference Paper. Mexico further submits that its ILD Rules fully implement
those provisions of the Reference Paper vis-�-vis foreign carriers with a
commercial presence in Mexico, among others, AT&T, WorldCom and Verizon.83
4.18 The United States contends that the plain
language of the Reference Paper simply does not support Mexico's argument.
According to the United States, the definition of "interconnection" in Section
2.1 is not limited to domestic interconnection, or in other words,
interconnection provided to commercially present suppliers. Rather, it argues,
it is written broadly to include all means of "linking" for the purpose of
enabling users to communicate � whether domestic (mode 3) or international (mode
1).84 Citing to provisions of Mexico's ILD Rules and Federal Telecommunications
Law, the United States also argues that even Mexico, in almost all references in
its internal laws and regulations, refers to the linking of foreign service
suppliers to its international port operators as "interconnection".85
4.19
Mexico submits that the United States ignores ILD
Rules 2, 10, 13, 16 and 19 which define "settlement rate" and explicitly
distinguish between "settlement rates", which are applicable to international
traffic, and "interconnection rates, which are paid to the local operator that
terminates the call.86
4.20 The United States submits that the distinction
Mexico draws between "interconnection rates" and "charges for use of a network
for transport and termination of traffic that originates on another network" is
irrelevant.87 In its view, even though interconnection arrangements cover a wide
variety of different commercial, contractual and technical situations, all of
these arrangements are "interconnection" under Section 2.1 of the Reference
Paper.88 According to the United States, the requirements of Mexico's Reference
Paper apply to all interconnection services, particularly call termination. The
United States explains that, because call termination means allowing calls
originated on the network of one supplier to be terminated on the network of
another supplier, it falls squarely within Mexico's definition of
"interconnection" in Section 2.1, which is "linking with suppliers providing
public telecommunications transport networks or services in order to allow
the users of one supplier to communicate with users of another supplier and to
access services provided by another supplier."89
(i) Interpretation of the term "interconnection"
in its context
4.21
Mexico argues that the United States' interpretation
arises from an improper application of the general rule of interpretation in
Article 31 of the Vienna Convention90 since, in its view, the United States
simply presents the "ordinary meaning" of the term "interconnection".91 Mexico
submits that, under Article 31 of the Vienna Convention it is
insufficient to rely solely on the ordinary meaning of a term and that the
United States has therefore failed to take into account the context of the term
and object and purpose of Mexico's Reference Paper.92
4.22 As regards the context, Mexico submits that, the
history of the negotiations on basic telecommunications confirms that
"interconnection", "accounting rates" and "termination services" were discussed
but that agreement was reached only on interconnection. Accordingly, Mexico
contends, accounting rates were clearly outside the scope of what was agreed.
Mexico contends that a specific draft text on accounting rates was removed from
the negotiating drafts for the Model Reference Paper.93 For example, Mexico states
that the following bracketed text was included in a 6 March 1996 provisional
negotiating text:
"[Accounting rate is the rate per traffic unit agreed
upon between administrations for a given relation, which is used for the
establishment of international accounts, as per International
Telecommunication Union Recommendation D. 150 New System for Accounting in
International Telephony.]�
[7. Public availability of accounting rates
International accounting rates maintained by any supplier
of public telecommunications transport services with foreign correspondents
will be open to public review. Upon request of another Member, and [sic]
essential facilities supplier will be required to justify why an
international accounting rate differs significantly from domestic
interconnection rates.]"
But the final version of the Reference Paper did not include
any of this text. Furthermore, Mexico submits that accounting rates were
consciously excluded from this text is confirmed by the fact that they are "on
the table" in the Doha Round of negotiations.94
4.23 The United States responds that Mexico's citation
of an earlier draft of the Reference Paper does not support its argument that
accounting rates (or international interconnection rates) were intended to be
excluded from the definition of "interconnection." According to the United
States, Mexico's argument ignores the rules of treaty interpretation included in
the Vienna Convention. The United States submits that whatever provisions
were considered during the drafting process, the Panel is charged with
interpreting the final version of the Reference Paper. Mexico's final version
includes, in Section 2.1, a definition of "interconnection" that broadly covers
"linking ... to allow the users of one supplier to communicate with users of
another supplier and to access services provided by another supplier."95
4.24 The United States also argues that the
requirement in that earlier draft of the Reference Paper that "a dominant
supplier explain the reasons why an international accounting rate differs
significantly from domestic interconnection rates" at the request of a Member
indicates that the negotiators considered accounting rates and domestic
interconnection rates to be charges for two types of interconnection. According
to the United States, the former is a charge for international interconnection
and the latter is a charge for domestic interconnection and that the deletion of
this provision merely demonstrates that Members did not undertake those specific
obligations. The United States further argues that it does not affect the
remaining Reference Paper obligations, including the obligation of Mexico to
ensure that its major supplier Telmex charges interconnection rates, including
rates for international interconnection, that are basadas en costos.96
4.25
Mexico submits that the following factors contradict
the position of the United States. First, the fact that the negotiating drafts
explicitly distinguished between "accounting rates" and
"interconnection/interconnection rates" confirms that the negotiators treated
the accounting rate regime separately from interconnection. Second, the fact
that there were transparency requirements in draft Sections 2.2(b) and 2.3
negated the need for a transparency requirement in square-bracketed Section 7
if, as the United States' argues, "interconnection" subsumed the accounting rate
regime. [This fact, t]hat an explicit transparency requirement was included in
Section 7 confirms that the negotiators treated the accounting rate regime
separately and distinctly from "interconnection". Third, the United States is
one of the few WTO Members that make their accounting rates transparent. If the
interconnection transparency provisions in the Reference Papers of WTO Members
applied to accounting rates, all WTO Members with such commitments would make
their rates transparent. Fourth, the fact that no other provisions in the
negotiating drafts, the Model Reference Paper and Mexico's Reference Paper could
be interpreted to include an obligation analogous to that contained in draft
Section 7, so it could not have been removed from the final version of the
Reference Paper because its substance was subsumed by other Sections of it.
Rather, its subject matter and substance was unique and the negotiators were
unable to agree upon its inclusion.97
4.26
Mexico further argues that the Understanding on
Accounting Rates ("the Understanding"), which was outlined in the February 15,
1997 Report of the Chairman of the Group on Basic Telecommunications98, confirms
that WTO Members did not intend that accounting rates would be subject to the
obligations of the GATS, including the Reference Paper.99 According to Mexico, the
Understanding resulted from a discussion of whether Members should take
Article II of the GATS (most-favoured nation) exemptions in respect of the
application of differential accounting rates, after several countries did take
such exemptions. Article II of the GATS, Mexico explains, applies to "any
measure covered by [the GATS]". The main debate was whether accounting rates
negotiated between private entities should be considered "measures" within the
meaning of Article XXVII of the GATS.100 Mexico argues that, given this
uncertainty, as well as the fact that the accounting rate regime was the subject
of ongoing and active study in the ITU, the Members agreed that accounting rates
would be treated as a subject for further negotiation, as part of the "built-in"
negotiations under the GATS. In the meantime, it explains, the Understanding
imposes a moratorium on dispute settlement action relating to accounting rates
in the WTO.101 In addition, Mexico argues, although the Understanding originally
arose in the context of Article II exemptions, WTO Members did not contemplate
that any other obligation of the Reference Paper or of the Annex on
Telecommunications would apply to accounting rates. According to Mexico, it only
agreed to inscribe the Reference Paper as an additional commitment in its
Schedule because of the Understanding that accounting rates were not covered by
it.102
4.27 As regards the Understanding, the United States
submits that it is concerned with Article II of the GATS, concerning
most-favoured-nation treatment, rather than the Reference Paper. The United
States points out that it did not address the issue of cost-orientation or
reasonable terms.103 The United States further argues that Mexico's claim based on
the Chairman's Note (the Understanding)104 is unsound for at least two reasons.105
First, the Chairman's Note is at best a non-binding statement that did not find
its way into the GATS, the Reference Paper or Mexico's Schedule itself.106 In
support of this, the United States cites to a report by the Group on Basic
Telecommunications107, which states that "[t]he Chairman stressed that this was
merely an understanding, which could not and was not intended to have binding
legal force. It therefore did not take away from Members the rights they have
under the Dispute Settlement Understanding . . ."108 Second, the United States
argues that the report itself made clear that the Chairman's Note "was merely
intended to give members who had not taken MFN exemptions on accounting rates
some degree of reassurance." Even in that limited context, the Note has no
application outside of GATS Article II - the MFN article.109 The United States
argues that this is clear from the Note's text: the reference in the Chairman's
Note to "such" accounting rates is a reference back to the introductory
paragraph of the Note, which speaks to "differential" accounting rates and the
MFN exemptions actually taken by the five countries mentioned in the Note.
However, it argues, because the United States has not brought a claim under
Article II of the GATS, the Note is irrelevant to this dispute.110 The United
States further indicates that the fact that accounting rates are subject to
discussions in the ITU has no relevance to whether they are covered by Mexico's
WTO commitments; nor is it relevant that WTO Members are considering further
commitments on accounting rates in the current services negotiations.111
(ii) Subsequent practice
4.28
Mexico submits that the rule of interpretation in
paragraph 3(b) of Article 31 of the Vienna Convention, which provides
that "[t]here should
be taken into account together with the context� any subsequent practice
in the application of the treaty which establishes the agreement of the parties
regarding its interpretation", is also relevant to this dispute. According to Mexico, all
fifty-five of the WTO Members (including the United States) that inscribed the
interconnection commitments in Section 2.2(b) of the Model Reference Paper
maintain the traditional joint service accounting rate regime. Thus, Mexico
argues, WTO Members, including the United States, did not intend Section 2 of
their Reference Papers to apply to international interconnection under the
traditional accounting rate regime.112
4.29
Mexico further submits that, its interpretation is
supported by the practice of the United States and other WTO members. According
to Mexico, fifty-five WTO Members included the interconnection commitments of
Section 2.2(b) of the Model Reference Paper in their individually inscribed
Reference Papers and all of them, including the United States, maintain the
traditional joint service accounting rate regime.113
4.30
Mexico submits that the Benchmarks Order is relevant
to this dispute in several respects. United States law, including the Benchmarks
Order, is consistent with Mexico's position that WTO Members did not believe
that the Fourth Protocol or the Annex on Telecommunications applied to
accounting rate arrangements. In this regard, the FCC established and applied
the benchmarks for the countries that inscribed the Reference Paper as well as
those that did not, and did not purport to set benchmarks for the former at the
same level as the domestic interconnection rates in those countries. Also,
although there are United States carriers that qualify as "major suppliers"
under the definition advocated by the United States, the Benchmarks Order does
not require any United States carriers to base settlement rates on their own
costs � to the contrary, the United States Benchmarks Order and International
Settlements Policy effectively prohibit United States carriers from adopting
settlement rates based on their own costs. In the event that the Panel were to
conclude that the Section 2.2 of the Reference Paper applies to accounting rate
arrangements and that Telmex is a major supplier within the meaning of the
Reference Paper in the context of the negotiation of rates for bilateral
United States-Mexican traffic exchanges, it would need to establish a
methodology to determine whether the rates were "cost-based, reasonable and
economically feasible." Initially, the United States seemed to suggest that the
requirement for "cost-based" rates required an evaluation of the specific costs
of Telmex. However, Mexico introduced evidence that it is accepted practice �
both in the international and domestic contexts � to use "benchmarks" to
determine whether rates are acceptable. The United States had also now agreed
with Mexico that Members "can reasonably rely on competitive market dynamics to
yield cost-based settlement rates." This meant that Mexico was not obliged by
the Reference Paper to make calculations of the specific costs of Mexican
carriers in providing transport and transmission services for incoming
international calls. It also meant that the Panel reasonably could refer to the
available benchmarks for accounting rates � those of the ITU Working Group 3 and
the FCC � to determine whether the rates are "cost-based" and "reasonable."
Mexico submits that, under the standards of both the ITU and the FCC, Mexico's
settlement rates clearly are cost-based and reasonable.114
4.31 The United States argues that Mexico errs in
suggesting that the FCC's "Benchmarks Order", which requires United States
carriers to negotiate lower accounting rates, is inconsistent with the United
States claim in this proceeding that Mexico's WTO Reference Paper obligations
apply to settlement rates. The United States submits that the FCC recognized in
the Benchmarks Order that "[t]he WTO Basic Telecom Agreement reached on 15
February 1997 will have profound effects on the accounting rate system," since
69 countries had agreed to open their markets, and 59 countries had agreed to
implement the Reference Paper. The United States points out that the FCC went on
to state that "the WTO Basic Telecom Agreement will fundamentally change the
nature of relations between international telecommunications carriers," and
expected that its benchmarks would be "moot for competitive countries and
carriers." However, the FCC emphasized that "[n]onetheles, the benchmarks are
necessary because many countries still will not be open to competition." Thus,
according to the United States, the FCC was particularly concerned by the
failure to achieve meaningful accounting rate reform through the ITU, the
189-country membership of which includes the large majority of countries for
which benchmark rates were established by the Benchmarks Order. The countries
opening their markets and accepting the Reference Paper comprised less than 25
per cent of the nearly 250 routes for which the FCC established benchmark
accounting rates. According to the United States, the Benchmarks Order was
necessary to fill this gap.115
4.32 The United States also argues that Mexico is
incorrect in its argument that its accounting rates are consistent with ITU
recommendations on benchmark rates. The United States submits that neither ITU
recommendations nor ITU benchmarks are relevant to Mexico's WTO obligations. In
addition, according to the United States Recommendation ITU D.140, included by
Mexico as Exhibit MEX-11, expressly states, at paragraph E.3.2, that the
benchmark levels discussed therein should not be "taken as cost-orientated
levels."116
4.33 Finally, according to Mexico, the United States
has argued that its own ILD rules are consistent with Section 1 of the Reference
Paper because it only applies the rules to foreign carriers that have market
power. As shown above, however, the FCC continues to apply the rules to Mexico
notwithstanding that, according to the FCC's own standards, there is "meaningful
economic competition" within Mexico. Mexico has also submitted documents from
the FCC establishing that it has waived its International Settlements Policy
only for 15 countries, and that it deems virtually every major foreign carrier
to have market power. According to Mexico, the conduct of the United States in
maintaining uniform settlement rate, symmetrical rate and proportionate return
requirements is evidence that the United States either does not believe that the
Reference Paper applies to accounting rate arrangements or that such market
control practices are consistent with Section 1.117
(iii) Supplementary means of interpretation
4.34 According to Mexico, even if the United States'
interpretation could be considered a proper application of Article 31 of the
Vienna Convention, it "leads to a result which is manifestly absurd [and]
unreasonable", thus requiring recourse to the negotiating history and to the
circumstances surrounding the conclusion of the treaty.118 Mexico explains that,
under Article 32 of the Vienna Convention, recourse may be had to
supplementary means of interpretation, including the preparatory work of the
treaty and the circumstances of its conclusion, in order to confirm the meaning
resulting from the application of Article 31 or to determine the meaning when
the interpretation according to Article 31 leaves the meaning ambiguous.119
aa) Negotiating history
4.35 According to Mexico, a review of the negotiating
history of the Reference Paper upon which Mexico's version is based confirms
that the term "interconnection" in the Reference Paper was not intended by the
WTO Members to encompass the accounting rate regime.120 See the parties arguments
on this matter in Section IV.A.2(b)(i) above.
bb) The international scope and bilateral nature of
the accounting rate regime
4.36
Mexico further argues that the United States'
expansive interpretation of Section 2 of Mexico's Reference Paper fails to take
into account the international scope and bilateral nature of the accounting rate
regime. In terms of the international scope, it argues, only fifty-five of the
one hundred and forty-four WTO Members inscribed a version of the Reference
Paper in their schedules that included the "cost-oriented" requirement in
paragraph 2.2(b) of the Model Reference Paper while the remaining eighty-nine
WTO Members are under no such obligation. Mexico contends that, under the United
States' interpretation of Section 2.2 of Mexico's Reference Paper, those
fifty-five WTO Members would be required to implement termination rates on their
own national carriers using the strict "cost-oriented" standard posed by the
United States, while nothing would oblige carriers from the remaining
eighty-nine WTO Members and from non-Members to do the same. In its view, the
result would be that the net outflows of payments from countries subject to
Section 2.2(b) disciplines to countries not subject to Section 2.2(b)
disciplines would rise astronomically, forcing carriers of the former countries
to choose between bankruptcy and refusing to pay. It further indicates that the
accounting rate regime would collapse completely without a viable replacement,
possibly even leading to interruptions in international traffic.121
4.37 Also, Mexico claims, the bilateral nature of
accounting rate regimes could lead to a further absurdity. Mexico explains that
the financial pressures caused by one of the parties in a bilateral accounting
rate arrangement dropping its settlement rate to a very low level could pressure
the other party to reduce its rates in order to sustain the economic viability
of the arrangement. In such a situation, the other party would effectively be
compelled to bring itself closer into compliance with a WTO standard or
requirement that it did not inscribe in its Schedule. Thus, it argues, even if
that WTO Member had been careful in its Schedule to ensure that its accounting
rate regime was not disciplined, it would be indirectly subject to disciplines
inscribed in the schedules of other WTO Members with whom it had accounting rate
arrangements in place. In Mexico's view, this circumstance would undermine the
overall balance of concessions that formed the basis for the agreement.122
4.38 The United States submits that neither Mexico nor
any other Member violates the Reference Paper by continuing to use "accounting
rates", or violates the ITU's International Telecommunications Regulation by
subjecting "accounting rates" to the obligations in the Reference Paper.
According to the United States, Members that have scheduled the Reference Paper
may continue to allow their carriers to charge "accounting rates" to terminate
traffic. Those Members must simply ensure that those "accounting rates", when
used by major suppliers, are consistent with the requirements of Section 2.2(b).123 4.39 The United States further submits that Mexico
need not worry that Telmex will be faced with "net outflows of payments." In
fact, it argues, ISR or other types of interconnection arrangements have, in
large part, already superseded the accounting rage regime among most of the 55
countries Mexico lists.124 Also, the United States argues that price reductions
made by private parties in response to competitive pressure are not "compelled".125
In the view of the United States, Mexico's "doomsday" scenario is an invention.
The United States contends that Mexico's assertion that Telmex would be forced
into bankruptcy if it is forced to observe the "strict 'cost-oriented' standard
posed by the United States" is not accurate. Rather, the United States submits
that Telmex's current rates substantially exceed the prices charged for the very
same elements of interconnection furnished domestically. Thus, it argues,
cutting Telmex's rates for the interconnection of international traffic to the
level of prices charged for interconnection furnished domestically would not
lead to the "doomsday" scenario posed in Mexico's submissions, since under
Mexican law these rates already cover costs, including a reasonable rate of
return.126 Moreover, the United States notes, approximately 80 per cent of Mexico's
international traffic is exchanged with the United States. Thus, it submits, if
Telmex were to charge cost-based interconnection rates to terminate this
traffic, given the large imbalance in traffic flows between the United States
and Mexico, the result will not even approach a situation in which Telmex makes
"net outflows of payments".127
cc) Circumstances of the conclusion of the treaty:
Mexican legislation at the time of negotiations
4.40 As to the circumstances of the conclusion of the treaty,
Mexico turns to Mexican legislation and regulation in effect at the time
of the basic telecommunications negotiations. This includes the ILD Rules. Those
rules recognize that the term "interconnection" can be used to describe the
technical aspects of interconnection in all contexts. However, they also
explicitly distinguish between "settlement rates" for international incoming
calls and "interconnection charges" for interconnection within Mexico's borders.
Accordingly, Mexico submits that, under these laws, at the time of the
conclusion of the negotiations, interconnection disciplines such as those in
Section 2.2 of Mexico's Reference Paper applied only to domestic interconnection
and points out that this is still the case today.128 As support, Mexico cites to
the Appellate Body Report in EC � Computer Equipment129, where the Appellate
Body found that, inter alia, a Member's legislation on customs
classification at the time of conclusion of the negotiations was part of the
circumstances of the conclusion of the treaty.130
4.41 The United States argues that, while it is true
that in EC � Computer Equipment, the Appellate Body found that a Member's
legislation at the time of negotiations can be used as a supplementary
means of interpretation, Mexico considers that its ILD rules should override
the definition of "interconnection" used in Section 2.1.131 The United States
submits that Mexico ignores the Appellate Body's cautionary note that "[t]he
purpose of treaty interpretation is to establish the common intention of
the parties to the treaty. To establish this intention, the prior practice of
only one of the parties may be relevant, but it is clearly of more
limited value than the practice of all parties." The Unites States submits that,
according to the Appellate Body, if the prior practice of a party is not
consistent, it is not relevant at all as a supplementary means of
interpretation. The Unites States further submits that, while Mexico focuses on
one particular provision of Mexican law which it contends distinguishes between
"interconnection" and "settlement rates", it has demonstrated that elsewhere in
Mexican law, the linking of foreign service suppliers to Mexican international
port operators is referred to as "interconnection", and that throughout its laws
and regulations, Mexico uses the term "interconnection agreement" to describe
agreements with foreign operators.132
(c) Whether the Reference Paper obligations extend to
accounting rate regimes
4.42 The United States claims that the interconnection
obligations in Section 2 of the Reference Paper apply to the interconnection
between United States service suppliers and Telmex for the purpose of delivering
their basic telecom services from the United States into Mexico.133 Because
accounting rates are interconnection rates between carriers located in two
different countries, the Reference Paper obligations apply to accounting rate
regimes as well.134
4.43
Mexico, on the contrary, argues that the substantive
provisions in Section 2.2 of Mexico's Reference Paper can be given full meaning
only in the domestic context and therefore cannot be given full meaning in the
context of arrangements under the accounting rate regime.135
(i) Concept of "accounting rate"
4.44
Mexico argues that the "accounting rate regime"
refers to bilateral relationships between carriers in two countries whereby they
agree to compensate one another for transporting and terminating traffic that
originates in the other country.136 Based on the definition by the ITU, Mexico
submits that the "accounting rate" is the price two carriers of different
countries negotiate for carrying one minute of international telephone service
between their countries. Mexico explains that each carrier's portion of the
accounting rate is called the "settlement rate." Settlement payments between
carriers result when traffic flowing in one direction exceeds traffic flowing in
the opposite direction. To calculate its settlement payment, a carrier
multiplies the number of minutes its outbound traffic to a particular foreign
carrier exceeds its inbound traffic from that foreign carrier and then
multiplies this amount by the settlement rate charged by the other carrier (also
known as the "accounting rate division share"). Thus, it concludes, a carrier
that originates more traffic than it terminates will make periodic settlement
payments to its foreign correspondent carrier.137
4.45 The United States notes that Mexico provides no
citation for the definition of accounting rate regime, and no definition � nor
any reference to accounting rates � is included in Mexico's Schedule Thus, the
United States submits, Mexico's definition confirms that accounting rates are
interconnection rates between carriers located in two different countries, and
fails to show that these terms are mutually exclusive. The United States also
points out that Mexico's ILD rules make no reference to accounting rates, and
refer throughout to "interconnection" and "international interconnection"
agreements.138
4.46 The United States submits that Mexico's Schedule
� including its Reference Paper commitments � must be interpreted on its own
terms, according to the rules of interpretation included in the Vienna
Convention. According to the United States, ITU instruments, developed for a
different organization, of different members, for different purposes, are not
relevant for the interpretation of the requirements of Section 2 of the
Reference Paper. The United States notes that Mexico cites no binding ITU
resolutions that would be violated by Mexico's compliance with its WTO
obligations as claimed by the United States and indeed there are none. According
to the United States, Mexico principally uses ITU documents to support its
argument that the accounting rate regime is not included within the scope of the
Reference Paper. The United States claims that Mexico neglects to discuss the
definition of "interconnection" included in Section 2.1 of its Reference Paper,
or to present any justification for its view that the arrangements in question
do not meet that unambiguous definition.139 Furthermore, the United States argues
that the definition of "accounting rates" maintained by the ITU is in fact
consistent with the definition of interconnection included in Section 2.1 of the
Reference Paper. According to the United States, the ITU has recognized that
competition has changed the ways that international carriers compensate one
another for interconnection, and that accounting rates are one, and only one, of
the alternative charging mechanisms that are available for use between carriers
in different countries to interconnect their networks.140
4.47
Mexico acknowledges that the ITU instruments do not
assist in the determination of when "tarifas basadas en costos" or "cost
oriented rates" are reasonable and economically feasible within the meaning of
Section 2.2(b) of Mexico's Reference Paper. However, Mexico argues, they could
have some relevance in the interpretation of Section 2.2(b) of Mexico's
Reference Paper in the context of interconnection rates within Mexico's borders.
In addition, Mexico notes, International Telecommunications Regulation ("ITR")
6.2.1, which requires that accounting rates be established by mutual agreement
among administrations or recognized private operating agencies is an important
element of the context in which the negotiations on basic telecommunications
took place. Mexico submits that ITR 6.2.1 requires that accounting rates be
determined in negotiations between carriers. As a result, accounting rates that
a carrier negotiates for carrying traffic to different countries typically vary
widely. Mexico further submits that other
recommendations of ITU working committees, such as E.110, also help to
illustrate the context in which certain terms are used within the
telecommunications sector, which in turn may assist the Panel in determining the
"ordinary meaning" of terms in the Reference Paper.141
4.48
Mexico also notes that the ITRs are supplemented by
a series of D-series Recommendations produced by ITU-T Study Group 3.
Recommendation D.140 states that "accounting rates for international telephone
services should be cost-orientated and should take into account relevant cost
trends." At the same time, this same Recommendation recognizes that that "the
costs incurred in providing telecommunication services, although based on the
same components, may have a different impact depending on the country's
development status."142 Thus, Mexico contends, as a whole, the Recommendation
encouraged a transition to lower accounting rates, but did not mandate a
particular methodology for calculating costs nor contemplate that countries
would be able to immediately establish cost-oriented rates.143
(ii) Domestic interconnection v. accounting rates
4.49 Comparing the two, Mexico argues that domestic
interconnection is more complicated than accounting rate regimes.144 Mexico
explains that, for example: international interconnection cannot occur at "any
technically feasible point"; by their nature accounting rates are per se
discriminatory and cannot comply with the non-discrimination requirement; and
domestic regulatory bodies do not have legal authority to resolve disputes and
impose solutions over carriers that are outside of their territorial
jurisdiction. Mexico also points to a Note by the Secretariat on Additional
Commitments under Article XVIII of the GATS, which states that the primary
purpose of the interconnection provisions of the Model Reference Paper (Section
2) is to safeguard competitive situations where a dominant supplier can exert
control over its competitors. Thus, Mexico argues, even assuming
arguendo that Telmex is a dominant supplier, it does not "exert control over
its competitors" with respect to the supply of a service from the territory of
one Member (i.e., the United States) into the territory of any other Member
(i.e., Mexico) because Telmex simply does not compete with United States
suppliers for the supply of such services.145
4.50 The United States argues that, under the
definition included in Section 2.1 of Mexico's Reference Paper, the "linking"
accomplished via the accounting rate regime is just one form of
"interconnection." As a result, there is no element of an "accounting rate
regime" that cannot also be an element of an "interconnection regime." Any
commercial, contractual, technical or regulatory differences between various
types of interconnection arrangements, including accounting rate arrangements,
fall under the broad definition included in Section 2.1.146
4.51 In response to a question by the Panel, the parties
commented on the possible differences between domestic interconnection and
accounting rate regimes from a commercial, contractual, technical and regulatory
point of view.147
aa) Differences from a commercial point of view
4.52
Mexico argues that domestic interconnection and
accounting rate regimes are different from a commercial viewpoint. According to
Mexico, a national carrier entering into an accounting rate arrangement with a
national carrier of another nation is not in competition with that carrier,
because the two carriers cannot compete for each other's customers. Moreover, it
argues, under the accounting rate regime, carriers from different countries must
come to a mutual agreement on their relationship; there is no supra-national
authority that can dictate terms or rates to both parties simultaneously. On the
other hand, Mexico indicates, the commercial context of domestic interconnection
regimes is quite different. In the sphere of domestic interconnection, the main
focus is on how new entrant ("competitive") carriers gain access to the
established networks of incumbent carriers, so as to compete with the incumbents
for their customers. Mexico explains that, for example, a new entrant providing
a local telephone service generally will not start out with a network that
reaches all of the potential customers in the region; it therefore must
interconnect with the incumbent carrier to ensure its customers can be connected
with all of the incumbent's customers. There is little economic incentive for
the incumbent carrier to allow its competitors to interconnect, since the
competitor will be trying to sell the same services to those customers as the
incumbent. But if the new entrant cannot interconnect, Mexico submits, it will
be unable to provide a fully competitive service.148
4.53
Mexico submits that domestic interconnection
arrangements vary depending upon the location as well as type of
interconnection, and also involve technical and operational issues.149 In addition,
unlike with the accounting regime whereby a relationship with only one carrier
in the destination country enables termination throughout that country, domestic
interconnection requires relationships with potentially numerous different
carriers.150 Mexico explains that this is because to ensure a local carrier's
customers can reach all customers in the market, a carrier must interconnect
with all other local carriers in the market. Similarly, it argues, a domestic
long-distance carrier (or inter-city or interexchange carrier) must interconnect
with local carriers throughout a country in order to be able to reach all
end-user customers. Because a long-distance carrier depends exclusively upon
local carriers for access to customers, whereas the local carrier has no similar
need for access to the long-distance carrier, the local carrier has the
incentive and ability to set interconnection rates as high as possible.151 Thus,
Mexico concludes, regulators again play an important role in setting the terms,
conditions, and rates for interconnection between domestic long-distance and
local carriers.152 In conclusion, Mexico submits, the accounting rate regime by its
nature must be cooperative, whereas domestic interconnection involves fierce
competition that must be regulated.153
4.54 The United States considers that, from a
commercial viewpoint, interconnection is a key wholesale input in supplying a
basic telecommunications service because it allows suppliers to complete phone
calls where the person placing the call uses a different network from the person
receiving the call. Because no telecommunications supplier has a worldwide,
ubiquitous network, all telecommunications suppliers must interconnect with
other telecommunications suppliers to complete phone calls to receiving parties
that use different networks. Similarly, it argues, telecommunications suppliers
without their own local networks also must interconnect with other
telecommunications suppliers to originate calls. The United States submits that
all interconnection, including accounting rate arrangements between carriers in
different countries, performs this key commercial function of allowing the
completion of calls between the networks of different suppliers. The definition
of interconnection set forth in Section 2.1 of the Reference Paper includes all
such "linking" between the networks of different suppliers.154
4.55 The United States further submits that Mexico
wrongly seeks to imply that the regulation of interconnection rates is necessary
only where interconnecting suppliers compete with each other. Mexico goes on to
acknowledge that interconnection is also an important concern in domestic
markets where the interconnecting carriers do not compete with each
other, such as where "a domestic long-distance carrier (or inter-city or
interexchange carrier) must interconnect with local carriers throughout a
country in order to be able to reach all end-user customers. " In these
circumstances, it argues, the domestic long-distance carrier must interconnect
with local carriers for both call termination and call origination. The
United States submits that Mexico further acknowledges that the regulation of
interconnection rates is necessary in such circumstances, not because the
interconnecting carriers are targeting the same customers, but because "the
local carrier has the incentive and ability to set interconnection rates as high
as possible." For the same reasons, it submits, the regulation of
interconnection rates is necessary for the cross-border supply of international
basic telecommunications services, which are also dependent on interconnection
arrangements for call termination with suppliers that have "the incentive and
ability to set interconnection rates as high as possible."155
bb) Differences from a contractual point of view
4.56 In response to a question by the Panel, Mexico
lists the major provisions of the standard domestic interconnection agreement in
comparison with accounting rate agreements. According to Mexico, most of the
provisions of one agreement are either not applicable or can never be a
provision in the other agreement.156 For example, Mexico pointed to an accounting
rate agreement that provided for dispute settlement through international
commercial arbitration, while a US domestic interconnection agreement provided
for dispute settlement in the courts, before a state public utility commission,
or before the Federal Communications Commission. Mexico also highlighted that
the domestic interconnection agreement contained many provisions not included in
accounting rate agreements, such as with respect to audits, indemnification,
insurance, discontinuation of service, intellectual property, directory and
operator assistance, access to unbundled network elements, access to poles,
ducts, conduits, and rights-of-way, access to databases needed to provide 911
emergency call service, and a provision that each party reserves the right to
institute an appropriate proceeding with the appropriate federal or state
governmental body of appropriate jurisdiction regarding the prices charges for
services by the incumbent carrier.157
4.57 The United States points out that, from a
contractual viewpoint, interconnection arrangements between suppliers in the
same or different countries, including accounting rate arrangements between
suppliers in different countries, may include a wide variety of rates, terms and
conditions concerning such matters as specific services covered by the
agreement, the rates applicable to specific services, payment schedules,
procedures for dispute resolution, time duration of the agreement, restrictions
on assignments of rights, and various network technical considerations. The
United States explains that interconnection arrangements may provide for one-way
or two-way traffic flows, with the same or different rates applying in each
direction, and two-way traffic flow. Interconnection arrangements may also
provide for "net" payment arrangements under which the two carriers set off
their interconnect payments with one carrier remitting the balance to the other
carrier.
4.58 The United States indicates that, under a
traditional accounting rate regime, an agreed accounting rate is divided in half
and applied to traffic flows in both directions. However, it argues, Mexico's
ILD rules governing "interconnection agreements with foreign operators" (Rule
23) do not restrict the compensation methods that may be negotiated by the
"concession holder who holds the largest outgoing long-distance market share"
(Rule 13). Notably, the rates that Telmex currently charges United States
suppliers differ significantly from the "accounting rate revenue division
procedure" described by the informal note submitted by the ITU to the Council on
Trade in Services ("a net settlement payment is made on the basis of excess
traffic minutes, multiplied by half the accounting rate"). The United States
explains that United States suppliers are currently charged different rates for
each of three rate zones in Mexico. Additionally, under that arrangement,
another rate applies to Mexico-United States traffic. Furthermore, the United
States submits, negotiated interconnection rates, including accounting rates
between suppliers in different countries, are normally established by the
interconnecting suppliers. Mexico's ILD Rule 13 requirement that only the
concession holder with the largest market share may negotiate with foreign
operators rates that are then binding on its competitors does not reflect any
traditional accounting rate regime and, to the knowledge of the United States,
is not required by any Member other than Mexico.158
cc) Differences from a technical point of view
4.59
Mexico argues that domestic interconnection and
accounting rate regimes are different from a technical viewpoint. Mexico submits
that Section 2.2 of the Reference Paper requires that interconnection be ensured
at "any technically feasible point" in the major supplier's network. In
contrast, under the accounting rate regime international carriers connect at a
border or some international mid-way point that is decided privately between the
carriers, who have a mutual interest in cooperating with each other to complete
international calls. In Mexico's opinion, unless a country permits foreign
carriers to establish their own facilities within its territory � which Mexico
has not, and for which it has a limitation in its Schedule � foreign carriers
must always connect at the border, not at any technically feasible point.159
4.60 According to Mexico, each specific international
relationship has its individual technical complexities. Nations that use ANSI
standards and interconnect with those that use CEPT standards must carry out
conversions of speeds and protocols for coding of voice channels or of
signalling of channels, among other things. These conversions require an
agreement between the parties on the installation of standard translator
equipment, which can be in the country of origin, the country of destination, or
even in an intermediate country. No authority regulates the required
translations, and neither company has any obligation to comply with the other's
requirements in any manner. Furthermore, conditions can vary from
interconnection to interconnection. National interconnection arrangements, in
contrast, are generally homogeneous, and the technical aspects of all agreements
entered into with one local company are virtually identical. Mexico also notes
that domestic interconnections are carried out between two carriers, and if they
in a particular case require a third party for interconnection, in general terms
it is transparent; the company that interconnects is always responsible for the
whole network, whether it is owned or leased, up to the point of interconnection
with the local operator. In contrast, in international relationships, the
infrastructure is shared up to an intermediate point, and the concept known as
HMIU, or "half-miu," applies, a term not commonly used in the domestic
interconnection lexicon. In the case of border interconnections, the HMIU is
limited to a virtual point or to a very short fiber optic segment; nevertheless,
a point of mutual responsibility between the parties continues to exist. Mexico
further submits that the special complexities of international interconnection
are reflected in ITU-T Recommendation E.110, and the recommendation to
concentrate international traffic in "a few international exchanges" highlights
that the concept of interconnection "at any technically feasible point" is not
applicable to international interconnection.160
4.61 The United States considers that, from a
technical viewpoint, interconnection, by definition, involves the "linking"
of networks of different suppliers, and the technical characteristics of the
networks of different suppliers vary. Consequently, it argues, there may be
technical differences between interconnection arrangements depending on the
technologies used by the interconnecting supplier networks, or on whether the
interconnection arrangement is between two fixed line carriers; between a fixed
line and a wireless carrier; between local and long-distance carriers; or
between two local carriers. The United States submits that, for all
interconnection arrangements, including interconnection arrangements involving
cross-border suppliers, technical issues are generally resolved through the use
of protocols and standards and through joint coordination and planning. Also, to
the extent that interconnection at a particular point in the network of the
major supplier is not "technically feasible", Section 2.2 of the Reference Paper
does not apply.161
4.62 The United States considers that since United
States carriers interconnect their networks with the network of Telmex at the
border, the border is clearly a "technically feasible point" of interconnection
under Section 2.2. In its view, that Mexico prohibits interconnection at other
technically feasible points does not change the nature of the activity
encompassed by interconnection.162 The United States also observes that the
international interconnection arrangements are plainly interconnection under
Section 2.1 of the Reference Paper, and also are similar to the "meet-point
interconnection arrangements" that incumbent local exchange carriers in the
United States are required to provide to new entrants. Thus, Mexico can not
exclude the accounting rate regime from interconnection on this ground.163
4.63 The United States contends that Mexico's attempt
to exclude the accounting rate regime from interconnection on the grounds that
"international carriers connect at a border or some international mid-way point"
is unfounded. In its view, such "linking" of networks is plainly interconnection
under Section 2.1 of the Reference Paper, and also is similar to the "meet-point
interconnection arrangements" that incumbent local exchange carriers in the
United States are required to provide to new entrants. The United States
considers that meet-point arrangements are arrangements by which each
telecommunications carrier builds and maintains its network to a meet point. The
FCC found in 1996 that meet-point arrangements for interconnection between
carrier facilities, also known as "mid-span meets", were commonly used between
neighbouring LECs (local exchange carriers) for the mutual exchange of traffic.164
dd) Differences from a regulatory point of view
4.64
Mexico argues that domestic interconnection and
accounting rate regimes are different from a regulatory viewpoint. According to
Mexico, in the domestic interconnection context, countries seeking to encourage
domestic competition must have strict requirements for incumbent providers with
market power. These rules generally require incumbent carriers to provide all of
their competitors interconnection with rates, terms and conditions that are
reasonable and non-discriminatory.165 In this regard, Section 2.2(a) provides that
interconnection must be provided under "non-discriminatory terms, conditions,
and rates." In contrast, there is no expectation that a carrier offer the same
accounting rate agreement to foreign carriers from different countries; indeed,
there was specifically no agreement in the GATS negotiations to require that
accounting rates be non-discriminatory.166 Interconnection must be permitted at any
technically feasible point within the carrier's network and at least equal in
quality to that provided by the incumbent provider to itself or to its
subsidiaries, affiliates, or any other competitor.167 Mexico notes that Section
2.2(a) also provides that a major supplier must provide interconnection "of a
quality no less favourable than that provided for its own like services or for
like services of non-affiliated service suppliers or for its subsidiaries or
other affiliates." In its view, issues of comparable quality arise only when
there is concern that an incumbent carrier could provide inferior quality
facilities to carriers competing with it. This issue does not arise in the
context of the accounting rate regime, where the traffic is handed off at the
border to a national long-distance carrier that has no interest in impeding
calls or providing low quality service, but rather is responsible for all of the
facilities within its country used to complete the call.168
4.65
Mexico submits that Section 2.2(b) of the Reference
Paper provides that interconnection must be provided in a "timely fashion". In
its view, this issue does not arise in the context of the accounting rate
regime, where national carriers have no incentive to block access; to the
contrary, international calls can be completed only if the carriers from the two
countries act in cooperation, and the carriers are compensated for completing
the call.169 Mexico further submits that Section 2.2(b) also provides that
interconnection tariffs must be "sufficiently unbundled so that the supplier
need not pay for network components or facilities that it does not require for
the service to be provided." In contrast, it argues, unbundling does not arise
in the context of the accounting rate regime because once a carrier hands
traffic off at a border, the terminating carrier is completely responsible for
ensuring that the call reaches its final destination.170
4.66
Mexico notes that Section 2.2(c) of the Reference
Paper provides that a major supplier shall provide interconnection upon request
"at points in addition to the network termination points offered to the majority
of users, subject to charges that reflect the cost of construction of necessary
additional facilities."171 Mexico points out that, under the accounting rate regime
in effect between Mexico and the United States, however, the decision of whether
to construct new gateways for connecting with international carriers is left
solely to the discretion of the carriers, and each carrier bears it own costs
because neither has facilities within the other country.172 Mexico argues that
Section 2.3 provides that procedures applicable for interconnection negotiations
must be made publicly available. Because negotiation of accounting rate
agreements is done privately, this requirement has no application to the
accounting rate regime.173 Mexico also contends that Section 2.4 provides that a
major supplier must make publicly available its interconnection agreements or a
reference interconnection offer. There
is, however, no expectation that accounting rates be made public.174
4.67
Mexico recalls that Section 2.5 requires that
countries have an independent domestic regulatory body to resolve disputes
regarding appropriate terms, conditions and rates for interconnection.175 Mexico
points out that competitors must have a process to resolve disputes with
incumbent carriers that arise during and after the negotiation process. Because
both parties to the interconnection agreement are established under the laws of
one country, dispute settlement mechanisms can be established giving a
governmental regulator the authority to impose terms, conditions and rates on
both parties. In the context of accounting rate agreements, in contrast,
governments have different regulatory goals and more limited power.176 For example,
a domestic regulatory body can have the authority to resolve disputes and impose
solutions only over two carriers that are within its rate-setting jurisdiction.
Mexico submits that a domestic regulatory agency cannot require a foreign
carrier to accept its determination of an appropriate accounting rate; and, in
any case, the foreign carrier would always be free to ignore the determination.177
As reflected in requirements such as those for uniform
settlement rates (adopted by both the United States and Mexico), proportionate
return (adopted by both the United States and Mexico), and symmetrical rates
(adopted by the United States but not Mexico), governments generally seek to:
(i) avoid allowing accounting rate arrangements to undermine domestic
competition; and (ii) bolster the negotiating position of their national
carriers vis-�-vis foreign carriers. At the same time, Mexico argues, because a
government of one country lacks jurisdiction over foreign carriers, neither
rates nor other terms and conditions can be enforced by that government. A
government can require that its national carriers seek approval of accounting
rate arrangements and in that manner try to impose various conditions, but its
authority is circumscribed.178
4.68 The United States submits that, from a regulatory
viewpoint, interconnection arrangements, including accounting rate arrangements,
may be subject to different regulatory requirements to address different
commercial, contractual and technical situations. The United States submits that
any such regulatory differences, however, do not alter the status of all of
these arrangements as "interconnection" under Section 2.1 of the Reference
Paper.179 The fact that some of the
requirements of Section 2 may not apply to interconnection provided to
cross-border suppliers does not mean that other requirements of Section 2 are
equally inapplicable.180 As stated by the European
Communities, "from a regulatory point of view, accounting rates are just one
form of interconnection."181 The United States further submits that Mexico is wrong
in implying that the regulation of interconnection rates is necessary only where
interconnecting suppliers compete with each other. The United States points out
that Mexico also acknowledges that interconnection is an important concern in
domestic markets where the interconnecting carriers do not compete with each
other, such as where "a domestic long-distance carrier (or inter-city or
interexchange carrier) must interconnect with local carriers throughout a
country in order to be able to reach all end-user customers". The United States
further notes that Mexico also acknowledges that the regulation of
interconnection rates is necessary in such circumstances, not because the
interconnecting carriers are targeting the same customers, but because "the
local carrier has the incentive and ability to set interconnection rates as high
as possible." The United States argues that, for the same reasons, the
regulation of interconnection rates is necessary for the cross-border supply of
international basic telecommunications services, which are also dependent on
interconnection arrangements for call termination with suppliers that have "the
incentive and ability to set interconnection rates as high as possible."182
4.69 The United States further submits that Mexico is
also wrong to contend that a major supplier "has no interest in impeding calls
or providing inferior quality service" to cross-border suppliers because these
suppliers are not competitors. In fact, major suppliers are direct competitors
with cross-border suppliers that originate services in-country through
home-country direct and similar call reversal services. Moreover, a major
supplier has an incentive to impose a competitive disadvantage on a foreign
cross-border supplier if an affiliate of the major supplier competes with the
cross-border supplier � as many such affiliates were expected to do following a
successful outcome of the basic telecommunications negotiations.183
The United States also notes that the requirements of non-discrimination and unbundling are equally relevant to the
interconnection of international traffic as they are to the interconnection of
domestic traffic.184
1 See WT/DS204/1.
2 See WT/DS204/2.
3 See WT/DS204/1/Add.1.
4 See WT/DS204/3.
5 See WT/DSB/M/123.
6 See WT/DS204/4.
7 See WT/DS204/4.
8 See ILD Rules 2 and 13.
9 See Mexico's first written submission, paragraph 87.
See also Mexico's first oral statement, paragraph 11.
10 See Mexico's first written submission, paragraph 88.
11 See Federal Telecommunications Law (FTL), ("Ley
Federal de Telecomunicaciones"), published in the Federal Gazette ("Diario
oficial de la Federaci�n") on 7 June 1995, entered into force on 8 June
1995.
12 See FTL, Article 1.
13 See FTL, Article 7.
14 See FTL, Article 11.
15 See FTL, Article 12. Foreign investment in cellular
telephone services may however be greater than 49 per cent, with the permission
of the Commission on Foreign Investment.
16 See FTL, Article 12.
17 Also referred to in English language translations of the FTL
as "telecommunications service marketing companies".
18 See FTL, Article 52.
19 See FTL, Article 53.
20 See FTL, Article 54.
21 See Mexico's answer to question No. 6(d) of the Panel
of 19 December 2002 ("Mexico has inscribed in its schedule that it 'will
not issue permits for the establishment of a commercial agency until the
corresponding regulations are issued'. Why has Mexico not issued the
regulations on the establishment and operation of commercial agencies?").
See also the Public Telephony Regulations, published in the Federal Gazette
on 16 December 1996 (Exhibit MEX-29).
22 See FTL, Article 47, paragraph 2.
23 See FTL, Article 47, paragraph 4.
24 See FTL, Article 3.
25 See Rules for the Provision of International Long-Distance
Service To Be Applied by the Licensees of Public Telecommunications Networks
Authorized to Provide this Service (ILD Rules) (Reglas para Prestar el
Servicio de Larga Distancia Internacional que deber�n aplicar los Concesionarios
de Redes P�blicas de Telecomunicaciones Autorizados para Prestar este Servicio).
Issued by the Commission; published in the Federal Gazette on 11 December
1996; entered into force on 12 December 1996.
26 See ILD Rule 1.
27 See ILD Rule 2:XI.
28 See ILD Rules 3 and 6.
29 See ILD Rule 2:VII.
30 See ILD Rule 2:VIII.
31 See ILD Rule 2:XV
32 See ILD Rules 2:XII(a) and (b); and 10.
33 See ILD Rule 13.
34 See ILD Rules 2:XII, 10, 13, 16, 17 and 19.
35 See ILD Rule 4.
36 See ILD Rule 4.
37 See FLEC. Approved by the Congress on 18 December
1992, promulgated by the President on 22 December 1992, published on 24 December
1992, entered into force 180 days after publication.
38 See FLEC, Article 2.
39 See FLEC, Article 12.
40 See FLEC, Article 13.
41 See Code of Regulations to the Federal Law on Economic
Competition ("Reglamento de la Ley Federal de Competencia Econ�mica"),
published in the Official Gazette on 4 March 1998, entered into force on 5
March 1998 (with the exception of Article 6 which entered into force 6 months
from 5 March 1998).
42 See Code of Regulations to the Federal Law on Economic
Competition, Article 9.
43 See Code of Regulations to the Federal Law on Economic Competition,
Article 12.
44 See the United States' first written submission,
paragraph 297, and the United States' second written submission, paragraph 129.
See also the United States' second oral statement, paragraph 88.
45 See Mexico's first written submission, paragraph 267.
See also Mexico's first oral statement, paragraph 58, Mexico's second
written submission, paragraph 107 and Mexico's second oral statement,
paragraph 124.
46 See the United States' first written submission,
paragraph 297, and the United States' second written submission, paragraph 129.
See also the United States' second oral statement, paragraph 88.
47 See the United States' first written submission,
paragraph 44.
48 See Mexico's first written submission, paragraph 112.
49 See Mexico's first written submission, paragraph 117.
50 Ibid.
51 See the United States' first written submission,
paragraph 45.
52 See the United States' first written submission,
paragraph 47.
53 See Mexico's first written submission, paragraph 112.
54 See Mexico's first written submission, paragraph 152.
See also Mexico's first oral statement, paragraph 25.
55 See Mexico's first oral statement, paragraph 48.
56 See Mexico's first oral statement, paragraph 49.
57 Ibid.
58 See Mexico's first oral statement, paragraph 50.
59 See Mexico's first written submission, paragraph 154.
60 See the United States' first oral statement,
paragraph 22. See also the United States' answer to question No. 7 of the
Panel of 19 December 2002 ("Article I of the GATS states that the agreement
covers all measures affecting trade in services, including the cross border
supply of services. Mexico claims that the Reference Paper applies only to
matters relating to domestic regulation within the borders of each WTO Member.
Please explain.").
61 See Mexico's answer to question No. 7 of the Panel of
19 December 2002. For question No. 7, see footnote 60 of this Report.
62 See Mexico's second written submission, paragraph 25.
See also Mexico's answer to question No. 7 of the Panel of 19 December
2002. For question No. 7, see footnote 60 of this Report.
63 See the United States' first written submission,
paragraphs 60-64.
64 See the United States' first written submission,
paragraph 65.
65 See the United States' first written submission,
paragraph 67.
66 As regards the definition of the term "interconnection",
see Section IV.A.2(a) of this Report.
67 See Mexico's second written submission, paragraphs
27-28. See also Mexico's answer to question No. 7 of the Panel of 19
December 2002. For question No. 7, see footnote 60 of this Report.
68 See the United States' second oral statement,
paragraphs 27-28.
69 See the United States' first written submission,
paragraph 39.
70 See the United States' first written submission,
paragraph 40.
71 See the United States' first written submission,
paragraph 41.
72 The United States refers to Directive 97/33/EC,
Interconnection in Telecommunications, Art. 2(1)(a), available at
http://europa.eu.int/ispo/infosoc/telecompolicy/en/dir97‑33en.htm.
73 The United States refers to Commission Recommendation on
Interconnection in a Liberalised Market, Part 1 � Interconnection Pricing,
Explanatory Memorandum (January 8, 1998), Sect. 3.1 (emphasis in original),
available at
http://www.europa.eu.int/ISPO/infosoc/telecompolicy/en/r3148‑en.htm.
74 See Mexico's first written submission,
paragraphs 36-38.
75 The United States refers to the Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, 11 FCC Rcd. 15499, paragraph 172
(1996) (emphasis added) (Exhibit US-55) 76 The United States refers to the 47 USC. � 251(b)(5) (Exhibit
US-56). Traffic terminated under reciprocal compensation arrangements is subject
to the same "forward‑looking economic cost-based pricing standard" that governs
other interconnection services provided by incumbent local carriers.
Implementation of the Local Competition Provisions in the Telecommunications Act
of 1996, 11 FCC Rcd. 15499, paragraph 1054 (1996) (Exhibit US-55).
77 See the United States' answer to question No. 8 of the
Panel of 19 December 2002 ("What are the main differences and
similarities between an accounting rate regime and an interconnection regime
from commercial, contractual, technical, and regulatory viewpoints?").
78 See Mexico's first written submission, paragraph 150.
79 See Mexico's first written submission, paragraph 151.
See also Mexico's first oral statement, paragraph 26.
80 See Mexico's first written submission, paragraph 164.
See also Mexico's first oral statement, paragraph 25.
81 See Mexico's first written submission, paragraph 152.
82 See Mexico's first written submission, paragraph 21.
83 See Mexico's first oral statement, paragraph 29.
84 See the United States' first oral statement,
paragraph 20. See also the United States' second written submission,
paragraph 41.
85 See the United States' first oral statement,
paragraph 20. See also the United States' second written submission,
paragraphs 41-42.
86 See Mexico's second oral statement paragraph 11.
87 The United States refers to Mexico's distinction in paragraph
36 of its first written submission (see paragraph 4.14 of this Report).
See the United States' second written submission, paragraph 54.
88 See the United States' answer to question No. 8 of the
Panel of 19 December 2002. For question No. 8, see footnote 77 of this
Report.
89 See the United States' second written submission,
paragraph 54.
90 See Mexico's second written submission, paragraph 33.
See also Mexico's answer to question No. 7 of the Panel of 19 December 2002.
For question No. 7, see footnote 60 of this Report.
91 See Mexico's first written submission, paragraph 150.
See also Mexico's first oral statement, paragraph 27.
92 See Mexico's first written submission, paragraph 151.
See also Mexico's first oral statement, paragraph 27
93 See Mexico's first written submission, paragraphs
167-169. See also Mexico's first oral statement, paragraphs 21-22,
Mexico's second written submission, paragraph 37 and Mexico's answer to question
No. 7 of the Panel of 19 December 2002. For question No. 7, see footnote
60 of this Report.
94 See Mexico's first written submission, paragraphs
167-170.
95 See the United States' second written submission,
paragraph 47.
96 See the United States' second written submission,
paragraph 48.
97 See Mexico's comments on the United States' answer to
question No. 18 of the Panel of 14 March 2003, paragraphs 29-33.
98 The Panel understands that the document referred to by Mexico
is the Report of the Group on Basic Telecommunications (S/GBT/4, February 15,
1997).
99 See Mexico's first written submission, paragraph 171.
100 See Mexico's first written submission, paragraph 172.
101 See Mexico's first written submission, paragraph 173.
102 See Mexico's first written submission, paragraph 176.
103 See the United States' answer to question No. 16(a) of
the Panel of 19 December 2002 ("At the close of the negotiations on basic
telecommunications, an understanding on accounting rates was reached (S/GBT/4,
paragraph 7). If Section 2 of the Reference Paper requiring 'cost-oriented'
rates and 'reasonable' terms applies to accounting rates, why would there have
been a need for the Group on Basic Telecommunications to arrive at a separate
understanding on accounting rates?").
104 The Panel takes note here that, from the context of the
United States' submission, the document referred to by the United States should
be the Report of the Group on Basic Telecommunications (S/GBT/4, 15 February
1997).
105 See the United States' first oral statement,
paragraph 25. See also the United States' second written submission,
paragraph 49.
106 See the United States' first oral statement,
paragraph 26. See also the United States' second written submission,
paragraph 50.
107 The Panel takes note here that, from the context of the
United States' submission, the document referred to by the United States should
be the Report of Meeting of 15 February 1997 (S/GBT/M/9, 10 March 1997).
108 See the United States' first oral statement,
paragraph 26. See also the United States' second written submission,
paragraph 50.
109 See the United States' first oral statement,
paragraph 27. See also the United States' second written submission,
paragraph 51.
110 See the United States' first oral statement,
paragraph 27. See also the United States' second written submission,
paragraph 51. See also the United States' answer to question No. 16(b) of
the Panel of 19 December 2002 ("What is the significance of the statement in
the understanding that 'the accounting rate system ... by its nature involves
differential rates'?").
111 See the United States' first oral statement,
paragraph 24. See also the United States' answer to question No. 12 of
the Panel of 19 December 2002 ("Which ITU instruments, if any, are relevant
for the interpretation of Section 2 of the Reference Paper? Why?").
112 See Mexico's second written submission, paragraph 32.
See also Mexico's answer to question No. 7 of the Panel of 19 December 2002.
For question No. 7, see footnote 60 of this Report.
113 See Mexico's second written submission, paragraphs 14
and 32.
114 See Mexico's comments on the United States' answer to
question No. 19(b) of the Panel of 14 March 2003, paragraph 41.
115 See The United States' second written submission,
footnote 42 to paragraph 59.
116 See the United States' second written submission,
paragraph 66.
117 See Mexico's comments on the United States' answer to
question No. 19(b) of the Panel of 14 March 2003, paragraph 41.
118 See Mexico's second written submission, paragraph 33.
See also Mexico's answer to question No. 7 of the Panel of 19 December 2002.
For question No. 7, see footnote 60 of this Report.
119 See Mexico's first written submission, paragraph 165.
120 See Mexico's first written submission, paragraph 166.
121 See Mexico's second written submission, paragraph 34.
See also Mexico's answer to question No. 7 of the Panel of 19 December 2002.
For question No. 7, see footnote 60 of this Report.
122 See Mexico's second written submission, paragraph 35.
See also Mexico's answer to question No. 7 of the Panel of 19 December 2002.
For question No. 7, see footnote 60 of this Report.
123 See the United States' second oral statement,
paragraph 33.
124 See the United States' second oral statement,
paragraph 37.
125 See the United States' second oral statement,
paragraph 38.
126 See the United States' second oral statement,
paragraph 35.
127 See the United States' second oral statement,
paragraph 36.
128 See Mexico's second written submission, paragraph 38.
See also Mexico's answer to question No. 7 of the Panel of 19 December 2002.
For question No. 7, see footnote 60 of this Report.
129 Mexico refers to paragraphs 92-94 of
the Appellate Body Report, EC � Computer Equipment.
130 See Mexico's second written submission, paragraph 38.
See also Mexico's answer to question No. 7 of the Panel of 19 December 2002.
For question No. 7, see footnote 60 of this Report.
131 See the United States' second oral statement,
paragraph 44.
132 See the United States' second oral statement,
paragraph 45.
133 See the United States' first written submission,
paragraph 44.
134 See the United States' second written submission,
paragraph 45.
135 See Mexico's second written submission,
paragraphs 29-30. See also Mexico's answer to question No. 7 of the Panel
of 19 December 2002. For question No. 7, see footnote 60 of this Report.
136 See Mexico's first written submission, paragraph 24.
137 See Mexico's first written submission,
paragraphs 28-29.
138 See the United States' second written submission,
paragraph 45. See also the United States answer to question No. 8 of the
Panel of 19 December 2002. For question No. 8, see footnote 77 of this
Report.
139 See the United States' answer to question No. 12 of
the Panel of 19 December 2002. For question No. 12, see footnote 111 of
this Report.
140 See the United States' second written submission,
paragraph 58.
141 See Mexico's first written submission,
paragraphs 30-31. See also Mexico's answer to question No. 12 of the
Panel of 19 December 2002. For question No. 12, see footnote 111 of this
Report.
142 See Mexico's first written submission, paragraph 32.
143 Ibid.
144 See Mexico's first written submission, paragraph 39.
145 See Mexico's second written submission,
paragraphs 29-30. See also Mexico's answer to question No. 7 of the Panel
of 19 December 2002. For question No. 7, see footnote 60 of this Report.
146 See the United States' answer to question No. 17 of
the Panel of 14 March 2003 ("In considering the commercial, contractual,
technical, and regulatory differences between an accounting rate regime and an
interconnection regime, which you described in your responses to our questions
following the First Panel Meeting, could you please identify those elements in
each regime that can never be elements of the other regime?").
147 See Mexico's answer to question No. 8 of the Panel of
19 December 2002. For question No. 8, see footnote 77 of this Report.
148 Ibid.
149 See Mexico's first written submission, paragraph 39.
150 See Mexico's first written submission, paragraph 40.
See also Mexico's answer to question No. 8 of the Panel of 19 December 2002.
For question No. 8, see footnote 77 of this Report.
151 See Mexico's first written submission, paragraph 41.
See also Mexico's answer to question No. 8 of the Panel of 19 December 2002.
For question No. 8, see footnote 77 of this Report.
152 See Mexico's first written submission, paragraph 41.
153 See Mexico's answer to question No. 8 of the Panel of
19 December 2002. For question No. 8, see footnote 77 of this Report.
154 See the United States' answer to question No. 8 of the
Panel of 19 December 2002. For question No. 8, see footnote 77 of this
Report.
155 Ibid.
156 See Mexico's answer to question No. 8 of the Panel of
19 December 2002. For question No. 8, see footnote 77 of this Report;
see also Mexico's answer to question No. 17 of the Panel of 14 March
2003. For question No. 17, see footnote 146 of this Report.
157 See Mexico's answer to question No. 8 of the Panel of
19 December 2202. For question No. 8 see footnote 77; see also
Mexico's answer to question No. 17 of the Panel of 14 March 2003. For question
No. 17 see footnote 146 of this Report.
158 See the United States' answer to question No. 8 of the
Panel of 19 December 2002. For question No. 8, see footnote 77 of this
Report.
159 See Mexico's first written submission, paragraph 155.
160 See Mexico's answer to question No. 8 of the Panel of
19 December 2002. For question No. 8, see footnote 77 of this Report.
161 See the United States' answer to question No. 8 of the
Panel of 19 December 2002. For question No. 8, see footnote 77 of this
Report.
162 See the United States' first oral statement,
paragraph 29.
163 See the United States' second written submission,
paragraph 44.
164 See the United States' answer to question No. 8 of the
Panel of 19 December 2002. For question No. 8, see footnote 77 of this
Report.
165 See Mexico's answer to question No. 8 of the Panel of
19 December 2002. For question No. 8, see footnote 77 of this Report.
166 See Mexico's first written submission, paragraph 156.
167 See Mexico's answer to question No. 8 of the Panel of
19 December 2002. For question No. 8, see footnote 77 of this Report.
168 See Mexico's first written submission, paragraph 157.
169 See Mexico's first written submission, paragraph 158.
170 See Mexico's first written submission, paragraph 159.
171 See Mexico's first written submission, paragraph 160.
172 Ibid.
173 See Mexico's first written submission, paragraph 161.
174 See Mexico's first written submission, paragraph 162.
175 See Mexico's first written submission, paragraph 163.
176 See Mexico's answer to question No. 8 of the Panel of
19 December 2002. For question No. 8, see footnote 77 of this Report.
177 See Mexico's first written submission, paragraph 163.
178 See Mexico's answer to question No. 8 of the Panel of
19 December 2002. For question No. 8, see footnote 77 of this Report.
179 See the United States' answer to question No. 8 of the
Panel of 19 December 2002. For question No. 8, see footnote 77 of this
Report.
180 See the United States' first oral statement,
paragraph 29. See also the United States' second written submission,
paragraph 57. See also the United States' answer to question No. 7 of the
Panel of 19 December 2002. For question No. 7, see footnote 60 of this
Report.
181 See the United States' answer to question No. 8 of the
Panel of 19 December 2002. For question No. 8, see footnote 77 of this
Report.
182 See the United States' second written submission,
paragraph 52.
183 See the United States' answer to question No. 8 of the
Panel of 19 December 2002. For question No. 8, see footnote 77 of this
Report. See also the United States' first oral statement, paragraph 30.
See also the United States' second written submission, paragraph 53.
184 See the United States' first oral statement,
paragraph 29. See also the United States' second written submission,
paragraph 57.
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