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
(Continued)
B. SECTION 1.1 OF THE REFERENCE PAPER: PREVENTION OF ANTI-COMPETITIVE PRACTICES IN TELECOMMUNICATIONS
4.253 The United States claims that Mexico's ILD Rules
operate to prevent competition in the termination of cross-border switched
traffic, hold international interconnection rates artificially high, and allow
foreign suppliers no choice but to pay Telmex-negotiated rate if they want to
supply services on a cross-border basis. According to the United States,
Mexico's ILD rules empower Telmex to engage in monopolistic practices with
respect to interconnection rates for basic telecom services supplied on a
cross-border basis and to create an effective cartel dominated by Telmex to set
rates for such interconnection.452 The United States therefore claims that Mexico
has failed to honour its commitments under Section 1.1 of the Reference Paper453,
which provides that "[a]ppropriate measures shall be maintained for the purpose
of preventing suppliers who, alone or together, are a major supplier from
engaging in or continuing anti-competitive practices."454
4.254
Mexico replies that its ILD Rules are not subject
to the obligations of the Reference Paper, and therefore, cannot be inconsistent
with its Section 1.1.455 456 Mexico further points out that, even if its ILD Rules were
subject to the obligations of the Reference Paper, the United States, in order
to succeed in its claim, must present a prima facie case that Mexico has not
maintained "appropriate measures... for the purpose of preventing suppliers
who... are major supplier from engaging in or continuing anti-competitive
practices". According to Mexico, the United States has not done so.457
Mexico also submits that the United States has misinterpreted the obligations of
Section 1.1.458 Mexico also points out that, although its ILD Rules are not subject
to the obligations of the Reference Paper, it has maintained appropriate
measures for the purpose of preventing Telmex from engaging in anti-competitive
practices.459 According to Mexico its measures meet the standards of Section 1.1 of
the Reference Paper and the Mexican regulatory framework contains the requisite
of "Competitive Safeguards".460
1. Panel's standard of review
4.255
Mexico submits that the fact that the United States
may have different goals centered on promoting the interest of its own carriers
should not influence the manner in which the Panel interprets Section 1 in the
light of the objectives of the GATS, which include:
"Desiring the early achievement of progressively
higher levels of liberalization in trade in services � while giving due
respect to national policy objectives;
Recognizing the right of Members to regulate � the
supply of services within their territories in order to meet national policy
objectives and, given wide asymmetries existing with respect to the degree
of development of services regulations in different countries, the
particular need of developing countries to exercise this right;
Desiring to facilitate the increasing participation
of developing countries in trade in services and the expansion of their
service exports including, inter alia, through the strengthening of their
domestic services capacity and its efficiency and competitiveness �"461
4.256
Mexico also submits that Section 1.1 does not
require a Panel to act as a domestic anti-trust authority, as, Mexico indicates,
the United States implicitly argues. In Mexico's view, Section 1.1 sets out
"principles and definitions" for regulatory authorities and does not mean that a
single and common regulatory system should be imposed in the territory of all
WTO Members.462
2. Section 1.1 of Mexico's Reference Paper
(a) Purpose of Section 1.1
4.257 According to the United States, Section
1.1 of Mexico's Reference Paper provides for the maintenance of appropriate
measures to prevent major suppliers from engaging in or continuing
anti-competitive practices.463 The United States recalls that those appropriate
measures are intended to prevent anti-competitive conduct by suppliers who
"alone or together" are a major supplier. The United Sates submits that the "or
together" language in Section 1.1 indicates that the negotiators attached
relevance to horizontal coordination between suppliers. The United States also
points out that, although this phrase has direct relevance to the definition of
"major supplier," it also lends context to the interpretation of the term
"anti-competitive practices," which the United States contends includes, at the
very least, horizontal price-fixing agreements.464
4.258 According to Mexico, the obligation in Section
1.1 is to maintain "suitable or proper" measures with the object or the
intention of preventing Telmex from engaging in anti-competitive practices.465
Mexico claims that Section 1.1 is drafted in such manner that it allows Mexico a
large measure of discretion in deciding what measures would be suitable or
proper to accomplish the intended objectives and cannot be interpreted to mean
that Mexico is required to prevent all suppliers from even engaging in or
continuing anti-competitive practices, as suggested by the United States.466 Mexico
further submits that, Section 1.1 creates an obligation of means, not an
obligation of result.467
(b) Extent of the requirement under Section 1.1
4.259 Mexico maintains that Section 1 of the Reference
Paper does not require markets to be opened to competition. According to Mexico,
the opening of markets is a market access issue that is dealt with in Mexico's
Schedule of Specific Commitments. Mexico submits that Section 1 requires only
that appropriate measures be maintained for the purpose of preventing major
suppliers from engaging in or continuing anti-competitive practices.468
4.260 The United States submits that it is not arguing
that Section 1 requires a guaranteed result and agrees that it is the
maintenance of appropriate measures that is required.469 According to the United
States, what matters is that a Party maintain measures of some sort to prevent,
not stimulate or condone, anti‑competitive marketplace conduct.470 The United
States further submits that it does not claim that Section 1 of the Reference
Paper contains language requiring a market to be opened to competition or that
the requirement of the Reference Paper can only be met by opening a market to
competition. According to the United States, Mexico's obligation to open various
markets derives from the broad range of market access commitments on basic
telecommunications contained in its Schedule.471
(i) "Appropriate measures"
aa) Whether the ILD Rules are "appropriate measures"
under Section 1.1
4.261 The United States asserts that the FCC has
identified Rule 13 as restricting competition, limiting the ability to achieve
cost-based cross-border interconnection rates.472 According to the United States,
Rules 13 and 23 prevent Mexican and foreign suppliers from agreeing to
alternative rates that could exert competitive pressures on the rate exclusively
negotiated by Telmex.473 The United States submits that Mexico's ILD Rules are the
opposite of "appropriate" measures to prevent anti-competitive practices, as
required by Section 1.1 of the Reference Paper.474 4.262
Mexico contends that Section 1.1 does not require
Mexico to ensure that Telmex does not act in an anti-competitive manner. Mexico
submits that it is obliged to put in place "appropriate measures" aimed at
preventing anti-competitive practices475 and that it has maintained appropriate
measures for the purpose of preventing Telmex from engaging in anti-competitive
practices.476 According to Mexico, it must be recognized that the ILD Rules pursue
legitimate policy development objectives, and, in fact, constitute appropriate
measures to encourage and ensure competition among domestic long-distance
carriers.477 In Mexico's view, the United States' claim under Section 1 fails, even
under its incorrect interpretation of the obligation in Section 1.1, since the
ILD rules do not require anti-competitive practices.478
4.263 Mexico submits that Rule 13 grants to the largest
carrier of outgoing international traffic to a particular country the right to
negotiate the rate for terminating incoming international calls from that
country. Mexico indicates that the uniform settlement rate policy ensures that
all Mexican international service providers that terminate international calls
are paid the same negotiated rate. Mexico further points out that the
proportional return policy, ensures that each Mexican provider receives fees
proportionate to the number of calls it actually handles.479 According to Mexico,
the combination of these policies prevents a large carrier taking advantage of
that authority by retaining an unfair share of the revenue from incoming
international traffic, or otherwise undercutting new entrants.480
4.264 According to the United States, preventing price
competition by new entrants to protect a major supplier's high price cannot
possibly be understood as promoting competition.481 The United States submits that
Mexico has offered no evidence that the new entrant carriers at issue need to be
protected from a competitive market or from Telmex. In its view, their best
prospects of building market share and challenging Telmex�s dominance in fact
lie in the freedom to compete with Telmex. The United States argues that
Mexico�s general competition law and its competition authority, the CFC, can
address any attempts by Telmex, alone or in collusion with others, to engage in
exclusionary or predatory conduct, once the constraints of the ILD rules are
lifted.482 The United States argues that although Mexico maintains a general
competition statute, it also maintains measures that require its
telecommunications carriers to adhere to a Telmex-led horizontal price-fixing
cartel, restrict competition for the termination of international switched
telecommunications traffic and otherwise restrict the supply of scheduled
telecommunications services.483 The United States claims that these measures stifle
market challengers and allow Telmex to maintain artificially high prices.484
4.265 The United States recalls Mexico's report to the
OECD's Committee on Competition Law and Policy in which Mexico stated that its
own ILD Rules may not be the most favourable for competition.485 The United States
claims Telmex is exactly the sort of former official monopoly that the Reference
Paper meant to be restrained in order to allow a competitive basic telecom
services trade to develop.486 The United States also claims that the OECD's
Report on Regulatory Reform in Mexico has recognized that Mexico's ILD Rules
prevent competition in the termination of international traffic and prevents
prices from decreasing for consumers, to the benefit of the Mexican
telecommunications operators. The United States further points out that the OECD
Secretariat concluded that an immediate price reduction on international calls
would follow the elimination of the Mexican system.487
4.266
Mexico submits that its ILD Rules are not per se
anti-competitive, they just form part of Mexico's regulatory framework, which is
aimed at increasing competition in its domestic telecommunications market.488
Mexico claims that Rule 13 of the ILD in combination with its uniform settlement
policy and the requirements of proportional return, serves to preserve
competition among domestic carriers and to promote investment in the domestic
telecommunications infrastructure, and cannot be evaluated in isolation.489
4.267 The United States considers that Mexican ILD
Rules, which contain an explicit restriction on price competition together with
the division of supply among market participants, have the classic features of a
cartel. The United States says that Mexico admits that the effect of its ILD
Rules is to prevent smaller carriers from undercutting Telmex on price.490 The
United States submits that ILD Rule 13, in combination with other provisions
of the ILD rules, affirmatively requires and promotes per se anti-competitive
conduct. According to the United States, the effect of Mexico's rules is to
maintain rates for international interconnection that are well in excess of
cost, eliminating any competitive incentive to lower international
interconnection rates. The United States further points out that the reduction
of international interconnection rates, as have occurred, cannot be attributed
to this anti-competitive scheme.491
4.268 According to the United States,
the impact of ILD Rule 13 is to prevent new entrant international carriers in
Mexico, some of which are affiliated with United States or other foreign
providers, from undercutting the above‑cost prices charged by Telmex, thereby
attracting more traffic for themselves. The United States claims that Mexico has
acknowledged its concern about new entrant carriers engaging in a "price war"
with Telmex.492 The United States submits that Mexico's maintenance of ILD Rule 13,
in other words, is not directed at preventing harm to competition but rather is
directed at preventing the natural results of competition. The United States
further points out that Mexico prohibits price competition in the market for
interconnection provided to United States suppliers operating on a cross‑border
basis, and justifies this prohibition as necessary to prevent such competition
from reducing rates. In the United States' view, this can only be regarded as
anti‑competitive.493
4.269
Mexico alleges that its ILD rules governing
settlement rates and proportionate return are not only appropriate, but
necessary to prevent a major supplier from engaging in anti-competitive
practices in the Mexican domestic market for long-distance services, and to
promote the development of the nation's telecommunications infrastructure to
meet fundamental goals such as broader consumer access to service.494 According to
Mexico, the requirements for uniform settlement rates and proportionate return
in ILD Rule 13 are crucial: (i) to preserve competition in Mexico's domestic
market for long-distance services; and (ii) to promote infrastructure
development by ensuring that carriers' shares of the settlement rate revenue
from incoming calls are proportionate to their success in penetrating the
domestic market for outgoing international calls. This is why, in Mexico's view,
the ILD rules must be evaluated in their totality.495
4.270 The United States submits that its concern that
Telmex is engaging in anti-competitive behaviour in its accounting rate
negotiations with United States carriers is exacerbated by the fact that, under
Rule 13 of the regulations issued by Mexico's Secretariat of Communications and
Transport, Telmex negotiates accounting rates for all Mexican carriers.496 As a
result, the United States contends, Telmex has de jure monopoly power in
its negotiations with United States carriers. The United States submits that its
suppliers have no choice but to interconnect with the Mexican public network at
the border, since under Mexico's ILD Rule 3, only "international port operators"
may interconnect with the public networks of foreign operators. The United
States recalls that Mexican law permits only Mexican facilities-based operators
to hold a concession to supply long-distance services.497 The United States further
points out that Mexico leaves no choice but to pay the Telmex-negotiated
interconnection rates, to suppliers from the United States willing to provide
scheduled services on a cross-border basis. The United States claims that Mexico
does not allow "resale" which requires the use of private lease circuits for the
purpose of providing circuit switched telecommunication traffic.498
4.271
Mexico argues that the United States' arguments are
an attempt to force Mexico to permit ISR.499 According to Mexico, its
commitments were limited to allow international traffic only "through the
facilities of an enterprise that has a concession granted by the Secretar�a de
Comunicaciones y Transportes". Mexico argues that Section 1.1 cannot be
construed to indirectly grant carriers, from the United States, access to ISR
when Mexico has an express limitation that allows it to prohibit ISR.500 According
to Mexico, the end result of the United States approach would be to affect
competitive long-distance carriers in Mexico and thereby cut down domestic
market competition with the argument of reducing costs for AT&T and Worldcom. It
further argues that the United States, incidentally, has not offered any
information whatsoever on how elimination of the ILD Rules would promote
competition in the United States, where WorldCom and AT&T together control more
than 90 per cent of United States traffic to Mexico. In its view, even with Rule
13, the negotiating power of the duopsony (exclusive market power of two
buyers on a market) on the United States side has been so dominant, and the
volume of traffic southwards so great, that historically the settlement rate has
been drastically reduced.501
4.272 In response to a question by the Panel, Mexico
indicated that it is not aware of any other WTO Member that has a de jure
Rule 13. However, it argues, most Members, including the United States, have a
de facto Rule 13, since the carrier with the highest market share is the one
that negotiates the corresponding accounting rates (and therefore the settlement
rates) with its counterpart, which also has the highest corresponding market
share, and the remaining carriers on both sides follow their leaders. Mexico
explains that, in the United States, for example, the ISP establishes uniform
settlement rates and proportional return rules that result in a de facto Rule 13
for all United States carriers. However, if one of the economic effects of Rule
13 could be said to prove "anti-competitive", most, if not all, WTO Members have
regulatory measures producing that effect. As is the case with ILD Rule 13,
there are legitimate grounds for such measures and the measures should not be
prohibited simply because one of the effects might be "anti-competitive"
according to a particular criterion or measure.502
4.273 The United States submits that Mexico finally
admits that no other WTO Member maintains a measure similar to Rule 13, and
fails to identify any WTO Members, other than purportedly the United States,
which it claims "have a de facto Rule 13." The United States submits that Mexico
then repeats its false charges that United States rules and policies are similar
to those of Mexico, and again makes no attempt to rebut the evidence put forward
by the United States showing that the United States International
Settlements Policy requires nondiscriminatory rather than uniform rates, that
ISP non-discrimination and proportionate requirements apply only to arrangements
with dominant carriers that maintain high rates, and that all United States
carriers negotiate rates independently.503
bb) Whether a proportionate return system could be an
anti-competitive measure
4.274
Mexico claims that Rule 13 prevents international
anti-competitive activities. According to Mexico, the United States fails to
mention that the two other major Mexican long distance carriers are affiliates
of carriers from the United States and also fails to explain how allowing those
carriers to dictate rates to their Mexican affiliates would serve any
anti-competitive purpose. Mexico submits that its ILD Rules were adopted to
mirror those of the United States, which otherwise would give carriers from the
United States an unbalanced negotiating advantage over Mexican carriers.504 Mexico
contends that its rules have prevented large foreign carriers from pressuring
their own affiliated Mexican companies to agree to predatory, uneconomic prices
that would serve only the interest of companies from the United States to the
detriment of the Mexican market, undermining the opportunity to expand access to
basic telecommunications services to those who now lack such services, and who
comprise two-thirds of Mexican households.505
4.275 The United States replies that its international
regulatory scheme upon which Mexico's ILD Rules were allegedly based is
qualitatively different from Mexico's rules. According to the United States, its
rules are designed to prevent monopolistic abuses where the potential for them
still exists, not to authorize and mandate such abuses like Mexico's ILD Rules.
According to the United States its uniform or nondiscriminatory settlement rate
and proportionate return requirements only apply to foreign carriers with market
power, whereas Mexico's rules apply to all foreign carriers regardless of their
market power. The United States claims that its rules encourage all its carriers
to negotiate cost-oriented rates. The United States further points out
that Mexico's rules prohibit all carriers, except Telmex, from negotiating rates
and thus encourage artificially high rates, the exact opposite of cost-based.506
The United States submits that it has not at any time given one carrier the
exclusive authority to negotiate international interconnection rates for itself
and other competitive carriers.507
4.276 Mexico contends that, despite the United States claim
that it applies its International Settlements Policy in a narrowly targeted
fashion, it has waived the policy only for 15 countries, and it deems virtually
every major foreign carrier to have market power, including all local exchange
carriers in the countries to which the Policy applies.508
4.277 In the United States' view, the use of a
proportionate return system is not an anti-competitive practice where it is used
solely to prevent the abuse of market power. The United States claims
that it applies proportionate return requirements only to cross border suppliers
that both (1) possess market power at the foreign end of the international
route, and (2) maintain high settlement rates.509 According to the United States,
proportionate return is applied to dominant suppliers with high rates in order
to prevent those dominant suppliers from using their control of return traffic
to obtain additional concessions from competing suppliers in the United States.
The United States claims that, except for dominant suppliers with high
rates, cross-border suppliers into the United States are not subject to
proportionate return. The United States refers that all suppliers, from
all countries, that do not possess market power at the foreign end of the
relevant international route, including all Mexican suppliers except Telmex, are
not subject to proportionate return, and may terminate unlimited amounts of
bound traffic in the Unite States with any supplier.510
4.278 The United States claims that it is
pro-competitive rather than anti-competitive to apply a proportionate return
system narrowly in order to prevent dominant suppliers with high settlement
rates from using their market power to receive increased above-cost subsidies.
The United States points out that Mexico has established a
"proportional return" system under which Mexican carriers receive a share of the
above cost payments associated with inbound international traffic in relation to
their outbound international traffic.511 In the Unites States' view, Mexico does
not apply proportionate return to prevent the abuse of market power, but just
requires all suppliers to comply with proportionate return, irrespective of
whether they possess market power. The United States submits that Mexico's
proportionate return requirement operates "in combination with" the Telmex
monopoly on rate negotiations and the requirement for uniform rates to prevent
one Mexican supplier "undercutting" any other Mexican supplier, or otherwise
competing to increase its share of traffic received from cross-border suppliers
from the United States.512 The United States contends that Mexico applies
proportionate return broadly to all suppliers with the purpose of maintaining
payment of above-cost subsidies resulting from the abuse of market power by
Telmex.513
4.279 The United States submits that Mexico has failed
to explain why a Mexican carrier, even if minority owned (but not controlled) by
a United States. carrier, would ignore its responsibility to its majority
shareholders and agree to predatory, uneconomic prices for international
interconnection. In its view, the impact of ILD Rule 13 is to prevent new
entrant international carriers in Mexico, some of which are affiliated with
United States or other foreign providers, from undercutting the above‑cost
prices charged by Telmex, thereby attracting more traffic for themselves. Mexico
has acknowledged its concern about new entrant carriers engaging in a "price
war" with Telmex. Mexico�s maintenance of ILD Rule 13, in other words, is not
directed at preventing harm to competition but rather is directed at preventing
the natural results of competition. Mexico prohibits price competition in the
market for interconnection provided to United States suppliers operating on a
cross‑border basis, and justifies this prohibition as necessary to prevent such
competition from reducing rates. This can only be regarded as anti‑competitive.514
4.280 In Mexico's view, the proportional return system
is a pro-competitive practice, directed at Mexico's legitimate policy
objectives.515 According to Mexico, its ILD Rules promote competition in the
Mexican domestic market, while protecting Mexican carriers from being played off
each other by foreign carriers. Mexico submits that among other pro-competitive
features, ILD Rules prevent negotiation by one supplier of a settlement rate
that could undercut other suppliers because it would be unprofitable for them
(i.e., a predatory settlement rate). Mexico points out that the United
States tries to dismiss the pro-competitive goals of the ILD rules as
irrelevant, persisting in its claim that Mexico's Reference Paper requires
competition in the negotiation of accounting rates regardless of the negative
impact on competition that this would bring to the domestic market, including
the impact on international calling services to consumers.516
(ii) "Major supplier"
4.281
The United States explains that Mexico's ILD
Rule 13 provides that the carrier with the greatest share of outgoing
international calls in the last six months is given the exclusive authority to
negotiate the interconnection rates with foreign carriers. The United States
points out that Telmex has always been the carrier with the largest outgoing
international calls, holding the exclusive negotiating authority. The United
States further points out that ILD Rules require all Mexican long-distance basic
telecom suppliers to charge foreign suppliers only the Telmex-negotiated
cross-border interconnection rate, even if Telmex is not a party to that
agreement.517 The United States therefore contends that Mexico's rules empower and
require Telmex to operate a cartel dominated by itself to fix rates for
international interconnection and mandate that all Mexican carriers must adhere
to those rates.518
4.282 The United States submits that Section 1.2 of
the Reference Paper defines "major supplier" as a "supplier which has the
ability to materially affect the terms of participation (having regard to price
and supply) in the relevant market519 for basic telecommunications services as a
result of: (a) control over essential facilities; or (b) use of its position in
the market."520 According to the United States, Telmex satisfies this definition of
"major supplier" because it has the ability, in the Mexican market, to use its
position to materially affect the prices charged and the supply of services.521 The
United States further submits that Mexican competition law, in determining
whether an economic agent has "substantial power in the relevant market",
considers "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", and other factors including "existence of
entry barriers", existence and power of � competitors", and possibility of
access � for sources of inputs.522 The United States defines the relevant market as
the termination of voice telephony, facsimile and circuit‑switched data
transmission services supplied on a cross‑border (i.e., international)
basis from the United States into Mexico, which, in its view, is demonstrated by
well‑accepted principles of market analysis which derive from competition law.523
The United States recalls that Mexican competition law provides that in order to
determine a relevant market, it is necessary to evaluate "[t]he possibilities of
substituting the goods or services in question, with others of domestic or
foreign origin, considering technological possibilities, and the extent to which
substitutes are available to consumers and the time required for such
substitution".524
4.283
Mexico argues that the United States has not
demonstrated that the interconnection at issue concerns a "major supplier"525 and
has not presented a prima facie case that Telmex is a "major supplier" within
the meaning of the Reference Paper.526 In Mexico's view, the United States'
analysis527 in which it sets out its argument that Telmex is a "major supplier" is
flawed.528 In this regard, Mexico submits that the United States has failed to
clearly define the services at issue and how they are supplied.529 It further
contends that, even if assuming that the services at issue are the
transportation and transmission of telecommunications signals and that the mode
of supply at issue is mode 1 (cross-border), the United States has failed to
explain how the "relevant market" it defines is relevant to the cross-border
supply of such services.
4.284 As regards the United States' definition of "relevant
market" as "the termination of voice telephony, facsimile and circuit-switched
data transmission services", Mexico submits that "termination services",
to the extent that they are provided by a carrier in a WTO Member, are provided
on a mode 3 (commercial presence) basis and not on a cross-border basis. Mexico
claims that the United States' analysis confuses two distinct modes of supply,
cross-border and commercial presence. Mexico further claims that the United
States relies on a relevant market resolution by the Mexican competition
authority that is under review by Mexican courts precisely because the data it
was based upon.530 Mexico also argues that, assuming that defining the relevant
market as "termination services" is relevant, it is unclear whether a carrier in
Mexico, such as Telmex, is providing "termination services" in the light of the
technical distinction between the traditional accounting rate procedure and a
termination regime. It further argues that, even if a carrier in Mexico does
provide termination services for foreign carriers wishing to terminate calls
within Mexico, "termination services" and how to schedule those services was a
specific topic of discussion during the negotiations on basic
telecommunications. There was no agreement on these services and, even if there
was, Mexico has not inscribed in its Schedule any specific commitments with
respect to these services, for example, by using the approach proposed by
Australia during the negotiations.531
4.285 The United States responds that Mexico's
assertion that termination services are not interconnection is refuted by the
plain language in Section 2.1 of Mexico's Reference Paper definition of
"interconnection". Additionally, the United States submits that the European
Commission has described call termination as "the most basic interconnection
service provided" and that in its submissions during the negotiations, Australia
stated that termination of international traffic is interconnection, and there
is no indication that any other Member objected to this characterization.532
4.286
Mexico submits that, basically, Mexico and the
United States differ on what constitutes the relevant market in which
competition must be promoted and protected. Mexican policy, as shown by the ILD
Rules, is that domestic carriers should share in and split agreements for
incoming calls in terms of their success in securing a share on the domestic
market and generating outbound calls. The United States sees it differently
(apparently, solely for the purposes of its argument in this case), i.e. the
only "market" worth protecting is the one for terminating United States traffic
to Mexico. Mexico contends that the United States is acting as if new operators
should compete to carry incoming international traffic calls instead of
competing for end-customers in Mexico. According to the criterion set by the
United States, it argues, an operator who has made a minimal investment in
Mexican infrastructure should be allowed to do so on an unlimited basis, taking
all the revenue for international calls from the operators who have made such
investments and have obtained successful results in acquiring a share of the
market.533
4.287 The United States claims that Mexico is
attempting to justify its anti-competitive ILD rules by alleging that the United
States "is acting as if new operators should compete in order to carry incoming
international traffic calls instead of competing for end-customers in Mexico."
The United States submits that Mexico misstates the United States position. In
the view of the United States, Mexico�s WTO obligations require it to allow new
carriers to compete both to carry inbound international calls and
for customers in Mexico. Likewise, it argues, Mexico implies that it is wrong
for the United States to assert that carriers that have made "minimal"
investments in Mexican infrastructure should be allowed to engage in "unlimited"
competition. The United States maintains that a carrier�s ability to compete,
either for inbound international calls, Mexican customers or in any other area,
is limited only by the limitations, if any, in Mexico�s Schedule. Mexico cites
no requirement in its Schedule that links a supplier�s ability to compete for
inbound international calls to that supplier�s level of investment in Mexican
facilities. Additionally, Mexico does not restrict competition for inbound
international traffic merely for those suppliers with an undefined level of
"minimal investment." Instead, Mexico's ILD rules restrict competition for
inbound international traffic for all commercially present suppliers,
irrespective of their level of investment in Mexican facilities.534
(iii) "Anti-competitive practices"
aa) Definition of anti-competitive practices
4.288 The United States explains that apart from three
illustrative practices included in Section 1, the Reference Paper does not
define the term "anti-competitive practices". The United States considers that
this term encompasses, at a minimum, what are usually characterized as "abuses
of dominant position" and/or "monopolization" offences as well as
"cartelization", which, according to the United States, are common antitrust
concepts generally included within the universe of business practices usually
found to be anti-competitive under national regulatory schemes and competition
laws and policies. The United States claims that Mexico's antitrust law
generally prohibits behaviour of this sort.535 The United States
further indicates that the 1999 Report of the WTO Working Group on the
Interaction Between Trade and Competition Policy describes the nature and
consequences of "horizontal" agreements which are likely to have a direct,
negative impact on competition and to give rise to the exercise of market power.536
4.289
Mexico indicates that a definition of
"anti-competitive practices" is provided in Section 1.2, which states that:
"The anti-competitive practices referred to in the above
paragraph shall include in particular:
(a) Engaging in anti-competitive cross-subsidization;
(b) using information obtained from competitors with
anti-competitive results; and
(c) not making available to other services suppliers
on a timely basis technical information about essential facilities and
commercially relevant information which are necessary for them to
provide service." (emphasis added)537 4.290
Mexico argues that the term "shall include"
indicates that the list is non-exhaustive and that the addition of the words "in
particular" demonstrate a focus on certain types of activities � namely, actions
taken by private companies to gain an advantage over their competitors. Mexico
claims that carriers from the United States are not competing with Mexican
carriers when they enter into bilateral accounting rate arrangements since they
do not offer service to Mexican customers. Mexico submits that, even if the
legal requirement that all Mexican carriers charge the same settlement rate
somehow could be construed as a "horizontal price fixing agreement" by private
companies, such an agreement would not be encompassed by Section 1 because all
Mexican carriers would be participating in the conspiracy and none would be
harmed by it.538 bb) Government intervention
4.291 According to the United States, the fact that
anti-competitive conduct is compelled by the government does not change the
underlying nature of the conduct as anti-competitive.539 In its view, even if an
activity engaged in by Mexico's major supplier, Telmex, is immunised from
domestic enforcement action under Mexican law, or is in some sense the act of
the Mexican State itself, that does not alter the anti-competitive character of
the activity at issue. The United States notes that it is Mexico's failure to
observe the obligations of Section 1 that is at issue in this dispute, not
Telmex 's failure to observe those obligations. According to the United States,
if a WTO Member were able to immunize itself from the obligation incumbent upon
it under Section 1 to take measures to prevent anti-competitive conduct by major
suppliers by simply requiring anti-competitive conduct by major suppliers, the
entire purpose of Section 1 would be undermined. The United States says that
such an interpretation of Section 1 would encourage Members affirmatively to
maintain measures requiring anti-competitive conduct, rather than put in place
measures to prevent anti-competitive conduct.540
4.292
Mexico submits that the United States has failed to
establish that Section 1 disciplines regulatory "measures" of a WTO Member that
have an anti-competitive effect.541 In Mexico's view, "anti-competitive practices"
refer to the practices of a major supplier and not to governmental measures that
may have an anti-competitive effect.542 Mexico recognizes that all regulation of
economic activity, by definition, interferes
with the operation of a freely competitive marketplace,
including rate-setting by governmental
authorities, but claims that such government regulation
itself is not typically understood to be capable of
violating competition rules.543 According to Mexico, if the
United States' interpretation is to be accepted, all government regulatory
measures in the telecommunications sector that restrain the actions of a major
supplier in a manner that interferes with the operation of a freely competitive
marketplace would be prohibited. Mexico claims that this is not what was
intended by Section 1 of its Reference Paper. Mexico submits that there is no
basis in the text of Section 1 to judge the legitimacy of a WTO Member's
internal regulatory policies in circumstances where no multilaterally
agreed-upon benchmarks exist. Mexico further contends that in order to justify
its own anti-competitive measures, the United States essentially distinguishes
between anti-competitive measures that, in its view, have legitimate policy
objectives and those that, in its view, do not. In Mexico's view, if the
drafters of Section 1 meant to include government regulatory measures, surely
they would have included text to take into account such important distinctions
and to provide objective benchmarks for assessing the legitimacy of such
measures.544 cc) Price fixing as an anti-competitive practice
4.293 Answering a Panel's question545, the United States
submits that, if price-fixing is anti-competitive, then it is anti-competitive
even if required by law. According to the United States, even if an activity
engaged in by Mexico's major supplier, Telmex, is immunized from domestic
enforcement action under Mexican law, or is in some sense the act of the Mexican
state itself, that does not alter the anti-competitive character of the activity
at issue.546 The United States further submits that Telmex's ability to negotiate
uniform settlement rates is per se anti-competitive. In its view, this is, by
definition, a horizontal price-fixing cartel that fits within virtually any
definition of anti-competitive practice. The United States notes that horizontal
price fixing is condemned both as a per se violation of its own law under
Section 1 of the Sherman Act and as an absolute monopolistic practice under
Article 9 of Mexico's FLEC.547 The United States affirms that it is the setting of
the rate by a monopolist (since Telmex is given the exclusive authority, it is
acting as a monopolist in this context) and the use of this rate by all other
suppliers (horizontal price-fixing) that comprise the anti-competitive practices
that form the basis for the United States' claim under Section 1 of the
Reference Paper. It submits that the fact that the government requires the
anti-competitive practice does not change the nature of the practice as
anti-competitive.548
4.294 Also in answer to a Panel's question, Mexico
submits that the fixing of a uniform price cannot be an anti-competitive
practice in violation of the obligations under the Reference Paper if uniform
prices are required by law.549 Mexico further submits that Telmex's ability to
negotiate uniform settlement rates is not per se anti-competitive since Mexican
law does not give Telmex the authority to negotiate the rate. According to
Mexico, Rule 13 provides the carrier having the greatest share of outgoing
traffic to a particular country is authorized to negotiate the rate. Mexico
claims that new entrant carriers have been gaining important shares of outgoing
traffic on certain routes, and therefore may soon have the right to negotiate
the rates for those routes.550
4.295
Mexico further submits that, in the economic sense,
monopolies may be "anti-competitive". However, it cannot be said that a domestic
regulatory regime that establishes and permits a monopoly or small number of
exclusive service suppliers to exist is equivalent to requiring an
"anti-competitive practice" within the meaning of Section 1 of Mexico's
Reference Paper. GATS Article VIII explicitly contemplates that WTO Members can
maintain monopolies and exclusive service suppliers. Moreover, many WTO Members
who have inscribed a Reference Paper maintain monopolies or exclusive service
suppliers under their domestic law. Section 1 of Mexico's Reference Paper and
the equivalent provisions in the Reference Papers of other WTO Members cannot be
interpreted to nullify a right that exists under GATS Article VIII. Mexico
submits that the obligations in the Reference Paper were negotiated specifically
to prevent major carriers in regulated markets from abusing their market
positions by engaging in anti-competitive "private" actions. With respect to
"the use of the [Telmex] rate by all other suppliers", such action is not the
result of anti-competitive practices of a major supplier � the focus of Section
1 of Mexico's Reference Paper � rather, it is the result of a legitimate
government regulatory scheme.551
4.296 The United States responds that there is no basis for
Mexico's assertion that GATS Article VIII contemplates Mexico's restrictions on
competition through the ILD rules, and therefore somehow precludes any challenge
to such measures under Article 1 of the Reference Paper.552 Article VIII only
applies to monopolists and "exclusive service suppliers, where a Member,
formally or in effect, (a) authorizes or establishes a small number of suppliers
and (b) substantially prevents competition among those suppliers in its
territory." Mexico has placed no limitation on the number of concessionaires,
either formally or in effect, and Article VIII therefore does not apply.
Mexico's Schedule contains no Article XVI:2(a) limitation on the number of
service suppliers, and as of September 2002 Mexico had granted no fewer than 27
concessions for domestic long-distance service, 11 of which are authorized to
operate international ports.553
(c) Relationship between Section 1.1 and Section 2.2(b)
of the Reference Paper
4.297 The United States submits that a Member that
scheduled the Reference Paper as an additional commitment is required by Section
1 of the Reference Paper to maintain appropriate measures to prevent its major
supplier from engaging in or continuing anti-competitive practices, and is also
obliged under Section 2.2(b) to ensure interconnection with that major suppliers
on reasonable terms, conditions and rates. The United States considers that
depending on the facts at issue, a conduct could be both anti-competitive and
restrict the supply of basic telecommunication services, leading to a violation
of both Sections 1 and 2.2(b).554 The United States also submits that the
purpose of Section 1 of the Reference Paper is to support the parallel goals of
de-monopolization and market access by protecting and fostering competition
among basic telecom competitors, and that it complements the more specific
interconnection rules for major suppliers found in Section 2.555
4.298
Mexico submits that Sections 1 and 2 of Mexico's
Reference paper do not cover the same subject matter. In Mexico's view,
independent meaning must be given to each provision and overlapping
interpretations must be avoided.556 According to Mexico, what is "not reasonable"
under Section 2.2 and what is "anti-competitive" under Section 1.1 are measured
against different standards, there being no relationship between the two.557
(d) Relationship between Sections 1.1 and 3 of Mexico's
Reference Paper
4.299 In response to question No. 23(b) of the Panel meeting
of 13 March 2003558, Mexico explains that there is no legal relationship
between Sections 1.1 and 3 of its Reference Paper. According to Mexico, those
Sections relate to different subjects and lay down different obligations. Mexico
submits that Section 3 has not been the subject of this dispute. In Mexico's
view, Section 1.1 does not regulate measures by a Member with a side-effect that
may prove anti-competitive from a particular standpoint. Mexico contends that
Section 3 relates to the maintenance of a type of specific governmental measure
for the universal service obligation, which includes laying down obligations on
domestic carriers to provide universal service coverage over a Member's
territory and that such measure be, inter alia, administered in a
"transparent, non-discriminatory and competitively neutral" manner.
4.300
Mexico submits that, for the purposes of this
dispute, it is notable that when a governmental measure must be regulated in
accordance with Mexico's Reference Paper, it is done explicitly as in Section 3,
so that it identifies the exact governmental measure in question (i.e. a
"universal service" measure and not a general governmental regulatory measure,
which would be the outcome of the United States interpretation of Section 1.1 of
Mexico's Reference Paper) and the specific disciplines that apply
(i.e., "competitively neutral", contrary to "anti-competitive practices", which
are more subjective and general). According to Mexico, this confirms its
position that Section 1.1 of its Reference Paper does not regulate a Member's
measures, but the "practices" of a "major supplier".559
4.301 The United States replies noting that Mexico's
ILD Rules are not "legislative requirement[s]," but regulatory requirements
imposed by Cofetel. According to the United States, Mexico's ILD Rules 13 and 23
implement per se anti-competitive practices under Section 1.1 of the Reference
Paper, which are not mitigated by any application of Section 3.560
4.302 The United States submits that Section 3 allows
a Member to "define the kind of universal service obligation it wishes to
maintain". The United States claims it is aware of no universal service
obligation implemented or defined by the Mexican authorities, and no such
obligation is defined by the ILD rules. The United States further submits that
Mexico has not even identified or defined a universal service obligation that
would, were it identified or defined, "not be regarded as anti‑competitive per
se," pursuant to Section 3. In the United States view, since Mexico has not
identified or defined a universal service obligation, it is not entitled to the
presumption against per‑se anti‑competitiveness included in Section 3.561
4.303 The United States further submits that even if
Mexico had defined a universal service obligation and Section 3 were to apply,
Mexico would not be entitled to this presumption, since its ILD rules also
breach the additional requirements that the defined obligation be "administered
in a transparent, non‑discriminatory and competitively neutral manner and
� not [be] more burdensome
than necessary for the kind of universal service defined by the Member."562
Specifically, the United States argues that, at present, any alleged universal
service obligations levied against foreign suppliers are apparently hidden in
interconnection rates paid to Telmex. There is no transparency when universal
service obligations are hidden in interconnection rates paid to the major
supplier. The United States submits that a transparent process must, at a
minimum, identify the level of charges associated with the universal service
obligation. The ILD rules also fail to provide the "non‑discriminatory and
competitively neutral" administration of the defined universal service
obligation that is required by Section 3. Because the ILD rules only address
interconnection rates paid by cross‑border suppliers, they ensure that the
entire burden of any universal service obligation implemented in this way falls
upon cross‑border suppliers. Finally, the United States notes that the ILD rules
fail to identify the monetary level of the obligation and ensure that the
charges are commensurate with that obligation. Because Mexico has not defined a
universal service obligation, it cannot determine what level of charges would be
"necessary" to meet that obligation. Similarly, levying charges allegedly
associated with that obligation are by definition more burdensome than
necessary.563
C. SECTION 5 OF THE GATS ANNEX ON TELECOMMUNICATIONS 4.304 The United States claims that Mexico has failed
to honour its commitments under the GATS Annex on Telecommunications. According
to the United States, the Annex requires Mexico to ensure that service suppliers
of other Members can access and use public telecommunications transport networks
and services on reasonable and non‑discriminatory terms and conditions to
provide a scheduled service.564 In the United States' view, Mexico has not
fulfilled its obligations under either Section 5(a) or 5(b) of the Annex for the
provision of the scheduled services.565
4.305
Mexico submits that the scheduled services - i.e.
the market-access commitments - that the United States alleges that Mexico has
made and which are the basis for the claim under the Annex do not exist. In
Mexico's view, the United States is incorrectly arguing that the Annex confers
rights to supply basic telecommunications services when the Annex applies only
to access to and use of those services. Therefore, Mexico submits that the
provisions of the Annex cited by the United States566 do not apply to the facts of
this dispute. Mexico further submits that even if Sections 5(a) and 5(b)
applied, the United States has failed to present a prima facie case that these
provisions have been violated. According to Mexico, the measures the United
States is challenging are consistent with paragraphs 5(e), 5(f) and 5(g) of the
Annex.567
1. Application of the Annex
4.306 The United States submits that the GATS Annex on
Telecommunications addresses telecommunications as a means of transporting
scheduled services. In its view, the Annex requires Members to ensure that users
of telecommunications (e.g., service suppliers) have access to, or use of,
telecommunications � free from obstacles � to deliver their services.568 It further
submits that the Annex grew out of a recognition that telecommunications
represent the primary delivery mechanism for many services, particularly those
offered on a cross‑border basis. Without telecommunications, it would be
impossible for many service suppliers to deliver their services.569 The United
States claims that access to telecommunications as a transport mechanism depends
on those entities which control telecommunications networks and offer
telecommunications services. Such entities � principally monopolies or former
monopoly providers � have represented the principal obstacle to access and use
of telecommunications as a transport mechanism.570 Like the Reference Paper, the
Annex represents an effort to prevent dominant telecom providers from using
their control over public telecom networks and services to undermine the supply
of a scheduled service and to ensure that dominant telecom suppliers cannot
nullify the services commitments that their home country undertakes.571
4.307
Mexico contends that enhanced services and
suppliers of services in sectors other than the telecommunications sector rely
on "access to and use of" the existing public telecommunication network.
According to Mexico, the Annex establishes general obligations to ensure that
such services have access to and use of the public network on non-discriminatory
and reasonable terms and conditions. Mexico claims that the Annex does not
confer any right to supply telecommunications transport networks and services
(i.e. basic telecommunications services) other than as provided in a Member's
Schedule. It further submits that market access rights for the supply of basic
telecommunication services were the subject of the later negotiations that led
to the Fourth Protocol.572
4.308 The United States maintains that the Annex
requires each WTO Member to ensure that foreign service suppliers have
reasonable and non‑discriminatory access to and use of public telecommunications
networks and services to supply a scheduled service. According to Section 5 of
the Annex:
"(a) Each Member shall ensure that any service
supplier of any other Member is accorded access to and use of public
telecommunications transport networks and service on reasonable and
non‑discriminatory terms and conditions for the supply of a service
included in its Schedule. This obligation shall be applied, inter
alia, through paragraphs (b) through (f) [footnote omitted].
(b) Each Member shall ensure that service suppliers
of any other Member have access to and use of any public
telecommunications transport network or service offered within or across
the border of that Member, including private leased circuits."573 4.309 The United States submits that for each service
inscribed in its Schedule, including basic telecom services, each WTO Member
must ensure that foreign service suppliers may access or use public
telecommunications networks and services � whether through interconnection or
any other form of access and use � to transport their service.574 According to the
United States the scope of this obligation is wide and extends to any public
telecom network and service offered within or across the border of that Member.
The definition of such networks and services is broad enough to encompass all
types of public networks and services that a telecom provider may offer.575
4.310
Mexico submits that the focus of the Annex on
Telecommunications services is as a transport means for other economic
activities, and not the supply of basic telecommunications services.576 The term
"access to and use of" is not defined in the Annex, but paragraphs (b) and (c)
of Section 3 of the Annex define the terms "public telecommunications transport
service"577 and public telecommunications transport networks".578 In Mexico's view,
the Annex applies to access to and use of a Member's available basic
telecommunications services. The services for which "access to and use of" is
provided are something other than basic telecommunication services.579 Mexico
contends that the United States' claims under the Annex must be assessed within
the context of these definitions. Mexico points out that the United States is
arguing that the Annex grants to its suppliers of basic telecommunications
services the right to "supply" basic telecommunications services cross-border
into Mexico by interconnecting with the public network or by interconnecting
with private leased or owned circuits in Mexico. It further points out that the
United States is also arguing that the Annex grants foreign companies the right
to own 100 per cent of operators established in Mexico who will be entitled to
supply such services cross-border into the United States.580
4.311 The United States claims that Mexican law
prevents foreign suppliers from owning public telecom networks and services in
Mexico, leaving them no choice but to rely on Mexican operators to provide the
access to and use of the public networks and services they need to deliver
scheduled basic telecom services from abroad into Mexico. Because of Telmex's
monopoly over the negotiation of settlement rates and the requirement that all
other Mexican carriers must charge the rate negotiated by Telmex, all Mexican
operators are required to charge rates that exceed cost.581 According to the United
States, the entire purpose of Section 5 of the Annex is to require WTO Members
to prevent this very form of behavior. The United States claims that Members
drafted the Annex to ensure that their suppliers of public networks and services
� whether they are monopolies, major suppliers, or competitive suppliers � do
not hold access to, and use of, their networks and services hostage to monopoly
rates, or any other form of unfair or anti‑competitive conduct that would
undermine the supply of scheduled services.582
4.312 In Mexico's view, the purpose of the Annex is
not to allow facilities-based and non-facilities-based basic telecommunications
suppliers to supply their services cross-border, but to provide supplementary or
additional obligations to allow "access to" and "use of" Mexico's existing
public telecommunications transport network and services.583 It submits that the
terms "access to" and "use of" have different meanings from the term "supply",
which is frequently used in the text of the GATS. The term "supply" is defined
as meaning "provide or furnish a thing needed". Mexico claims that the Annex
applies only to measures which affect "access to or use of public
telecommunications transport networks or services, and it does not apply to
measures that affect "supply" of telecommunications transport services
cross-border.584 According to Mexico, the United States is confusing "market
access" with "access to and use of" existing public telecommunications transport
networks operated by domestic concessionaires. Mexico contends that "market
access" is dealt with in the market-access commitments made under Article XVI of
the GATS inscribed in Mexico's Schedule, whereas "access to and use of" public
telecommunications networks is dealt with in the Annex.585
4.313 In Mexico's view, the Annex was not drafted to
provide "market access" to foreign suppliers of basic telecommunications
services.586 According to Mexico, paragraph (c) of Section 2 of the Annex provides
important exemptions from the application of the Annex:
"Nothing in this Annex shall be construed:
(i) to require a Member to authorize a service
supplier of any other Member to establish, construct, acquire, lease,
operate, or supply telecommunications transport networks or services,
other than as provided in its Schedule; or
(ii) to require a Member (or to require a Member to
oblige service suppliers under its jurisdiction) to establish,
construct, acquire, lease, operate or supply telecommunications
transport networks or services not offered to the public generally."587
4.314 According to Mexico, the services at issue in
this dispute are "telecommunications transport � services", governed by Mexico's
Schedule. In Mexico's view, pursuant to Section 2(c)(i), nothing in the Annex
can be construed to require Mexico to authorize service suppliers from the
United States to supply these services beyond the terms and conditions inscribed
in its schedule.588 The United States submits that Section 1 of the Annex
states that telecommunications has a "dual role as a distinct sector of economic
activity and as the underlying transport means for other economic activities."
It further submits that Section 2(a) states that the Annex applies to "all
measures" affecting access to and use of public telecommunications transport
networks and services, which would include measures regulating
telecommunications "as a distinct sector of economic activity . . ." The United
States also recalls Section 5(a), which imposes obligations "for the supply of a
service included in [a Member's] Schedule," without imposing any limits on the
type of service that would be relevant, including basic telecommunications
services scheduled by Mexico.589
4.315
Mexico maintains that the fact that Section 1
(entitled "Objectives") of the Annex on Telecommunications refers to a "dual"
role of the telecommunications services sector does not mean that the Annex
covers both aspects of this "dual" role. In Mexico's view, Section 1 simply
confirms that the Annex is based on the recognition that, beyond constituting a
service sector of their own, telecommunications services and networks are
essential tools for other economic activities, such as banking, insurance, etc.
According to Mexico the fact that these other activities rely heavily on
telecommunications services as an underlying transport means that is the
raison d'�tre of the Annex, supporting Mexico's view that the Annex is aimed
at addressing the second aspect of the dual role. The first aspect � the supply
of basic telecommunications services � was dealt with under the basic
telecommunications negotiations that led to the Fourth Protocol to the GATS in
1997.590 Although Section 1 refers to a "dual" role of the telecommunications
services sector, it also stipulates that the Annex was agreed to "with the
objective of elaborating upon the provisions of the Agreement with respect to
measures affecting access to and use of public telecommunications transport
networks and services".591 The reference in Section 1 of the Annex to "measures
affecting access to and use of" PTTNS must be contrasted with the scope of the
provisions of the GATS Annex on Financial Services. Section 1(a) of that Annex
states "[t]his Annex applies to measures affecting the supply of financial
services. Reference to the supply of a financial service shall mean the supply
of a service as defined in paragraph 2 of Article I of the Agreement". Thus,
where the negotiators of the GATS intended that an annex apply to the "supply"
of a service within the broader meaning of the GATS, they did so explicitly.592
4.316 According to Mexico the Annex distinguishes
between access to and use of public telecommunications transport networks
and services, which is relevant to telecommunications services as an underlying
transport means for other economic activities, and the supply of such
services, which is relevant to trade in telecommunications services as a
distinct sector of economic activity.593 In Mexico's view, Section 2 of the Annex
makes clear that the Annex is devoted solely to the guarantees of access and
use. It explains that Paragraph (a) of Section 2 stipulates that the Annex
"shall apply to all measures of a Member that affect access to and use of public
telecommunications transport networks and services". In Mexico's view, the Annex
is limited in scope and deals only with the right to access and use public
telecommunications transport networks and services and not the right to provide
and supply them.594 Mexico contends that the services at issue in this dispute are
the transport of customer-supplied information or data between two or more
points, being themselves "public telecommunications transport networks and
services", which cannot be supplied through access to and use of another
Member's PTTNS.595 It further submits that, by definition, Mexico's suppliers of
"public telecommunications transport networks and services" cannot transport
public telecommunications transport services supplied by other suppliers. It
explains that, in the circumstances of this dispute, when suppliers from the
United States hand off traffic to a Mexican supplier at the border, they rely on
the PTTNS provided by that supplier and do not supply their services into
Mexico. Mexico contends that basic telecommunications services are the
underlying transport means for other economic activities and Mexico fails to see
how they could be viewed as a transport means for the same economic activity,
which is the implication of the United States' position in this dispute.596
4.317 Answering a question by the Panel597, Mexico
submits that Section 5 of the Annex refers to access to and use of a Member's
PTTNS "for the supply of a service included in its schedule", that applies only
until the services scheduled by a Member can be supplied by access to and use of
another Member's PTTNS.598 According to Mexico, the services that are the subject
of this dispute are telecommunications transport and transmission services,
which cannot ipso facto be supplied through access to and use of another
Member's PTTNS since the latter are, in themselves, "public telecommunications
transport networks and services".599 Mexico contends that the United States
interpretation would lead to the conclusion that the Mexican postal authority
would be transporting United States postal services by delivering mail sent from
the United States and handed over at the border, that a pipeline within Mexican
territory would be transporting United States pipeline services when it
transports oil received from a United States pipeline that stops at the border,
and that a Mexican transport company would be performing United States transport
services when it delivers the freight that was transferred to it at the border.
In Mexico's view, Mexican service suppliers � including public
telecommunications transport suppliers � only supply their own transport
service.600
4.318 The United States contends that Mexico's
assertion that the services at issue are "transport and transmission" services,
is erroneous, as it ignores the text of the CPC codes Mexico has inscribed in
its Schedule. In the view of the United States, Mexico's Schedule does not limit
its cross-border commitment to only a portion of the service defined in the CPC
codes, but the entirety of a telephone call's path, from its point of origin to
its point of termination.601 The United States further disagrees with the analogy
that Mexico draws with regard to the transport of oil or of goods sent via mail.
In case of the transport of goods, the goods are separate products, while a
basic telecommunications service � a telephone call or a "communication" is an
inseparable part of the service itself. Section 1 of the Annex draws an explicit
distinction between telecommunications services as a distinct sector of economic
activity and as the underlying transport means for other economic activities.602
2. Application of Sections 5(a) and 5(b) of the Annex
4.319 The United States submits that, its claims are related
to five distinct situations for which, in the United States' view, Mexico
has made specific commitments, and for which Mexico must comply with its Annex
obligations. According to the United States, under the first two situations, in
accordance with Section 5(a) of the Annex, Mexico must ensure that foreign
facilities-based and non-facilities based suppliers of cross border
telecommunications services are accorded access to and use of public
telecommunications transport networks and services (PTTNS) on reasonable and
non-discriminatory terms and conditions.603 Under the third and fourth situations,
the United States claims that, according to Section 5(b) of the Annex, Mexico
must ensure that these suppliers have access to and use of private leased
circuits.604 The United States further points out that locally established
non-facilities based operators (commercial agencies) must likewise be afforded
access to and use of private leased circuits to supply international telephone
services.605
(a) Claims under Section 5(a) of the Annex
4.320 According to the United States, pursuant to the
Annex, services suppliers from the United States are entitled to access and use
of public telecommunications networks and services. The United States claims
that interconnection is the means by which service suppliers from the
United States access and use Mexico's public telecommunications networks and
services. The United States asserts that its service suppliers must interconnect
with the Mexican network in order to ensure they can transport their scheduled
service to its final destination in Mexico. The United States further points out
that without such access, a service supplier from the United States could never
supply a scheduled facilities‑based or non‑facilities‑based basic telecom
service.606 4.321
United States submits that Section 5 of the Annex
requires Mexico to ensure that for the supply of a service included in its
Schedule, any service supplier of any other Member is accorded access to and use
of public telecom transport networks and services on reasonable terms and
conditions.607
4.322 The United States claims that Mexico undertook
market access and national treatment commitments for public basic telecom
services supplied by facilities‑based operators and non‑facilities‑based
operators ("commercial agencies"). In the United States' view, Mexico undertook
these obligations on a cross‑border basis, with few limitations, applying to the
supply of cross-border public basic telecom services supplied by
facilities‑based operators and commercial agencies.608
4.323 The United States also claims that Mexico's
Annex obligations apply to any service supplier from the United States (whether
facilities‑based or non‑facilities‑based) wishing to supply the scheduled basic
telecom services.609
4.324 The United States submits that the Annex imposes
a broad obligation upon Members to ensure - by whatever measures necessary610 �
that service suppliers have broad access to and use of public telecom networks
and services to transport their services.611 In the United States' view,
interconnection, as defined by Section 2.1 of the Reference Paper612, is the
principal method for suppliers from the United States to obtain access and use
of Mexican public telecommunications networks and services for the cross-border
supply of scheduled basic telecom services.613
4.325 The United States claims that Mexican law
prohibits foreign suppliers from owning public telecom networks and services in
Mexico614, preventing such suppliers of scheduled basic telecom services to
originate and terminate services over their own networks. The United States
submits that its suppliers have no choice but to rely on Mexican suppliers of
public telecom networks and services � such as Telmex and others � to transport
their service to its final destination.615 According to the United States, this
interconnection of its suppliers can take two principal forms: (1) a
facilities-based supplier of the scheduled basic telecom services who links its
network with that of a Mexican supplier616; or (2) a supplier who does not own
facilities and interconnects by leasing circuits from other operators with
Mexican public networks and services.617
4.326
Mexico contends that in its Schedule, for the
subsector of "Telecommunications services supplied by a facilities based public
telecommunications network through any existing technological medium �", it
specifically inscribed in the column "Limitations on Market Access" the
following limitations on the modes of supply of (1) cross border-supply and (3)
commercial presence:
"(1) None, except the following:
International traffic must be routed through the
facilities of an enterprise that has a concession granted by the
Ministry of Communications and Transport (SCT).
�
(3) A concession from the SCT is required. Only
enterprises established in conformity with Mexican law may obtain such a
concession.
Footnote 1 � Concession: The granting of title to
install, operate or use a facilities-based public telecommunications
network."618 4.327 The United States submits that unlike the term
"non-discriminatory", the Annex does not define "reasonable". In the United
States view, to determine the scope of "reasonable" terms and conditions, a
treaty interpreter should look to the ordinary meaning of "reasonable" in its
context and in light of the object and purpose of the Annex and the GATS.619
According to the United States, the terms and conditions that Mexico has imposed
are unreasonable under the object and purpose of the Annex and the GATS.620
4.328
Mexico contends that the term "reasonable" set out
in Section 5(a) of the Annex does not have the same meaning as the term
"reasonable" set out in Section 2.2 of the Reference Paper.621 In Mexico's view,
although the ordinary meaning is applicable to the term "reasonable" in both
provisions, Section 5(a) of the Annex and Section 2.2(b) of Mexico's Reference
Paper provide different contexts for interpreting its meaning.622
4.329
Mexico submits that in US � Definitive Safeguard
Measures on Imports of Wheat Gluten from the European Communities, the
Appellate Body stated that "[i]n view of the identity of the language in the two
provisions, and in the absence of any contrary indication in the context, we
believe that it is appropriate to ascribe the same meaning to this phrase
in both Articles 2.1 and 2.2".623 In Mexico's view, where identical language is
used in two provisions, it is only appropriate to ascribe the same meaning to
the language where there is an "absence of any contrary indication in the
context". Mexico contends that the different context of the term "reasonable" in
the two provisions necessitates that a different meaning be ascribed to the
term. According to Mexico, Section 5(a) of the Annex applies to "access to and
use of public telecommunications transport networks" on terms and conditions
that are inter alia, "reasonable", while Section 2.2(b) applies to
interconnection with a major supplier on, inter alia, cost-oriented rates
that are "reasonable". In its view, the two provisions address different subject
matters. Mexico claims that these different contexts are important, particularly
when interpreting the meaning of a word like "reasonable". Mexico further
submits that reasonableness can be judged only within the context of all
relevant facts and circumstances because it is those facts and circumstances
that provide a basis for reason and expectation.624 Mexico further points out that,
in determining whether a service supplier of another Member is accorded "access
to and use of public telecommunications transport networks" on terms and
conditions that are inter alia, "reasonable", the Panel must examine all
relevant facts and circumstances related to access to and use of PTTN.625
(b) Claims under Section 5(b) of the Annex
4.330 The United States submits that Section 5(a) of
the Annex requires Mexico to ensure that service suppliers of other Members can
access and use public telecom networks and services on reasonable terms and
conditions to provide a scheduled service.626 The United States further submits
that, to this end, Section 5(b) of the Annex requires Mexico to ensure that
foreign suppliers can access and use private leased circuits offered within and
across Mexico's border and interconnect those circuits with public networks and
services.627 Consequently, both facilities and non-facilities based suppliers of
cross-border telecom services must have access to and use of private leased
circuits. Further, established non-facilities based operators (commercial
agencies) must likewise be afforded access to and use of private leased circuits
under reasonable terms and conditions, to supply scheduled basic telecom
services. In the United States' view, Mexico's measures preclude foreign
suppliers from offering scheduled basic telecom services over private leased
circuits; and are therefore violating the basic obligation to provide access to
and use of private leased circuits for the provision of a scheduled service by
Mexico.628
4.331
Mexico contends that under Mexican law, only
companies established in Mexico and qualifying for a "concession" may "install,
operate or use a facilities-based public telecommunications network". It
contends that under Mexican law, suppliers of facilities-based
telecommunications services from the United States are not permitted to provide
facilities-based telecommunications services in Mexico. Mexico further submits
that it made clear, by specifically inscribing limitations in its Schedule, that
suppliers of facilities-based telecommunications services from the United States
would not be permitted to supply basic telecommunications services cross-border.629
4.332 The United States submits that Section 5(b)
contemplates both principal forms of interconnection, as follows:
"Each Member shall ensure that service suppliers of any
other Member have access to and use of any public telecommunications
transport network and service offered within or across the border of that
Member, including private leased circuits, and to this end shall ensure,
subject to paragraphs (e) and (f), that such suppliers are permitted . . .
(ii) to interconnect private leased or owned circuits with public
telecommunications transport networks or with circuits leased or owned by
another service supplier."630 4.333
Mexico claims that there is no basis for the
allegation from the United States that Mexico committed itself to cross-border
access for facilities-based suppliers of basic telecommunications.631 According to
Mexico, the language of Section 5(b) explicitly demonstrates that WTO Members
intended and expected that "access to and use of any public telecommunications
transport network or service" was something that could be "offered" or not
"offered", within or across the border of a particular Member. Mexico claims
that it did not "offer" or commit itself to "access to or use of" a public
telecommunications transport network or service either within Mexico or across
its border. In Mexico's view, two provisions of a treaty - Sections 2(c)(i) and
5(b) - should not be interpreted in a manner which renders one of them
ineffective or inutile.632
4.334 According to the United States, Section 5(b)
specifically guarantees that foreign service suppliers may obtain access to and
use of Mexican public telecom networks and services through interconnection of
private leased or owned circuits.633 The United States maintain that, in both
cases, its service suppliers must rely on interconnection with a Mexican
supplier of public telecom networks and services � such as Telmex � in order to
access and use Mexican public telecom networks and services for the supply of a
scheduled basic telecom service between the United States and Mexico. In the
United States' view, Mexico must therefore ensure � under Section 5 of the Annex
� that suppliers of scheduled basic telecom services from the United States may
interconnect with Mexican suppliers on reasonable terms and conditions.634
4.335 In Mexico's view, Section 2(c)(i) of the Annex
exempts Mexico from allowing non-facilities-based suppliers of basic
telecommunications services to supply their services cross-border over capacity
that they lease from operators in Mexico. Mexico claims that to interpret the
Annex otherwise would not only be inconsistent with the provisions of Section
2(c)(i) of the Annex, but would also undermine and render ineffective the
express language of the limitations on Market Access inscribed in Mexico's GATS
Schedule.635
4.336 According to the United States, private leased
circuits are essentially lines that a user leases from a public telecom operator
over which it transports (or supplies) its service. As an example, the United
States explains that a bank might lease a line from a public telecom operator
over which it sends financial information from its branch in Mexico City to its
home office in New York, or a telecommunications company may lease a line from a
public telecom operator over which its sends a phone call from its customer in
Los Angeles to the end-user in Montreal. In the United States' view, in both
cases the service supplier (the bank or the phone company) needs access to a
line (a public telecom network or service) to provide a scheduled service (a
financial service or a basic telecom service).636 It claims that Mexico has
not ensured that suppliers from the United States have access to and use of any
public telecommunications network and service for the supply of the basic
telecom services inscribed in Mexico's Schedule637, failing to honour its
commitments under the Annex.638
4.337
Mexico submits that, even if the Annex were to
apply to this dispute, the terms and conditions that Mexico applies on access to
and use of PTTNS would have to be considered reasonable. According to Mexico,
the Annex allows WTO Members great latitude to regulate access to and use of
PTTNS. In Mexico's view the word "reasonable" in Section 5(b) would have to be
interpreted broadly to include all relevant facts and circumstances related to
interconnection, including the economic feasibility of the terms of access to
the Mexican carrier and Mexico.639
4.338 According to the United States, Section 5(b) of
the Annex requires Mexico to ensure that service suppliers of any other Member.
"(ii) interconnect private leased or owned circuits with public
telecommunications transport networks and services or with circuits leased or
owned by another supplier". In the United States view, because the
obligation in Section 5(a) of the Annex apply to paragraph (b), Mexico must
ensure that foreign suppliers have access to and use of such private leased
circuits on reasonable terms and conditions for the supply of scheduled
services. The United States further points out that in this case, the analysis
need not to extend to whether the "terms and conditions" are reasonable and
non‑discriminatory, because Mexico has failed to ensure any access to and use of
private leased circuits for the supply of scheduled services640, acting
inconsistently with its obligations under Section 5(a) and (b) of the Annex.641
4.339 The United States claims that Mexico has failed
to comply with Section 5 of the Annex with respect to the market access and
national treatment commitments it undertook for the: (1) cross‑border (mode 1)
supply of facilities‑based basic telecom services; and (2) the cross‑border
(mode 1) and domestic (mode 3) supply of non‑facilities‑based basic telecom
services. The United States submits that, to avoid any confusion, the claims it
makes related to private leased circuits address the delivery of scheduled
public basic telecom service using private leased circuits.642
4.340 The United States contends that Mexico scheduled
market access and national commitments to allow non‑facilities‑based suppliers
("commercial agencies") to provide basic circuit‑switched telecom services to
third parties over a private (i.e., dedicated) circuit that it leases from a
concessionaire.643 The United States recalls that according to Mexico's Schedule,
commercial agencies do not supply basic telecom services over their owned
facilities but over capacity they lease from a licensed facilities-based telecom
operator.644 The United States points out that the supply of telecommunications
over leased capacity is typically known as "resale", but Mexico's Schedule uses
the phrase "commercial agencies".645 The United States recalls that "leased
capacity" is essential to the supply of this scheduled service, because without
access to such capacity, a commercial agency cannot, according to Mexico's
definition, supply its service. The United States submits that private leased
circuits � not defined in the Annex � are generally understood to mean telephone
lines leased from a phone company that are specifically dedicated to a
customer's use.646 4.341 The United States submits that Mexico undertook
these commitments for the cross‑border supply of services (mode 1) over leased
capacity from the territory of one Member (e.g., the United States) into the
territory of any other Member (i.e., Mexico). According to the United States,
Mexico limited this mode 1 commitment to ensure that foreign commercial agencies
route international traffic through the facilities of a "concessionaire". The
United States claims that Mexico committed to allow a foreign,
non‑facilities‑based supplier to offer telecom services from the territory of
the United States into the territory of Mexico over capacity leased from a
public network concessionaire (i.e., private leased circuits). The United States
points out that the cross‑border supply of a basic telecom service over leased
capacity is typically known as International Simple Resale (ISR).647
4.342 The United States recalls that Mexico also
undertook commitments for locally-established (mode 3) commercial agencies, with
certain limitations. The United States points out that a foreign service
supplier should be able to own 100 per cent of a locally established commercial
agency, because Mexico did not schedule a foreign ownership limitation for such
services. The United States argues that, because Mexico did not indicate
otherwise, this mode 3 commitment allows a locally established commercial agency
to provide international basic telecom services over leased capacity.648 4.343 The United States contends that Mexico undertook
mode 1 and mode 3 commitments for services, which require access to and use of
private leased circuits for their supply. The United States claims that its
suppliers cannot supply basic telecom services over leased capacity on a
cross-border basis if they cannot lease private leased circuits from a Mexican
supplier. The United States further points out that its suppliers can not
establish a commercial presence to supply international basic telecom services
over leased capacity if they cannot lease private leased circuits from a Mexican
supplier. The United States recalls that Mexico does not permit its basic
telecom service suppliers to lease such circuits for these services and
therefore precludes the supply of mode 1 and mode 3 commercial agency services.649
4.344
Mexico submits that with respect to access through
commercial presence for non-facilities based suppliers, the United States argues
that Mexico committed to the establishment of commercial agencies and to the
provisions of services by such agencies through private leased circuits, i.e.
ISR.650 Mexico claims that its mode 3 (commercial presence) commitment for
commercial agencies is subject to the following limitations:
"A permit issued by the SCT is required. Only
enterprises set up in accordance with Mexican law may obtain such permit.
Foreign governments may not participate in an enterprise
set up in accordance with Mexican law nor obtain any authorization to
provide telecommunication services.
Except where specifically approved by the SCT, public
telecommunications network concessionaires may not participate, directly or
indirectly, in the capital of a commercial agency.
The establishment and operation of commercial agencies is
invariably subject to the relevant regulations. The SCT will not
issue permits for the establishment of a commercial agency until the
corresponding regulations are issued."651 4.345
Mexico submits that the permit requirement is
central to the limitation. According to Mexico, because at the time the
limitation was inscribed, permits were not issued by the SCT, then it is
equivalent to a zero quota, falling the requirement within the category of
"limitations on the number of service suppliers" in paragraph (a) of GATS
Article XVI:2.652
4.346 Answering a Panel's question653, the United States
contends that Mexico's refusal to adopt regulations necessary to issue
commercial agency permits violates Mexico's obligation under Section 5(b) of the
Annex on Telecommunications to ensure that service suppliers have access to and
use of private leased circuits.654 The United States further submits that Telmex,
through its subsidiary in the United States, assured the FCC that Mexico's WTO
commitments requires Mexico "promptly" to adopt the relevant regulations and
issue reseller permits.655
4.347 The United States submits that Mexico also
undertook cross‑border market access and national treatment commitments for
specific public basic telecom services supplied by a facilities‑based operator.
According to the United States, Mexico limited this commitment to ensure that
foreign service suppliers route international traffic through the facilities of
a Mexican concessionaire. The United States contends that, for the supply of
these public facilities‑based services from the territory of the United States
into the territory of Mexico, Mexico promised to accord market access and
national treatment to suppliers of these services provided that the service
supplier, from the United States, routes international traffic through the
facilities of a Mexican concessionaire.656
4.348 According to the United States, access to and
use of private leased circuits is essential to the supply of the following
services inscribed in Mexico's Schedule: (a) facilities‑based services
(i.e., voice telephone, circuit‑switched data, facsimile services by a
facilities‑based operator from the United States into Mexico) supplied on a
cross‑border basis; (b) commercial agencies (i.e., basic telecom services by a
non‑facilities‑based operator over leased capacity from the United States into
Mexico) supplied on a cross‑border basis; and (c) locally established commercial
agencies (i.e., basic telecom services by a non‑facilities‑based operator over
leased capacity from Mexico into the United States). The United States claims
that Mexico has failed to ensure that private leased circuits are available for
the supply of these scheduled services.657
4.349 The United States submits that Mexico committed
under Section 5(a) and (b) to ensure that foreign facilities-based suppliers,
foreign commercial agencies and locally established commercial agencies have
access to and use of private leased circuits to supply scheduled international
basic telecom services over such circuits and can interconnect such circuits
with public telecom networks and services. The United States contends that
because Mexican suppliers offer private leased circuits to their customers, then
Mexico must ensure that these circuits are available to all suppliers of
scheduled basic telecom services. The United States claims that foreign
suppliers do not have access to and use of private leased circuits to supply
scheduled basic telecom services.658 The United States further submits that Mexican
suppliers have refused to provide these circuits, Mexican law prevents foreign
basic telecom service suppliers from using such circuits, and Mexican
authorities continue to refuse to permit the supply of scheduled services over
leased capacity. According to the United States, these restrictions prevent
foreign service suppliers from accessing and using private leased circuits to
supply scheduled basic telecom services.659
4.350 The United States submits that its suppliers
based in the United States have no access to private leased circuits for the
supply of scheduled basic telecom services and even if they did, Mexican ILD
Rules prevent foreign suppliers from interconnecting private leased circuits
with public telecom network services, violating the obligation to provide access
to and use of private leased circuits.660 It claims that Telmex has refused to make
private leased circuits available for the cross-border supply of scheduled voice
telephone services661, and that Mexican authorities have done nothing to ensure
that Telmex or any other supplier provides these leased circuits to suppliers
from the United States for the cross-border supply of scheduled basic telecom
services.662
4.351 The United States contends that Mexico not only
has failed to ensure that its suppliers provide private leased circuits to
foreign suppliers for the cross‑border supply of scheduled basic telecom
services but has also maintained measures that preclude foreign suppliers from
ever using these circuits to supply such services.663 The United States recalls
that under Mexico's ILD Rule 3664, a foreign supplier cannot interconnect a private
circuit leased in Mexico with foreign public networks and services for the
provision of scheduled basic telecom services.665 The United States submits that
according to this Rule, only "international port operators" may interconnect
with the public telecommunications networks of foreign operators in order to
supply basic telecom services, but Mexican ILD Rules require an international
port operator to be a supplier with a concession to supply long-distance
services and Mexican law prohibits non‑Mexican entities from holding such a
concession, since Mexico inscribed this nationality restriction for
concessionaires in its Schedule.666
4.352 The United States contends that the
interconnection of a private circuit leased in Mexico with the public telecom
network in the United States is essential to the cross-border provision of
public basic telecom services over private leased circuits, which is a
commitment included in Mexico's Schedule. Because a non facilities-based service
supplier cannot be a long-distance concessionaire, it cannot interconnect a
private circuit leased in Mexico with the public telecom network in the
United States, as it is unable to supply the scheduled public telecom service.667
4.353 The United States submits that Mexico undertook
cross‑border commitments for "commercial agencies", which Mexico defined as the
supply by non‑facilities‑based providers of telecommunications services to third
parties over capacity leased from a Mexican concessionaire. According to the
United States, by Mexico's definition, the supply of this international "resale"
service requires a Mexican concessionaire to provide a foreign service supplier
access to and use of private leased circuits. The United States claims that
without such circuits, foreign suppliers cannot provide cross‑border telecom
services as commercial agencies.668 The United States recalls that Sections 5(a)
and (b) of the Annex ensure that foreign commercial agencies have access to and
use of these circuits and can interconnect these circuits with public telecom
networks and services on reasonable terms and conditions to provide "resale"
services on a cross‑border basis � services that cannot be supplied without such
circuits. In the United States' view, Mexico has failed to comply with these
commitments, prohibiting foreign service suppliers from offering this "resale"
service that it scheduled. The United States further points out that even if
Mexico permitted foreign suppliers to offer this "resale" service, ILD Rule 3
precludes the supply of this service by preventing all commercial agencies
(domestic and foreign) from interconnecting private leased circuits with foreign
telecom networks.669
4.354 The United States submits that the policy of the
Mexican Government � since undertaking commitments for commercial agencies � has
been to refuse to permit any foreign carrier from supplying international
"resale" services (i.e., international telecom services supplied over private
leased circuits). Eight months after finalizing its "commercial agencies"
commitments, the then‑Secretary of Mexico's Secretariat of Communications and
Transportation (SCT) wrote a letter to the then‑Chairman of the FCC stating that
the policy of his Government was to forbid the resale of "long‑distance public
network capacity in Mexico".670 The United States claims that, in other words,
although Mexico had committed to its WTO partners that it would permit
commercial agencies to provide all forms of telecommunications services to third
parties over resold capacity, Secretary Ruiz Sacrist�n affirmed that Government
of Mexico had no intention of allowing telecom operators to do so.671 The United
States further submits that Secretary Ruiz Sacrist�n reaffirmed this position in
a 8 May 1998 letter to then‑USTR Charlene Barshefsky. According to the United
States, Ambassador Barshefsky wrote to both Secretary Ruiz Sacrist�n and
Secretary Herminio Blanco Mendoza (then‑Secretary of Commerce and Industrial
Development) on 4 April 1998 to express her deep concern over Mexico's
implementation of its GATS basic telecom commitments, including "Mexico's
failure to permit unrestricted domestic and international resale of
telecommunications services (including international simple resale)".672 The United
States recalls that Secretary Ruiz Sacrist�n responded that Mexico's WTO
commitments did not include these services.673
4.355 The United States contends that, by expressing
his Government's refusal to permit the domestic and international resale of
telecommunication services, Secretary Ruiz Sacrist�n acknowledged Mexico's
failure to honour its scheduled commitment to allow "commercial agencies" to
supply cross‑border telecommunications services to third parties over leased
capacity (i.e., private leased circuits).674
4.356 According to the United States, Mexico undertook
a mode 3 commitment for commercial agencies promising to permit foreign
suppliers to acquire a 100 per cent interest in a local non-facilities-based
supplier and offer international telecommunications services to third parties
over capacity leased from a Mexican concessionaire. The United States points out
that the supply of this international "resale" service requires a Mexican
concessionaire to provide a foreign service supplier access to and use of
private leased circuits.675 The United States further submits that Sections 5(b) of
the Annex obliges Mexico to ensure that foreign service suppliers: (1) have
access to and use of the private leased circuits they need to supply this
scheduled resale service; and (2) can interconnect such circuits with public
telecom networks and services. The United States claims that Mexico has failed
to comply with these obligations by not permitting non‑facilities‑based service
suppliers (commercial agencies) to establish locally and supply international
telecom services from Mexico over private leased circuits. The United States
further points out that ILD Rule 3 prevents all commercial agencies from
interconnecting private leased circuits with foreign telecom networks,
preventing Mexico from complying with its commitments under the Annex.676
4.357 The United States submits that to its knowledge,
Mexico does not permit foreign non‑facilities‑based suppliers to establish
locally and supply third parties international telecommunications services over
private leased circuits.677 The United States recognizes that Mexico conditioned
the mode 3 supply of "commercial agencies" on the issuance of the relevance
regulations, but claims that over five years have elapsed since Mexico finalized
this commitment in February 1997 (and four years have elapsed since this
commitment entered into force in February 1998), and Mexico still has not issued
� and has indicated no intention to issue � the relevant regulations. According
to the United States, the refusal to issue such regulations raises questions
about whether Mexico ever intends to implement this scheduled mode 3 commitment
for commercial agencies.678
4.358
Mexico replies that there is nothing in the wording
of the limitations that indicates that Mexico has made a commitment to issue the
corresponding regulation within a certain time-frame. According to Mexico, the
issuance of the regulation is at the discretion of the Mexican authorities
taking into account the transition occurring in the Mexican telecommunications
market. Mexico claims that the fact that the regulation has not yet been issued
does not nullify the limitation.679 Furthermore, Mexico has issued regulations for
the establishment and operation of commercial agencies for pay-telephone public
services. Based on those regulations, Mexico has granted 59 permits for public
pay phone commercial agencies. 35 of those agencies have begun operations and
five of them have foreign capital.680
4.359 The United States submits that it is not
inconsistent with the obligation under Section 5(b) of the Annex to require that
cross-border service suppliers route traffic through the facilities of a Mexican
concessionaire. According to the United States, the routing requirement is one
way in which a member may satisfy the obligation in Section 5(b). In its view,
the routing requirement included in Mexico's Schedule, interpreted according to
the rules of interpretation in the Vienna Convention, permit service
suppliers from the United States to provide basic telecommunications services
into Mexico over capacity leased from a Mexican concessionaire.681
4.360 In response to question No. 27 of the Panel on 19
December 2002, Mexico submits that Section 5(b) relates to "access to and
use of" private leased circuits and the interconnection of those circuits with
the PTTNS or with other leased circuits. Mexico notes that, in the context of
the claims being raised by the United States, this provision does not entitle
service suppliers of any other Member to supply public telecommunications
services over private leased circuits. In Mexico's view, Section 5(b) does not
entitle service suppliers of the United States to offer ISR into Mexico.
According to Mexico, this interpretation is confirmed by Section 2(c)(i) which:
(i) refers to Schedule limitations; and (ii) which refers to available services
and networks. Mexico submits that its Schedule, which includes the routing
restriction, denies any market access for service suppliers from the United
States to provide ISR into Mexico.682 In the same line, Mexico submits that ISR
services are prohibited under Mexican law as manifested in its Schedule.
Therefore, ISR was "not offered to the public generally" within the meaning of
Section 2(c)(i) of the Annex.683
452 See the United States' first written submission,
paragraph 206.
453 See the United States' first written submission,
paragraph 31.
454 See Mexico's Reference Paper, page 8,
GATS/SC/56/Suppl.2.
455 See Mexico's first written submission, paragraph 197.
456 The United States maintains that Mexico's Reference Paper
obligations apply to the terms and conditions of cross-border interconnection
between Telmex and suppliers from the United States. Mexico disagrees and
contends that the settlement rates that carriers from the United States have
agreed to pay to Telmex under the accounting rate regime are not subject to
Mexico's commitment under Section 2.1 and 2.2 of the Reference Paper. Moreover,
Mexico argues that it did not agree to grant cross-border access in its Schedule
of specific commitments and that the Reference Paper has no application in this
context. For more information regarding the discussion on the scope of
application of the Reference Paper, see Section IV.A.1 of this Report.
457 See Mexico's second written submission, paragraph 122.
458 See Mexico's first written submission, paragraph 199.
459 See Mexico's first written submission, paragraph 204.
460 See Mexico's first written submission, paragraph 205.
461 Mexico refers to the preamble of the GATS. See
Mexico's answer to question 17(a) of the Panel of 19 December 2002,
paragraph 273 ("Are Mexican rules that impede price competition among Mexican
companies terminating incoming international calls consistent with the GATS and
the Reference Paper?").
462 See Mexico's first written submission, paragraph 204.
463 The United States refers to Section 1.1 of Mexico's Schedule,
Reference Paper, Sec 1, GATS/SC/56/Supp.2, p.7, Spanish Version. See the
United States' first written submission, paragraph 191.
464 See the United States' second written submission,
paragraph 80.
465 See Mexico's first written submission, paragraph 201.
466 See Mexico's first written submission, paragraph 202.
467 See Mexico's first written submission, paragraph 203.
468 See Mexico's answer to question 17(b) of the Panel of
19 December 2002 ("Does Section 1 of the Reference Paper require that markets
be opened to competition?").
469 See the United States' first oral statement, paragraph
36.
470 See the United States' second written submission,
paragraph 83.
471 See the United States' answer to question 17(b) of the
Panel meeting of 19 December 2002. For question No. 17(b), see footnote 468 of
this Report.
472 See the United States' first written submission,
paragraph 201.
473 See the United States' first written submission,
paragraph 202.
474 See the United States' first written submission,
paragraph 206.
475 See Mexico's first oral statement, paragraph 54.
476 See Mexico's first written submission, paragraph 213.
477 See Mexico's first oral statement, paragraph 54.
See Mexico's first oral statement, paragraph 8.
478 See Mexico's first written submission, paragraph 213.
479 See Mexico's first written submission, paragraph 208.
480 See Mexico's first written submission, paragraph 209.
481 See the United States' first oral statement, paragraph
38.
482 See the United States' answer to question No. 25 of
the Panel of 14 March 2003, paragraph 62 ("Please explain whether the effect
of Rule 13 of the ILD Rules is pro‑competitive or anti‑competitive, and support
your argument with the appropriate illustrative figures and examples").
483 The United States refers to Mexico's ILD Rules. See
the United States' first written submission, paragraph 196. See the
United States' answer to question 17(a) of the Panel of 19 December 2002,
paragraph 86. For question No. 17(a), see footnote 461 of this Report.
484 See the United States' first written submission,
paragraph 200.
485 The United States refers to OECD, CLP, Working Party No.2 on
Competition and Regulation, "Competition and Regulation Issues in
Telecommunications," submitted by Mexico (18 May 2001),
DAFFE/CLP/WP2/WD(2001)25, at 3‑4. See the United States' first written
submission, paragraph 199.
486 See the United States' first written submission,
paragraph 199.
487 The United States refers to the OECD, Regulatory Reform in
Mexico (1999). See the United States' first written submission, paragraph
205.
488 See Mexico's first written submission, paragraph 206.
489 See Mexico's first written submission, paragraph 207.
See Mexico's first oral statement, paragraph 53. See Mexico's answer
to question No. 18 of the Panel of 19 December 2002, paragraph 284 ("Do you
agree with Mexico's claim that ILD Rule 13 promotes competition? If so, please
explain how, giving illustrative examples of desired and undesired outcomes");
and Mexico's answer to question No. 25 of the Panel of 14 March 2003, paragraph
132. For question No. 25, see footnote 482 of this Report.
490 The United States refers Mexico's first written submission,
paragraph 79. See the United States' first oral statement, paragraph 38.
491 See the United States' answer to question No. 18 of
the Panel of 19 December 2002, paragraph 89. For question No. 18, see footnote
489 of this Report.
492 The United States refers to Mexico first written submission,
paragraph 79. See the United States' answer to question No. 24 of the
Panel of 14 March 2003 ("Are there examples of WTO Members other than Mexico
who maintain measures similar to ILD Rule 13 � granting one supplier the right
to negotiate with foreign suppliers a settlement rate that is applicable to all
other domestic suppliers?").
493 See the United States' answer to question No. 24 of
the Panel of 14 March 2003, paragraph 48. For question No. 24, see footnote 492
of this Report.
494 Mexico refers to the preamble of the GATS. See
Mexico's answer to question No. 17(a) of the Panel of 19 December 2002,
paragraph 273. For question No. 17(a), see footnote 461 of this Report.
495 See Mexico's answer to question No. 18 of the Panel of
19 December 2002. For question No. 18, see footnote 489 of this Report.
496 See the United States' first written submission,
paragraph 201.
497 The United States refers to Mexican law. See the
United States' first written submission, paragraph 204.
498 See the United States' first written submission,
paragraph 203.
499 Mexico refers to the United States first written submission,
paragraphs 203-204. See Mexico's first written submission, paragraph 211.
500 See Mexico's first written submission, paragraph 212.
501 See Mexico's answer to question No. 25 of the Panel of
14 March 2003. For question No. 25, see footnote 482 of this Report.
502 See Mexico's answer to question No. 24 of the Panel of
14 March 2003, paragraphs 128-129. For question No. 24, see footnote 492 of this
Report.
503 See the United States' comments on Mexico's answer to
question No. 24 of the Panel of 14 March 2003, paragraph 67.
504 See Mexico's first written submission, paragraph 210.
See Mexico's answer to question No. 17(a) of the Panel of 19 December 2002,
paragraph 256. For question No. 17(a), see footnote 461 of this Report.
505 See Mexico's answer to question No. 17(a) of the Panel
of 19 December 2002, paragraph 256. For question No. 17(a), see footnote 461 of
this Report.
506 See the United States' first oral statement, paragraph
40.
507 See the United States' first oral statement, paragraph
41.
508 See Mexico's comments on the United States' answer to
question No. 19(b) of the Panel of 14 March 2003, paragraph 41.
509 The United States refers to the International Settlement
Policy Reform, IB Docket No. 02-234, Notice of Proposed Rulemaking. See
the United States' answer to question No. 19(d) of the Panel of 19 December
2002, paragraph 96 ("Does a proportional return system necessarily constitute
an anti-competitive practice?").
510 See the United States' answer to question No. 19(d) of
the Panel of 19 December 2002, paragraph 96. For question No. 19(d), see
footnote 509 of this Report. See the United States' second written
submission, paragraph 95.
511 The United States refers to Mexico's ILD Rules 16 and 17.
See the United States' first written submission, paragraph 198.
512 The United States refers to paragraph 207-209 of Mexico's
first written submission. See the United States' answer to question No.
19(d) of the Panel of 19 December 2002, paragraph 97. For question No. 19(d),
see footnote 509 of this Report.
513 See the United States' answer to question No. 19(d) of
the Panel of 19 December 2002, paragraph 97. For question No. 19(d), see
footnote 509 of this Report.
514 See the United States' answer to question No. 25 of
the Panel of 14 March 2003, paragraphs 63-64. For question No. 25, see footnote
482 of this Report.
515 See Mexico's answer to question No. 19(d) of the Panel
meeting of 19 December 2002. For question No. 19(d), see footnote 509 of this
Report.
516 See Mexico's second oral statement, paragraph 92.
517 The United States refers to Mexico's ILD Rules 13 and 23.
See the United States' first written submission, paragraph 197.
518 See the United States' first written submission,
paragraph 190.
519 As regards the parties' argumentation on the "relevant
market", see also Section IV.A.4(a).
520 See the United States' first written submission,
paragraph 68.
521 See the United States' first written submission,
paragraph 71.
522 The United States refers to the unofficial translation of the
Mexican Federal Law of Economic Competition, Chapter II, Article 13 (issued
December 24, 1992). Exhibit US‑18. See the United States' first written
submission, paragraph 80.
523 See the United States' first written submission,
paragraph 73.
524 The United States refers to the unofficial translation of the
Mexican Federal Law of Economic Competition, Chapter II, Article 13 (issued
December 24, 1992). Exhibit US‑18. See the United States' first written
submission, paragraph 74.
525 See Mexico's second oral statement, paragraph 68.
526 See Mexico's second oral statement, paragraph 74.
527 Mexico refers to paragraphs 68-99 of the United States' first
written submission.
528 See Mexico's second oral statement, paragraph 69.
529 See Mexico's second oral statement, paragraph 70.
530 See Mexico's second oral statement, paragraph 71.
531 See Mexico's second oral statement, paragraphs 72-73.
532 See the United States' comments on Mexico's answer to
question No. 17 of the Panel of 14 March 2003, paragraph 59.
533 See Mexico's answer to question No. 25 of the Panel of
14 March 2003, paragraph 132. For question No. 25, see footnote 482 of this
Report.
534 See the United States' comments on Mexico's answer to
question No. 25 of the Panel of 14 March 2003, paragraphs 68 and 69.
535 The United States refers to the WTO, Working Group on the
Interaction between Trade and Competition "The Fundamental Principles of
Competition Policy" (7 June 1999), Exhibit US-42; "Overview of
Members' National Competition Legislation" (Rev. 2,4 July 2001); ABA
Section of Antitrust Law, Competition Laws Outside the United States I (2001)
Chapter 1, Exhibit US-49; OECD "Recommendation of the Council Concerning
Effective Action against Hard Core Cartels (1998)"; Mexican Federal Law
of Economic Competition, Arts. 8 and 9, Exhibit US-18. See the United
States' first written submission, paragraph 193. See the United States'
first oral statement, paragraph 34. See the United States' answer to
question No. 17(a) of the Panel of 19 December 2002, paragraph 86. "Are
Mexican rules that impede price competition among Mexican companies terminating
incoming international calls consistent with the GATS and the Reference Paper?".
See the United States' second written submission, paragraph 79.
536 See the United States' first written submission,
paragraph 194.
537 See Mexico's answer to question No. 19(a) of the Panel
of 19 December 2002, paragraph 287 ("How do you define "anti-competitive
practices" in the sense of Section 1.1 of the Reference Paper?").
538 See Mexico's answer to question No. 19(a) of the Panel
of 19 December 2002, paragraph 288. For question No. 19(a), see footnote
537 of this Report.
539 See the United States' first oral statement, paragraph
42.
540 See the United States' answer to question No. 17(c) of
the Panel of 19 December 2002 ("Can the fixing of a uniform price be
anti-competitive practice in violation of the obligation under the Reference
Paper if uniform prices are required by law?"). See the United
States' answer to question No. 23(a) of the Panel of 14 March 2003, paragraph
31. For question No. 23(a), see footnote 545 of this Report.
541 See Mexico's second oral statement, paragraph 10.
542 See Mexico's answer to question No. 19(a) of the Panel
of 19 December 2002, paragraph 287. For question No. 19(a), see footnote
537 of this Report.
543 See Mexico's second written submission, paragraph 128.
544 See Mexico's second oral statement, paragraph 10.
545 Namely, question No. 17(c) of the Panel of 19 December 2002.
For question No. 17(c), see footnote 540 of this Report, and question No.
23(a) of the Panel of 14 March 2003 ("Explain why the Mexican legal
requirement that all Mexican suppliers must apply the settlement rate negotiated
by the major supplier, amounts to requiring an 'anti-competitive practice'
in violation of Section 1.1 even if Mexican suppliers do not collude and do not
distort competition voluntarily.").
546 See the United States' answer to question No. 17(c) of
the Panel of 19 December 2002, paragraph 88. For question No. 17(c),
see footnote 540 of this Report. See the United States' answer to
question No. 23(a) of the Panel of 14 March 2003, paragraph 31. For question No.
23(a), see footnote 545 of this Report.
547 See the United States' answer to question No. 19(c) of
the Panel of 19 December 2002, paragraph 95 ("Do you consider that Telmex's
ability to negotiate uniform settlement rates is per se anti-competitive?").
548 See the United States' answer to question No. 23(a) of
the Panel of 14 March 2003, paragraph 31. For question No. 23(a), see
footnote 545 of this Report.
549 See Mexico's answer to question No 17(c) of the Panel
of 19 December 2002, paragraph 283. For question No. 17(c), see footnote
540 of this Report. See also Mexico's comments on the United States'
answer to question No. 23(a) of the Panel of 14 March 2003, paragraphs 48-51.
550 See Mexico's answer to question No. 19(c) of the Panel
of 19 December 2002, paragraph 292. For question No. 19(c), see footnote
547 of this Report. See also Mexico's comments on the United States'
answer to question No. 23(a) of the Panel of 14 March 2003, paragraph 52.
551 See Mexico's comments on the United States' answer to
question No. 23(a) of the Panel of 14 March 2003, paragraphs 50-51.
552 See Mexico's second oral statement, paragraphs 100-01.
553
See the United States' comments on Mexico's answer to
question No. 25 of the Panel of 14 March 2003, footnote 82 to paragraph 70.
554 See the United States' answer to question No. 19(b) of
the Panel of 19 December 2002, paragraph 94, "How do you view the
relationship between an 'anti-competitive practice' in the sense of Section 1.1
and a practice that is not "reasonable" in the sense of Section
2.2(b)?".
555 See the United States' first written submission,
paragraph 192.
556 See Mexico's answer to question No. 19(b) of the Panel
of 19 December 2002, paragraph 290. For question No. 19(b), see footnote
554 of this Report.
557 See Mexico's answer to question No. 19(b) of the Panel
of 19 December 2002, paragraph 291. For question No. 19(b), see footnote
554 of this Report.
558 See Mexico's answer to question No. 23(b) of the Panel
of 14 March 2003, paragraphs 124-126. "Please also elaborate on the
relationship between Section 1.1 and Section 3 of the Reference Paper, i.e.
under what conditions can a legislative requirement that all domestic suppliers
must apply the settlement rate negotiated by the major domestic supplier be
considered as a 'non-discriminatory and competitively neutral'
universal service obligation that is not 'regarded as anti-competitive per se'
in the sense of Section 3 of the Reference Paper."
559 See Mexico's answer to question No. 23(b) of the Panel
of 14 March 2003, paragraph 127. For question No. 23(b), see footnote 558
of this Report.
560 See the United States' answer to question No. 23(b) of
the Panel of 14 March 2003, paragraphs 49 and 50. For question No. 23(b), see
footnote 558 of this Report.
561 See the United States' answer to question No. 23(b) of
the Panel of 14 March 2003, paragraph 51. For question No. 23(b), see
footnote 558 of this Report.
562 See the United States' answer to question No. 23(b) of
the Panel of 14 March 2003, paragraph 52. For question No. 23(b), see
footnote 558 of this Report. See also the United States' comments on
Mexico's answer to question No. 23(b) of the Panel of 14 March 2003, paragraphs
62-66.
563 See the United States' answer to question No. 23(b) of
the Panel of 14 March 2003, paragraphs 53-55. For question No. 23(b), see
footnote 558 of this Report.
564 See the United States' first written submission,
paragraph 32.
565 See the United States' first written submission,
paragraph 33.
566 Mexico refers to Sections 5(a) and (b) of the Annex on
Telecommunications. See Mexico's first written submission, paragraph 220.
567 See Mexico's first written submission, paragraph 220.
568 See the United States' first written submission,
paragraph 207.
569 See the United States' first written submission,
paragraph 208.
570 See the United States' first written submission,
paragraph 209.
571 See the United States' first written submission,
paragraph 210.
572 See Mexico's first written submission, paragraph 216.
573 See the United States' first written submission,
paragraph 211.
574 Ibid.
575 See the United States' first written submission,
paragraph 212.
576 See Mexico's first written submission, paragraph 221.
577 "Public telecommunications transport service" means any
telecommunications transport service required, explicitly or in effect, by a
Member to be offered to the public generally. Such services may include,
inter alia, telegraph, telephone, telex, and data transmission typically
involving the real-time transmission of customer-supplied information between
two or more points without any end to end change in the form or content of the
customer's information. See Mexico's first written submission,
paragraph 223.
578 "Public telecommunication transport network" means the public
telecommunications infrastructure which permits telecommunications between and
among defined network termination points. See Mexico's first written
submission, paragraph 220.
579 See Mexico's first written submission, paragraph 224.
580 See Mexico's first written submission, paragraph 225.
581 See the United States' first written submission,
paragraph 243.
582 See the United States' first written submission,
paragraph 244.
583 See Mexico's first written submission, paragraph 226.
584 See Mexico's first written submission, paragraph 227.
585 See Mexico's first written submission, paragraph 228.
586 See Mexico's first written submission, paragraph 229.
587 See Mexico's first written submission, paragraph 230.
588 See Mexico's first written submission, paragraph 231.
589 See the United States' answer to question No.
21 of the Panel meeting of 19 December 2002, paragraph 99, ("Can Mexico
reconcile its argument that the 'Annex only address telecommunications
transport services as the underlying transport means for other economic
activities' with the reference, in the GATS Annex, to a 'dual'
role of the telecommunications service sector?").
590 See Mexico's answer to question No. 21 of the
Panel meeting of 19 December 2002, paragraph 299. For question No. 21, see
footnote 589 of this Report; see also Mexico's first written submission,
paragraph 214.
591 See Mexico's answer to question No. 21 of the
Panel meeting of 19 December 2002, paragraph 300. For question No. 21, see
footnote 589 of this Report.
592 See Mexico's answer to question No. 21 of the
Panel meeting of 19 December 2002, paragraph 301. For question No. 21, see
footnote 589 of this Report.
593 See Mexico's answer to question No. 21 of the
Panel meeting on 19 December 2002, paragraph 302. For question No. 21, see
footnote 589 of this Report.
594 See Mexico's answer to question No. 21 of the
Panel meeting on 19 December 2002, paragraph 303. For question No. 21, see
footnote 589 of this Report.
595 See Mexico's answer to question No. 21 of the
Panel meeting on 19 December 2002, paragraph 306. For question No. 21, see
footnote 589 of this Report.
596 See Mexico's answer to question No. 21 of the
Panel meeting on 19 December 2002, paragraph 307. For question No. 21, see
footnote 589 of this Report.
597 See question No. 26 of the Panel of 13 March 2003, ("Please
explain why Mexico says at paragraph 307 of its Responses to questions that
'by definition, Mexico's suppliers of 'public telecommunications transport
networks and services' cannot transport public telecommunications transport
services supplied by other suppliers.'").
598 See Mexico's answer to question No. 26 of the
Panel meeting on 13 March 2003, paragraph 135. For question No. 27, see
footnote 597 of this Report.
599 See Mexico's answer to question No. 26 of the
Panel meeting on 13 March 2003, paragraph 136. For question No. 27, see
footnote 597 of this Report.
600 See Mexico's answer to question No. 26 of the
Panel meeting on 13 March 2003, paragraph 137. For question No. 26, see
footnote 597 of this Report.
601 See the United States' comments on Mexico's answer to
question No. 26 of the Panel of 14 March 2003, paragraph 71.
602 See the United States' comments on Mexico's answer to
question No. 1 of the Panel of 14 March 2003, paragraph 5.
603 See the United States' first written submission,
paragraph 211.
604 See the United States' first written submission,
paragraph 213.
605 See the United States' first written submission,
paragraph 214.
606 See the United States' first written submission,
paragraph 216.
607 See the United States' first written submission,
paragraph 218.
608 See the United States' first written submission,
paragraph 219.
609 See the United States' first written submission,
paragraph 220.
610 The United States refers to Section 2(a), note 14 of the GATS
Annex on Telecommunications. See the United States' first written
submission, paragraph 222.
611 See the United States' first written submission,
paragraph 222.
612 As regards the definition of the term "interconnection",
see Section IV.A.2 of the United States' first written submission. See
also the United States' first written submission, paragraph 224.
613 See the United States' first written submission,
paragraph 223.
614 The United States refers to Mexico's Federal
Telecommunications Law, art. 12, Exhibit US-16. See the United States'
first written submission, paragraph 225.
615 See the United States' first written submission,
paragraph 225.
616 See the United States' first written submission,
paragraph 227.
617 See the United States' first written submission,
paragraph 228.
618 See Mexico's first written submission, paragraph 233.
619 The United States refers to the customary rules of treaty
interpretation reflected in Article 31(1) of the Vienna Convention. See
the United States' first written submission, paragraph 232.
620 See the United States' first written submission,
paragraph 232.
621 See Mexico's answer to question No. 23 of the
Panel meeting of 19 December 2002, paragraph 315 ("Does the term 'reasonable',
as set out in Section 5(a) of the Annex on Telecommunications, have the same
meaning as in Section 2.2 of the Reference Paper?").
622 See Mexico's answer to question No. 23 of the
Panel meeting of 19 December 2002, paragraph 316. For question No. 23, see
footnote 621 of this Report.
623 Mexico refers to paragraph 96 of the
Appellate Body Report, US � Wheat Gluten. See Mexico's second
written submission, paragraph 163.
624 See Mexico's answer to question No. 23 of the
Panel meeting of 19 December 2002, paragraph 318. For question No. 23, see
footnote 621 of this Report.
625 See Mexico's answer to question No. 23 of the
Panel meeting of 19 December 2002, paragraph 319. For question No. 23, see
footnote 621 of this Report.
626 See the United States' first written submission,
paragraph 247.
627 Ibid.
628 See the United States' first written submission,
paragraph 248.
629 See Mexico's first written submission, paragraph 234.
630 The United States refers to Section 5(b) of the GATS Annex on
Telecommunications. See the United States' first written submission,
paragraph 229.
631 See Mexico's first written submission, paragraph 240.
632 See Mexico's first written submission, paragraph 239.
633 See the United States' first written submission,
paragraph 230.
634 See the United States' first written submission,
paragraph 231.
635 See Mexico's first written submission, paragraph 242.
636 See the United States' first written submission,
paragraph 213.
637 See the United States' first written submission,
paragraph 214.
638 See the United States' first written submission,
paragraph 215.
639 See Mexico's answer to question No. 25 of the
Panel meeting on 19 December 2002, paragraph 322 ("If the Annex were to apply
to the services in question, would Mexico consider that the 'terms and
conditions' it applies on access to and use of Public Telecommunications
Transport Networks and Services (PTTNS) are 'reasonable'?").
640 See the United States' first written submission,
paragraph 249.
641 See the United States' first written submission,
paragraph 250.
642 See the United States' first written submission,
paragraph 251.
643 See the United States' first written submission,
paragraph 254.
644 The United States refers to Mexico's Schedule,
GATS/SC/56/Suppl.2., note 2. See the United States' first written
submission, paragraph 252.
645 See the United States' first written submission,
paragraph 252.
646 ee the United States' first written submission,
paragraph 253.
647 See the United States' first written submission,
paragraph 255.
648 See the United States' first written submission,
paragraph 256.
649 See the United States' first written submission,
paragraph 257.
650 Mexico refers to paragraphs 252-257 and 265-294 of the United
States' first written submission. See Mexico's first written submission,
paragraph 243.
651 See Mexico's first written submission, paragraph 244.
652 See Mexico's answer to question No. 6(a) of the Panel
of 19 Dec 2002, paragraph 90. For question No. 6(a), see footnote 282 of
this Report. For more information regarding the discussion on the scope of
Mexico's commitments, see Section IV.A.3 of this Report.
653 Namely, question No. 6(c) 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'. Does Mexico Mode 3 commitment regarding commercial agencies include an
obligation, at present, to issue permits for the establishment and operation of
such agencies?").
654 See the United States' answer to question No.
6(c) of the Panel of 19 Dec 2002, paragraph 32. For question No. 6(c), see
footnote 653 of this Report.
655 The United States refers to the Consolidated Opposition of
Telmex/Sprint Communications, L.L.C. to Applications for Review, page. 7,
Exhibit US-54. See the United States' answer to question No. 6(c)
of the Panel of 19 Dec 2002, paragraph 34. For question No. 6(c), see
footnote 653 of this Report.
656 See the United States' first written submission,
paragraph 258.
657 See the United States' first written submission,
paragraph 261.
658 See the United States' first written submission,
paragraph 266.
659 See the United States' first written submission,
paragraph 267.
660 See the United States' first written submission,
paragraph 268.
661 See the United States' first written submission,
paragraph 269.
662 See the United States' first written submission,
paragraph 272.
663 See the United States' first written submission,
paragraph 274.
664 See the United States' first written submission,
paragraph 275.
665 See the United States' first written submission,
paragraph 274.
666 See the United States' first written submission,
paragraph 275.
667 See the United States' first written submission,
paragraph 276.
668 See the United States' first written submission,
paragraph 278.
669 See the United States' first written submission,
paragraph 279.
670 The United States refers to the letter from Secretary Carlos
Ruiz Sacrist�n to Chairman Hundt, 22 October 1997, Exhibit US-46. See the
United States' first written submission, paragraph 281.
671 See the United States' first written submission,
paragraph 281.
672 The United States refers to the Letter from Ambassador
Charlene Barshefsky to Secretary Carlos Ruiz Sacrist�n, 4 April 1998, Exhibit
US-47. See the United States' first written submission, paragraph 282.
673 The United States refers to the Letter from Secretary Carlos
Ruiz Sacrist�n to Ambassador Charlene Barshefsky, 8 May 1998, Exhibit US-48.
See the United States' first written submission, paragraph 282.
674 See the United States' first written submission,
paragraph 283.
675 See the United States' first written submission,
paragraph 291.
676 See the United States' first written submission,
paragraph 292.
677 See the United States' first written submission,
paragraph 293.
678 See the United States' first written submission,
paragraph 294.
679 See Mexico's first written submission, paragraph 245.
680 See Mexico's answer to question No. 6(d) of the Panel
of 19 December 1992, paragraphs 111-113. For question No. 6(d), see
footnote 21 of this Report.
681 See the United States' answer to question No.
27 of the Panel of 19 December 2002, paragraph 111 ("How does the routing
requirement under mode 1 relate to the obligation in Section 5(b) to ensure
access to and use of leased circuits?").
682 See Mexico's answer to question No. 27 of the
Panel of 19 December 2002, paragraph 329. For question No. 27, see
footnote 681 of this Report.
683 See Mexico's answer to question No. 27 of the
Panel of 19 December 2002, paragraph 326-331. For question No. 27, see
footnote 681 of this Report.
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