33194 Telecommunications and the WTO The Case of Mexico by Björn Wellenius, Juan Galarza, and Boutheina Guermazi June 2005 The World Bank Global Information and Communication Technologies Department The Case of Mexico Telecommunications and the WTO The Case of Mexico By Björn Wellenius, Juan Galarza, and Boutheina Guermazi The U.S.-Mexico case is the first (and so far only) case ofWorldTrade Organiza- tion (WTO) dispute resolution on telecommunications services and, indeed, the first on services generally. The findings of the Panel charged with resolving the dispute, formally adopted by the WTO members, contain interpretations of the GeneralAgreementonTradeinServices(GATS).Thespecificdetailsofanycase areuniqueandthefindingsinthiscaseapplyonlytoMexico.Manygovernments, however,havemademarketaccesscommitmentsontelecommunicationsunderthe auspicesoftheGATS,andmoreintendtodosointhecontextoftheongoingDoha tradenegotiations.Hence,theinterpretativeelementsofthefindingshaveimplica- tions beyond those for the case at hand. The WTO in Brief TheWorldTradeOrganization(WTO)istheinternationalbodywhereglobalrules for trade among nations are agreed. The WTO was created in 1994 at the conclu- sionoftheUruguayRoundoftheGeneralAgreementonTariffsandTrade(GATT). The GATTagreement and provisional secretariat had administered the rules for muchoftheworld'smerchandisetradesince1948.Atthecenterofthenewmulti- The authors are grateful to Lee Tuthill, Bernard Hoekman, Philip English, and Charles Kenny for valuable comments and suggestions on drafts of this paper. Disclaimer: The findings, interpretations, and conclusions expressed herein do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the governments they represent. The World Bank Group 1 Telecommunications and the WTO lateraltradesystemresultingfromtheUruguayRoundareagreementsontradein goods,tradeinservices,trade-relatedaspectsofintellectualpropertyrights,adis- putesettlementunderstanding,andatradepolicyreviewmechanism.1 The GeneralAgreement onTrade in Services (GATS) came into force at the con- clusionoftheUruguayRound.ItconsistsoftheArticlesofAgreementanditsAn- nexes, and the schedules of specific commitments (and lists of exemptions from most favored nation treatment, MFN) submitted by member governments.2 The schedulesandexemptionlistsareintegralpartsoftheGATS.Itisbyreferencetoa country'sscheduleandMFNexemptionsthatitcanbeseenunderwhatconditions the basic principles of the GATS (MFN treatment, market access, and national treatment) are applied by the government concerned to particular services.3 The schedule identifies the service sectors to which the country will apply the market accessandnationaltreatmentobligationsoftheGATSandanylimitationstothese obligationsitwishestomaintain.Thesecommitmentsandlimitationsarespecified separatelyforeachoffourmodesofsupplythatconstitutethedefinitionoftradein servicesintheGATS:cross-bordersupply,consumptionabroad,commercialpres- ence, and temporary presence of natural persons.4 Of these, cross-border and commercialpresencearethemostrelevantfortelecommunications. TheGATSAnnexonTelecommunicationscontainsobligationsregarding telecom- municationsnetworksandservices.TheAnnexrequiresmembergovernmentsto 1 Attempts at the end of World War II to create an international trade organization to handle the trade aspects of international economic cooperation (as companion to the World Bank and International Mon- etary Fund) failed. Twenty-three of the 50 participating countries, however, agreed to negotiate to reduce customs tariffs, give an early boost to trade liberalization, and dismantle protectionist trade practices in place since the 1930s. These negotiations led in 1948 to the General Agreement on Tariffs and Trade (GATT). The GATT remained the only multilateral instrument governing international trade from 1948 until the World Trade Organization (WTO) was established in 1995. Eight rounds of multilateral trade negotiations were held under the auspices of the GATT. The Uruguay Round of 1986-94 was the last and most extensive of all. It led to creating the WTO and a new set of agreements. A new trade round, now under the auspices of the WTO, was initiated in Doha, Qatar in 2001 and is still underway. For an introduction to the WTO and links to all major documents see www.wto.org. 2 Under the General Agreement on Trade in Services (GATS), banks, insurance firms, telecommunications companies, tour operators, hotel chains, transport companies, and other service providers looking to do business abroad enjoy principles of free and fair trade that originally only applied to trade in goods. The GATS is a fairly concise document, 55 pages long in total, of which the main text has 24 pages and the Annex on Telecommunications has less than four pages. The country schedules add several thousand pages. Further details on the GATS are available on http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm6_e.htm . 3 In lay terms, most favored nation treatment means that a member country will accord services and service suppliers of other member countries a treatment no less favorable than it accords to like services and service suppliers of any other country (whether a member or not). With respect to market access, a GATS member country must treat services and service suppliers of other member countries not less favorably than as specified in its schedule of specific commitments. National treatment means that, in the sectors inscribed in its schedule, a member country will accord services and service suppliers from other member countries a treatment no less favorable than it accords to like services and service suppliers of its own country. 4 In lay terms, cross-border services are supplied from one country to another. Consumption abroad means services supplied in one country to consumers coming from another. Commercial presence occurs when entities of one country are located in another country where they provide services. And temporary presence of natural persons means services provided by nationals of one country in the territory of any other. 2 Global Information and Communication Technologies Department The Case of Mexico ensurethattheirtelecommunicationssuppliersgiveaccesstoanduseofpublictele- communications,onreasonabletermsandconditions,toservicesuppliersfromother countriessupplyinganyservicesincludedinthemembercountry'sschedule.The Annex also ensures the freedom of movement of information within and across bordersforpurposesofprovidingscheduledservices.Anditlimitstherestrictions thatcanbeplacedonaccessanduseofpublictelecommunicationstothoseneeded tosafeguardpublicserviceandthetechnicalintegrityofthenetworks,aswellasto preventthesupplyoftelecommunicationsservicesbyothercountriesotherthanas providedforinthehostcountry'sscheduleofcommitments. TheGATSprovidesfortheresolutionofdisputesbetweenmembercountrieswith respecttocompliancewithobligationsundertheGATS,includingannexesandspe- cificandadditionalcountrycommitments.AWTODisputeSettlementUnderstand- ingestablishestheproceduretobefollowed.5 On completion of the Uruguay Round in 1994, WTO member countries set up a NegotiatingGrouponBasicTelecommunications(NGBT)toagreeonspecificcom- mitmentstoliberalizethetelecommunicationsmarketswithintheframeworkofthe GATS.ParticipantsintheNGBTalsonegotiatedacommontext,calledtheRefer- encePaper,thatwouldserveasatemplateforschedulingadditionalcommitments on regulatory principles for the sector (see Box 1). By the close of negotiations in 1997, 55 schedules had been agreed by 69 countries and were annexed as the Fourth Protocol of the GATS.6 The collection of specific and additional commit- ments negotiated under the NGBT is commonly known as theAgreement on BasicTelecommunicationsServices.7Sincethen,afurther24countrieshavemade specificcommitmentsonbasictelecommunications.8 The Dispute on Mexico WTOhandlingofthedisputeconcerningMexicowasinitiatedin2000bytheU.S., followingmanymonthsofbilateraleffortstoresolvetheissuedirectlybetweenboth countries.InAugust2000theU.S.requestedconsultations,underWTOauspices, onMexico'sobligationsonbasicandvalue-addedservicesundertheGATSAnnex 5 An introduction to the WTO dispute settlement mechanism is available on http://www.wto.org/english/thewto_e/whatis_e/tif_e/disp1_e.htm 6 The 15 countries of the European Communities shared one schedule. 7 Despite its name, the ABTS is not a specific document. And it is not limited to basic telecommunications, since over 70 percent of schedules also refer to value-added services. A guide to telecommunications in the WTO is found on http://www.wto.org/english/tratop_e/serv_e/telecom_e/telecom_e.htm . 8 Ten other countries have made commitments on value added services only. The World Bank Group 3 Telecommunications and the WTO Box1 The Telecommunications Reference Paper Besides specific commitments to liberalize telecommunications markets, many countries have adopted the Reference Paper as an additional commitment under the GATS. The Reference Paper becomes part of a country's legally binding obligations only when it is included in its schedule. Most countries (including Mexico) have adopted the Reference Paper verbatim, but a few have adopted modified forms. The Reference Paper is a brief document (2-1/2 pages) that contains definitions and principles on the regulatory framework for basic telecommunications services. The Reference Paper provides broad principles and guidelines but leaves it to individual member countries to interpret this general framework and translate it into specific legislation and regulation. WTO member countries that adopt the Reference Paper mainly commit to: · Establish a regulatory authority that is independent of all suppliers of telecommunications services and networks · Maintain measures that prevent and safeguard against anti-competitive practices by major suppliers · Require major suppliers to interconnect other suppliers at any technically feasible point on a non-discriminatory, cost-oriented basis following transparent procedures and subject to dispute settlement by an independent body · Administer universal service programs in a transparent, non-discriminatory, and competitively neutral manner · Allocate and assign use of scarce resources, including the radio spectrum, numbering blocks, and rights of way, in an objective, timely, transparent, and non- discriminatory manner. A major supplier is defined as a supplier that, through control of essential facilities or use of market position, can materially affect the price and supply in the relevant market. Source: WTO 1996. onTelecommunicationsandtheReferencePaper. Successiveroundsofconsulta- tions did not resolve the issues raised, and in February 2002 the U.S. formally requestedtheestablishmentofaPanelunderrevisedclaims(thatnolongerincluded value-added services). InAugust 2002, after several months of negotiation be- tweentheparties(theU.S.andMexicangovernmentrepresentatives)ontheselec- tion of Panelists, the WTO constituted the Panel. The Panel met initially with the parties and with the third-parties having an interest in the case, and several times thereaftertodevelopanddraftitsfindings.9ThePanelissueditsfinalreporttothe 4 Global Information and Communication Technologies Department The Case of Mexico parties in March 2004.Although the parties claimed not to be satisfied with all aspectsofthePanelfindings,neitherpartyelectedtotakethePaneldecisiontothe WTOAppellate Body.As a result, theWTO's Dispute Settlement Body adopted thePanelreport,byconsensus,inJune2004.Thepartiesagreedon,andsubmitted to the WTO, a plan to redress the underlying problems by July 2005. Table 1 summarizeshowtheprocessevolvedovertime. Table 1: Milestones of the dispute resolution process August 2000 U.S. requests WTO consultations on Mexico's GATS telecommunications services obligations October 2000 Initial consultations. Helpful, but do not resolve disagreement January 2001 Additional consultations but little progress February 2002 U.S. files request for formal dispute resolution panel April2002 WTO establishes dispute resolution panel August 2002 Panel members selected December 2002 First meeting of panel with parties March2003 Second meeting with parties November 2003 Panel submits draft report for review by parties April 2004 Panel submits final report June2004 DSB adopts panel report Parties agree to implementation timetable The services subject to the U.S. complaint were public voice telephony, circuit- switched data transmission, and facsimile services, provided both on a facilities- andnon-facilitiesbasis.10Mexicohadscheduledtelecommunicationscommitments under the GATSArticles XVI (market access), XVII (national treatment), and XVIII(additionalcommitments,comprisingtheReferencePaper).Thesecommit- mentsobligedMexico,amongotherthings,toensurecost-basedinterconnection, prevent anti-competitive practices, and give foreign service suppliers access to 9 The third parties were Australia, Brazil, Canada, Cuba, the European Communities, Guatemala, Honduras, India, Japan, and Nicaragua. 10Loosely speaking, facilities-based services are those provided by suppliers using their own networks. Non- facilities based services, often referred to as resale, are provided by suppliers primarily using networks owned by others, through leasing or other commercial arrangements. The World Bank Group 5 Telecommunications and the WTO Mexicannetworks.Summarizedinplainlanguage,theU.S.claimedthat,withre- spect to the services at issue, Mexico had: · Failed to ensure thatTELMEX, the largest operator, interconnects U.S. cross-border suppliers of these services on cost-oriented, reasonable rates, terms,andconditions.ThiswasinconsistentwithSections2.1and2.2ofits ReferencePaper. · Failedtopreventanticompetitivebehavior,asregulationsempowered TELMEXtofixratesforinternationalinterconnectiononbehalfofall suppliersinthemarket,resultinginacartel. Thiswasinconsistentwith Section 1.1 of its Reference Paper. · FailedtoensureaccessbyU.S.supplierstopublictelecommunications networksinMexico,thuspreventingthemfromprovidingnon-facilities basedserviceswithinMexico(throughcommercialagenciesor `comercializadoras')andinternationalsimpleresale(throughcross-border leasedcircuits).ThiswasinconsistentwithArticles5aand5boftheGATS AnnexonTelecommunications. Othertelecommunications-relateddisputesbetweenWTOMembershadbeenun- der discussion and one or two had nearly come to the WTO before being settled throughpurelybilateralchannels.11Thatthisdisputebecamethefirsttoundergothe formalWTOdisputesettlementmechanismwasinlargepartduetotheeconomic significance of the trade concerned. In 2000, Mexico accounted for 16 percent of totaloutgoingU.S.internationaltelephonetraffic.Netinternationalsettlementsfrom U.S. operators to foreign correspondents reached a record high US$3.9 billion in 2002, of which about 19 percent was paid to Mexican operators.Although settle- ments had been declining from 1998, they remained high in comparison to more competitivehigh-trafficroutes(suchasbetweentheU.S.andCanadaandtheUnited Kingdom,seeFigure1)andaboutdoubletheFederalCommunicationsCommission's benchmarkforU.S.operatorssendingtrafficintoMexico.AlthoughMexico'sinter- national long distance market had been open to competition since 1997, by 2000 TELMEX'smarketsharestillexceeded60percentandwasrisingagain(seeFigure2). ThePanelmostlyagreedwiththeU.S.claims,butfoundthatMexicohadnotcom- mittedtoallowinternationalsimpleresaleandthuswasnotinviolationofitsobliga- tions on that count. The final report of 250 pages explains in detail how the Panel reachedtheseconclusions(WTO2004).Forillustration,thefollowingaresomeof thearguments,relatedprimarilytotheReferencePaper,castinplainlanguage. 11Between the U.S. and Japan on interconnection, and between the U.S. and the European Communities on standards for licensing mobile services. 6 Global Information and Communication Technologies Department The Case of Mexico Figure 1: Settlement rates in Mexico, Canada and the United Kingdom 0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 - 1998 1999 2000 2001 2002 2003 Canada United Kingdom Mexico Source: Telegeography 2005. Figure 2: International long distance market shares in Mexico 100.0 90.0 80.0 70.0 Others 60.0 Avantel 50.0 40.0 Alestra 30.0 Telmex 20.0 10.0 - 1996 1997 1998 1999 2000 2001 2002 2003 Source: Telegeography 2005. Definition of cross-border services A key question related to compliance with Sections 2.1 and 2.2 of the Reference Paper was whether the services at issue were supplied cross-border, as the U.S. claimed,or,asMexicoargued,weremerelyservicesprovidedbyU.S.firmsupto theMexicanborderfromwheretheywereprovidedbyMexicanfirms.ArticleI:2 of the GATS defines four modes of trade in services, of which the first mode, The World Bank Group 7 Telecommunications and the WTO usually referred to as cross-border, comprises "...the supply of a service...from theterritoryofoneMemberintotheterritoryofanyotherMember..."Thedistinc- tion mattered because Mexico had committed to cross-border market access for theprovisionoftheservicesatissue.12 ThePanelconcludedthatatelephonecalloriginatedintheU.S.andterminatedin Mexico was indeed a cross-border service irrespective of whether the U.S. firm haditsownfacilitiesinMexicoormadearrangementswithMexicanfirmstocarry thecallfromthebordertoitsfinaldestination.Summarizingpartoftheargument, the Panel explained that the supply of "...telecommunications services normally involveorrequirethelinkingwithanotheroperatortocompletetheservice,andthe operation, or presence in some way, of the supplier on both ends of the service cannotthereforebeanecessaryelementofthedefinitionofcross-bordersupply." 13 "More generally, a supplier of services under the GATS is no less of a supplier solely because elements of the service are subcontracted to another firm, or are carried out with assets owned by another firm. What counts is the service that the supplier offers and has agreed to supply to a customer." 14 Had the panel agreed with Mexico's position, there would have been no grounds to consider the U.S. claims and, as a consequence, most cross border traffic flows would have been consideredtofalloutsidetheambitoftheGATS. Cost-oriented interconnection. Section 2.2 of the Reference Paper requires that "Interconnection with a major supplier be ensured at...cost-oriented rates that are transparent, reasonable, hav- ingregardtoeconomicfeasibility,andsufficientlyunbundledsothatthesupplier need not pay for network components or facilities that it does not require...". The U.S. presented several estimations of the cost incurred in terminating inter- national calls in Mexico, based on available information including TELMEX's domestic interconnection charges, and argued that the settlement rates that U.S. companies were required to pay were above each of these cost estimates - on average 2.5 times higher. Mexico did not offer comments on these cost estimates and settlement charges, and it did not take up the Panel's invitation to submit is owncalculations. 12Mexico had scheduled cross-border market access commitments, subject to the limitation that "Interna- tional traffic must be routed through the facilities of an enterprise that has a concession granted by the Ministry of Communications and Transport." Concession was defined as "The granting of a title to install, operate or use a facilities-based public telecommunications network." See Mexico 2004, Schedule of Specific Commitments, section 2C. 13WTO 2004, para 7.40. 14WTO 2004, para 7.42. 15WTO 2004, para 7.203. 8 Global Information and Communication Technologies Department The Case of Mexico The Panel concluded that the difference between the costs presented to it and the settlementrateswas"...unlikelytobewithinthescopeofregulatoryflexibilityal- lowedbythenotionofcost-orientedrates..."oftheReferencePaper.15 Inreaching thisconclusion,thePanelemphasizedthatonlycostsdirectlyincurredinproviding interconnection are relevant.16 Costsforgeneraldevelopmentofthenetworkand foruniversalserviceprograms,inparticular,werenotdeemedrelevanttodetermin- ingthecostbasisforinterconnectionrates.ThePaneldidnotendorseanyparticu- larcostingmodel,andrecognizedthatmorethanonecostingmethodologycould beused,butitstatedthatincrementalcostmethods,suchasthelongrangeaverage incrementalcostmethodologyprescribedinMexico'stelecommunicationslawfor certainpurposes,areconsistentwiththisconcept.17 Rather than challenge the cost figures presented by the U.S., Mexico argued that the settlement rates pertained to the international accounting rate regime, not an interconnectionregime.18Atthetimenegotiationsonbasictelecommunicationsser- vicescametoclosurein1997,anonbindingunderstandinghadbeenreachedamong the negotiating parties that accounting rates would not be used as a basis of dis- putes.Otherwise,mostcountrieswouldhavefounditnecessarytofileexemptions toMFNtreatmentunderGATSArticleII. The Panel, however, found that the accounting rate regime is subject to the disci- plineofcost-basedinterconnectionforcountriesthathaveadoptedtheReference Paper.While the 1997 understanding prevented disputes arising under the GATS frameworkagreementfromdifferentaccountingrateswithdifferentcountries,itdid notexemptcountriesfromanyoftheirobligations,includingcost-basedintercon- nection, once they had also adopted the Reference Paper. Anti-competitive practices. Section1.1oftheReferencePaperestablishesthat"Appropriatemeasuresshallbe maintained for the purposes of preventing suppliers who, alone or together, are a 16The Panel took this view in part from the ITU's Recommendation ITU-T Rec. D.140 of June 2002, which set guidelines for establishing accounting rates for international telephone services. 17 Ley Federal de Telecomunicaciones, Art. 63. The law gives Comisión Federal de Telecomunicaciones (COFETEL, the regulator) authority to impose on any concessionaire with substantial market power rates that aim at recovering at least the long run average incremental cost of a service. This measure is aimed at preventing predatory pricing. 18The accounting rate is the nominal price per unit of traffic agreed upon between two countries for the joint provision of service. Under this mechanism, operators in the originating country compensate operators in the country of destination for providing international circuits and switching capabilities and domestic routing to deliver the call to the recipient. In case traffic in one direction exceeds the other, the operator with more outbound traffic transfers funds to the other operator. The payment is called settlement payment. It usually equals one-half the accounting rate. The World Bank Group 9 Telecommunications and the WTO majorsupplierfromengagingorcontinuinganti-competitivepractices."TheMexi- can rules for international telephone service required that the Mexican operator with the largest outgoing traffic over an international route should negotiate the settlementrateforterminatingincomingcallsoverthatroute,andrequiredthisrate to apply to all operators (`uniform settlements rates'). Since TELMEX had the mostoutgoingtrafficinallroutestotheU.S.,itwasinpracticethesolenegotiatorof settlementratesthatappliedaswelltoitscompetitors.19Therulesalsorequiredthat incomingcallsbedistributedforterminationamongMexicanoperatorsinpropor- tiontoeachoperator'soutgoingtraffic(`proportionalreturn').Mexicanoperators being offered more than their share of incoming calls should route them over to another operator or compensate it for the difference in revenue. The U.S. argued thatuniformsettlementratesandproportionalreturnresultedinacartelthatfixes pricesandmarketshares,soMexicohadfailedtomaintain`appropriatemeasures' to prevent anti-competitive practices. Mexico argued that the rules had been de- signed precisely to prevent anti-competitive behavior by large foreign operators playingoffMexicancompaniesagainstoneotherdowntounsustainableprices. The Panel found that uniform settlement rates and proportional returns required Mexican operators to engage in practices that were tantamount to a cartel and hence were anti-competitive. Mexico, therefore, had not met its obligation under Section 1 to take measures to prevent such practices. The Panel, furthermore, clarifiedthattheanti-competitivepracticesconcernedfellwithinthescopeofthe Reference Paper even when, as in the case of Mexico, they were mandated by governmentrules.Alongstandinginternationallegalprinciplewasthusreinforced, namelythatagovernmentmustbringitsdomesticlawsandregulationsintoconfor- mitywiththetreatyobligationsitundertakes. Application of the Annex on Telecommunications. Article5(a)oftheAnnexonTelecommunicationsstatesthat"EachMembershall ensure that any service supplier of any other Member is accorded access to and useofpublictelecommunications...onreasonableandnon-discriminatoryterms and conditions, for the supply of a service included in its Schedule."Article 5(b) adds that "Each Member country shall ensure that service suppliers of any other Member have access to and use of any public telecommunications...network or serviceofferedwithinoracrosstheborderofthatMember,includingprivateleased circuits..."Thismeans,essentially,thatwhenacountrycommitstoopenupapar- 19TELMEX's two largest competitors were Alestra, a subsidiary of ATT, and Avantel, a subsidiary of MCI (then WorldCom). ATT and MCI are major U.S. firms that had been excluded from TELMEX's partnership with Sprint, another major U.S. firm. 10 Global Information and Communication Technologies Department The Case of Mexico ticularmarket(e.g.financialservices),foreignsuppliersoftheseservicesareentitled tousethehostcountry'stelecommunicationsnetworksandservicestopursuetheir business.TheU.S.arguedthatU.S.telecommunicationssuppliersshouldbeallowed tointerconnectinternationalleasedcircuitstoMexicannetworkstoterminateincom- ingcallsoriginatedintheU.S.(internationalsimpleresale)aswellasprovideservices toMexicancustomersthrough`comercializadoras'byleasingfacilitiesownedbyMexi- canconcessionaires.TheU.S.alsoarguedthattheinterconnectionpricesbeingcharged to U.S. suppliers were not `reasonable'. Mexico held thatArticles 5(a) and 5(b) appliedonlytowardsmeetingthetelecommunicationsneedsofsuppliersofother services,nottheprovisionoftelecommunicationsservicesperse,andinanycase werelimitedtoservicesforwhichMexicohadundertakenmarketaccessobligations. The Panel clarified that interconnection and the ability to interconnect and lease circuitswereformsof`access'totheservicesatissue,andthereforetheprovisions in theAnnex applied to them.20The Panel upheld the U.S. position regarding the provisionofnon-facilitiesservicesthrough`comercializadoras'.Thefactthatregu- lationswerenotinplacetolicenseU.S.(oranyother)supplierstoprovidethisform ofservice,didnotexcuseMexicofrommeetingitscommitmenttomarketaccess throughcommercialpresence.ThePanel,however,sidedwithMexicoregarding internationalsimpleresale,sinceMexicohadnotundertakencommitmentsoncross- bordermarketprovisionofnon-facilitiesbasedservices. The Panel also found that `reasonable access and use' of public telecommunica- tions includes prices. Since the Panel had already concluded that Mexico's inter- connectionpricesdidnotmeettherequirementofcostorientationundertheRefer- encePaper,thisfindingundertheAnnexdidnotaddanythingnewinthiscase. Initial Effects in Mexico TheagreementreachedbetweenMexicoandtheU.S.inApril2004calledforthe followingactions: · WithintwomonthsofadoptionofthePanel'sreport,Mexicowillreviseits internationallongdistancerulestoallowcompetitivenegotiationof settlementratesbyeliminatinguniformsettlementrates,proportionalreturns, andtherequirementthattheoperatorwithmostoutboundtrafficnegotiate thesettlementrateonbehalfofallMexicanoperators 20This dispels the view held by some member countries that the Annex on Telecommunications applies only to value-added services, not basic services. The World Bank Group 11 Telecommunications and the WTO · Within13months,Mexicowillhaveinforceregulationstolicense `comercializadoras'allowedtoresellinternationalswitched telecommunicationsservicesprovidedbyMexicanconcessionaires · Mexicowillcontinuetorestrictinternationalsimpleresale(useofleased linestocarrycross-bordercalls) The Panel report was adopted in June 2004. The agreed implementation plan is wellunderway. Rules for international telecommunications services. Newinternationalrulesapplicabletoalltelecommunicationsserviceswereapproved by Comisión Federal deTelecomunicaciones (COFETEL, the regulatory author- ity)inJune2004andpublishedinAugust2004.21Theolduniformsettlementsand proportionalreturnruleshavebeen abolished.NowMexicanoperatorsofinterna- tionallongdistanceservicesarefreetonegotiateindividuallythetermsandcondi- tionsofinterconnectionwithforeignoperators,includingpricesforincomingand outgoing traffic. Foreign operators decide to which Mexican operators they wish to deliver their traffic for termination in Mexico. Thus Mexican operators can competeeffectivelywithoneanotherinthelargewholesalemarketofterminating incomingtraffic. Thenewrulesalsoallowmoreeffectivecompetitionintheretailmarketofoutgoing traffic.TheuniformsettlementrateshadalsoappliedtopaymentsbyMexicanopera- torstoforeignoperatorsforterminatingoutgoingcallsinothercountries.Thislargely ruled out price competition in Mexico as a means for any operator to increase its shareofoutgoingcalls.Sincetheshareofincomingsettlementswasdeterminedbythe shareofoutgoingtraffic(ruleofproportionalreturns),theoldrulesinpracticemade boththecallterminationandoriginationmarketslargelynon-competitive.22 Thenewrulesdonotsayhowinternationalinterconnectionshouldbepriced,noris this required under the agreement.The rules, however, establish that termination charges in Mexico cannot be below the cost incurred in providing this service.23 Thisreflectsaprovisioninthetelecommunicationslawaimedatpreventingpreda- 21These rules apply to all services and technologies, with a view to facilitating convergence among and between services and networks. The rules are preceded by a detailed explanation of the background and rationales of the old and new rules. See COFTEL 2004. For a discussion of the new rules from the viewpoints of competition law and economics, see Carreño et al. 2005. 22This aspect of the old rules was not argued by the parties in the WTO dispute and thus was not considered by the Panel. 23COFETEL 2004, Regla 18. 12 Global Information and Communication Technologies Department The Case of Mexico torypricingofanytelecommunicationsservicebyamajorsupplier.Therulesdonot sayhowcostwouldbedetermined,butthelawrefersexplicitlytolongrunaverage incremental costs.Also, in the explanation of the new rules, reference is made to ITUrecommendationstowardscost-basedinterconnection. Mexican operators reportedly have started to negotiate individually with their counterparts in the U.S.According to COFETEL, prior approval and publication of these agreements, as well as approval of points of international interconnec- tion, have been simplified and expedited. Processing time is reportedly down to about 16 days. Total incoming international traffic in 2004 increased by 31 per- cent24 and TELMEX's by 55 percent (TELMEX 2004). This rapid growth is attributed largely to the new rules having reduced the incentive for illegal by- pass.25 Freeing termination charges and ending proportional returns are seen as the main factors (COFETEL 2004b). It is too early to assess the extent to which competitiveinterconnectionchargesresultinlowerpricestousers,trafficgrowth, or changes in market shares. Theseimprovementsareexpectedtobenefitbusinessandresidentialusersofinter- national services and increase competitiveness of the Mexican economy overall. Mexicanoperatingcompanieswithlimiteddirectinvolvementintheprovisionof internationalservicesbutunderutilizeddomesticnetworksarelikelytodevelopa substantialbusinessasprovidersofalternativeinfrastructurestocarryinternational traffic within Mexico. Some of these companies may use this new cash flow to strengthentheirpresenceinthedomesticmarkets,ormaybecomeattractivemerger oracquisitiontargets(Carreñoetal.2005). Rules for licensing `comercializadoras'. COFETELhassubmittedtoSecretaríadeComunicacionesyTransporte,theline ministry,adraftoftherulestoissuelicensestocommercialagenciesthatwouldbe authorizedtoprovideinternationaltelecommunicationsservicesusingthefacilities ofMexicanconcessionaires.TheruleswouldbeissuedinJune2005. 24Outgoing traffic increased by only 9 percent. All traffic figures refer to minutes. 25By-pass: U.S. carriers, using cross-border private links, can avoid paying the uniform settlement rate and negotiate lower rates directly with Mexican operators. Although illegal in Mexico, this practice was driven by the large margins between termination costs and settlement rates, and attracted small Mexican operators that, because of the proportional return rule, did not benefit as much from the settlement revenues as the incumbent. Illegal bypass reportedly resulted in TELMEX losing in 2003 around US$230 million or 20 percent of its revenues from incoming U.S. calls. The World Bank Group 13 Telecommunications and the WTO International simple resale. Mexicocontinuestoprohibitinternationalsimpleresale,asagreed.Thenewrules forinternationaltelecommunicationsservicesareclearonthis,bothintheexplana- tory notes and the rules themselves. International interconnection can only take place at gateways approved by COFETEL. Only Mexican companies that have concessions to install, operate, and exploit public telecommunications networks authorizedtoprovideinternationalservicescanreceiveauthorizationtosetupin- ternational gateways. These gateways must offer interconnection services to all concessionaireswithoutdiscrimination. These remaining restrictions, while consistent with the WTO resolution and the agreementwiththeU.S.,constituteimportantbarrierstoentryintheinternational telecommunicationsservicesmarket.Also,TELMEXisbyfarthelargestoperator and has control over major network elements and functions that are essential for completingincomingcalls.TELMEX'sdomesticlongdistancenetworkisthelarg- est in the country and the only one reaching several hundred mid-size and small towns.TELMEXisstillthesoleprovideroflocaltelephonesinmanyplaces.Ob- serversnotethatCOFETELhasnotbeenparticularlysuccessfulsofarincontaining abuse of market power (Carreño et al. 2005). Implications for Telecommunications Beyond Mexico The Panel report states clearly that its findings apply solely to the specific case of Mexico brought to its consideration. But insofar as the Panel's analysis and con- clusions clarify aspects of both the Reference Paper and the GATSAnnex on Telecommunications, it can be expected to have a significant influence on tele- communicationspolicyandregulationbeyondthecaseofMexico.Thefollowing are some examples. International accounting rates, according to the Panel report, are subject to cost- basedinterconnectiondiscipline.Whilecountriescancontinuetousetheaccount- ingrateregimeasoneofthecommercialmodalitiestocompensatecompaniesfor jointly providing international service, adoption of the Reference Paper requires that such payments to major suppliers be cost-oriented.26 This adds pressure to- wardsreducingthelevelofaccountingrates,andmoregenerallyreplacingtheac- 26This is consistent with ITU guidelines that recommend that accounting rates should be cost-oriented and also now recognize a wide array of options beyond the traditional accounting rates regime. 14 Global Information and Communication Technologies Department The Case of Mexico countingrateregimebyaninterconnectionregimeasbefitsanincreasinglycompeti- tiveglobaltelecommunicationsmarket.Whilethingshavebeenmovinginthisdirec- tionforsometimedrivenbyeconomicandtechnologicalfactors,andreflectedin guidelinesfromtheITUandregionalorganizations,thePanel'srulingislikelyto acceleratechange(Guermazi2004). Regarding interconnection rates, the Panel determined that only costs related to interconnection itself can be reflected in prices that are required under the Refer- ence Paper to be cost-oriented. It is not that the Reference Paper ignores other coststhatthesuppliermustalsorecover,suchasthecostofgeneralnetworkdevel- opmentorofuniversalservice,butratherthattheycannotbefinancedbydistorting interconnectionpricestructures.Infact,theReferencePaperexplicitlyrecognizes therightofmembercountriestomaintainuniversalserviceprograms,providedthey are administered in a transparent, non-discriminatory, and competitively neutral manner and are not excessively burdensome (Reference Paper, Section 3).As to how interconnection costs should be determined, the Panel remained silent but commentedthatlongrangeincrementalcostpricingmodelsareconsistentwiththe principleofreflectingonpricesonlythecostscausedbytheservice.AlsothePanel ruling does not mean that prices must be set equal to costs, but rather that prices should bear a clear and reasonable relationship to costs. ThePanelclarifiedthatthebenefitsoftheAnnexonTelecommunicationsaccrueto suppliersofbasictelecommunicationsservices.UndertheGATSAnnexonTelecom- munications,foreignbanks,insurancecompanies,hotels,transportationcompanies, andothersallowedtoprovideservicesinthecountry,areassuredtheycanuseavail- ablepublictelecommunicationsonreasonableandnon-discriminatoryconditionsto carryouttheirbusiness.ThePanelclarifiedthatthisrightappliesalsotoforeignpro- vidersofscheduledtelecommunicationsservices,includingusingtheincumbent'sfa- cilitiestocompeteagainstit.Moreover,thePanelconcludedthatundertheAnnexon Telecommunications,whichisanintegralpartoftheGATS,evenmembersthathave notcommittedtotheReferencePaperaresubjectedtoapricedisciplineofsorts,for thosetelecommunicationsservicesincludedintheirschedules.27 ThePanel'srulingmayprovideabasisforchallengingothertelecommunications servicesinothercountries.28 Thiscouldbethecaseofhighfixed-to-mobiletermi- nation charges and lack of access to leased lines by mobile and Internet service providers.Asmobilecommunicationservicesgrowquickly,thetermsandcondi- 27This, however, is a more flexible concept than that of cost orientation under the Reference Paper. 28For example, the U.S. Office of the Trade Representative has identified high fixed-to-mobile charges in Australia, burdensome licensing requirements in Colombia, poor quality and high prices of local access leased lines in Germany, and access deficit charges used in India to finance rural services as situations that could be addressed supported by the Panel's arguments and findings. See USTR 2004. The World Bank Group 15 Telecommunications and the WTO tionsofinterconnectionwithfixednetworksbecomecritical.29Generallysubjectto lighterregulationthanfixedservices,themobilemarkethasinrecentyearsattracted regulatoryattentionbecauseofmulti-countrymergersandacquisitions,hightermi- nationcharges,non-transparentretailtariffs,anddisputesoverthedivisionoffixed- to-mobile call revenues and technical access. Lack of local access leased circuits for Internet service providers (ISP), or terms and conditions that discriminate in favoroftheincumbent'sownInternetoperation,coupledtoprohibitionofcompet- ingISPsfrombuildingtheirownnetworks,havebeenmajorfactorsholdingback Internet development in some parts of the world (Serot et al. 2003). Implications Beyond Telecommunications ThePanel'sfindingsclarifycertainaspectsoftheGATSthataresignificantbeyond thetelecommunicationssector. At the core of the Panel's ruling is its conclusion that cross-border market access commitments under the GATS apply even when the supplier is not present in the countrywheretheserviceisterminated.Whatgivestheserviceitscross-borderna- tureisthataservicecontractedinonecountryisdeliveredinanother.Thisapplies irrespectiveofwhethertheoriginatingservicesupplierhasitsownoperationinthe terminatingcountryormakesarrangementswithanothertodelivertheservice.30This conclusionhaspotentialimplicationsforothernetworkedservicesindustries,suchas electricity,transportservices,andpostalandcourierservices.Someobservers,how- ever, have argued that the services at issue in the case of Mexico were not cross- borderservicesatallbutratherdomesticserviceswithintheU.S.andexportinter- connection services from Mexico to the U.S (Neven et al. 2005).31Awidely ac- cepted understanding of the reach of cross-border delivery would have potential implicationsforelectronicallydeliveredcontentservices(Hauser2004). Oncecommitmentsareagreedandinplace,theyareinterpretedequallystrictlyfor allcountries.TheGATSgivesdevelopingcountriesspecialconsiderationinterms 29Fixed-to-mobile termination charges are still well above costs in many countries. While this may have been justified when mobile service was a nascent premium service, by now in many countries there are more mobile than fixed telephone connections and mobile service accounts for a large proportion of total sector revenue. 30The Panel stated, among other arguments, that if such were not the case, cross-border market access could only occur together with commercial presence, yet these two modalities have been defined separately in the GATS. 31According to this view, the U.S. operator provides a service to a customer located also in the U.S. and purchases termination services from a Mexican operator. The sale of termination services by the Mexican operator is an export to the U.S.. Mexico had not entered into commitments with respect to the export of telecommunications services. Moreover, the Reference Paper does not apply to cross-border supply at all but only to services supplied through commercial presence. See Neven et al. 2005. 16 Global Information and Communication Technologies Department The Case of Mexico ofthepaceatwhichtheycommittoliberalization.ThePanelclarified,however,that thisappliesonlyduringthenegotiationstage,whenspecificandadditionalcommit- mentsarebeingtradedoffamongcountries.Thisemphasizestheneedfordevelop- ingcountriestounderstandclearlywhattheyarecommittingtodo,andmakesure thattheywillbeabletostanduptothoseobligationsifchallenged.Nonetheless,in rulingagainsttheU.S.claimswithregardtointernationalsimpleresale,thePanel clearly indicated a respect for recognizing the line between services that are com- mittedandthosethatarenot. ThePanelalsoclarifiedthatlackofimplementingrulesandregulationscannotbe used as excuse to delay the effectiveness of market access commitments under- taken in the schedule. Mexico had committed to commercial presence of foreign serviceprovidersthrough`comercializadoras',essentiallynon-facilitiesbasedop- eratingcompanies,indicatingintheschedulethatlicensingofsuchproviderswould not begin until the regulations were published. But seven years after this commit- ment became effective, the rules for licensing `comercializadoras' had not been enacted so none had been licensed. Although the Panel did not say how soon the implementingrulesshouldbeinplace,itfoundthatsevenyearswastoolong.The broadconclusionisthatimplementingrulesshouldbeinplaceatthetimecommit- mentsbecomeeffective,orbonafideactionshouldbeunderwaytohavethemsoon. Implications Beyond Trade Law The Panel adopted a wide interpretation of what constitute anti-competitive prac- tices.Itruledthatacartelisatypeofpracticeagainstwhichappropriatepreventive measuresshouldbemaintained,althoughitisnotexplicitlymentionedintheRefer- ence Paper. In this respect, the panel clarified that the scope of the obligation to safeguardagainstanti-competitivepracticeswascomprehensive. Thishasproventobeahighlycontentiousoutcome.Someauthorsbelievethatthe Panel's report will become a landmark for interpreting GATS commitments and look forward to more cases of similar reach and quality of deliberation (Hauser 2004).Others,however,findthePaneltohavebeenexceedinglyweakintermsof economicandcompetitionanalysis(Marsden2004,Sidaketal.2004),offeralter- nativeinterpretationsoftheissuesthatwouldhaveledtoverydifferentconclusions (Neven et al. 2005), or worry that dispute settlement panels may create new com- mitmentstoopenmarketswherenonehavebeenagreedbynegotiators(Marsden 2004, Sharma et al. 2004). Some believe the U.S. operating companies, rather thanMexicanorU.S.users,willbetheprimarybeneficiariesoftheWTOdecision, andthatmoreeffectivecompetitionamongU.S.supplierspursuedinthecontextof The World Bank Group 17 Telecommunications and the WTO U.S. anti-trust law would have had a greater impact than dispute resolution at the levelofinternationaltradetreaty(Sidaketal.2004).Theseandotherreservations deserveseriousconsiderationbytelecommunicationsandtradeexperts,especially asmoredevelopingcountriescommittofurtherliberalizationandglobalmarkets become more competitive. It is beyond this note, however, to comment on the relativemeritsoftheseviews. The Panel also found that anti-competitive behavior by suppliers of services for whichGATScommitmentstocompetitivesupplyhavebeenundertakencannotbe excused by national law. Specifically, the cartel led by TELMEX was not only toleratedbythegovernmentandregulatorbutwasactuallymandatedbyMexico's rulesforinternationalservices.Mexicoarguedthattheseprovisionshadbeenbuilt intotherulespreciselytopreventMexicanfirmsfrombeingplayedoffagainstone another by powerful foreign operators often acting together.Although this may have been sensible in the early days of opening its markets, and, in fact, was commonlyusedbysuppliersincompetitivemarketswhendealingwithmonopoly markets,nowitisseeninthecontextofrelationsbetweencompetitivemarketsto beundulyrestrictive.32 Issues for the Doha Round In the ongoing round of trade negotiations, a number of telecommunications- related issues have been tabled.33Amajor negotiating goal, as revealed by coun- try proposals, is to achieve more widespread liberalization of trade in telecom- munications services with more countries undertaking commitments. The pro- posals also seek to revise existing schedules and significantly reduce the number and scope of limitations to both market access and national treatment. The Ref- erence Paper is receiving considerable attention.All negotiating proposals sub- mitted suggested that more governments should undertake the Reference Paper. One proposal (by a middle-income country) suggested converting the Reference Paper to a GATSAnnex, hence applicable to all WTO members. Other propos- alsinviteadaptingtheReferencePapermodeltootherservicessectors(EU2000, EU 2003, US 2000a).34 32This historical perspective eventually was later also expressed by COFETEL as part of the rationale for Mexico's new rules for international telecommunications services. 33Under article XIX of the GATS, WTO members committed to the progressive liberalization of services. A new round of services liberalization was launched in early 2000. This GATS 2000 Round was then incorpo- rated in a wider negotiating round launched during the 2001 Doha Ministerial Meeting. 34The Dominican Republic, Honduras, and El Salvador propose that the Reference Paper be applied in the tourism sector. 18 Global Information and Communication Technologies Department The Case of Mexico AstheDoharoundisunfoldingagainstthebackdropofspectaculartechnological developments and convergence of networks and services, many countries have triedtoreflectthesechangesintheirtabledoffers.Manygovernmentshaveempha- sizedtheimportanceoftelecommunicationstotakeadvantageofe-commerceand informationandcommunicationtechnology.SomecountrieshaveincludedInternet- basedservicesintheirtelecommunicationscommitments.Othercountrieshavelinked theiroffersinthetelecommunicationssectortooffersincomplementaryservices suchasadvertising,expressdelivery,computerandrelatedservices,andfinancial services(US2000b).Mostdevelopingcountriesarebecomingincreasinglyaware ofthepotentialfortelecommunicationsliberalizationtocontributetoeconomicdevel- opmentstrategies.Asaresult,fromthevantagepointofavarietyofdifferentmotiva- tions,thetelecommunicationssectorandtheprospectofnewandimprovedcommit- mentsontelecommunicationsreformremainapriorityintheDohanegotiations. TheMexicocaseaddsurgencytoaddressingthetensionsbetweentradeandcom- petitionlawinthetelecommunicationssector.Noconsensushasemergedonwhether or how to address competition concerns within a global trade framework (Lloyd 1997, Hoekman 1997). The Reference Paper could be seen as a legal instrument thatapproachestheproblemthroughsector-specificregulatorycommitmentswith competition policy elements.As the Mexico case showed, however, introducing broad competition policy elements such as the notions of major supplier, domi- nance, essential facilities, and competitive safeguards, even when limited to one specificsector,canraiseseriousinterpretativedisputes.Shortofabroadcompeti- tion agreement, some observers suggest, it should be possible to reach consensus onsomespecificpointsbyrevisingtheGATSrulesorprovidingmoredetailsinthe Reference Paper or other sector-specific instruments. For example, it could be agreedwhethergovernmentsareallowedtoimposelimitationsoncompetitionas partoftheircommitments,orthattheGATSdoesnotprejudgewhatisacarteland thatthisisanissuethatfallsoutsidethescopeofviolationcasesandhencecannot be litigated under the WTO. The issue is more complex than the specific case of cartels raised in Mexico, and merits a response in the way of a fresh approach to internationallawmaking. Concluding Comments UndertakingGATSobligationshasbroaddomesticpolicyimplications.TheMexico case unfolded in the context of domestic tensions that commonly arise, in both developedanddevelopingcountries,regardinghowfar,andhowfast,governments shouldmovetoinstitutefullycompetitivelegalframeworksforthetelecommunica- tionssector.CommitmentsunderGATStoliberalizemarketsandfollowtheRefer- The World Bank Group 19 Telecommunications and the WTO ence Paper provide leverage to keep domestic telecommunications reforms on track and resist the inevitable pressures brought to bear by incumbents to slow down or reverse the process.These commitments, however, have an impact well beyonddomesticagendas,andshouldnotbeundertakenwithoutseriousconsider- ationofthecapacityandpoliticalwilltoimplementthem. The GATS schedules are legally binding and enforceable treaty obligations.The Mexico case illustrates that undertaking and implementing the Reference Paper needstobegivenconsiderablethoughtandeffort.Governmentsnownegotiating new or improved schedules should encourage their trade and telecommunica- tions authorities to work closely together to make sure the trade commitments areconsistentwithrealistictelecommunicationsreformagendas.35 Governments will also need to make an informed decision on applying the GATS and Refer- ence Paper principles to the settlement of international traffic.The Panel's inter- pretationoftheinterconnectiondisciplinesoftheReferencePaperinvitesadeeper thinking on the importance of early tariff rebalancing and the fate of the account- ing rate regime in the context of global transformation of the sector. Given the complexity of these issues, and to help avoid future WTO-related pitfalls, gov- ernmentsmaybenefitfromdrawingupontelecommunicationsandtradeexpertise to assist them in the planning and implementation of reforms upon which they wishtocommitinGATS. TheReferencePaperisakeyelementoftheWTOframeworkfortelecommunica- tions services. While the Reference Paper leaves up to each member country the translationofguidelinesintospecificmeasures,theprinciplesareclear,powerful, and, as illustrated by the Mexico case, ultimately enforceable. The Reference Pa- perprovidesanimportantblueprintofbestpracticeforcountriesintheearlystages ofdesigningtelecommunicationspolicy,legislation,andregulation,particularlyfor countriesthatseektojointheWTO.Inthissense,aminimumcommondenomina- tor of regulatory practice is building up among WTO member countries. Some authors,however,worrythatthesepracticesdonotdofulljusticetothechallenges facedbydevelopingcountries(Hendersonetal.2005).Notallinternationaltrade treatieshavesuchaninstrument.36TheGATSAnnexonTelecommunicationsand 35The need to achieve a constructive dialogue between trade negotiators and sector specialists is key to the success of domestic reform through trade liberalization. It is an important challenge of the Doha Round that these two policy communities work in concert. See Mattoo et al. 2003. 36The North American Free Trade Agreement (NAFTA), for example, has only rudimentary provisions on telecommunications services and nothing equivalent to the Reference Paper. It has been argued that, for this reason, NAFTA has had little effect on cross-border telecommunications investment and services between the US and Mexico. Rather, it was only once the WTO telecommunications commitments came into force that US investors were able to enter the Mexican telecommunications markets and call charges between both countries began to drop. See Harris 2002. 20 Global Information and Communication Technologies Department The Case of Mexico the Reference Paper have also been used as templates for bilateral and regional tradeagreements.Morerecently,somefreetradeagreementshaveimprovedonor gonebeyondtheseGATSinstruments. MultinationaltelecommunicationscompaniestakeGATSseriously.Theyarewell informedoftherightsandbenefitstowhichtheGATSentitlesthem.TheMexico case suggests that suppliers are likely to increasingly use GATS commitments to secure markets and pursue GATS benefits. Indeed, many developing countries undertaketheGATScommitmentsinthehopeofattractingforeigninvestmentfrom just such companies. Once having committed, however, countries will find it in- creasinglydifficulttorenegeontheirpromises. TheWTOdisputeresolutionmechanismwillcontinuetobeusedonlysparingly.It isgovernments,notcompanies,thathaveaccesstothedisputemechanism.Asup- plierhastoconvinceitsgovernmenttofileacomplaintbeforeeventhefirstformal consultative steps take place in the WTO framework. Large markets and those with seriousshortfallsinimplementingscheduledcommitmentscanexpecttobe themostlikelycandidatesforfuturedisputes.Amongdevelopingcountries,issues regardingChina,India,andMoroccohavebeenarising(USTR2004).Moreover, disputes can be resolved through bilateral efforts, without resort to formal WTO procedures,whicharecostlyintermsofhumanresourcesandexpertadvice.Well- triedpracticesofprivatesectordisputeresolutionofferalternativesfordealingwith conflictsamongoperatingcompanies(Bruceetal.2002). The World Bank Group 21 Telecommunications and the WTO References Bruce, R. andA. Merritt, 2002, "Discussion Paper on the Use ofAlternative Dis- puteResolutionTechniquesintheTelecomSector",InternationalTelecommunica- tion Union, Global Symposium for Regulators, paper No. 12, Hong Kong, 7-8 December2002.Accessibleathttp://www.itu.int/ITU-D/treg/Events/Seminars/2002/ GSR/Documents/12-Bruce_document.pdf Carreño, F. and L. Burgueño, 2005, "WTO Panel rules against Mexico", Von Wobeser y Sierra SC, Mexico, DF. Accessible at http:// www.globalcompetitionreview.com/ara/mex_telecoms.cfm COFETEL 2004a, "Resolución mediante la cual la Comisión Federal de Telecomunicaciones expide las reglas de telecomunicaciones internacionales", Comisión Federal deTelecomunicaciones, 15 June 2004, México, DF. COFETEL2004b,"ÍndicedeProduccióndelSectorTelecomunicaciones­ITEL", fourthquarter2004,p.5,ComisiónFederaldeTelecomunicaciones,Mexico,DF. 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Luff (eds.),TheWTOandGlobalConver- gence in Telecommunications and Audio-Visual Services, Cambridge Univer- sityPress Harris,S.,2002,"PreparedWitnessTestimony,TheHouseCommitteeonEnergy and Commerce, U.S. House of Representatives", 9 October 2002.Accessible at http://energycommerce.house.gov/107/Hearings/10092002hearing740/ Harris1218.htm Hauser,H.,2004,"Mexico­MeasuresAffectingTelecommunicationsServices", WTO News No. 11, July 2004, Swiss Institute for International Economic and AppliedEconomicResearch,UniversityofStGallen.Accessibleathttp://www.wto- news.ch Lloyd,P.,1998,"MultilateralRulesforInternationalCompetitionLaw?"TheWorld Economy, 21, 1029-1049. 22 Global Information and Communication Technologies Department The Case of Mexico Hoekman, B., 1997,"Competition Policy and the Global Trading System," The World Economy, 20:383-406. Marsden, P., 2004, "WTO decides first competition case ­ with disappointing results", Competition Law Insight, May 2004. Mattoo,A. and P. Sauve (eds.), 2003, Domestic Regulation and Service Trade Liberalization,Trade and Development Series,World Bank and Oxford Univer- sityPress. Neven, D., and P. Mavroidis, 2005, "El mess inTELMEX", Graduate Institute ofInternationalSciences,Geneva,andColumbiaLawSchool,NewYork, forthcoming. Serot,A., C. Rossotto, and M.Terrab, 2003,"Middle East and NorthAfrica:Tele- communicationsforExport-LedGrowth",TheWorldBank,Washington,DC.Ac- cessibleathttp://info.worldbank.org/ict/WSIS/docs/comp_MENA.pdf Sharma, R., and J.Rosychuck, 2004, "The Collision of Trade and Competition Law:Assessing theAftermath of theWTOTelmex Decision",Tradeweek, Cana- dianAssociation of Importers and Exporters, Inc. July 15, Vol. 115, No. 17.Ac- cessibleathttp://www.heenanblaikie.com/en/media/pdfs/pdf/20040625_Sharma.pdf Sidak, G., and H. Singer, 2004, "Uberregulation without Economics:TheWorld TradeOrganization'sDecisionintheU.S.­MexicoArbitrationonTelecommuni- cation Services", Federal Communications Law Journal, December. TELMEX 2004, "Resultados relevantes, 40 trimestre 2004", 3 February 2005, México,DF. US2000a,"CommunicationfromtheUnitedStates-EnergyServices",document S/CSS/W/24,WorldTradeOrganization,Geneva. US2000b,"CommunicationfromtheEuropeanCommunitiesandtheirMember States: GATS 2000 : Postal/courier Services, document S/CSS/W/6123, World TradeOrganization,Geneva. US 2000b, "Communication from the United States - MarketAccess inTelecom- munications and Complementary Services: theWTO's Role inAccelerating the DevelopmentofaGloballyNetworkedEconomy",documentS/CSS/W/30,World TradeOrganization,Geneva. The World Bank Group 23 Telecommunications and the WTO USTR,2004,"ResultsofSection1377ReviewofTelecommunicationsTradeAgree- ments",U.S.OfficeoftheTradeRepresentative,Washington,DC. WTO 1996, "Reference Paper",WTO Negotiating Group on BasicTelecommu- nications,Geneva,24April1996.Accessibleathttp://www.wto.org/english/tratop_e/ serv_e/telecom_e/tel23_e.htm WTO2004,"Mexico:MeasuresAffectingTelecommunicationsServices:Report of the Panel," document WT/DS204/R of 2April 2004, World Trade Organiza- tion, Geneva. Accessible at http://www.wto.org/english/tratop_e/dispu_e/ dispu_subjects_index_e.htm#bkmk13 24 Global Information and Communication Technologies Department The Case of Mexico The World Bank Group 25