- The Washington Times - Tuesday, November 25, 2003

The United States won the World Trade Organization’s first case considering telecommunications services, a major victory for U.S. long-distance carriers if it holds up, sources said.

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The preliminary decision was circulated to governments last week but is not expected to be finalized until early next year.

Responding to a press inquiry, a U.S. trade official yesterday confirmed the decision.

“This is the first WTO panel proceeding dealing with telecom services, so it’s being watched closely around the world,” the official said.

The United States in February 2002 asked the WTO to rule on a complaint that Mexico failed to open its cross-border telecommunications market, as required under global trade rules, effectively stifling price competition for cross-border services.

Companies including AT&T;, MCI and Bell Atlantic waded into Mexico’s long-distance market during the 1990s but quickly ran into high international connection rates that must be paid to Telefonos de Mexico (Telmex), the dominant local phone system.

The U.S.-based firms complained they could not compete because of the rates they had to pay to transmit over the Telmex system.

The preliminary ruling reportedly found that Mexico’s rates were not cost oriented, did not allow competition and inappropriately restricted calls within and leaving Mexico.

The ruling deals with wholesale rates, not consumer rates. But lower wholesale charges would allow greater competition and falling charges for calls in and out of Mexico.

U.S. carriers in 2002 estimated that the high international rate costs U.S. customers about $500 million in excess payments a year.

“We have long been concerned about high termination rates on the U.S.-Mexico route and Mexico’s restrictions on competition for terminating international calls.

“It appears that the WTO has agreed that Mexico has not implemented its telecommunications trade commitments,” Claudia Jones, an AT&T; spokes-woman, said in a statement.

“We hope Mexico will at long last take its commitments seriously and take the necessary steps to fully implement all its telecommunications trade obligations,” she said.

Once a final ruling is adopted, Mexico still would have the right to appeal any decision.

An official at Mexico’s embassy in Washington said his government was not yet commenting on the case.

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