U.S. Ambassador to the WTO Rita Hayes
Statements on Issues before the DSB
December 12, 2000

Item 1a. Surveillance of Implementation - EC Banana Regime
Once again, the EC has nothing new to report since last month's meeting.

We are particularly disappointed that the EC is once again (as it did in 1998) proceeding with a solution that will not resolve this dispute -- since the United States, working with its allies in Latin America and the Caribbean, has developed a viable alternative as the final solution to this longstanding dispute.

We urge the Commission to reconsider its position.

Item 1b. Surveillance - Japan - Varietal Testing of Agricultural Products

The United States thanks Japan for its report. We also hope to conclude our work with Japan in the near future.

Item 1c. Surveillance - Canada - Measures Affecting the Importation of Milk and Exportation of Dairy Products.

Last week the United States, Canada, and New Zealand held their final consultation under the implementation agreement concluded last December. The United States regrets that the parties failed to reach a consensus regarding whether Canada's new provincial measures implement the DSB recommendations in this dispute.

As the United States has noted at earlier DSB meetings, it is our view that Canada has not brought its export regime for dairy products into compliance with its export subsidy obligations under the Agreement on Agriculture. Little time now remains in the implementation period to do so and it appears unlikely that this will be accomplished.

Despite our disagreement with Canada regarding the adequacy of the actions taken to implement the DSB's recommendations, the United States wishes to both acknowledge and commend the exemplary spirit in which Canada approached the consultative process provided for in the implementation agreement. Over the course of the last year, Canada regularly advised the parties of the steps it was taking in light of the DSB's findings and engaged in a candid and constructive exchange of views regarding those actions.

Item 1d. Surveillance - India - Balance of Payments Quantitative Restrictions on Agricultural, Textile and Industrial Products

We thank the Indian delegation for this month's status report.

We look forward to further reports as April 1 comes closer.

Item 5. First U.S. Request for Establishment of a Panel on Mexico Telecommunications Services

The United States is requesting the establishment of a panel to examine measures of the Government of Mexico affecting telecommunications services.

Mexico's telecommunications regime prevents service suppliers from availing themselves of key commitments undertaken by Mexico in the GATS. For instance, Mexico's International Long Distance Rules prevent service suppliers from supplying cross-border telecommunications services over leased lines. These rules also prevent service suppliers from obtaining competitive rates and conditions for such telecommunications traffic.

In addition, it appears that Mexico has failed to abide by its key obligations under the Reference Paper, particularly with respect to ensuring timely and cost-oriented interconnection with Telmex Mexico's major telecommunications supplier. For instance, competitive service providers have been unable to obtain local interconnection with Telmex in a timely manner - in one case for over a year. Competitive service providers have also been unable to obtain from Telmex cost-oriented rates for interconnection at the local, long-distance, and international levels, including for calls to regions where competitors lack their own facilities.

These measures deny the service suppliers the opportunity to supply the Mexican markets consistent with Mexico's GATS commitments.

Mr. Chairman: We acknowledge the positive steps taken by Mexico in the past few months to issue rules to regulate the anti-competitive practices of Telmex and to reduce long-distance interconnection rates for 2001. Notwithstanding these steps forward, we remain very concerned about whether these steps will be implemented, given Telmex's legal challenges against both measures, and Mexico's apparent reluctance to enforce its new rules against Telmex. We are also concerned that Mexico has not yet addressed Telmex's failure to ensure timely interconnection at the local level and the lack of competitive alternatives to the above-cost rates for phone calls between the United States and Mexico.

Our dialogue with Mexico has certainly been useful, and we appreciate the cooperation that we have had on this issue. However, we have unfortunately not yet reached a solution that is satisfactory to both sides. Accordingly, we have regrettably concluded that our interests are best served by moving forward with our panel request at this time. We have therefore taken the logical step of bringing this matter to the DSB.

The United States of course remains open to further discussions with Mexico and fully expects that both sides will continue their efforts to resolve this matter on a mutually agreeable basis.

As the matter remains unresolved at this time, however, we are asking for establishment of a panel.

Item 6. Brazil-Export Financing for Aircraft: Recourse by Canada to Article 22.7 of the DSU and Article 4.10 of the SCM Agreement

Given the posture of this long-running case, the United States believes that the negative consensus rule of Article 22.7 DSU entitles Canada to receive authorization to suspend concessions at this time, if it so requests.

A simple declaration of compliance at the DSB is not enough to prevent such authorization.

The United States has been following this case with interest. We are hopeful that Canada and Brazil will ultimately find a way to resolve their differences.