Statement by Ambassador Linnet F. Deily
U.S. Permanent Representative to the WTO

June 1, 2004

MEXICO - MEASURES AFFECTING TELECOMMUNICATIONS SERVICES

REPORT OF THE PANEL (WT/DS204/R)

-- Madam Chair, the United States is pleased to request the adoption of the panel report. As the Members are aware, this dispute was the first WTO panel proceeding to deal with telecommunications services. We welcome the Panel’s thorough analysis of both the GATS Annex on Telecommunications and the Reference Paper. Delegations will recall that the Reference Paper is included in many Members’ schedules.

-- This morning, Madam Chair, we would like to take the opportunity to highlight a number of specific aspects of the panel report.

-- First, we note with approval the Panel’s recognition of the importance of the pro-competitive regulatory principles contained in the GATS Annex on Telecommunications and the Reference Paper. We welcome the Panel’s careful analysis of the nature of cross-border telecommunications services and the regulatory concepts of major supplier status and cost-orientation.

-- Second, we welcome the Panel’s confirmation that international interconnection, including through accounting rate regimes, is included within the scope of Section 2 of the Reference Paper.

-- Third, we wish to underscore the Panel’s finding that the obligations of the GATS Annex on Telecommunications apply to measures of a Member that affect suppliers of basic telecommunications services of any other Member, as the obligations would apply to measures affecting any other service supplier of another Member.

-- Fourth, as a general matter, we note that in undertaking its analysis, the Panel made reference to a number of documents outside the agreements themselves, specifically the Draft Model Schedule and a Note by the Chairman of the Negotiating Group on Basic Telecommunications. We commend the Panel’s use of these documents for the sole purpose of confirming the ordinary meaning of the relevant agreement text, as provided under Article 32 of the Vienna Convention on the Law of Treaties. Panels should not overstate the legal significance of such documents.

-- Fifth, we disagree with the Panel’s conclusion that a specific provision in Mexico’s GATS schedule allowed Mexico to prohibit the supply of cross-border services using leased capacity in Mexico. We strongly disagree with some of the Panel’s discussion in reaching that conclusion concerning the obligations of GATS Article XVI:2, particularly as those elements of the discussion do not derive from the actual text of that provision.

-- However, on the whole we would like once again to commend the Panel for its careful and diligent work in this dispute and thank the members of the Panel and the Secretariat for their efforts.

-- Finally, Madam Chair, we are pleased to inform the DSB that we have been able to reach an agreement with Mexico with respect to the steps necessary to comply with the recommendations and rulings that the DSB is about to adopt and on the reasonable period of time for compliance. We are providing a copy of the agreement to be circulated to all Members. The careful structure and discussion of the Panel’s report provided a useful framework under which the parties were able to reach agreement. Our experience in this dispute provides an excellent example of the ways in which Members can use the dispute settlement procedures to facilitate resolution of a dispute in a mutually satisfactory manner.

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