"To examine, in the light of the relevant provisions of the covered agreements cited by the United States in document WT/DS204/3, the matter referred to the DSB by the United States in that document, and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements."6
"If there is no agreement on the panelists within 20 days after the date of the establishment of a panel, at the request of either party, the Director-General, in consultation with the Chairman of the DSB and the Chairman of the relevant Council or Committee, shall determine the composition of the panel by appointing the panelists whom the Director-General considers most appropriate in accordance with any relevant special or additional rules or procedures of the covered agreement or covered agreements which are at issue in the dispute, after consulting with the parties to the dispute. The Chairman of the DSB shall inform the Members of the composition of the panel thus formed no later than 10 days after the date the Chairman receives such a request."
(a) Mexico's failure to ensure that Telmex provides interconnection to United States basic telecom suppliers on a cross‑border basis on cost‑oriented, reasonable rates, terms and conditions is inconsistent with its obligations under Sections 2.1 and 2.2 of the Reference Paper, as inscribed in Mexico's GATS Schedule of Commitments, GATS/SC/56/Suppl.2; in particular, that:
(i) Mexico's Reference Paper obligations apply to the terms and conditions of interconnection between Telmex and United States suppliers of basic telecommunications services on a cross-border basis;
(ii) Telmex is a "major supplier" of basic telecommunications services in Mexico, as that term is used in Mexico's Reference Paper obligations;
(iii) Mexico has failed to ensure that Telmex provides interconnection to United States suppliers at rates that are "basadas en costos" and terms and conditions that are razonables because:
- Mexico has allowed Telmex to charge an interconnection rate that substantially exceeds cost,
- Mexico allows Telmex to restrict the supply of scheduled basic telecommunications services; and
- Mexico prohibits the use of any alternative to the Telmex negotiated interconnection rate through Mexico's ILD rules, specifically Rule 13 along with Rules 3, 6, 10, 22 and 23.
(iv) Mexico's ILD Rules (specifically Rule 13 along with Rules 3, 6, 10, 22 and 23) fail to ensure that Telmex provides cross‑border interconnection in accordance with Section 2.2 of the Reference Paper.
(b) Mexico's failure to maintain measures to prevent Telmex from engaging in anti-competitive practices is inconsistent with its obligations under Section 1.1 of the Reference Paper; as inscribed in Mexico's GATS Schedule of Commitments, GATS/SC/56/Suppl.2; and in particular, that Mexico's ILD Rules (specifically Rule 13 along with Rules 3, 6, 10, 22 and 23) empower Telmex to operate a cartel dominated by itself to fix rates for international interconnection and restrict the supply of scheduled basic telecommunications services;
(c) Mexico's failure to ensure United States basic telecom suppliers reasonable and non‑discriminatory access to, and use of, public telecom networks and services is inconsistent with its obligations under Sections 5(a) and (b) of the GATS Annex on Telecommunications; and in particular, Mexico failed to ensure that United States service suppliers may access and use public telecommunications networks and services through:
(i) interconnection at reasonable terms and conditions for the supply of scheduled services by facilities‑based operators and commercial agencies; and
(ii) private leased circuits for the supply of scheduled services by facilities‑based operators and commercial agencies.
(a) The measures being challenged by the United States are not inconsistent with Sections 2.1 and 2.2 of the Reference Paper, inscribed in Mexico's GATS Schedule of Specific Commitments;
(b) Mexico has not acted inconsistently with its obligations under Section 1.1 of the Reference Paper, inscribed in Mexico's GATS Schedule of Specific Commitments; and
(c) The measures being challenged by the United States are not inconsistent with Section 5 of the GATS Annex on Telecommunications.45
"[Accounting rate is the rate per traffic unit agreed upon between administrations for a given relation, which is used for the establishment of international accounts, as per International Telecommunication Union Recommendation D. 150 New System for Accounting in International Telephony.]…
[7. Public availability of accounting rates
International accounting rates maintained by any supplier of public telecommunications transport services with foreign correspondents will be open to public review. Upon request of another Member, and [sic] essential facilities supplier will be required to justify why an international accounting rate differs significantly from domestic interconnection rates.]"
But the final version of the Reference Paper did not include any of this text. Furthermore, Mexico submits that accounting rates were consciously excluded from this text is confirmed by the fact that they are "on the table" in the Doha Round of negotiations.94
"Foreign operators can, if they wish, carry their international calls into the interior of the destination country and terminate them there via interconnect arrangements similar to, or even identical to, those used for domestic traffic. They are no longer compelled to hand off their traffic to a correspondent operator before it reaches the destination country".203
(i) First, the specific language of Mexico's Reference Paper — i.e., the phrase "respecto de los cuales se contraigan compromisos específicos" – plainly restricts the application of the Reference Paper to the precise scope of Mexico's commitments for market access for the supply of basic telecommunication services. In order to give meaning to this restriction, it is necessary to interpret Mexico's specific commitments in totality, including the inscribed limitations.
(ii) Second, those commitments must be interpreted in the light of the relevant mode of supply and any associated limitations, because it is the positive inscriptions and the limitations read together that define Mexico's specific commitments with respect to the supply of particular services.
(iii) Third, the United States is wrong to interpret the phrase "where specific commitments are undertaken" to simply mean that where any commitments are undertaken by a WTO Member the Reference Paper applies fully. The inscription of the Reference Paper in the fourth column of a Member's Schedule is, itself, a commitment that would invoke the application of Section 2 of the Reference Paper under the United States' interpretation. Such an interpretation means that the phrase "respecto de los cuales se contraigan compromisos específicos" in Section 2.1 of the Reference Paper is unnecessary. This renders the phrase meaningless and, therefore, is an impermissible interpretation under Article 31 of the Vienna Convention.222
"… must give meaning and effect to all the terms of the treaty. An interpreter is not free to adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to redundancy or inutility."225
(i) Mexico's own Schedule does not limit market access in mode 1 to only those foreign service suppliers that route traffic through the facilities of a Mexican concessionaire that the foreign service supplier itself owns or controls.288
(ii) Second, accepting Mexico's argument would mean that the provision of basic telecommunications services on a cross-border basis would only be possible if a service supplier also operated on a commercial presence basis. The result would be to make mode 1 redundant, and to render meaningless Members' mode 1 commitments in the basic telecommunications sector – a result that is contrary to the rules of interpretation to be applied by the Panel.289 Such an interpretation would be contrary to the meaning of mode 1, which is defined in GATS as the supply of a service "from the territory of one Member into the territory of any other Member." The ordinary meaning of these terms is that the service moves from the territory of one Member into the territory of the other Member, not the service supplier. This reading is also supported by an explanatory scheduling note, which states that "international transport, the supply of a service through telecommunications or mail, and services embodied in exported goods (e.g. a computer diskette, or drawings) are all examples of cross-border supply, since the service supplier is not present within the territory of the Member where the service is delivered".290
"(i) International transmission and switching: this network component includes transport from the United States-Mexico border to and through the Telmex/Telnor international gateway switch.
(ii) Local links: this network component consists of those facilities utilized to transport a call from the international gateway switch to an entry point in the Telmex/Telnor domestic network.
(iii) Subscriber line: this network component includes switching in the terminating city and transmission over facilities (such as a local loop) to the receiving telephone.
(iv) Long-distance links: this network component consists of those facilities utilized to transport traffic from the entry point in the Telmex/Telnordomestic network to the last switch in the network chain."393