WORLD TRADE  
ORGANIZATION  WT/DS204/7 
S/L/161  
2 June 2004 
 (04-2366) 
 Original:   English/ 
                  Spanish 
  
 
MEXICO – MEASURES AFFECTING TELECOMMUNICATIONS SERVICES  
 
Notification of an Agreement
  
  
 The following communications, dated 1 June 2004,   from the Permanent Missions of Mexico 
and the United States, are circulated at their request.  
_______________  
 
 
June 1, 2004 
 H.E. Ms. Linnet F. Deily  Ambassador  Permanent Representative  
Permanent Mission of the United States to  
The World Trade Organization  Route de Pregny 11  1292 Chambesy  Switzerland  
 
Dear Ambassador Deily:   Over the past several days, delegations of the Un ited States and Mexico (the "Parties") have been 
discussing a mutually agreed solution of the dispute Mexico – Measures Affecting 
Telecommunications Services (WT/DS204/R).  Notwithstanding the fact that Mexico does not share 
the interpretation of Mexico’s World Trade Organi zation (the "WTO") commitments as set forth in 
the panel findings, Mexico will not exercise its ri ght to appeal under Article 16 of the Understanding 
on Rules and Procedures Governing the Settlement of Disputes (the "DSU") in light of the following 
understanding reached by the Parties to comply w ith the recommendations of the panel report:  
 
1. The Parties agree that thirteen (13) months constitutes a reasonable period of time to 
comply with the recommendations of the Report, as set forth in paragraphs 2 to 6 of this letter.   
 2. Within two (2) months of adoption of the Re port, Mexico shall have in force revised 
International Long Distance Rules (the "ILD Ru les").  Mexico shall completely eliminate 
those aspects of the current ILD Rules that  implement the "uniform settlement rate" 
system, the "proportional return" system, and the requirement that the carrier with the 
greatest proportion of outgoing traffic to a count ry negotiate the settlement rate on behalf 
of all Mexican carriers for that country.  Thus, the new ILD Rules shall allow the 
competitive commercial negotiation of international settlement rates.  
 
3. Within thirteen (13) months of adoption of the report, Mexico shall have in force 
regulations ( Reglamentos ) authorizing the issuance of permits ( permisos ) for the resale of WT/DS204/7 
S/L/161 Page 2 
 
 
international long distance public switche d telecommunications services.  Such 
Reglamentos  will regulate commercial agencies ( comercializadoras ) established in 
Mexico and permit them to purchase and resell these telecommunications services through the use of capacity of concessionaires,  within the limits established in Articles 52 
and 61 of Mexico’s Federal Telecommunications Law.   
 
4. The Parties anticipate that the competitiv e commercial negotiation of international 
settlement rates resulting from the revisions of  the ILD Rules described in paragraph 2 
will result in reasonable and cost-oriented rates.    
 
5. The United States recognizes that Mexico will c ontinue to prohibit International Simple 
Resale (ISR). 
 
6. Once Mexico has complied with the obligatio ns set out in paragraphs 2 and 3, and 
provided that international settlement rate s offered do not increase above the rates 
established by commercial negotiations concl uded in May 2004 between United States 
carriers and the Mexican carrier authorized unde r the current ILD Rul es, the Parties will 
file a notice with the Dispute Settlement Body stating that a mutually agreed solution to 
this dispute has been achieved.  Provided that Mexico has complied with this agreement, the United States shall not seek recourse to Article 21.5 of the DSU, concerning any 
finding or recommendation of the panel report.  
 The Parties shall consult periodically regardi ng the implementation of this agreement.  
 I have the honor to propose that this letter done in  the English and Spanish languages, both texts being 
equally authentic, and your letter of confirmation in  reply shall constitute an agreement between our 
two Governments, effective as of the date of the letter in reply.            S i n c e r e l y ,    
 
        (Signed) Eduardo Pérez Motta,  
  Ambassador  
 
  WT/DS204/7 
 S/L/161 
 Page 3 
 
  
 
June 1, 2004 
 
H.E. Mr. Eduardo Pérez Motta  
Ambassador Permanent Representative  Permanent Mission of Mexico to      the World Trade Organization 
Avenue du Budé 16 (7 piso)  
1202 Geneva Switzerland   Dear Ambassador Pérez Motta:  
 
I am pleased to receive your letter of today’s date, which reads as follows:    
"Over the past several days, delegations of the Un ited States and Mexico (the "Parties") have been 
discussing a mutually agreed solution of the dispute Mexico – Measures Affecting 
Telecommunications Services (WT/DS204/R).  Notwithstanding th e fact that Mexico does not 
share the interpretation of Mexico’s World Trad e Organization (the "WTO") commitments as set 
forth in the panel findings, Mexico will not exercise its right to appeal under Article 16 of the Understanding on Rules and Proce dures Governing the Settlement of Disputes (the "DSU") in 
light of the following understanding reached by the Parties to comply with the recommendations 
of the panel report:  
 
1. The Parties agree that thirteen (13) months constitutes a reasonable period of time to 
comply with the recommendations of the Report, as set forth in paragraphs 2 to 6 of this letter.   
 2. Within two (2) months of adoption of the Re port, Mexico shall have in force revised 
International Long Distance Rules (the "ILD Ru les").  Mexico shall completely eliminate 
those aspects of the current ILD Rules that  implement the "uniform settlement rate" 
system, the "proportional return" system, and the requirement that the carrier with the 
greatest proportion of outgoing traffic to a count ry negotiate the settlement rate on behalf 
of all Mexican carriers for that country.  Thus, the new ILD Rules shall allow the 
competitive commercial negotiation of international settlement rates.  
 
3. Within thirteen (13) months of adoption of the report, Mexico shall have in force 
regulations ( Reglamentos ) authorizing the issuance of permits ( permisos ) for the resale of 
international long distance public switche d telecommunications services.  Such 
Reglamentos  will regulate commercial agencies ( comercializadoras ) established in 
Mexico and permit them to purchase and resell these telecommunications services 
through the use of capacity of concessionaires,  within the limits established in Articles 52 
and 61 of Mexico’s Federal Telecommunications Law.   
 
4. The Parties anticipate that the competitiv e commercial negotiation of international 
settlement rates resulting from the revisions of  the ILD Rules described in paragraph 2 
will result in reasonable and cost-oriented rates.    
 
5. The United States recognizes that Mexico will c ontinue to prohibit International Simple 
Resale (ISR). 
 WT/DS204/7 
S/L/161 Page 4 
 
 
6. Once Mexico has complied with the obligatio ns set out in paragraphs 2 and 3, and 
provided that international settlement rate s offered do not increase above the rates 
established by commercial negotiations concl uded in May 2004 between United States 
carriers and the Mexican carrier authorized unde r the current ILD Rul es, the Parties will 
file a notice with the Dispute Settlement Body stating that a mutually agreed solution to 
this dispute has been achieved.  Provided that Mexico has complied with this agreement, the United States shall not seek recourse to Article 21.5 of the DSU, concerning any finding or recommendation of the panel report.  
 
The Parties shall consult periodically regardi ng the implementation of this agreement.  
 
I have the honor to propose that this letter done  in the English and Spanish languages, both texts 
being equally authentic, and your letter of confirmation in reply shall constitute an agreement 
between our two Governments, effective as of the date of the letter in reply."  
 
I have the honor to confirm that the understanding re ferred to in your letter done in the English and 
Spanish languages, both texts being equally authenti c, is shared by my Government, and that your 
letter and this letter in reply shall constitute an agreement between our two respective Governments, 
to enter into force on the date of this letter.    
       S i n c e r e l y ,   
         ( S i g n e d )  L i n n e t  F .  D e i l y           A m b a s s a d o r   
 
 
   
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