MEXICO – MEASURES AFFECTING TELECOMMUNICATIONS SERVICES
Document: Notification of an Agreement
Date: 2 June 2004
Document codes: WT/DS204/7; S/L/161
Complainant: U.S.
Respondent: Mexico
Third parties: Australia, Brazil, Canada, Cuba, EU, Guatemala, Honduras, India, Japan, Nicaragua
Dispute stage: Panel
Agreements cited: Art. VI:1, VI:5, XVI:1, XVI:2, XVII:1, XVII:2, XVII:3, XVIII  Services (GATS)

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
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 (). 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 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).

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 regarding 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

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 United States and Mexico (the "Parties") have been
discussing a mutually agreed solution of the dispute (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).

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 regarding 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