U.S. Threatens to Bring WTO Case (washingtonpost,com) Pagina | de 3 Register News Home Page Hews Digest ‘onPotitics Notion + Caribbean South America Meteo, Businens/Teeh sports style Education Health Opinion Weather Weekly Sections Classifieds Print Edition. BWITANNIEA.EOM Chances of winning - 1:1 A U.S. Threatens to Bring WTO Case Shop Diam By Peter S. Goodman Rio Washington Post Staff Writer Saduntey Depart es Saturday, July 29, 2000; Page E01 * Telecommunicatioes } Jukeb Fale ‘The United States yesterday —specia te 2 formally threatened to fake the * Mxie.chaoensFox rea Mexican government before the ae ee = — Word Trade Organization for oo failing to open its telecommunications market to competition, the latest battle over global trade rules in an era when the explosive growth of the Internet is raising the stakes. ‘As the industry titans increasingly turn their sights beyond borders, aiming to capture greater flows of traffic through the global communications network, national governments are finding themselves ¥ caught between the pressure to open their markets and the instinct to defend their turf against foreign invasion. thie At stake in Mexico is & potentially enormous opportunity, Though the national telecommunications market remains relatively small--worth only about $12 billion a year-it holds the prospect for dramatic growth. aa USS. telecommunications giants-led by AT&T Corp. and WorldCom Inc.--have long argued that Mexico's national carrier, TelMex, refuses to WOR share its basic wiring into homes and businesses, impeding their efforts to reach customers "These barriers adversely affect U.S. interests and deprive Mexican x citizens of the benefits of competition,” U.S, Trade Representative Charlene Barshefsky said in a statement announcing her intent to file a complaint against Mexico at the WTO. The warning followed the collapse of bilateral negotiations aimed at striking a settlement Mexican officials sharply rejected the U.S, complaint and accused the Clinton administration of using the WTO as a vehicle to press the interests of U.S. companies. Fox's Tows ext “Welre not violating any agreement," said Jorge Nicolin, president of http //washingtonpost.com/wp-dyn/ werld/americas/A62744-20005ul28. html 02/09/00USS. Threatens to Bring WTO Case (washingtonpost.com) Pagina 2 de 3 Mexico's Federal Telecommunications Commission, the agency ven cunnarwss. overseeing the deregulation of the industry, "The United States is inthe tase ‘aout bad habit of trying to resolve everything in court." Elect He accused Barshefsky's office of "responding to private commercial Spe interests. They have no legal basis nor facts to sustain their complaint." a oh Retit ‘The skirmish comes only days after Washington resolved a similar dispute Su! with Japan over complaints that Nippon Telegraph & Telephone Corp. ner has yet to release its monopolistic grip on its turf, the world's second- largest telecommunications market. The conflict also comes as Congress debates legislation that would block Deutsche Telekom AG, the German national carrier, from taking contro! of Seattle-based mobile telephone provider VoiceStream Wireless Corp. ‘The deal has provoked concerns that Deutsche Telekom--predominately ‘owned by the German government—would gain an unfair advantage over U.S. competitors and perhaps compromise national security. Some say the hostile reception to the German cartier reflects the dawning of an uncomfortable American realization: Globalization is not a one-way street. Foreign enterprises could come to dominate the U.S. market. — tidiness of open-market theory and the messiness of free-trade realities, ‘The telecommunications tensions also highlight a divide between the ele € as new entrants collide with entrenched companies rooted in government. "You have an industry that has either been government-owned or had heavy government involvement," said Clyde Prestowitz, a former U.S. trade negotiator in the Reagan administration and now president of the Economic Strategy Institute, a Washington think tank, "Once you have a monopoly, it turns out, it's not too easy to get rid of it." Barshefsky's announcement follows the surprise election to the presidency of free-trade advocate Vicente Fox, ending decades of rule by the country's long-dominant party, known by its Mexican acronym PRI During his campaign, Fox pledged to open the telecommunications market to competition, warning that Mexico would otherwise remain a technological backwater at a time when the Internet is playing an increasingly vital role in global trade At issue is whether Mexican authorities have fulfilled their 1995 promises to open the door to telecommunications competition, or have instead insulated TelMex from rivals, TelMex is a national icon whose stock value makes up rougiily a third of the entire national stock exchange AT&T and WorldCom have erected networks in Mexico, burying fiber- optic cables and seeking to forge links with TelMex in a bid to sell telephone and Internet services, According to U.S. officials, TelMex has butp://washingtonpost. comiwp-dyn/world/americas/ A62744-2000Jul28, html 02/09/00U.S. Threatens to Bring WTO Case (washingtonpost. com) Pagina 3 de 3 yet to share its network and Mexican authorities have refused to impose regulations that would force it to open its market. According to the carriers, TelMex charges exorbitant rates for interconnection to its system and subsidizes its long-distance rates with higher local rates in order to undercut the new long-distance threat \ey are doing what monopolies do," said John Stupka, president of alliances and ventures for WorldCom, "TelMex is protecting the past and attempting to steal the future,” Mexican officials rejected the claim that federal regulators have protected TelMex, “Our regulatory and institutional systems are opening," said Luis de la Calle, undersecretary for international commercial negotiations in the Commerce Ministry, "We have a work plan that is being executed.” Barshefsky said negotiations with the Mexican government ultimately proved futile. Once the United States files its WTO complaint, it will trigger a mandatory 60-day negotiation period. If. settlement is not reached, the United States could bring a formal case--essentially, a trial--before a panel at WTO headquarters in Geneva. Washington Post researcher Alejandro Juarez in Mexico City contributed to this report © 2000 The Washington Post Company SEC Cine http://washingtonpost.com/wp-dyn/world/americas/A62744-2000)ul28. html 02/09/00