U.S. Wins Case on Mexico Phone System

The Bush administration said Friday that it won a trade case before the World Trade Organization that would result in millions of dollars in savings for Americans who make telephone calls to Mexico.

The administration said the WTO ruled that Mexico was violating global trade rules by refusing to dismantle barriers to its telephone market. U.S. companies estimate the barriers have cost callers more than $1 billion since 2000.

“Mexico has provided a single, dominant company with a government mandate to set excessive rates for international calls to Mexico,” U.S. Trade Representative Robert B. Zoellick said in announcing the decision.

The United States contended that Mexico’s giant telephone company, Telefonos de Mexico, known as Telmex, was reaping improper profits by charging inflated connection fees for long-distance calls.

In addition to the higher charges, U.S. companies including AT&T; Corp. had complained that they were unable to use alternative channels for carrying their calls within Mexico.

About 80% of calls between the United States and Mexico originate in the United States, where price competition between U.S. carriers has led to much lower rates for consumers.

The Geneva-based WTO will not make its decision public for several weeks, but the U.S. and Mexican governments were provided copies of the ruling Friday.

Mexico will have the right to appeal the decision, and only if it loses on appeal will it be required to remove the objectionable trade barriers. If Mexico refuses to remove the barriers, the United States will have the right to impose retaliatory trade sanctions.

The decision marked a welcome victory for the Bush administration, which has lost several high-profile cases before the WTO recently. One was a ruling against steel tariffs imposed by President Bush. In another case, the European Union successfully argued that about $5 billion in tax breaks the United States provided U.S. exporters represented a banned subsidy.