The GATS Structure Relating to Telecommunications Services - WTO Panel Report on the U.S.-Mexico Telecommunications Dispute: Impact and Issues

This paper examines the significance of the report made by WTO dispute settlement mechanism (a dispute settlement panel) concerning the dispute between the U.S. and Mexico over international telecommunications. In contrast to the former GATT structure, WTO system includes an agreement covering trade in services in the form of GATS (General Agreement on Trade in Services). However, since there had been no decisions from dispute settlement procedures dealing directly with GATS, the real significance of the agreement was unclear. This case was therefore crucial to understanding the realities of GATS, especially since it dealt with telecommunications services, which are one of the most strictly regulated areas of trade in services. The decision showed that vague wording on the meaning of "cost-oriented rate" specified in related agreements had clear significance, that Annex on Telecommunications has an influence that extends to regulations on basic telecommunications services, and that GATS and related agreements and commitments place greater restrictions on states than has generally been imagined. The WTO dispute settlement panel demonstrated the severely restrictive nature of GATS, and this may cause delays in the progress of negotiations on trade in services currently under way. Widespread discussion of the appropriateness of this decision is therefore anticipated.