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March 13, 2004

WTO Orders Mexican Phone Privatization

That seems to be the upshot of this ruling by the WTO:

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 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 charges 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.

This is not "free trade" or any kind of trade policy. This is regulatory law ordered by trade arbitrators without a legislative body in sight.

Those of who oppose the workings of the WTO or other "free trade" agreements don't object to lower tariffs-- I think the US and Europe should be forced to eliminate far more tariffs, especially on agricultural goods, since we are terrible protectionists against developing nations seeking access to our markets.

But most "free trade" agreements are attempts to override domestic intellectual property, corporate, and regulatory laws-- using the club of trade deals to dictate policy to poor countries.

This decision forcing telephone competition in Mexico is just one clear example.

Posted by Nathan at March 13, 2004 08:37 AM

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