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Business-Managed Democracy

“Business-managed democracies are those in which the political and cultural arrangements are managed in the interests of business”

Sharon Beder

Business-Managed Government

Telmex Ruling


Telmex logoIn 2004 the US won a case against Mexico over its telecommunications services GATS commitments. The WTO panel found that Mexico had failed to ensure that its major telecommunications supplier provided interconnection to US suppliers at a reasonable price to allow the US telecommunications companies to provide cross-border telecommunications services. It also found that Mexico had failed to provide US companies with access to private leased circuits in Mexico and to prevent anti-competitive practices.


Mexico had argued that foreign firms given access to the Mexican telecommunications market should have to contribute to the cost of developing and maintaining the telecommunications infrastructure. However, the WTO panel rejected this argument. According to the WTO, Mexico’s efforts to ensure universal service so that even the poor have access to telephone services, is legitimate but it must be done in a way that is ‘no more burdensome that necessary’ to foreign companies. Cross subsidization, whereby the infrastructure to provide the service to the poor is paid for in part by companies not supplying services to the poor, is more burdensome than necessary because other countries provide universal service in other ways and so cross-subsidization in not ‘necessary’.


Ironically, in the US access to telecommunications networks is not provided at a ‘reasonable price’ but the US telecommunications industry is dominated by US firms and so the US is unlikely to face a GATS complaint from another country.