Reuters | 16 November 2017
Mexico bristles at US proposal that would benefit AT&T in NAFTA
by Julia Love, David Lawder
Mexico shot down a proposal by the United States to include provisions in the North America Free Trade Agreement that would benefit AT&T Inc (T.N), Mexico’s Economy Minister Ildefonso Guajardo said on Wednesday.
“AT&T, which is North American, asked its government to reflect its interests in the negotiation,” Guajardo said in an interview on local radio without specifying the details of the U.S. proposal. “You cannot have an agreement... that gives a tailor’s cut, a perfect handiwork, to a specific company.”
AT&T and the U.S. Trade Representative’s office declined to comment.
During the last round of talks in Virginia, the United States proposed incorporating Mexico’s landmark telecommunications reform into a NAFTA provision that would apply only to Mexico, four sources with knowledge of the matter told Reuters.
Mexico’s 2013-14 telecommunications reform aimed to break up the dominance of America Movil (AMXL.MX), the telecommunications firm owned by billionaire Carlos Slim, which emerged from a state monopoly in the 1990s.
Negotiators are still working to make sure the reform is included in the agreement, Guajardo said.
“What we said is that we cannot accept a specific annex,” he said. “We can reflect conceptually the commitments that are reflected in the law, which for us is very important to consolidate.”
Beckoned by the reform, AT&T entered the Mexican market in 2014, spending $4.4 billion to buy Mexico’s No.3 and No.4 carriers.
But the market was plunged into uncertainty in August when the Mexico Supreme Court ruled America Movil should not be barred by law from charging its rivals for calls to its network, weakening a key pillar of the reform.
The turmoil has spilled over into NAFTA negotiations, Guajardo said.
“What has kept us from closing (he telecoms chapter)is that it was contaminated a little bit by this debate over the zero-rate,” he said.
The telecommunications reform, which sharply lowered prices for consumers, is one of Mexico President Enrique Pena Nieto’s signature accomplishments. But throughout the negotiations, Mexico has consistently rejected proposals that isolate the nation, trade experts say.
“What’s surprising (about the telecommunications proposal) is that there is the principle that we are negotiating as three countries,” said Mexico Senator Gerardo Flores, who was briefed on the proposal.
“And suddenly the United States puts on the table a proposal that demands commitments specifically from Mexico, which converts the negotiation into a bilateral negotiation.”
Mexico has been enthusiastic about enshrining a 2014 energy reform in NAFTA, but also with the condition that the language applies to all three countries in the pact, said Duncan Wood, director of the Wilson Center’s Mexico Institute.
“Mexico doesn’t want to be singled out in any way,” he said. “You set a precedent where side deals with individual countries can be made.”