March 1, 2018 / 9:17 PM / 2 years ago

NAFTA teams set to close telecom chapter as US softens stance -sources

MEXICO CITY, March 1 (Reuters) - NAFTA negotiators paved the way for closing the telecommunications portion of the trade deal this weekend, as the United States has dropped a proposal to enshrine measures targeting Mexican billionaire Carlos Slim’s America Movil, sources said.

Telecommunications are due to be discussed in Mexico City on Saturday as part of talks to rework the 1994 North American Free Trade Agreement, according to a schedule.

Although officials in Mexico are upbeat about the chances of an agreement, political considerations have in the past dragged out the process of announcing the conclusion of chapters.

Progress on the telecom chapter, viewed as an area of common ground in the tough negotiations, was stalled by a U.S. proposal to include Mexico’s 2014 telecommunications reform in an annex that would apply only to Mexico, Reuters reported.

Now, U.S. negotiators have signaled they will only seek to include general principles of the reform that would apply to all three countries, said two sources with knowledge of the matter.

The new proposal allays Mexico’s concerns considerably, said Senator Gerardo Flores, who has been briefed on the matter.

Negotiations “have advanced a lot,” he said. “There is an expectation that they will close the chapter this round.”

The reform aimed at loosening America Movil’s grip on the market was one of President Enrique Pena Nieto’s signature legislative accomplishments. But Mexico balked at being singled out in the trilateral pact, and was concerned the annex would tie the hands of its telecommunications regulator.

Mexican officials saw the U.S. proposal as an attempt to favor U.S. telecom giant AT&T, which spent billions to enter Mexico after the telecommunications reform was announced.

A spokeswoman for AT&T declined to comment. A spokesman for America Movil did not respond to a request for comment.

A private sector trade expert close to the NAFTA talks said the U.S. team had agreed the revised accord did not need to refer to antitrust provisions against the dominant player in Mexico under which America Movil faces tougher regulation.

In particular, the United States sought to codify in NAFTA a measure agreed in the Mexican reform bill to bar America Movil from charging competitors for calls to its network.

However, Mexico abandoned the policy last year after the country’s Supreme Court ruled that the regulator, not legislators, should set so-called interconnection rates.

With roughly two-thirds of mobile users, America Movil’s market share in Mexico is unparalleled in the NAFTA region. Canada’s largest operator, Rogers Communications Inc, held about 33 percent of wireless subscriptions in the fourth quarter of 2017, excluding wholesale and mobile virtual network operators (MVNO) subscriptions, according to research firm Strategy Analytics.

In the United States, Verizon and AT&T held 33.9 percent and 27 percent, respectively, of wireless subscriptions in the fourth quarter, excluding wholesale and MVNOs, according to Strategy Analytics.

NAFTA negotiators are now discussing including key principles of the Mexican telecom reform that can be applied to all three nations, such as regulatory transparency and competitive conditions in the marketplace, Senator Flores said. (Additional reporting by Dave Graham; Editing by David Gregorio)

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