TRADE AND COMPETITION POLICY
Working group set up by Singapore Ministerial

As government barriers to trade and investment have been reduced, there have been increasing concerns that the gains from such liberalization may be thwarted by private anti-competitive practices. There is also a growing realization that mutually supportive trade and competition policies can contribute to sound economic development, and that effective competition policies help to ensure that the benefits of liberalization and market-based reforms flow through to all citizens.

Approximately 80 WTO member countries, including some 50 developing and transition countries, have adopted competition laws, also known as “antitrust” or “anti-monopoly” laws. Typically, these laws provide remedies to deal with a range of anti-competitive practices, including price fixing and other cartel arrangements, abuses of a dominant position or monopolization, mergers that limit competition, and agreements between suppliers and distributors (“vertical agreements”) that foreclose markets to new competitors. The concept of competition “policy” includes competition laws in addition to other measures aimed at promoting competition in the national economy, such as sectoral regulations and privatization policies.

The WTO Working Group on the Interaction between Trade and Competition Policy (WGTCP) was established at the Singapore Ministerial Conference in December 1996 to consider issues raised by members relating to the interaction of these two policy fields. Since its initial meeting in July 1997, the Group has examined a wide range of such issues organized into a Chairman’s Checklist. The approximately 180 submissions received by the Working Group from members thus far attest to the keen interest that has been shown by members in the subject.

Since 1999, pursuant to a decision by the General Council of the WTO, the Working Group have been examining the following three topics in addition to the Checklist of Issues:

• the relevance of the fundamental WTO principles of national treatment, transparency, and most-favoured-nation treatment to competition policy and vice versa;

• approaches to promoting cooperation and communication among members, including in the field of technical cooperation; and

• the contribution of competition policy to achieving the objectives of the WTO, including the promotion of international trade.

At the beginning of the year, the Group agreed to also address the following points, as suggested by delegations:

• address concerns by some developing countries regarding both the general impact of implementing competition policy on their national economies and the particular implications that a multilateral framework on competition policy might have for development-related policies and programmes;

• continue to explore the implications, modalities and potential benefits of enhanced international cooperation, including in the WTO, in regard to the subject-matter of trade and competition policy; and

• continuing focus on the issue of capacity building in the area of competition law and policy.

While the relevance of WTO principles to competition policy and the need for enhanced cooperation among members in addressing anti-competitive practices were affirmed by a number of members, views differed as to the need for action at the level of the WTO to enhance the relevance of competition policy to the multilateral trading system. In particular, while a number of members expressed support for the development of a multilateral framework on competition policy in the WTO, to support the implementation of effective competition policies by member countries and reduce the potential for conflicts in this area, others questioned the desirability of such a framework and favoured bilateral and/or regional approaches to cooperation in this field.

The question of the desirability of developing a multilateral framework on competition policy will now be taken up at the Doha Ministerial Conference. In the preparations for the conference, a number of members have renewed the call for a WTO framework to support the implementation of effective national competition policies by members and enhance the overall contribution of competition policy to the multilateral trading system while other members have expressed continuing objections to negotiations on this matter.

Reflecting these divergent views, the draft ministerial declaration issued on 26 September 2001 contains two options for a decision to be taken in Doha on the nature of the future work on competition policy in the WTO:

• “We agree to negotiations aimed at enhancing the contribution of competition policy to international trade and development. To this end, the negotiations should establish a framework to address the following elements: core principles, including transparency, non-discrimination and procedural fairness, and provisions on hardcore cartels; modalities for voluntary cooperation; and, support for progressive reinforcement of competition institutions in developing countries through capacity building. In the course of negotiations, full account shall be taken of the situation of developing and least-developed country participants and appropriate flexibility provided to address them. We commit ourselves to ensure that appropriate arrangements are made for the provision of technical assistance and support for capacity building both during the negotiations and as an element of the agreement to be negotiated.”

or

• “The Working Group on the Interaction between Trade and Competition Policy shall undertake further focused analytical work, based on proposals by members. A report on this work shall be presented to the Fifth Session of the Ministerial Conference.”