Competition Policy at the WTO
1
Competition Policy at the WTO:
An Update on the Process and
State-of-Play Post-Seattle
Outline for Presentation to:
Conference on Recent Developments in U.S. Antitrust Law:
Impact on Central European Business
By:
Robert D. Anderson
Counsellor, Intellectual Property Division
World Trade Organization
Marriott Hotel
Vienna
October 13, 2000
Status of the Work on Competition Policy in the WTO
Work is continuing in the exploratory Working Group on the Interaction between Trade and Competition Policy which was established at the Singapore Ministerial Conference (December 1996), since there was no outcome on this or other issues at the Seattle Ministerial Conference in November-December 1999.
Some delegations continue to pursue the possibility of launching a new Round of Multilateral Trade Negotiations, including provision for negotiation of a multilateral framework on competition policy (no consensus on this as yet).
Work in the WTO Working Group is being complemented by regional Workshops organized by the Secretariat on the issues before the WTO in this area, in response to demands made by developing countries in the preparatory process for Seattle. The first such Workshop was held in Phuket, Thailand, in early July, for WTO Members and observers in South, Southeast and East Asia.
Interest in the issues before the WTO has been heightened by the proposal last month by Mr. Joel Klein, then U.S. Assistant Attorney-General for Antitrust, for a "Global Competition Initiative"[1] along the lines proposed in the Report of the International Competition Policy Advisory Committee (ICPAC), in February 2000.[2]
How and Why Competition Policy Came to Be
on the WTO Forward Agenda[3]
A.Historical recognition of the importance of competition policy as a complement to trade liberalization
-Havana Charter, Chapter V (not incorporated in GATT 1947)
B.Economic and policy developments prompting increased interest in competition policy in recent times:
-Reduction of tariffs and conventional non-tariff barriers: concern that these might, to an extent, be replaced by private anti-competitive arrangements
-Globalization of business activities including, in some cases, anti-competitive practices (e.g., recent cases of international cartels): widely held view that these cannot be satisfactorily addressed at the national level alone
-Apparently growing incidence of actual/potential conflicts of jurisdiction in antitrust cases
-Importance of competition policy for market access in particular sectors (e.g., basic telecom services)
-Use of competition policy as a tool of economic integration in many regional trade arrangements
-Potential for competition policy to assist in addressing post-Seattle concerns re: alleged "producer bias" in the multilateral trading system
Competition-Related Provisions in
Existing WTO Agreements
•GATS (Article VIII): Members to ensure that state monopolies do not act in manner inconsistent with their obligations/commitments
•TRIPS (Articles 8 and 40): Authority to take measures against abuses of intellectual property rights/anti-competitive licensing practices
•Basic Telecom Negotiations, Reference Paper on Regulatory Principles: commitment to adopt appropriate measures to prevent anti-competitive practices by major suppliers
•Agreement on Safeguards (Article 11:3): Members not to encourage/support the adoption of non-governmental measures equivalent to voluntary export restraints, orderly marketing arrangements or other governmental arrangements prohibited under Article 11.1
•Consultation arrangements: - (1960 resolution under GATT, GATS (ArticleIX))
•Implication: competition is not a "new" issue at WTO, although it is one which is not yet systematically developed
Possible Elements of a Multilateral
Framework on Competition Policy[4]
•Basic principles to be reflected in Members' competition policies, likely including the fundamental WTO principles of national treatment, MFN and transparency and a commitment to take measures against hard-core cartels.
•New modalities/enabling provisions concerning case-specific cooperation.
•A standing WTO Committee on competition policy to monitor progress, provide a forum for exchange of national experience, promote voluntary convergence in Members' policies, etc.
•Enhanced technical cooperation/other measures to promote institution building and address the development dimension of the issues.
Looking Ahead
•Implications for further work in the WTO of Mr. Klein's recent proposal for a Global Competition Initiative.
•The conceptual challenges for policy-makers: (i) identifying the potential value-added in a multilateral framework on competition policy; and (ii) assessing the choice of administering forum. Some relevant considerations might include:
-The potential contribution to institution building/promoting a culture of competition of the WTO vs. a new intergovernmental forum or organization;
-The suitability of the WTO (or otherwise) as the administering authority for the proposed new modalities/enabling provisions on cooperation to deal with anti-competitive practices;
-The role to be played by dispute settlement/alternative compliance mechanisms in any new international arrangement on competition policy;
-The extent to which competition policy is important to the future evolution of the multilateral trading system:
-Helping to realize the benefits of market-access commitments;
-Ensuring that markets work to the benefit of consumers, not merely producer interests;
-Helping to guide the overall evolution of the system.
Appendix I
Singapore Ministerial Declaration, Paragraph 20
(December 1996)
"20.…, we also agree to:
…
establish a working group to study issues raised by Members relating to the interaction between trade and competition policy, including anti-competitive practices, in order to identify any areas that may merit further consideration in the WTO framework.
In the conduct of the work of the working group[s], we encourage cooperation with the above organizations to make the best use of available resources and to ensure that the development dimension is taken fully into account. … It is clearly understood that future negotiations, if any, regarding multilateral disciplines in these areas, will take place only after an explicit consensus decision is taken among WTO Members regarding such negotiations."
Appendix II
General Council's Decision of December 1998
The General Council decides that the Working Group on the Interaction between Trade and Competition Policy shall continue the educative work that it has been undertaking pursuant to paragraph20 of the Singapore Ministerial Declaration. In the light of the limited number of meetings that the Group will be able to hold in1999, the Working Group, while continuing at each meeting to base its work on the study of issues raised by Members relating to the interaction between trade and competition policy, including anti-competitive practices, would benefit from a focused discussion on: (i) the relevance of fundamental WTO principles of national treatment, transparency, and most-favoured-nation treatment to competition policy and vice versa; (ii) approaches to promoting cooperation and communication among Members, including in the field of technical cooperation; and (iii) the contribution of competition policy to achieving the objectives of the WTO, including the promotion of international trade. The Working Group will continue to ensure that the development dimension and the relationship with investment are fully taken into account. It is understood that this decision is without prejudice to any future decision that might be taken by the General Council, including in the context of its existing work programme.
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[1] Mr. Joel Klein, U.S. Assistant Attorney General for Antitrust, "Time for a Global Competition Initiative?" (Remarks at the 10th Anniversary Conference on EC Merger Control, Brussels, September 14, 2000).
[2]International Competition Policy Advisory Committee, Final Report (U.S. Government Printing Office, February 28, 2000)
[3] For further background, see "Special Study on Trade and Competition Policy", in World Trade Organization, Annual Report for 1997 (Geneva).
[4]The following is a synthesis of proposals that have been put forward by various Members at various times, prepared by the speaker for discussion purposes. There is no implication that Members have reached a consensus on the above proposals. For related background, see "A Multilateral Framework on Competition Policy" (Communication by the European Community and its member States, WT/WGTCP/W/152, WTO, 25 September 2000).