./.RESTRICTEDWORLD TRADE
ORGANIZATIONWT/WGTCP/W/73
30 March 1998
(98-1265)
Working Group on the Interaction
between Trade and Competition PolicyOriginal:  English
COMMUNICATION FROM THE REPUBLIC OF KOREA
The following communication, dated 12 March 1998, has been received from the Permanent
Mission of the Republic of Korea with the request that it be circulated to Members.
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WTO Rules Viewed from a Competition Policy Perspective
I. LIMITATIONS OF THE EXISTING WTO RULES VIEWED FROM A COMPETITION
POLICY PERSPECTIVE
1. Basically, the WTO rules aim at increasing market access by removing tariff and non-tariff
barriers.  As they focus on abolishing barriers at the border, not much attention has been paid to the
competition conditions within the market, including restrictive business practices, which vary from
country to country.  The existing WTO Agreements do not provide specific rules on competitionper se .  Even if they have various competition-related provisions, these provisions are different from
competition rules and principles in their natu re, purpose, and criteria for determining anti-
competitiveness of measures or practices in question.
2. Such a difference is most salient in their respective approaches to dumping practices.  Viewed
from a competition policy perspective, dumping practices can be divided into two categories:monopolizing and non-monopolizing).
1  Whereas the former results in reduced welfare of the
importing country, the latter may increase the welfare of the importing country in the form of
consumer surplus which exceeds the producer's loss.  Therefore, anti-dumping measures on non-
monopolizing dumping practices may reduce the welfar e of the importing country.  Nevertheless, the
WTO Agreement on anti-dumping comprehensively regulates all kinds of international price
discrimination including non-monopolizing dumping.
3. As industrial technologies including in formation and telecommunication technology are
progressing rapidly, technical barriers in relation to competition policy have acquired a growing
significance in and relevance to international trade.  In particular, technical standards are expected to
have greater importance in the formation of strategies for entering as well as securing markets.  In
sectors where rapid technical advancement takes place, a certain country may attempt to gain or
maintain the technical upper hand by relaxing or delaying the application of competition laws.
                                                     
1 Robert D. Willig, Ch. 1. "The Economic Effects of Anti-dumping Policy", Competition Policy and
Anti-Dumping, OECD, 1995.WT/WGTCP/W/73
Page 2
However, there are no provisions in the existing WTO Agreements addressing the issue of such a
technical monopoly.
4. Multinational corporations that have built up global networks are expanding their market
dominance by means of international trade, overseas investment, international subcontracting,
international licensing, and joint research and development that contribute to broadening the scope of
anti-competitive practices.  Anti-competitive international cartels, competition-restrictive internaltransactions, multinational vertical mergers and acquisitions, abuse of market dominance, and market
division or maintenance of market dominant positions through strategic cooperation in state of the art
technology are good examples which directly or indirectly exacerbate the market conditions and
narrow the scope of competition.  Such practices also raise barriers to market access.  The WTO rules
have no mechanism to deal with these new competition policy problems that may impede fair and free
trade.
5. The procedures and methods of resolving competition-related trade disputes under the
existing WTO rules are ambiguous.  As there is no multilateral agreement on resolving competition-
related trade disputes, there is no alternative but to rely on the non-violation complaints clause,
Article 26 of the WTO Dispute Settlement Understanding.  According to the clause, rulings and
recommendations can be made with reference to paragraph 1(b) of Article 23 of GATT 1994, should a
panel or the Appellate Body believe that any benefit of a party to the disputes is being nullified orimpaired or the attainment of any objective of that Agreement is being impeded as a result of the
application by a Member of any measure, whether or not it conflicts with the provisions of that
Agreement.  Despite these provisions, however, it is unclear how far the interests of Member States
can be protected from competition-restrictive measures.  Furthermore, the current WTO system lacks
effective mechanisms for the exchange of inform ation and international cooperation in the field of
competition law and policy.
II. CONSIDERATIONS FOR FUTURE WORK OF THE WORKING GROUP
6. As examined above, the existing WTO rules have not a few limitations from a competition
policy perspective.  Therefore, the future work of this Working Group should be focused on how to
reform the existing WTO provisions in a competiti on-oriented manner so that the multilateral trading
system can be further strengthened.  More specifically, how to remove the inconsistencies between
trade and competition policy.
7. In this connection, it would be useful for the future work of this Working Group to utilize the
experiences of other international organizations such as OECD and UNCTAD.  In particular, the work
of the OECD Joint Group on Trade and Competition deserves this Working Group's further scrutiny.
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