RESTRICTEDWORLD TRADE
ORGANIZATIONWT/WGTCP/M/10
1 October 1999
(99-4083)
Working Group on the Interaction
between Trade and Competition Policy
REPORT ON THE MEETING OF 14 SEPTEMBER 1999
Note by the Secretariat
1. The tenth meeting of the Working Group on the Interaction between Trade and Competition
Policy took place on 14 September 1999, under the Chairmanship of Professor Frédéric Jenny.
I. REQUESTS FOR OBSERVER STATUS FROM INTERNATIONAL
INTERGOVERNMENTAL ORGANIZATIONS
2. The Working Group agreed to postpone consideration of requests made by SELA, the
Organization of the Islamic Conference and the South Centre, having regard to the ongoing
consultations on related matters in the framework of the General Council.
II. OTHER BUSINESS
3. Before commencing its consideration of its draft Report (1999) to the General Council, the
Working Group was informed by the Chairman that some delegations had requested an opportunity to
make statements or introduce written contributions to the Group which had been submitted but not yet
introduced.  The Working Group agreed to hear these statements under the heading of other business,
before proceeding to its consideration of the Report, to facilitate any appropriate additions to the
Report based on these statements.
4. The representative of Mauritius, introducing document WT/WGTCP/W/137, said that,
notwithstanding the breadth of the work that had been undertaken in the Working Group, somewhat
more specific guidance and support were needed for small, open developing countries which were
committed to market principles but lacked experience  with the administration of competition laws and
policies.  In the light of this, the development of a possible WTO discipline preceded by voluntary
guidance and support regarding competition law and policy implementation could help to support
ongoing liberalization efforts and sustain the momentum for deepening the integration into the
mainstream of the multilateral trading system of small, developing economies.  This could also be
viewed in the context of international coherence initiatives.  Taking account of these challenges andconstraints, it was suggested that future work on competition policy in the WTO could focus on the
following matters:  (a) the core elements of competition policy in a developing economy context, with
particular reference to smaller economies;  (b) prac tical approaches to institution-building that would
economize on administrative costs and permit the exploitation of synergies with other relevant
market-place institutions;  (c) promotion of coherence between competition policy and relatedlaws/policies and WTO disciplines and also coherence in related activities and initiatives of the
international community;  (d) practical approa ches to cooperation and assistance in the
implementation of competition law and policy, both at the regional and multilateral levels.
5. The representative of South Africa, introducing document WT/WGTCP/W/138, said that the
new Competition Act of the Republic of South Afri ca (Act No. 89 of 1998) had come into effect on
1 September 1999.  The new Act provided for the establishment of three institutions for itsWT/WGTCP/M/10
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administration, namely the Competition Commissi on, the Competition Tribunal and the Competition
Appeal Court.  The Act had extensive application, covering horizontal and vertical restrictive
practices, mergers and acquisitions as well as abuses of dominance.  Building upon the contribution
that had been provided to the Working Group on the Interaction between Trade and Competition
Policy by Zimbabwe on behalf of the WTO African Group (WT/WGTCP/W/126), she said thatnegotiations on competition policy should be preceded by a thorough pre-negotiating educative
process.  In the course of this process, the following notions should be recognized:  (a) globalization
processes were leading to increasingly international or multi-market effects of restrictive business
practices;  (b) private barriers to the gains from trade and investment liberalization remained as public
barriers were eroded, implying that, while liberalization of trade and investment were necessary
conditions for market contestability, they were not sufficient  conditions for it;  (c) developing
countries suffered from the restrictive business practices of, inter alia , multinationals and foreign
companies in general;  (d) the curbing of these practices was hampered by the differences in
substantive measures contained in country-specific competition laws, and could be improved by
cooperation, including information-sharing, and po ssibly by harmonization of competition laws or
multilateral competition rules, for which further resear ch with specific reference to the developmental
dimension was required;  (e) it had to be recognized that competition laws in developing countrieswere part of a specific policy framework, often including explicit public interest considerations;
(f) the implications of universal competition standards for developing countries had therefore to be the
subject of thorough research before negotiations on multilateral competition rules could commence;
and (g) the development dimension should be taken into explicit consideration.  It was apparent that
the analytical demands placed on developing countries regarding preparations for the next Round ofnegotiations were huge.  In the light of this, it was suggested that certain conditions should be
established as a basis for possible negotiations regarding multilateral competition rules.  In particular,
technical assistance should be provided that  would venture beyond the traditional support to
competition agencies in terms of the development of competition laws and their enforcement and
include assessment of the expected outcomes and the implications for developing countries ofmultilateral competition rules.  A necessary condition for negotiating multilateral rules should
therefore be the conclusion of a thorough educative process for a period of up to two years, following
which negotiations would be launched.  The multilateral institutions involved (such as UNCTAD and
the WTO) would, therefore, have to redefine their roles and find new and improved ways of assisting
in the preparation for these negotiations, for example by hosting fora and concentrating on capacity
building.  Special and differential treatment for developing countries should be guaranteed, and
developing country-specific concerns awarded a prominent place on the agenda.  It was suggested thatthis process would result in an informed position on  a number of specific issues that were detailed in
the written contribution of her delegation.  She noted that her Government remained committed to the
initiation of conditional negotiations at the Seattle Ministerial Conference, with the formal
negotiations starting only upon completion of the aforementioned educative process.
6. The representative of New Zealand, introducing document WT/WGTCP/W/139, said that
within APEC, there had been a growing recognition of the need to work on structural and regulatory
issues if the goal of fostering regional prosperity was to be achieved.  This work had been initiated in
response to the realities of globalization and had intensified as a result of the economic crisis in the
region.  New Zealand, as Chair of APEC in 1999, had promoted a theme of "Strengthening Markets".
This theme recognized:  (i) that the efficient functioning of markets was necessary for sustainedeconomic growth;  (ii) the central role of competit ive concepts in providing a framework for coherent
policy development;  and (iii) the importance of effective economic governance, public and private.
The theme had two key objectives:  (i) the development of policy frameworks founded on competition
principles;  and (ii) capacity building, in terms of institutions, infrastructure and skills development, to
achieve sound markets.  As a key part of this overall theme, it had been agreed at the APECCompetition Policy and Deregulation Workshop in Christchurch on 30 April and 1 May to develop a
set of APEC competition and regulatory principles.  Subsequent work had developed and refined the
principles with the end result being the APEC Principles to Enhance Competition and Regulatory
Reform  which had been endorsed by APEC Ministers and Leaders earlier in September.  Four coreWT/WGTCP/M/10
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principles (non-discrimination, comprehensiveness, transparency and accountability) and a set of
action-oriented undertakings had been endorsed, in this regard.  The aim of these non-binding
principles was to provide a basis for policy development rather than a stringent set of specific rules.
She suggested that these principles and undertakings explicitly recognized the diverse circumstances
of APEC member economies, including developing economies, that sought to implement them, andwould assist in the process of introducing competitive markets within the Asia-Pacific region.
7. The representative of Canada said that the initial phase of the consultations in which his
government had been engaged throughout much of th e year, involving discussions with civil society,
Parliamentarians and business groups, had now been completed and he was, therefore, in a position to
provide a statement of Canada's current thinking on the subject of trade and competition policy.
Competition law and policy were taking on greater significance as instruments that could maintain
and safeguard competitive market structures.  Certainly, this was the case in Canada wherecompetition policy was now an important aspect of national economic policy in promoting prosperity
and progress.  In addition, competition principles and concepts were not new to the international
arena.  They appeared in a number of WTO agreements, in addition to agreements such as the North
American Free Trade Agreement, the Canada-Chile Free Trade Agreement and the Canada–Israel
Free Trade Agreement.  As well, there was the OECD Recommendation on hard-core cartels, theframework for merger pre-notification and the Recommendation concerning cooperation between
member countries on anti-competitive practices affecting international trade.  Canada also had
agreements with the United States and the Europ ean Community that allowed competition agencies to
better address, and cooperate and consult on, anti-competitive activities with an impact on the
economies of both parties.  There were several reasons calling for the development of a multilateralframework agreement on competition law and policy.  To begin with, there was a growing
appreciation of the complementary role that competition law and policy could play in the process of
trade liberalization.  While government-sanctioned obstacles to trade and investment, both at the
border and inside the border, were subject to increasingly strict disciplines under the WTO, such
disciplines did not affect private anti-competitive conduct.  Private anti-competitive practices couldhave a significant impact on market entry and it was the function of competition law to eliminate
them.  A WTO agreement on competition law would make the international trading system more
competitive and robust, which after all was the overarching objective of the WTO.  A second reason
was the recognition that the choices and enforcement decisions of competition authorities could affect
important interests of other countries.  Countries wanted to be assured that decisions of foreign
competition authorities would take into consideration their important interests.  A WTO framework
agreement would provide countries with the opportunity to arrive at solutions in a cooperative fashion
that would take into consideration the interests of all parties, and thereby reduce the risk of
jurisdictional conflicts.  A third factor calling for multilateral rules on competition policy was that the
private sector was seeking assurances that, when either investing or exporting, it would enjoy the
benefits of an objective, transparent, non-discriminatory and predictable competition regime that
would protect firms from anti-competitive practices in the foreign market.  Fourthly, as had alreadybeen noted, competition concepts appeared in a number of WTO agreements.  However, the
interpretation and application of these principles was guided by their contribution to the liberalization
of trade and not the overriding objective of competition law, which was the maintenance and
promotion of the competitive process.  Canada believed that it was critical for the WTO to bring both
these perspectives to bear if the WTO was to deliver on its promise of offering consumers greaterchoice, at competitive prices in a rapidly changing technological environment.  Furthermore, a
multilateral agreement would help to ensure systematic adherence to competition principles and the
consistent application of the competition policy perspective.  In sum, a multilateral agreement on
competition policy should be at the heart of the WTO.  Canada supported the development of a WTO
framework agreement that would entail:  (i) a commitment by Members to adopt a sound competitionlaw, with appropriate scope and independence in investigation and adjudication; (ii) a commitment to
the principles of transparency, non-discrimination and procedural fairness; (iii) guarantees of access to
effective deterrents, an advocacy role for the competition authority and the protection of confidential
information; (iv) common substantive approaches to private conduct that directly and adverselyWT/WGTCP/M/10
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affected opportunities created by trade and investment liberalization, such as cartels, abuse of
dominance and anti-competitive mergers; and (v) mechanisms to facilitate and foster cooperation
between competition authorities.  A multilateral agreement would need to recognize legitimate
differences in the objectives and application of competition laws.  The application of binding dispute
settlement to competition policy cases was complex and controversial.  In his delegation's view, thismatter would require substantial analysis to determine how specifically it would work in competition
cases, and its impact on law enforcement activities.  Certainly, dispute settlement procedures should
not review decisions of competition authorities in individual cases.  The newness of the subject-
matter, the lack of WTO experience, and the need for the WTO to establish a track record also pointed
to the need to examine alternative ways to deal w ith disputes arising in the competition field.  The
establishment of support mechanisms would be crit ical to the successful implementation of a WTO
agreement on competition policy.  A peer review process similar to the existing Trade Policy ReviewMechanism – a Competition Policy Review Mechanism (CPRM) – could provide countries with an
objective review of the substantive provisions of the law.  A council of competition policy experts
could offer Members support in respect to implementation issues, and provide constructive advice on
the establishment or modernization of competition law, enforcement questions and other matters
related to the functioning of a competition authority.  The council of experts would not have anyformal enforcement role in assessing Members' compliance with the agreement.  These two
mechanisms would promote transparency and establish a competition authority's "track record" for
procedural fairness in implementing their competition policy obligations.  A multilateral agreement on
competition law and policy would also need to take account of the development dimension.  Canada
believed that developing and emerging economies would gain particular advantage from a multilateralagreement on competition law and policy, but only if they were in a position to participate as full and
equal partners.  A coordinated technical assistan ce programme would need to be developed and
implemented in order to build up the capacity of developing economies.  This would promote greater
participation of all WTO Members in the multilateral process and ensure that the benefits made
possible by multilateral trade liberalization were realized.
III. REVIEW AND APPROVAL OF THE REPORT (1999) OF THE WORKING GROUP
TO THE GENERAL COUNCIL
8. The Group had before it a draft of the Report (Job No. 4760, dated 10 August 1999), which
had been prepared by the Secretariat as requested at the Group's previous meeting (WT/WGTCP/M/9,
paragraph 67).  The Chairman recalled the nature of the report and the guidelines given to the
Secretariat for its drafting.  It was to be factual, descriptive, balanced and objective, in the style of theReport that had been prepared at the end of 1998 (WT/WGTCP/2) but without any recommendation,
and was to be based on the minutes of the Group's meetings.
9. The Working Group adopted its Report (1999) to the General Council with the inclusion of
additional paragraphs that were approved by the Group to reflect the above-noted statements made by
Mauritius, New Zealand and South Africa and various minor corrections and additions which were
agreed by Members.  In addition, it was understood that the Report was subject to certain changes inits concluding paragraphs to be proposed by a delegation.  It was further understood that any such
changes would be limited in scope and would be based on the minutes of the Group's meeting in June
1999.  The proposed changes were to be circulated to Members by the Secretariat, and would be
incorporated in the Report if no objections were received within a short period.
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