RESTRICTEDWORLD TRADE
ORGANIZATIONWT/WGTCP/M/9
4 August 1999
(99-3298)
Working Group on the Interaction
between Trade and Competition Policy
REPORT ON THE MEETING OF 10-11 JUNE 1999
Note by the Secretariat
1. The ninth meeting of the Working Group on the Interaction between Trade and Competition
Policy took place on 10-11 June 1999, under the Chairmanship of Professor Frédéric Jenny.
I. THE RELEVANCE OF FUNDAMENTAL WTO PRINCIPLES OF NATIONAL
TREATMENT, TRANSPARENCY AND MOST-FAVOURED-NATION TREATMENT
TO COMPETITION POLICY AND VICE VERSA
2. The United States introduced a written contribution on this topic (WT/WGTCP/W/131).  In
addition, Turkey introduced a non-paper, and the Group had before it a background note by the
Secretariat on the Fundamental Principles of Competition Policy (WT/WGTCP/W/127).
Representatives of Hong Kong, China;  Korea ;  Switzerland ;  the European Community and its
member States;  India ;  Norway ;  Japan ;  Malaysia ;  and the Czech Republic  and observers from the
Russian Federation and Croatia  provided oral comments or posed questions on this item.
3. The representative of the United States, introducing document WT/WGTCP/W/131, said that
it examined each of the three fundamental principles of transparency, national treatment and most-
favoured-nation treatment, considered how each had been given effect in the various instruments and
provisions of the WTO Agreement, and addressed how such principles manifested themselves in the
administration of the United States antitrust laws, noting also where adaptations had been appropriate
for the effective and impartial enforcement of those laws.  The treatment of the principle of
transparency in the paper began by detailing the seve ral purposes that were served by adherence to the
principle in the context of the WTO system.  Transparency was critical to ensuring fair application of
WTO obligations in the administration of a Member's domestic legal system, in demonstrating a
Member's compliance with those obligations to other Members, and in reinforcing support by the
public at large for the operation and objectives of the multilateral trading system.  The submission
reviewed the main provisions of the WTO Agreements where the transparency principle was found,and focused on how these provisions ensured proper balancing between transparency and the adequate
protection of confidential information.  In pointing out  the extent to which this principle was reflected
in the administration of the United States antitrust laws, it described the vast amount of information
which was made available to the public through internet websites, government and business
publications, academic journals, laws and regulations, public advocacy efforts and the fulfilment ofnotification obligations in international agreements.  It also explained how, within the context of
transparency, appropriate and effective steps were taken to protect commercially sensitive information
and to maintain the integrity of investigative pro ceedings.  With regard to national treatment and
most-favoured-nation treatment, the submission provided an overview of the relevant WTO
provisions and noted that it was the long-standing policy of the United States antitrust agencies that
they did not discriminate in the enforcement of the antitrust laws on the basis of the nationality of the
parties.  This commitment to non-discrimination was essential to maintaining the effectiveness,
impartiality and credibility of the laws.  The basic tenet of United States antitrust law was to protect
competition in the market as a whole, not individual competitors, irrespective of their nationality.WT/WGTCP/M/9
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Adherence to these principles did not always mean that arrangements were treated identically in the
course of a proceeding, just as this was not necessarily the case when such principles were applied
through measures related to WTO obligations.  A transaction involving foreign firms would
sometimes receive treatment that was different from  the treatment of a similar transaction involving
domestic firms simply because the two transactions had different effects on United States markets.However, any differentiation which came about in the application of United States antitrust laws was
due not to differences in nationality, but rather to differences in the degree of culpability among
parties in a particular case, to the differing eviden ce available with respect to such parties, or to
differences in the nature and extent of their cooperation in the investigative context.  The submission
concluded that antitrust law enforcement and competition policy in the United States and many other
countries was consistent with fundamental WTO principles.  United States antitrust authorities
respected public notice rules, consistent with legal and confidentiality requirements.  They enforcedlaws that were not in themselves discriminatory, in a non-discriminatory manner.  Indeed, the
fundamental principles of transparency and non-discrimination were essential to the economically
optimal application of the antitrust laws and to maintaining public confidence and support of
competition policy, and were also features of good governance generally.
4. The representative of Turkey, introducing a non-paper by her delegation, said that the WTO
principles of non-discrimination and transparency, which were cornerstones of the multilateral trading
system, aimed to improve market access opportunities by eliminating discriminatory actions that
caused distortions in trade and by increasing predictability in the market and in the administrative
procedures in the fields of trade in goods, trade in services and trade-related intellectual property
rights.  While the general framework of these principles was set out in the WTO system and relatedcommitments by Members, it was important to note that the context and implementation of these
principles could differ with regard to the scope of the relevant WTO Agreements and the specific
needs of the underlying subject-matter.  No direct reference to competition policy or to relevant
practices was made in the wording of the general principles.  However, the objectives of "removing
any barrier to market access" and "improving market access opportunities" could be considered as oneof the common points in the implementation of the basic principles in relation to both trade and
competition policies.  When in-depth analysis was made, it was possible to find some differences in
the non-discrimination and transparency approaches that were required by the multilateral trading
system and national competition policy and legislation (e.g. the transparency approach).  Thus, the
non-discrimination and transparency principles might be best applied in relation to competition policy
and legislation through proper adaptation in accordance with the specific needs of competition policy.
When dealing with the relationshi p between competition policy and these fundamental principles, an
important point to be considered was the necessity for the existence and application of national
competition legislation and relevant administrative procedures.  In cases where no such legislation
existed or it was not effectively applied, or where competition rules were applied through sector-
specific legislation or where there were exceptions, exclusions and derogations from the competition
laws, the relevance of the fundamental WTO principles to competition rules was unclear.  With regardto the application of the non-discrimination principles to competition policy, either exempting a
certain country or its undertakings from generally accepted competition rules or discriminating
between domestic and foreign undertakings contradicted the objective of realizing competition under
equal conditions.  It could, nonetheless, be said that, as discrimination between firms was not
acceptable in terms of competition objectives, competition policy and law inherently reflected thenon-discrimination principle.  A non-transparent syst em or discriminatory actions against foreign
firms, products or services under the provisions of competition laws would cause market distortions
and undermine the competitive environment in the relevant market.  Reflecting this belief, the
provisions of the Turkish Competition Law were applied to all domestic and foreign firms in a non-
discriminatory and transparent manner.  At all levels of the legal framework (laws, regulations,communiqués), decisions and information about administ rative procedures were published to meet the
transparency requirement.  In doing so, the principle of confidentiality was fully respected.  In a
globalized world economy, it was generally recognized  that a multilateral approach on competition
would be helpful to achieve the objectives of the WTO.  Due to the nature of competition rules, itWT/WGTCP/M/9
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should be kept in mind that a multilateral framew ork would work most efficiently if all Member
countries had national competition legislation based on a common understanding reached at the
multilateral level.  To this end, the future work of this Group should be focused on studies to reach a
common understanding of the issues and to promote the adoption of national competition laws based
on the principles of non-discrimination and transparency.  In doing so, the differences in theprovisions of national legislations and administrative procedures should be taken into account.
5. The representative of the Secretariat, introducing a Note on the Fundamental WTO Principles
of Competition Policy (WT/WGTCP/W/127), said that it responded to a request that had been made
by the Working Group at its meeting on 19-20 April, to provide a note setting out factual background
on the fundamental principles of competition policy.  Consistent with the approach that had been
taken in the previous note by the Secretariat on the Fundamental WTO Principles of National
Treatment, Most-Favoured-Nation Treatment and Transparency (WT/WGTCP/W/114), the presentnote did not attempt to analyse the relevance of the pr inciples discussed in it for trade policy.  Rather,
it was understood that this was a task for Members in the Working Group.  One important difference
between the subject-matter of this Note and the previous Note was that, whereas the fundamental
WTO principles addressed in the previous Note had been identified in the mandate given to the
Secretariat and indeed in the work programme of the Working Group, the same had not been the casefor the fundamental principles of competition policy.  In fact, these were not codified in any
international treaty.  Principles relating to the control of restrictive business practices were addressed
in one multilateral instrument, namely the United Nations Set of Multilaterally Agreed Equitable
Principles and Rules for the Control of Restrictive Business Practices ("the Set").  The Set was of
obvious interest and relevance to the work of the Group and was referred to at several points in theNote.  The Set, however, took the form of non-binding recommendations rather than treaty
obligations.  For that reason, and following th e instructions given by the Working Group, in
identifying the principles that were addressed in the Note, the Secretariat had sought guidance from a
number of sources, including statements that had been made by Members in the Working Group,
guidelines and analyses that had been prepared by other intergovernmental organizations, nationalcompetition laws and guidelines, and academic analyses.  For the purposes of the Note, the concept of
the "fundamental principles of competition policy" had not been treated as being synonymous with the
elements of competition or antitrust law.  Rather, what had been identified in the Note were principles
of policy design and application, including but not limited to objectives that were set out in national
competition laws, whose impact transcended specific statutory provisions and sectors and was
common to a broad range of jurisdictions having competition policies.  From this perspective, three
general categories of principles were identified in the Note.  The first category concerned principles inthe sense of the overriding goals or objectives of competition policy - for example, the promotion of
economic efficiency, the promotion of consumer welfare and economic development.  These
objectives were known to serve as important guide-posts for officials in applying diverse aspects of
related laws and policies.  The second category of principles consisted of operational principles of
policy design and application.  Examples of principles in this category included the promotion ofmarket-opening measures, the identification of situations in which market power was likely to be
exercised, and the distinction that was made in virtually all competition law systems between
arrangements that were primarily horizontal in nature and those that were primarily vertical in nature.
The third category of principles related to the institutions and processes through which competition
policy was applied.  Examples of principles in this category included adherence to due process in theapplication of competition law and policy, optimizing the scope of competition policy and ensuring
coherence between competition policy and direct economic regulation, adherence to the fundamental
WTO principles of non-discrimination and transparency, and international cooperation to the extent
permitted by national laws.
6. The observer from the Russian Federation said that the Russian Antimonopoly Law was
applicable both to domestic and foreign companies in cases where the operations of these companies
affected competition on Russian domestic markets.  All the provisions of the Russian law had the
same force for Russian and for foreign companies, and their enforcement was conducted by theWT/WGTCP/M/9
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Russian antimonopoly authorities on a non-discriminatory basis.  There were no exemptions in this
regard from the Russian Antimonopoly Law, including with regard to such se nsitive matters as the
activities of export cartels, mergers and acquisitions with foreign companies, and so on.  Her country
had not had any complaints from foreign companies concerning the discriminatory application of
competition law, nor was there any discrimination among foreign companies.  Transparency in theadministration of competition law was also very important.  In this regard, in Russia, all of the
relevant laws were published;  furthermore, methodological recommendations and guidelines were
registered in the Ministry of Justice and then published officially.  It had to be noted that, unlike the
principles of national treatment and most-favoured-nation treatment, full implementation of the
principle of transparency required substantial financial resources for activities such as official
publications, competition advocacy and the provision of explanations of the provisions of law
guidelines.  Technical assistance had an important role to play in this regard.
7. The representative of Hong Kong, China, comm enting on the Note by the Secretariat on the
Fundamental Principles of Competition Policy (WT/WGTCP/W/127), said that the Secretariat's
attempt to group competition principles in three categories was helpful.  Hong Kong, China supported
a broad treatment of the term "competition policy" as was mentioned in paragraph 2 of the Note, i.e.,
it considered that competition policy should be defined broadly to comprise the full range of measuresthat might be used to promote competitive market structures and behaviour, including but not limited
to a comprehensive competition law.  In view of the broad application of competition policy and in
order to ensure that the principles identified were capable of wide application, he saw merits to first
identifying core competition principles and then second-level principles to uphold core principles.  In
doing so, the Group should guard against narrow, prescriptive rules with limited applicability.  Workthat was under way in the context of APEC would be helpful in future work on this matter.  It was
important to note, as was pointed out in paragraph 3 of the Note by the Secretariat, that, while the
fundamental WTO principles had been codified in multilateral law and jurisprudence, namely that of
the WTO, the same could not be said for the fundamental principles of competition policy.  This
statement highlighted the problems that would be posed by any attempt to harmonize competitionprinciples.  He noted that, while economic effici ency, development and the promotion of consumer
welfare were widely recognized as overriding goals or objectives of competition policy, there was
considerable diversity in terms of the application or achievement of these goals in the respective laws
and policies of individual WTO Members.  In this regard, he also noted an observation made by the
United States in paragraph 16 of its submission to the meeting (WT/WGTCP/W/131), which pointed
out that differences in analytical approaches as well as in substantive legal standards could, in certain
instances, account for the sometimes differing tr eatment of multinational mergers by antitrust
authorities in different countries.  Given the evident diversity between Members in their development
history and socio-economic background, further work on competition principles must continue to
respect Members' different approaches to promoting competition, so long as they were consistent with
the core principles and contributed to the goals of promoting market contestability and economic
efficiency.  Competition law was but a means to achieve an end and never an end in itself.
8. The representative of Korea, commenting on the contribution of the United States
(WT/WGTCP/W/131), said that it spoke not only about the United States antitrust laws and
enforcement policies, but also defended other countries' laws and policies in terms of their consistency
with the fundamental WTO principles of non-discrimination and transparency.  This was encouraging,
because it vindicated an important role that competition policy could play in further promoting theobjectives of the WTO, both in theory and in practice.  Whether or not the United States had intended
to do so, it had provided a significant empirical finding supporting the arguments for establishing a
framework on competition policy within the WTO, as well as for a competition-oriented reform of the
current WTO rules.  The same conclusion could be drawn from observations made by the European
Community and its member States, Japan and Switzerland in their respective papers presented at thelast meeting of the Group (documents WT/WGTCP/W/115, WT/WGTCP/W/119 and 120, and
WT/WGTCP/W/117, respectively).  As indicated more fully in the paper prepared by Korea for
agenda item III (document WT/WGTCP/W/133), his delegation believed that, after the rich debate onWT/WGTCP/M/9
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the interaction between trade and competition policy that the Group had engaged in over the past two-
and-a-half years, the time was ripe to engage in more serious talks about the advantages and
disadvantages of a multilateral framework on competition policy and on how to reform the existing
WTO rules in a competition-oriented manner.  As long as the Group agreed on the compatibility and
shared objectives of competition policy and trade policy in terms of promoting international trade and
market access, there was no reason why mechanisms to benefit more fully from the interaction of
trade and competition policy should not be explored.  However, as had been made clear at the last
meeting, it was also important not to be too ambitious in efforts to this end.  As had been said in the
Symposium held before the Group's last meeting, a modest approach, consistent with the current
structures of the WTO, would be the most realistic and deliverable one.  Efforts to achieve excessive
conformity in national competition laws might re sult in an entrenchment of a "lowest-common-
denominator" body of rules that would be difficult to remedy over time.  As one of the advocates formultilateral rules on competition, Korea was and would remain flexible on the scope, coverage and
standards to be adopted in the proposed rules.
9. The representative of Switzerland recalled the debate on this item which had taken place at
the Group's previous meeting, on 19-20 April.  Several delegations, including her own, had presented
contributions to show the impact of basic principles such as national treatment, transparency andMFN on competition policy.  While some delegations remained to be convinced, for others the
discussions which had taken place in the Working Group over two years of discussion had shown
clearly that anti-competitive practices could under certain circumstances reduce market access and
distort trade.  In order to deal effectively with these barriers to international trade, it was necessary to
develop rules.  The report which the Working Group had adopted last December provided explicitdocumentation of these problems.  In the written contributions which her delegation had submitted to
the Group's meetings in July 1998 and April 1999 (WT/WGTCP/W/89 and 117, respectively), it had
tried to show the limits of the principles of transparency and non-discrimination as they were
currently defined in WTO Agreements vis-à-vis  the field of competition law and policy.  One of the
central points that had been made was that, as currently defined, the principles applied only in respectof government practices.  In the field of competition, the proportion of anti-competitive practices
accounted for by private arrangements such as price-fixing cartels, export and import cartels, and
market-sharing arrangements could not be ignored.  If Members wished to remedy these situations
and strengthen progressive liberalization of markets within the Organization, it was essential to ensure
that competition conditions were, in fact, applied.  Concerning the Note by the Secretariat on the
Fundamental Principles of Competition Policy (WT/WGTCP/W/127), this provided a wide-ranging
and useful exposition of the principles and objectives of competition policy.  In a related vein,Article I of the Federal Law on Cartels that her delegation had submitted to the Group two years
previously clearly stipulated that competition must  be promoted in the interests of a market economy
based on a liberal regime.  With regard to the relevance of these principles to trade policy concerns,
this had been clearly established in the Group's initial meetings, in 1997, in which the relationship
between the objectives, principles and concepts of trade and competition policy had been discussedexhaustively.  Additional discussion on this point was unnecessary to achieve further progress.
10. The representative of the European Community and its member States said that one element
which had emerged very clearly from the Group's discussion was that transparency and non-
discrimination were fundamental principles both for the multilateral trading system and for
competition law.  This had been very clearly indicated in the contribution by the United States(WT/WGTCP/W/131) and in the Note prepared by the Secretariat on Fundamental Principles of
Competition Policy (WT/WGTCP/W/127).  This showed that there was a very good basis on which to
develop common principles relating to competition law and its enforcement, which would to a large
extent build upon the fundamental WTO principles of transparency and non-discrimination.  His
delegation agreed with the statement made by Hong Kong, China that competition policy was abroader concept than competition law.  What was also clear, at least, for his delegation, was that
competition law was an essential component of competition policy.  He had, therefore, noted with
interest that Hong Kong, China had mentioned that it saw competition policy as also includingWT/WGTCP/M/9
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competition law.  He felt that it was extremely im portant that the Group look together into the scope
for development of common principles relating to  the adoption and enforcement of competition law.
He emphasized that such an exercise would not be  aimed at the harmonization of competition laws, as
there were many reasons why competition laws had to be different in individual countries.  Rather,
what would be desirable would be to define the elements relating to transparency and non-discrimination which were common to most jurisdicti ons and were most important for the multilateral
trading system.  It was also worth recalling that the purpose of the non-discrimination principle in the
WTO was to promote the equality of competitive opportunities.  In this context, effective
implementation of the principle of non-discrimination implied a need to look into some aspects of
competition law.  These, he felt, should include the following elements:  first, the existence of a
national competition law which covered key anti-competitive practices and was backed up by an
effective and transparent enforcement structure;  second, the matter of sectoral exclusions from theapplication of competition law;  and third, the competition advocacy role of competition authorities.
These elements could contribute importantly to promoting the equality of competitive opportunities.
Transparency was another key element in the co ntext of competition law.  It was clear that
competition authorities were committed to the application of this principle which was fundamental
both for competition and for the multilateral trading system.  Here, three considerations were relevant.First, it was important to ensure transparency as regards the legal framework, including both the law
itself and any related guidelines or administrative regulations.  Second, transparency needed to be
ensured in the enforcement process.  With regard to this aspect, it was also essential to ensure due
protection of confidential information.  Third, it was important to ensure due process in the
enforcement of the law.  This had at least two aspects:  first, the possibility for private firms to haveaccess to domestic competition law systems whether through complaints presented to the competition
authorities or through the judicial system.  Second, it was important to ensure fair treatment of parties
in the application of the law.
11. The representative of India noted that the contributions by the United States and the
Secretariat had been received only shortly before the meeting, and said that they should receive
further consideration at the next meeting of the Group.  The contribution by the United States had
clearly shown the broad relevance and importan ce of the fundamental WTO principles of non-
discrimination and transparency to competition law a nd policy.  It had also been shown that these
principles were already imbibed in most jurisdictions' domestic competition regimes.  In this regard, it
was not just the rules and regulations and laws which needed to be transparent and non-
discriminatory, but more importantly the processes through which those rules and legislations were
enforced.  A further important point which had been made by Switzerland was that some of thefundamental WTO principles, as presently define d, seemed to address government practices and
government actions more than private practices and actions.  This was despite the fact that the latter
constituted a greater proportion of competition practices and policies.  Reflecting on these
observations, three conclusions could be drawn.  First, the fundamental WTO principles were basic to
any competition policy regime.  Second, these principles should be incorporated in domestic policyregimes.  Third, and this was linked to the broader objective that the Group seemed to be arriving at in
its discussions over the past one-and-a-half years, countries which did not have domestic competition
policy regimes at the moment not only needed to have such regimes – this would be helpful – but also
needed to ensure that these regimes imbibed these basic principles.  However, while his delegation
agreed with others regarding the relevance and importance of these principles, he did not think thatthis created a need for a multilateral framework of rules as the way to move forward.  Harmonization,
as the representative of the European Community and its member States had stated, was not an
objective.  Similarly, he felt that, at least on the basis of the discussion that had taken place on this
item, the need for multilateral rules had not been s hown.  With regard to the Note by the Secretariat,
the section where the rules of competition policy were elaborated was important in that it could assistthe Group in focusing on both the broader rules of competition policy and the more micro rules of
competition laws and regimes.  This could assist the Group in its consideration of other agenda items,
including with respect to the subject of trade remedies.WT/WGTCP/M/9
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12. The representative of the United States, responding to the comments made on his delegation's
paper (WT/WGTCP/W/131) by the delegation of Korea, said that his delegation's assessment that
most countries' competition laws and policies were  consistent with basic WTO principles could also
be taken as demonstrating that from the WTO standpoint, things were fine as they stood and that no
multilateral framework was needed.  As had been said by US Assistant Attorney-General forAntitrust, Mr. Joel Klein, at the recent Berlin Cart el Conference in Berlin, "if it ain't broke, don't fix
it".
13. The representative of Norway said that the Note by the Secretariat on the Fundamental
Principles of Competition Policy (WT/WGTCP/W/127) would be especially useful for trade officials.
He noted that the first category of principles discussed in the paper was defined in the form of
overriding goals of competition policy such as economic efficiency.  In his view, it would have been
useful to distinguish more clearly between the goals of competition policy, on the one hand, and therelevant principles, on the other.  Furthermore, the paper indicated that the most basic goal of
competition policy was to promote and maintain healthy inter-firm rivalry in markets.  Although this
could be said to be a partial goal, his delegation felt that the overriding objectives of competition
policies were or should be those enumerated in paragraph 16 of the paper, namely economic
efficiency, consumer welfare and economic development.  The promotion of inter-firm rivalry inmarkets was more to be regarded as a means rather than a goal in itself.  He stressed, in particular, the
importance of the principle referred to in paragraph 34 of the Note, that competition policy protects
competition and not competitors. In the internati onal context, this implied that nationality was
irrelevant in well-constituted competition policies.  With regard to the relevance of competition
principles for trade policy, it could be said, firstly, that such principles could clearly contribute tosecure market access and provide predictability in markets;  and secondly, that competition policies,
including the application of fundamental competition principles and the multilateral trading system,
should be made mutually supportive in order to realize the broader societal objectives that he had
mentioned.  There was, therefore, a need to ensure an orderly relationship between a defined set of
fundamental competition principles and the trading system.
14. The observer from Croatia said that the interaction between trade policy and competition
policy called for more efficient enforcement of competition rules, including those contained in
national laws.  It also highlighted the need for international cooperation in this field.  Croatia, as a
country in transition from the mid-European region had faced significant changes in market
structures, and had found it necessary to initiate extensive reforms to its legal system as a whole.  As
one element of the necessary reforms, it had enacted the law on protection of market competition in
1995.  The law stipulated rules of conduct and a sy stem of measures aimed at protecting free and
effective market competition, and was modelled on Articles 85 and 86 of the Treaty of Rome.  The
law as well as the entire competition framework of Croatia reflected the principles of transparency,
national treatment and most-favoured-nation treatment .  The Croatian Competition Authority made its
best efforts to ensure equal access to the market  to every company which appeared on the market.
With regard to transparency, the law on protection of market competition and related by-laws werepublished in the Official Gazette, with the newest amendments to the law.  In 1998, it was decided
that the agency's decisions and the competition cases would be published in the Official Gazette as
well.  In the same way, the second degree decisions, which were issued by the Administrative Court
of Croatia, were also published in the Official Gazette.  Concerning the matter of international
cooperation in the field of competition policy, she felt that the promotion of competition and acompetition culture was necessary for countries in transition.  Competition advocacy promoted
national welfare and was especially important for obtaining the resources and mechanisms for
preventing anti-competitive practices such as horizontal restraints and abuse of a dominant position.
Perhaps, it would be worthwhile to develop a multilateral system of competition rules, especially in
view of the fact that anti-competitive practices harmed the development of international and regionaltrade.WT/WGTCP/M/9
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15. The representative of Hong Kong, China, respond ing to comments by the United States on the
need or otherwise for a multilateral framework to codify the application of WTO principles on
national treatment, MFN and transparency to competition policy, said that Article XVI:4 of the
Marrakesh Agreement stipulated that each Member should ensure the conformity of its laws,
regulations and administrative procedures with its obligations in the WTO Agreement.  There was nodoubt that the principles of national treatment, MFN and transparency had been enshrined in the WTO
Agreement.  Therefore, by virtue of Article XVI :4, those competition policies and competition laws
that had an impact on international trade in gene ral, and relating to individual WTO agreements in
particular, would necessarily be subject to the three principles under discussion.  Consequently, he
remained to be educated as to why additional frameworks or elements needed to be considered.
16. The representative of the European Community and its member States, replying to the point
made by the United States that "if it ain't broke, don't fix it", said that, if consideration was being
given to certain commitments at the multilateral le vel, it was not solely a question of determining
whether existing national laws or the laws of other countries created a problem in terms of those
commitments.  Rather, the starting-point should be a consideration of whether competition law was
relevant for the trading system.  On this point, the discussions that had taken place in the Group thus
far had shown clearly that there was a very large degree of agreement that the effective application ofcompetition law complemented and reinforced the process of trade liberalization.  In the light of this,
the question arose as to whether such law had to be implemented by countries purely at the domestic
level, or whether it was something which could usefully be reinforced through common commitments
and common understandings.  In his delegation's view, the latter was clearly the case.  As a second
comment, his delegation was convinced that cooperation in the field of competition policy was aglobal issue and was something from which all countries should benefit, and in which all countries
could participate.  An option which was based purely on bilateral agreements was something which
did not respond adequately to the challenges of globalization.  He emphasized, however, that, in order
to have effective and sustained cooperation, it was not necessary to harmonize competition law, and
this was not the objective of his delegation.  Rather, what was needed was a common agreement onthe key principles which should be reflected in competition laws.
17. The representative of Japan said that his delegation was very much encouraged by the
statements made by Korea as well as by the European Community and its member States that there
were significant commonalities between the fundamental WTO principles and competition policy, and
especially the competition-oriented principle as was correctly noted in the Note by the Secretariat.  A
number of WTO instruments, including the GATS in general, Article 40 of the TRIPS Agreement and
the results of the Basic Telecoms Negotiations, all suggested that competition enhancement was animportant aspect of trade liberalization.  Clearly, the WTO was the right place to study the possibility
of adopting a multilateral framework on competition policy.
18. The representative of Malaysia said that, as had been pointed out, even now WTO Members
were required to notify, in the interests of transparency and non-discrimination, all relevant laws and
provisions.  Consequently, he did not see the value added in having global rules on competition policythat would inscribe and further entrench these principles.  Of course, domestic competition laws
should firmly entrench these principles.  However, it should be left to the domestic legislators to
formulate domestic laws and as far as his delegation was concerned, international cooperation could
be pursued through bilateral means and there was no need for having global rules or rules at the
multilateral level discussed in the WTO.
19. The representative of the Czech Republic said that it was clear to  his delegation that questions
concerning the application of regulations governing economic competition must play a leading role in
the evolution of economic policies.  For this reason, it placed great emphasis on the debate concerning
adherence to the fundamental WTO principles of national treatment, most-favoured-nation treatment
and transparency.  These principles provided a basis for achieving the aims of competition policiesand also for effective international cooperation in this field.  The importance of these principles wasWT/WGTCP/M/9
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greater than ever in this era of globalization of world trade.  This trend, which was indicated by the
increased concentration of the market in a few major centres, necessitated clear legislation which in
turn would shape the economic policies of each country.  Only through adherence to these principles
would WTO Members create a favourable environment for fair competition and likewise for the
growth of international trade with all of its positive repercussions on economic development andliving standards worldwide.
20. In reflecting on the discussion on this item, the Chairman recalled that, in the course of the
discussion of this item at the Group's meeting in April, a number of Members had made the point that
the WTO principles of non-discrimination, national treatment and transparency were relevant in the
field of competition policy.  The discussion today had substantiated this point, with reference to a
number of Members' national experiences.  For example, the contribution of the United States had
made the point that the antitrust laws of that country indeed incorporated the fundamental WTOprinciples.  A number of other delegations had made the same point regarding their respective
national laws.  In this context, several important questions had been raised.  First, it had been pointed
out that it was important to look not only at the wording of the relevant statutes, but also at the
possibility of discriminatory application of competition laws.  Further to this point, it was important to
consider the question of what escaped the law, either because it was exempted or it was excepted.This was because the extent of exceptions and exemptions to the law might create a possibility of
differential treatment.  With regard to the principle of transparency, one delegate had mentioned the
fact that, even if a law or an agency was required to adhere to the principle of transparency, fulfilling
this commitment required resources and some countrie s might have more difficulty than others in this
regard.  Another delegation had tried to spell out the elements that would be involved in applying thisprinciple in the context of competition law and policy.  He had suggested, for example, that these
might include not only transparency with respect to the basic legal framework but also transparency of
the enforcement process, transparency with respect to access of foreign firms to the domestic
competition law system and also due process requirements.  A detailed analysis of these elements
might be needed to ascertain the relevance of the fundamental WTO principle of transparency tocompetition policy.  The paper prepared by the Secretariat for this meeting had looked at the
fundamental principles of competition policy per se , as opposed to the matter of how fundamental
WTO principles applied to competition policy, and a number of delegations had indicated that they
had found it to be useful.  It had been observed that principles could be delineated at different levels -
the level of objectives, the level of policy design and the level of institutional design and due process.
It had been suggested that these principles were fully consistent with the principles of trade policy or,
at least, trade liberalization.  In other words, the implementation of transparent and effectivecompetition policies by WTO Members was something that would help to promote the goals and
principles of the multilateral trading system.  Further to this point, an extended and inconclusive
discussion had taken place on what, if anything, needed to be done to entrench the application of
fundamental WTO principles in the field of  competition policy, given the fundamental
complementarity of competition policy with trade liberalization.  One view was that, in fact,competition policy was already fully consistent with the fundamental WTO principles - indeed,
naturally so given its focus on protection of competition as a process rather than individual
competitors – and, therefore, that nothing particularly  needed to be done to reinforce this.  This point
of view had, however, been challenged in two ways.  First, it had been said that, even if it seemed
apparent that competition policy satisfied the requirements of the fundamental WTO principles ofnational treatment, most-favoured-nation treatment and transparency in some key jurisdictions, would
it not be useful to reinforce this tendency and ensure its general applicability across the membership
of the WTO through more specific and formal commitments?  It had also been pointed out that, even
if competition legislation itself was already subject to fundamental WTO principles, this might not
address situations in which market access was thwarted through private arrangements.  This may beparticularly true in national markets where there was no competition law or effective enforcement
structure.  From this perspective, some delegations had felt that there was a case to be made for some
kind of framework agreement that would involve a commitment to adopt a competition law, and
would spell out specific elements that should be reflected in the law with respect to the fundamentalWT/WGTCP/M/9
Page 10
principles of national treatment, most-favoured-nation treatment and transparency.  Of course, certain
other Members had felt that this was premature or unnecessary and an unwelcome intrusion on
national sovereignty.  He emphasized that these were merely his personal reflections on the
discussion.
II. APPROACHES TO PROMOTING COOPERATION AND COMMUNICATION
AMONG MEMBERS, INCLUDING IN THE FIELD OF TECHNICAL
COOPERATION
21. The representatives of the European Community and its member States, Zimbabwe  on behalf
of the WTO African Group, and Romania introduced written contributions on this agenda item
(documents WT/WGTCP/W/129, WT/WGTCP/W/126 and WT/WGTCP/W/132, respectively).  In
addition, the representatives of the United States; Singapore, on behalf of ASEAN ; Japan ; Australia ;
Switzerland; Canada ; Hong Kong, China ; India ; Korea ; the Czech Republic ; the European
Community and its member States; and Morocco  made oral statements or posed questions on this
item.
22. The representative of the European Community and its member States, introducing document
WT/WGTCP/W/129, said that, while bilateral agreements were an important means of developing
international cooperation, they had some limitations as well.  Bilateral agreements were  drawn upmainly between countries which shared the same id eas in the field of competition policy.  Further,
they were set up on a case-by-case basis and this approach did not make it possible to take up all the
challenges arising from globalization.  A broader approach needed to be considered.  In administering
the bilateral competition law agreements to wh ich the European Community was a party, the
Commission did not consult every c ountry affected by a competition investigation;  rather, it only
consulted those countries with whom the Community had signed a bilateral agreement.  It was not
feasible to set up a bilateral agreement with every country, since in many cases very few business
transactions were involved.  In contrast, within the framework of a multilateral agreement, countries
would be informed in a quick and detailed way about the cases that were important to them.  The
contribution presented by his delegation was organized around two major issues:  the Community'sexperience with respect to international cooperation on competition matters, and the role that the
WTO could play in this regard, including the matter of the provisions relating to cooperation that
could be inserted in a multilateral agreement.  The Community had concluded a bilateral agreement
with the United States.  This agreement included  provisions on positive comity.  Positive comity
entailed several advantages, for instance cutting down on the number of cases examined by
competition authorities and reducing market access problems arising from anti-competitive behaviour.
Positive comity was also an important alternative to the extraterritorial application of competitionrules.  To date, however, this tool had rarely been  applied and perhaps there were lessons to be drawn
from this when considering the adoption of a mu ltilateral cooperation framework.  Limited use of
positive comity was not a problem for competition authorities closely attached to their own work
programme and priorities and who did not wish to be overwhelmed by inquiry requests transmitted by
other countries.  This suggested that positive com ity should not enter into a multilateral agreement as
a binding tool.  There were two possible options in this regard.  One option was to define the general
principles of positive comity in a multilateral agreement and develop implementation through bilateral
agreements.  Another option was to build into the multilateral agreement limitations intended to avoid
the proliferation of inquiry requests.  A multilateral agreement could also feature an obligation to
notify investigations having an important effect upon WTO Members.  With regard to the matter oftechnical assistance, the Community was heavily invo lved in providing this.  While such assistance
had been principally directed at countries seeking accession to the European Union, great efforts had
also been made in this regard for countries in Latin America and the Mediterranean region.  The
provision of technical assistance could play an important role within a multilateral framework.  It was
important to ensure that the provision of technical assistance took into consideration that hostcountries were at different levels of development.  Technical assistance could be provided more
efficiently if there was increased cooperation among the different agencies performing this function.WT/WGTCP/M/9
Page 11
23. The representative of Zimbabwe, speaking on behalf of the WTO African Group and
introducing document WT/WGTCP/W/126, said that, while the Group was in agreement with the
overall thrust that markets should remain competitive, developing countries should be assisted to
develop their competition regimes in order to ensure efficient competition and the protection of the
consumer.  In the view of this Group, special attention should be accorded to the specific situation ofmany African countries that had not yet adopted domestic legislation on competition matters, or
created institutions for the enforcement of competition policy.  Two levels of technical cooperation
were interesting for the WTO African Group.  At the operational level, countries could be assisted in
developing their institutional capabilities on a bilateral, on a regional and on a multilateral basis;
relevant institutions and organizations in this regard were the World Bank, the OECD, the European
Commission as well as the UNCTAD and the WTO.  A second level of cooperation related to the
analysis of certain anti-competitive practices with  cross-country effects; mega-mergers, for example.
The WTO African Group would encourage the Working Group to examine this issue in its further
deliberations.
24. The representative of Romania, introducing document WT/WGTCP/W/132, said that
international cooperation in the field of competition law and policy was useful even if initially limited
to the exchange of non-confidential information.  It paved the way for the adoption, at a later time, ofrules such as positive comity and bilateral notification of investigations.  At an advanced stage,
cooperation should aim at coordinating actions controlling anti-competitive practices.  This type of
cooperation promoted the efficient enforcement of competition law as it reduced the risk that
domestic agencies might take conflicting decisions with respect to competition problems cutting
across national boundaries.  From a broader perspective, competition policy could help to preventrestrictive practices from nullifying the welfare gains resulting from the elimination of tariff and non-
tariff barriers.  The application of competition pol icy would benefit from the adoption of international
rules.  For instance, there was value in setting up procedures through which a country could consult
others with respect to the control of anti-compe titive practices and exchange information relating to
these practices.  Competition policy was a main pivot integrating Romania into the multilateraltrading system.  In addition, in Romania, as was the case in other Central and Eastern European
countries, competition policy played an important role in enforcing the European Agreements as well
as in pre-accession strategies.  Trade liberalization and deregulation did not obviate the need for
properly regulating the behaviour of private firms and the government as an economic agent.  For
instance, the formation of strategic alliances by way of acquisitions and mergers could create a market
environment leading to the abuse of dominant positions.  In addition, privatization could convert a
government monopoly into a private monopoly.  As these issues were very complex, they meritedmultilateral discussions.  Such discussions would enhance the abilities of national competition
authorities to create and protect competition in the domestic market.  Romania had signed bilateral
cooperation agreements both with WTO Members, such as the Czech Republic and Bulgaria, and with
non-WTO Members such as the Russian Federation and Belarus.
25. The representative of the United States said that the United States shared many of the views
that had been expressed by the European Community and its member States.  For instance, the United
States agreed with the Community that cooperation in international enforcement and policy issues was
extremely important, and that technical assistance to antitrust agencies in countries that had recently
adopted or were in the process of drafting antitrust laws was crucial to effective antitrust enforcement
in those countries.  However, the United States had questions and reservations about other aspects ofthe presentation by the Community.  First, the notification of antitrust actions as proposed by the
Community was unworkable.  The United States made more of these notifications every year than any
other country;  nearly 130 in 1998.  These notifications were made either in the course of an
investigation, or nearing the end of an investigation at the point in time where the agency concerned
was contemplating prosecution, in a criminal context, or taking non-criminal action against a mergeror similar matter.  These matters called for great confidentiality and secrecy, given the due process
protection that should be accorded to companies involved in antitrust investigations.  Notifications
were made ordinarily on a bilateral basis;  that is, only the affected country was notified.  This meantWT/WGTCP/M/9
Page 12
that, for instance, the OECD secretariat was not notified.  Disclosing upcoming antitrust actions to all
OECD Member countries would make a mockery of the notion of confidentiality, apart from
impairing the effectiveness of such actions.  Second, the Community had expressed the view that
disciplines at the multilateral level on positive comity should be non-binding.  In the opinion of the
delegation of the United States, this position was inconsistent with the Community's objective toarrive at a multilateral agreement on competition matters binding WTO Members to specific
commitments.  Third, the justification for a multilateral agreement standardizing country practices in
the area of competition was not evident.  There wa s nothing theoretically inappropriate or offensive
about having 80 plus competition laws in the world.  Striving for homogeneity in this field was of no
particular relevance to any practical concern.  Therefore, from the perspective of the United States, a
major problem with the Community's proposal was it did not address why the diversity in antitrust
laws around the world was a bad thing that needed to be fixed by imposing some sort of standardregime upon the laws.  Lastly, centralizing the provision of technical assistance to new competition
agencies did not seem warranted.  The experience of the United States in this regard had been that
countries seeking assistance usually had a clear idea of what they needed and who they needed it
from, and thus there was no point in having some centralized organization step in to provide overall
coordination.  There was nothing wrong in a developing country seeking technical assistance andpolicy advice from several countries at once.
26. The representative of Singapore, speaking on behalf of ASEAN, noted several "markers" in
respect of the arguments made in favour of developing WTO instruments addressing cooperation on
competition law and policy.  To begin with, past experience with international cooperation, at the
bilateral, regional or multilateral level, had confirmed that it was facilitated by a degree ofcommonality.  Differences in substantive competition law, differences in enforcement practices and
procedures and differences in the economic, social and political environment underpinning the
direction that Members took on competition policy and law, could constitute legitimate impediments
to cooperation.  Nevertheless, a number of arguments had been put forward favouring the adoption of
formal instruments of cooperation at the WTO.  For instance, the argument had been made that,following globalization, the effects of private anti-competitive practices could now be felt across
countries and that could result in conflicts of law and jurisdiction and in excessive costs, not only to
firms, which were subject to different jurisdictions , but also to competition agencies.  It had been
argued, further, that the solution to these problems lay in making multilateral cooperation binding.
This prescription raised several questions.  First, were these problems all that prevalent?  A few well-
publicized multi-jurisdictional cases did not make such problems global nor did they make a case for
a global solution.  Second, could other approaches be more realistic?  Past experience bore importantlessons in this regard.  In ASEAN's view, it appear ed that bilateral and regional approaches had been
relatively more successful than multilateral ones.  Besides, none of the instruments that had been
negotiated or discussed at the multilateral level, such as UNCTAD's Set of Multilaterally Agreed
Equitable Principles and Rules for the Control of  Restrictive Business Practices, or the numerous
instruments developed by the OECD, were binding.  They remained as recommendations orguidelines.  Another marker related to the costs and benefits of cooperation at a WTO level on
competition law issues.  Did the benefits of cooperation outweigh the considerable costs entailed in
achieving the degree of commonality of approach required to ensure the success of multilateral
cooperation?  Some had suggested that, even if the modalities for cooperation were flexible, there was
a net benefit to be gained from cooperation.  Nevertheless, the fact remained that Members wouldonly be prepared to cooperate if there was a shared perception of common interest and mutual benefit.
The representative of Australia said that these were important matters for consideration in the Group.
27. The representative of Japan offered a number of comments with respect to the presentation by
the European Community and its member States.  He recalled that the contribution by the Community
had focused on two issues which were important from the perspective of a WTO framework oncompetition:  the exchange of experiences relating to the application of competition law, and the
promotion of enhanced and better coordinated technical assistance with respect to competition
matters.  A further step in the dissemination of experiences regarding the application of competitionWT/WGTCP/M/9
Page 13
law would be to launch regular reviews at the WTO in  the area of competition policy, including of the
handling of individual cases.  The WTO already had the Trade Policy Review Mechanism (TPRM) in
place but the TPRM dealt with broader trade issues and one could not expect to have sufficient
discussion of competition law and policy in this context.  In the view of his delegation, it was useful
to consider the possibility of setting up regular WTO meetings focusing on competition law andpolicy.  He said further that, as had been pointed out in earlier meetings, technical assistance could
make a substantial contribution towards helping Members solve some of the difficulties involved in
implementing a competition regime.  An option worth considering was the creation of technical
cooperation and competition advocacy support systems within the WTO.  In particular, it would be
valuable to discuss whether the WTO could assist Members facing problems with respect to the
application of competition law and policy through technical cooperation and competition advocacy.
28. The representative of Switzerland said that in the view of her delegation it was essential to
ensure that national legislation on competition matters conformed to the minimal requirements of the
WTO system – i.e., national treatment, transparency and MFN treatment.  The importance of greater
cooperation between competition authorities was underlined by the many examples referred to by the
United States and the European Community in the discussions in the Group.  These had highlighted
the distinctions to be made between different types of cooperation.  The first form of cooperationbetween competition authorities was solely educational; it involved cooperation between a
competition authority with substantial experience and another which had not gone past the process of
putting the legislation into practice.  This kind of cooperation could be seen as a form of technical
assistance.  At a second stage, there was a more elaborate type of cooperation featuring the exchange
of non-confidential information regarding specific inquiries, the notification of decisions and inquiriesto affected trading partners, and possibly the introduction of a traditional positive comity mechanism.
Some Members had taken a position already on what was the level of cooperation they could accept.
This seemed prejudicial, however, since there was not a direct connection between cooperation
consisting of technical assistance and more developed and elaborate forms of cooperation.  Besides,
the context in which cooperation took place was evolving given the speed at which developingcountries and transitional economies were adopting competition policy.  Limiting discussions to
educational cooperation could mean failing to anticipate the real needs that developing countries and
transitional countries might face in the near future.  Her delegation agreed with the European
Community and its member States that one of the main reasons to promote multilateral cooperation
was that anti-competitive practices could affect several markets at the same time.  Effective
enforcement of competition policy in this setting required concerted communication between
competition authorities.  In turn, communication between competition authorities helped achieve
acceptable solutions for all parties concerned.  There was also a question as to whether the lack of a
multilateral framework for cooperation on competition matters did not highlight some degree of
mistrust between competition authorities.  Multilateral cooperation could be seen as a form of
confidence building.  Lastly, in the view of her delegation, bilateralism and multilateralism were not
mutually exclusive and the coexistence of these two types of cooperation in the area of competitioncould enhance multilateral trade.
29. The representative of Canada said that, given the growing interdependence of markets, the
enforcement work of competition authorities was no longer conducted in isolation but rather in a more
coordinated fashion in cooperation with foreign competition authorities.  Canada had gained
considerable experience in both bilateral and regional competition policy initiatives.  NAFTA, theCanada-Chile and the Canada-Israel Free Trade Agreements featured provisions on competition
policy committing parties to adopt or maintain comp etition laws and encouraging further cooperation
on competition law enforcement.  In addition, Canada had a bilateral cooperation agreement on
competition policy with the United States and exp ected to sign a similar agreement with the European
Community in the near future.  Agreements of this type included commitments on cooperation and
information exchange taking into account confidenti ality considerations and the interests of parties.
The effectiveness of bilateral cooperation agreements could be constrained by differences in
substantive laws, the degree of independence of competition agencies, whether a competition agencyWT/WGTCP/M/9
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was adequately resourced, and differences in national laws governing the exchange of confidential
information.  Notwithstanding these limitations, there was a need to find cooperation mechanisms to
reduce pressures for unilateral action.  A multilateral initiative through the WTO could offer a broader
and more coordinated approach to developing cooperation in competition policy.  Such an agreement
could augment and reinforce bilateral and regional initiatives.  Through commitments on transparency
and national treatment, such an agreement would confirm the rules of business conduct in foreign
markets and ensure that firms were treated in a non-discriminatory manner with respect to the
application of competition policy.  In the view of her delegation, the WTO provided the most
appropriate forum for an effective and comprehensive discussion of competition issues within a
multilateral framework.  Canada was engaged in domestic consultations on the merits of exploring,
within a multilateral framework, principles such as transparency and non-discrimination in the
application of competition policy;  core elements of sound competition policy including due process;and approaches to enhancing cooperation on competition policy among Members.  A multilateral
agreement on competition policy could serve to solidify the gains from trade liberalization by
disciplining private barriers to trade, improving cooperation and communication among Members on
competition policy matters, and promoting greater certainty as to the rules for conducting business in
foreign markets.
30. The representative of Hong Kong, China said  that the competition policy of Hong Kong,
China basically consisted of measures liberalizing trade and investment flows and for this reason
Hong Kong, China had neither competition law nor a competition authority.  In this context, there was
a question as to how Hong Kong, China could cooperate with other WTO Members on competition
matters.  More generally, half of the WTO Members had still not adopted a competition law orestablished a competition authority.  Hence, the paper presented by the European Community and its
member States seemed premature since it took for granted the existence of national competition
regimes.  The fundamental objective of competition policy was economic efficiency and consumer
welfare.  Thus, multilateral cooperation with respect to competition policy was not an end in itself, but
rather a means to achieve these objectives.  The purpose of the paper tabled by the Community wasnot clear.  The paper addressed the question of how to construct a WTO agreement on competition
policy but not why such an agreement was necessary.  In addition, the paper was not sufficiently clear
with respect to other issues.  For instance, wa s the agreement envisioned by the Community to be
binding?  Was it limited to rules regarding cooperation?  Did it feature dispute settlement provisions?
In the view of his delegation, the most appropriate forum to explore multilateral cooperation on
competition matters was the Working Group itself.  At this juncture, a WTO agreement on
competition policy was certainly premature and bound to fail.
31. The representative of India said the presentations and comments made by the delegations of
Zimbabwe, the United States, Singapore, and Hong Kong, China had been very useful.  The paper by
Zimbabwe had brought out clearly two distinct situations wherein developing countries would require
assistance and perhaps advice on how to proceed.  The first of these situations concerned mergers
with cross-border implications.  In the opinion of his delegation, this was an extremely importantissue that needed to be elaborated upon in future meetings of the Working Group.  The second
situation concerned anti-competitive practices affecting developing countries but originating
elsewhere.  These practices were not controlled by the relevant national competition authorities since
the effects of anti-competitive behaviour on foreign countries tended to be overlooked.  This was too
narrow a perspective and cooperation could help to promote the notion that the global good should beduly taken into consideration by national competition authorities.  The Indian delegation agreed with
the view that it was premature to discuss multilateral rules on competition policy.  The implications
and ramifications of such rules required further study and analysis.  As had been pointed out by Hong
Kong, China, the paper presented by the European Community and its member States had explained
what should constitute a WTO agreement on competition policy without really elaborating on why.The necessity of such an agreement on competition policy was not generally accepted.  Furthermore,
the proposal tabled by the Community was problematic in several regards.  First, notification of
competition actions would make the burden of WTO notifications even more onerous.  This was aWT/WGTCP/M/9
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serious concern for developing countries.  Second, notification of competition actions could be
unnecessary given that the firms concerned would be better placed to inform their governments about
such actions directly and this was a quicker procedure than notification.  Third, the Community itself
had recognized that the exchange of information and positive comity posed difficulties.  The Indian
delegation recognized that the exchange of experiences relating to the application of competition law,particularly between countries at different levels of economic development, was especially fruitful.  In
fact, experience-sharing could perhaps expedite the adoption of a competition regime.  However, the
dissemination of experiences in the application of  competition policy did not require a multilateral
framework or a WTO agreement.  Similarly, technical assistance was available regardless of whether
these instruments existed.  Lastly, the notion that bilateral agreements were of limited scope and had
to be supplemented by a multilateral agreement was directly contradicted by India's experience with
respect to the Agreement on the Application of Sanitary and Phytosanitary Measures.  In this case, theexistence of a multilateral agreement had not, in India's view, generated the expected benefits and it
was now argued that such benefits were contingent upon the establishment of bilateral agreements.
32. The representative of Korea said that his delegation agreed with the observations made by
Romania and the European Community and its member  States.  Such observations were very similar
to those in an earlier written contribution by Korea (WT/WGTCP/W/124).  In particular, hisdelegation agreed that flexible modalities of cooperation were required to support the process of
reinforcing domestic capacities, to ensure that the interests of all countries were taken into account,
and that technical assistance was well adapted to the specific needs of developing countries, within a
well established and coordinated framework.  In the area of positive comity, his delegation agreed
with the need to take a step-by-step approach wi th respect to introducing rules of a binding nature
given the limited experience in this area.
33. The representative of the Czech Republic said his country had put in place a competition
regime starting in 1991.  Bilateral cooperation with some experienced WTO Members had helped
bring about a competitive environment.  Seen from  this perspective, international cooperation was
very important for the successful implementation of competition law and policy.  Further, it wasessential to create as wide a basis of cooperation as possible by allowing national authorities to pool
information concerning anti-competitive practices.  Such cooperation could be the subject of future
negotiations.
34. The representative of the European Community and its member States responded to some of
the comments concerning its presentation.  He said that one of the main reasons justifying cooperation
on competition matters within the WTO framework was that anti-competitive practices increasingly
had an international dimension and therefore affected the interests of a multiplicity of  WTOMembers.  He disagreed with the notion that anti-competitive practices with a global dimension were
unimportant.  Quite the contrary, investigations against international cartels, merger reviews involving
multiple jurisdictions, and anti-competitive practices with cross-country effects were already
relatively common.  Such problems called for a framework of cooperation involving all participants in
the multilateral trading system.  This framework would have to be flexible in modalities so as to take
into account the needs of countries at different levels of development.  Such a framework could also
support the progressive development of capacities in the competition field.  In this connection, it was
important to bear in mind the observation made by the representative of Switzerland that one should
not try to distinguish the type of cooperation that arises in an enforcement context from the type of
cooperation which is related to a general exchange of experiences.  Both types of cooperation wereneeded and both of them responded to the actual needs of countries.  On the subject of notifications,
he said that, in the view of his delegation, if a WTO Member conducted a competition investigation
and this investigation affected the interests of other WTO Members, it seemed normal that there
should be some process for signalling that such an investigation had taken place, as well as a
framework of consultations where other WTO Members could raise any particular concerns relatingto that investigation.  Further, the Community was fully aware of the need to avoid overburdening the
WTO system of notifications and thus had a flexible system in mind.  On the subject of informationWT/WGTCP/M/9
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exchange, he said that his delegation recognized that there were obvious limits to the exchange of
confidential information.  However, it was importa nt not to lose sight of the fact that in every
investigation there was a significant amount of non-confidential information which could be
exchanged.  With respect to multilateral cooperation, he said that, while his delegation was fully
convinced of the value of bilateral and regional cooperation, a framework of multilateral cooperationprovided wider benefits, particularly by taking into consideration the interests of third countries.  With
respect to the question of whether cooperation in th e framework of a multilateral agreement should be
binding, he said that it was important that these commitments with respect to cooperation were seen as
binding, although his delegation acknowledged that some aspects of those commitments, for instance
those relating to notifications and consultations, did not easily lend themselves to dispute settlement.
In the view of his delegation, positive comity was at an early stage of development and creating an
obligation to investigate on request did not seem warranted at this point.  With respect to whether acompetition regime was a pre-condition to cooperation, he said that a flexible framework for
cooperation would feature progressivity of commitments so that, whatever the stage of development
of the competition regime, countries would draw benefits from the kinds of cooperation suitable to
their particular circumstances.  Finally, with resp ect to whether multilateral cooperation should await
a broader dissemination or development of competiti on law across the world, he said that this view
was not practical because if WTO Members waited to have sufficient convergence in competition law
to engage in cooperation they risked in fact never cooperating.
35. The representative of Canada said that one of the essential stepping stones to the development
of a competition regime was the recognition of the benefits of sound competition policy.  In the
context of the Free-Trade Area of the Americas (FTAA) and APEC, Canada had advanced substantiveinitiatives aimed at promoting awareness of the fundamental elements of sound competition policy
and its benefits.  One of the most notable and encouraging features of the Working Group had been
the active and positive contribution of developing economies.  Discussions in the Working Group had
illustrated the positive interaction between competition principles and development objectives.
Finally, her delegation concurred with the notion that assistance to the efforts by developingeconomies to develop, implement and enforce domestic competition laws and policies should be
coordinated internationally.  Such assistance should take into consideration the particular social,
political and economic structures of those economies.
36. The representative of Morocco said that there was a complementarity and a synergy between
bilateral cooperation and multilateral cooperation.  His delegation agreed with the Swiss delegation
that there was no exclusion or incompatibility between different forms of cooperation.  Bilateralism
presupposed the existence of affinities with respect to language, culture and other factors, but for thisvery same reason it was insufficient as a tool to integrate successfully in an ever more globalized
economy.  A multilateral approach posed a clear advantage in this regard, but the general feeling was
that it was still too early to consider a multilater al agreement.  One should remain practical, flexible
and pragmatic between these two extremes.  In undertaking this approach, it was important to make a
distinction between competition law and competiti on policy.  A lot of convergence had taken place
already with respect to competition law, at least as  far as the fundamental principles were concerned.
Basically, all countries shared the same definition of monopolies, anti-competitive agreements, abuse
of a dominant position, and concentrations.  These concepts lay at the heart of every competition law.
In contrast, countries should retain the possibility of implementing a competition policy according to
its specificities and according to the stage of development they found themselves in without this beingnecessarily incompatible with or contrary to an y regional or multilateral commitments they may have
subscribed to.
37. The representative of the United States reiterated his objections to the system of notifications
of competition actions suggested by the Community.  He said that he did not object to a notification
process as such but to what had been proposed to be notified.  As had been pointed out by India,notifications involving the exchange of non-confiden tial information did not mean much in the way of
a substantive commitment.  Conversely, if notific ations involved the exchange of confidentialWT/WGTCP/M/9
Page 17
information, then this was a serious problem because this was the most sensitive information that any
law enforcement agency possessed with respect to cases under investigation and cases that it was
preparing to prosecute.  Notifications of confidential information would adversely affect the due
process rights of the companies involved and would surely impose serious impediments to the ability
to enforce antitrust laws.  In response to a question by Japan, he said that under NAFTA there was noobligation to exchange confidential information.  Under the OECD, however, there was an obligation
to notify individual OECD governments about upc oming competition enforcement actions when such
actions affected their interests significantly.  These notifications were exclusively bilateral, from
government to government.  Bilateral notifications served the purpose of the notification obligation
which was to give the government in question an opportunity to convey any possible concerns about
the proposed action.  The experience of the United States had been that bilateral notifications did not
adversely affect the confidentiality and the integrity of investigations, nor the due process rights of thefirms involved.
38. The Chairman offered a number of comments summarizing the major issues that had been
outlined in the foregoing presentations.  There had seemed to be general agreement that cooperation
was useful.  For instance, the point had been made that cooperation would assist developing countries
in dealing with international mergers and anti-competitive practices affecting such countries buttaking place in other markets.  Most of the discussion had centered on whether there were
complementarities or synergies between bilatera l and multilateral cooperation.  Specific issues
discussed in this regard included voluntary cooperation as opposed to a commitment to cooperate, and
small-scale cooperation between like-minded countries versus cooperation in a more general
framework.  Several contributions had raised questions as to how cooperation, in whatever format,could be made more efficient.  Another question had been whether there was a tendency for voluntary
cooperation to result in a binding process.  A number of delegates had explained what they would
include in a framework of multilateral cooperation; for example, general competition advocacy, a
competition review mechanism, multilateral notifications, exchange of information, and positive
comity.  Other delegates had also addressed the objectives of multilateral cooperation;  that is, whatadditional purpose would multilateral cooperation fulfil as compared to bilateral cooperation?  Some
had argued that multilateral cooperation would help fill in the gaps existing in bilateral cooperation
given that bilateral cooperation was generalized and thus left third countries out of the process.
Others had said that a multilateral framework was increasingly necessary because there were more
and more anti-competitive practices with internationa l implications.  Words of caution with respect to
a multilateral framework for cooperation had also been expressed.  A first comment in this regard had
been that cooperation was best left to parties who wanted to cooperate and should remain a flexibletool to remain useful.  Another view had been that cooperation required a certain amount of
commonality which did not sit well in a multilateral framework including very diverse countries.  A
counter-argument to this view had been that c ooperation was most useful between countries which
were at very different levels of development and had different experiences.
III. THE CONTRIBUTION OF COMPETITION POLICY TO ACHIEVING THE
OBJECTIVES OF THE WTO, INCLUDING THE PROMOTION OF
INTERNATIONAL TRADE
39. The representatives of the European Community and its member States, Korea,
 and Japan
introduced written contributions (in Japan's case, two contributions) relating to this agenda item
(documents WT/WGTCP/W/130; WT/WGTCP/W/133; and WT/WGTCP/W/134 and 135,
respectively).  In addition, the representatives of the United States;  Zimbabwe  on behalf of the WTO
African Group;  Switzerland;  Hong Kong, China ;  Korea ;  the European Community and its member
States;  and Japan  made oral statements or posed questions on this item.
40. The representative of the European Community and its member States, introducing document
WT/WGTCP/W/130, said that a multilateral fram ework for competition would make a majorWT/WGTCP/M/9
Page 18
contribution towards the promotion of international trade.  This framework should be part of a more
general and balanced WTO agenda.  In the view of his delegation, there were several benefits to be
derived from such a multilateral framework.  First, although it was generally recognized that anti-
competitive practices had a significant adverse impact on international trade and investment,
especially in the context of globalization, there was no mechanism at the WTO to address suchpractices.  A multilateral framework on competition would play this role.  Second, because many
countries had adopted and were enforcing competition law, and because anti-competitive practices
increasingly had an international dimension, there seemed to be a need for a multilateral framework
for cooperation, complementing cooperative efforts at the bilateral and at the regional levels.  Third, a
WTO agreement on competition would contribute towards the spread of a competition culture and this
would reinforce the WTO system overall.  Finally, a multilateral agreement on competition would be
very helpful in cases falling under a multiplicity of jurisdictions and this could help reduceunnecessary costs to business.
41. In his opinion, there were several elements that should be considered in the context of a
multilateral agreement on competition matters.  The first one related to common principles and rules
on competition law and policy.  Principles such as  transparency and non-discrimination were essential
building blocks for both effective competition law and the multilateral trading system.  Discussingother principles of competition law and policy promoting an open trading system would be a useful
exercise.  The second element concerned the need to focus on anti-competitive practices with a
significant impact on international trade and investme nt.  It was generally recognized that hard-core
cartels were in this category, that their harmful effects were clear and unambiguous, and that they
could, therefore, be treated under a common rule.  In contrast, in areas where competition law reliedon a case-by-case assessment, such as abuse of dominant position or monopolization, and vertical
agreements, a common rule was not the right approach because it would eliminate the flexibility
which was essential for a proper assessment.  The Working Group should discuss how other anti-
competitive practices could be incorporated into the framework.  The third element suggested for
consideration concerned cooperation.  As the topic had already been the subject of discussion in themeeting, he simply reiterated his delegation's view that there should be a flexible mechanism for
cooperation, well adapted to the needs of countries at different stages of development.  Finally, he
said that dispute settlement within a multilateral agreement on competition was a very complex issue
requiring much further study.  One early conclusion, however, was that dispute settlement in this
context did not require a review of individual decisions taken by national competition authorities.  In
the view of his delegation, a multilateral framework of competition rules and principles had to be
characterized by flexibility.  In addition, it should not envisage the harmonization of competition law,given that there was value in the diversity of national practices.  Convergence should occur where
convergence mattered and where it helped the process of international cooperation.  His delegation
did not see the WTO as an institution which should develop some kind of power to investigate or to
enforce competition law.  This was very much a domestic process.
42. Continuing, he emphasized that a multilateral agreement on competition matters should give
due consideration to the development dimension.  Progressivity was an essential concern in this
regard.  In particular, commitments relating to the introduction of competition law would be
progressive in nature on account of different levels of development and different capacities.  In
addition, while one of the objectives of a competition agreement could be to gradually limit
exclusions from competition law, the progressivity of this process would have to take into accountdifferences in levels of development.  Flexibility was another key aspect of a multilateral framework
addressing development concerns.  Merger control could provide a good illustration of this flexible
approach.  As a number of Members had indicated that they faced difficulties in establishing a system
of merger control at the early stages of development, a multilateral framework would not necessarily
envisage commitments regarding merger control.  A flexible approach could also be adopted with
respect to small- and medium-sized enterprises.  His delegation was very willing to engage in the
consideration of any issues raised by developing countries where flexibility in rules was needed.
Cooperation was another key aspect from a developm ent perspective.  It would provide sustainedWT/WGTCP/M/9
Page 19
support for the process of progressive development of a competition enforcement structure in
developing countries.  Cooperation in individual cases and general exchanges of experiences should
be core components of a multilateral agreement on competition and should be geared towards meeting
the particular concerns that developing countries had expressed in this field.  The WTO itself could
become a significant provider of technical assistance in the competition area.
43. The representative of Korea, introducing document WT/WGTCP/W/133, said that the paper
presented by his delegation discussed how competition law and policy could contribute to achieving
the objectives of the WTO, and what were the key elements of a possible multilateral framework on
competition policy.  Although there was no agreement or consensus on the need for a multilateral
framework on competition policy, many Members recognized the desirability of such a framework.
The WTO was considered by many to be the best available forum to address this issue.  Some
Members had argued that divergence on the substantive provisions of competition laws andenforcement practices would make it impossible to establish a multilateral framework on competition
policy.  However, according to other Members, the ve ry fact that competition law and its enforcement
were so diverse suggested that setting up a multilateral framework was valuable.  A multilateral
framework on competition policy would provide a level playing field for world trade and investment
and this would also help firms reduce costs regarding compliance with national regimes.  In the viewof his delegation, non-discrimination and transparency should be two key elements of a multilateral
framework.  The substantive provisions of this multilateral framework should include commitments
with respect to issues such as the adoption of a competition law, the establishment of a competition
authority, and the prohibition of hard-core cartels.  A multilateral framework should also feature
provisions on international cooperation for better enforcement of competition law and policy.However, there would not be any commitments regarding positive comity.  Further, a number of
specific provisions would address the development dimension:  grace periods, exemptions from
certain obligations, waivers, and reservations.  Technical assistance would also be of importance in
this connection.  While it would be difficult to impose an obligation on competition agencies to
assume a competition advocacy role, the status of competition advocacy should be pressed politicallyto enhance competition in markets.  In addition, the Korean contribution discussed dispute settlement
procedures in the context of a multilateral framework.  The last section of the Korean paper covered
governmental measures adversely affecting intern ational trade.  Although a competition-oriented
reform of the existing WTO system was not part of a future multilateral framework on competition
policy, such a framework should address the anti-competitive effects of government measures.
44. The representative of Japan, introducing document WT/WGTCP/W/134, said that the view
that competition policy had a major role to play in economic development, which was a key objective
of the WTO, had been broadly supported throug hout the discussions of the Group.  A number of
issues merited consideration in this regard.  In particular, some Members had argued that limiting the
number of the players in a given industry could facilitate the attainment of economies of scale and the
allocation of resources in accordance with policy priorities.  However, Japan's experience had been
that facilitating rather than curbing competition in the domestic market was more likely to improve
international competitiveness.  In industries such as textiles, automobiles and microchips that had
been the locomotives of Japan's economic growth there had been severe competition in the domestic
market.  This was strong evidence that exposing domestic firms to competition promoted the
development of internationally competitive industries.  The second issue was the impact that
exemptions and exceptions from competition law had on economic development.  Under the Anti-Monopoly Act exemption system, various types of cartels could be authorized.  Only one type of
cartel authorization related to industrial development.   In practice, however, this type of cartel had
seldom been used.  Some industries that had applied for such authorization had not actually formed a
cartel and others had not been covered by the exemption system.  Thus, the exemptions system had
had a negligible impact on industrial development in Japan.  In the view of his delegation, carefulstudies should be undertaken prior to the introduction of exemption systems, taking into consideration
the balance between the negative impact of these systems on competition and other policy objectives.
In addition, after their introduction such systems shou ld be reviewed in order to determine whetherWT/WGTCP/M/9
Page 20
they should be revised or abolished following ch anges in the domestic and global economies.  The
third issue meriting special consideration was the social effects of competition policy.  In inefficient
industries, the introduction of competition policy could result in heavy unemployment.  An optimal
approach to tackling this problem would be to combine the implementation of competition policy with
policies to minimize any adverse effects of such policy by way of creating new industries, promotingjob mobility and implementing relief measures for the unemployed.  Japan was now actively engaged
in undertaking economic structural reform in this context.  With regard to the justification for
competition law and the matter of dispute settlement, it had been argued that there were ways to
achieve the benefits of competition law without actually resorting to such a law.  It would be useful to
have further discussion on this issue.  In the view of his delegation, judgements on individual disputes
regarding the application of competition law should be reserved to national competition authorities.
When such disputes arose, it was preferable not to go beyond the exchange of opinions in a legallynon-binding forum.  He also offered a number of suggestions regarding the matter of a WTO
framework on competition policy.  First, transitional measures would be important when putting the
framework into place.  A second suggestion wa s to prioritize anti-competitive practices to be
addressed.  A third suggestion was to examine the appropriateness of exemptions systems, particularly
any adverse effects on economic development.  A fourth suggestion was to study further whethercompetition law was a necessity.  In particular, it should be discussed whether there were ways to
render markets competitive without resorting to a competition law.  Fifth, it would be desirable to
conduct regular reviews on competition policy, including the handling of individual cases by each
Member.  The last suggestion was to create a technical cooperation and competition advocacy support
system within the WTO.
45. Introducing document WT/WGTCP/W/135, the representative of Japan said that it described
the impact of import cartels, export cartels and inte rnational cartels on international trade and market
entry by foreign firms.  The impact of import and export cartels was fairly obvious.  Import cartels
directly restricted competition in the domestic market between domestic and foreign suppliers by
restraining imports of goods and services.  Export cartels restricted competition in the foreign marketto which exports were directed.  International cartels, in turn, prevented competition in global
markets.  Of course, this had an effect upon the domestic market as it generated a rise in the price of
goods and services sold domestically and a reduction in consumer welfare.  A complicated question
was whether domestic hard-core cartels, such as price-fixing, output allocation, and the division of
markets, had adverse effects on international trade.  Such cartels did not distort international trade by
themselves.  For example, price-fixing would result in high prices in the domestic market.  As high
prices in the domestic market would attract entry by foreign firms, a successful domestic cartel had tobe accompanied by government measures excluding foreign companies from the domestic market,
such as tariffs and non-tariff barriers.  Another possibility was for domestic firms to behave anti-
competitively to jointly prevent the entry of foreig n firms, for example by controlling the distribution
of imported goods.
46. The representative of the United States said that discussions in the Working Group had
provided numerous examples of how the pursuit of a soundly structured and vigorously enforced
competition policy, including the enactment and en forcement of an antitrust law, supported the
general objectives of trade liberalization and the development of open and competitive markets.  In
addition, the Working Group had learned a great deal about how trade policy and competition policy,
notwithstanding their complementary roles, were frequently aimed at different objectives andoperated in different contexts.  Further, it was an over-simplification to posit the convergence of trade
policy and competition policy and it was not necessarily the case that one policy was superior to the
other.  His delegation was still reflecting on how these and other considerations could come into play
for discussing future work at the WTO with respect to competition policy.  At this point, his
delegation was firmly convinced that, where appropriate and necessary, competition considerationswould continue to influence the development of WTO rules and market access provisions.  For
instance, competition-related concerns had been instrumental to the achievement of a high-quality
agreement on the liberalization of trade on basic telecommunications services.  There was no need toWT/WGTCP/M/9
Page 21
undertake some sort of comprehensive review of all WTO provisions to determine whether they
needed to be infused with allegedly pro-competitive modifications.  In the view of the United States,
the means by which competition-related concerns became important for the purpose of ensuring
market access was frequently a function of the attributes of the trade involved, in particular the
products or the particular markets concerned, and it was not necessary or even desirable to considersuch means on a general basis.  It was also important  to bear in mind that certain WTO rules, such as
those on trade remedies, fulfilled a particular role in the balance of concessions offered by Members
and that any attempt to philosophically refashion those rules would fundamentally disrupt the existing
balance in the WTO system.  His delegation also remained unconvinced that the negotiation of a legal
framework for competition rules and obligations in the WTO was the appropriate course to take at
present.  A multilateral agreement of a binding nature would provide no assurance of doing a better
job in promoting mutual education, cooperation and understanding than the efforts that were takingplace in the Group and other international fora.  In fact, activities such as education, cooperation,
technical assistance, and further analytical exploration could occur quite naturally outside the bounds
of a legal framework.  Furthermore, such an agreemen t, even if it were relatively general in scope and
content, would still pose the risk of interfering seriously with the intelligent and dynamic evolution of
methodologies and practices to address anti-competitive conduct.  At this stage there were many waysin which the Working Group could continue to pursue many of the sensible goals motivating the
various proposals for negotiation.  Whether the WTO could continue to host some or all of these
activities was to be settled elsewhere in the context of creating a agenda for the future work of the
WTO.
47. The representative of Zimbabwe, speaking on behalf of the WTO African Group, said that
few of the nearly 80 countries with a competition regime were African.  The communication
submitted by Zimbabwe on behalf of the African Group drew attention to the fact that, while African
countries had benefited from the assistance provided by UNCTAD, the World Bank and other
intergovernmental organizations in this area, the degree of assistance provided had not been equal to
the challenges faced by developing economies.  In addition, the Working Group had devotedinsufficient attention to technical assistance and training in the adoption and application of
competition policy.  Therefore, the Working Group should consider how to augment assistance and
enhance coordination between the relevant agencies in  order to make such assistance more effective.
In addition, it was necessary to undertake further studies on the strengths and weaknesses of the
adoption of multilateral rules, including discussions on the so-called commonly agreed principles and
rules of competition policy.
48. The representative of Switzerland said that the negotiations on intellectual property rights
during the Uruguay Round provided an interesting parallel to possible future negotiations in the
competition area.  At the time that such negotiations had begun, relatively few Members had a
functioning regime protecting intellectual property rights.  However, this had been no impediment to a
WTO agreement covering this subject.  Discussions in the present Working Group had evidenced that
there was a significant number of anti-competitive practices directly impinging upon trade.  Suchpractices had been amply illustrated in a number of presentations, notably Japan's.  The question of
why a new Round should address competition aspects could be answered by referring to many of
those examples.  The WTO was a privileged forum for strengthening the progressive liberalization of
markets through the adoption of a multilateral framework of competition rules.  Opening negotiations
in this sector should serve a threefold purpose.  First, competition must be integrated in a horizontalmanner into the system of rules and disciplines of the WTO.  A sectoral approach, as was the case in
telecommunications, was nothing other than a partial reply to anti-competitive practices affecting
trade.  A horizontal approach also meant that inte grating competition rules in the multilateral system
would of necessity have an impact on the WTO rules and disciplines in order to maintain consistency.
Second, it was important to ensure that national competition legislation satisfied the minimumrequirements of WTO principles.  Third, a common approach in respect of hard-core cartels,
import/export cartels or criteria for assessing certain anti-competitive practices should be thoroughly
explored.  In the view of her delegation, the above three objectives should be pursued bearing in mindWT/WGTCP/M/9
Page 22
diverse modalities to be defined through negotiation, amongst them flexibility and progressivity.  This
approach seemed to be rightly balanced, particularly in the interests of developing countries and
countries in transition.
49. The representative of Hong Kong, China said that technological changes had rendered the
world economy of today very different from what it  had been at the founding of the GATT.  Firms
now took decisions on investment and production matters from a global rather than from a national
perspective.  Therefore, there was a need to modernize the multilateral framework in tandem with
economic realities.  In the view of his delegation, the WTO should work towards the promotion of
market contestability taking into account this changed paradigm.  For instance, the Group should
examine whether the notion that investment, goods a nd services had a clear-cut national origin should
remain as the foundation of multilateral rules on trade.  In addition, this review should aim at
reforming and, where appropriate, removing all unnecessary measures that impeded the contestabilityof the global market.  There were no cogent reasons why such a review should be confined to
measures in either the public or private sectors.  It should cover both.  For these reasons, Hong Kong,
China had advocated a WTO approach;  that is the adoption of a competition-oriented approach to
review all existing WTO rules.  He said further that, while his delegation recognized the desirability
of a multilateral framework on trade and competition, the question was what the optimum frameworkshould be.  If consideration was being given to the pros and cons of developing multilateral rules and
disciplines, it was equally important to bear in mind that Members were at various stages of
development with very different domestic considerations and institutional set-ups.  Hence, any
multilateral framework promoting a harmonized approach to competition in a one-sided manner
would not be the best result for all Members.  What was important was whether markets wouldbecome more contestable as a result of the adoption of the framework, and not whether the statute
books of Members became thicker.
50. The representative of Korea said that his delegation wished to contribute some analytical
inputs regarding how to reform the WTO system  by introducing competition policy perspectives
therein.  His delegation was in broad agreement with the views presented by Hong Kong, China in
this regard (document WT/WGTCP/W118).  In particular, he felt that, in the process of discussing
whether and how to formulate multilateral rules on competition, one should not overlook addressing
anti-competitive elements in the current WTO system.  Out of the six elements identified in the paper
by Hong Kong, China as illustrative examples for reform, the third element, concerning producer-
biased WTO rules such as anti-dumping and safeguard measures, was particularly relevant.  Korea's
concerns about anti-dumping rules were well-known.  In addition, Korea was of the opinion that the
WTO rules on safeguard measures also needed to be reviewed from a competition perspective.  Forexample, Article 11 of the Agreement on Safeguar ds did not address purely private business practices,
which raised the question of whether measures such as voluntary restraints initiated by private firms
were prohibited under this Article.  In the opinion of his delegation, the reason why Article 11 banned
grey-area measures such as voluntary export restraints and orderly market arrangements was that such
measures adversely affected competition.  Therefor e, whether or not certain grey-area mesures were
prohibited under Article 11 would have to be decided on the basis of the effects these measures had
on competition rather than on the basis of whether the government was involved in the establishment
of such measures.  This interpretation appeared to be consistent with the letter and the spirit of the
Preamble to the Agreement on Safeguards, which emphasized the need to enhance rather than limit
competition in international markets.  To avoid problems of interpretation, Article 11 required furtherimprovement from a competition perspective.  This competition-oriented review should be extended
to other WTO rules.
51. The representative of the European Community and its member States, responding to a
question from Hong Kong, China, said that a multilateral agreement on competition should, in his
view, incorporate a binding framework of rules and principles relating to domestic legislation andenforcement, and dispute settlement would come into  play only in this context.  However, dispute
settlement should not provide for the review of individual decisions taken by competition authorities.WT/WGTCP/M/9
Page 23
There were important substantive reasons for this.  Very clear rules on the substance of competition
law were needed if dispute settlement was to be put into practice meaningfully.  However, many anti-
competitive practices were examined by competition authorities on a case-by-case basis according to
their assessment of the particular situation in the market.  His delegation did not think it was sensible
to allow dispute settlement to go into how a particular anti-competitive practice had been assessed.This would imply a substantive overview of the wo rk of competition authorities by panels which, in
the opinion of his delegation, was neither feasible nor desirable to envisage.  Further, although there
were areas of competition law with rules subject to precise application, the per se  prohibitions
regarding cartels for instance, gathering evidence to prove the existence of a cartel was extremely
fact-intensive.  Dispute settlement in this context would involve a panel review of whether the facts of
a case justified the application of the law.  Again, in the view of his delegation, this kind of panel
review was neither feasible nor desirable.  Dispute settlement regarding trade remedy cases should notbe seen as a model for dispute settlement in the area of competition policy commitments.  Each
particular WTO agreement had its own justifications for the scope of the obligations contained
therein.  In response to a question from Australia regarding the treatment of small- and medium-sized
enterprises within a multilateral agreement on competition matters, he said that his delegation was not
proposing to exempt such firms from the application of competition law and the scope of amultilateral framework.  Rather, his delegation was of the view that, generally speaking, these types
of firms would not infringe competition law given their lack of market power and that for this very
same reason normally they would not be able to affect international trade.  However, as small- and
medium-sized firms could gain collective market power, taken together they could raise serious
concerns under competition law and foreclose acc ess to markets with a consequent disruption of
international trade.
52. The representative of Japan said that his delegation shared the concern of the Korean
delegation about the anti-competitive aspects of trade remedies such as anti-dumping.  His delegation
fully agreed with the statement by the Korean delegation that trade-related governmental measures
could have anti-competitive effects on international trade similar to those caused by private anti-competitive practices, and that a competition-oriented reform of the existing WTO rules could be
necessary in areas such as anti-dumping.  On th e issue of the multilateral framework on competition
policy, he said that he found very many similarities between the papers tabled by his delegation
(WT/WGTCP/W/134 and W/135) and those presented by Korea (document WT/WGTCP/W/133) and
the Community (WT/WGTCP/W/130).  His delegation was of the view that the Working Group
should undertake further discussions on how a multilateral framework on competition policy could be
developed.
IV. OTHER ISSUES RAISED BY MEMBERS RELATING TO THE GROUP'S
MANDATE TO STUDY THE INTERACTION BETWEEN TRADE AND
COMPETITION POLICY
53. Mexico introduced a written contribution on this matter (WT/WGTCP/W/136).  In addition,
the Group had before it an Overview of Members' National Competition Legislation
(WT/WGTCP/W/128) prepared by the Secretariat.  The following delegations made oral comments:
Argentina;  Korea ;  Romania ;  Canada ;  Hong Kong, China ;  Malaysia ;  Japan ;  Australia ;  and the
Russian Federation.  The observers from UNCTAD and the OECD provided updates on relevant
activities of their organizations.
54. The representative of Mexico, introducing the contribution of his delegation
(WT/WGTCP/W/136), said that the aim of the paper was to set out certain ideas on the principles of
competition and how they could contribute to the objectives of the WTO.  These ideas were premised
on the understanding that the fundamental goal was to improve the well-being of the populations of
the Member countries of the WTO, through continuing liberalization and efforts to ensure the better
functioning of market forces.  There was no doubt that the application of competition disciplines inthis framework would contribute effectively to prot ecting competition in the international realm andWT/WGTCP/M/9
Page 24
thereby to the objectives of the multilateral trading system.  Furthermore, it would seem that a general
agreement as to the application of competition legislation on a national level would make an
important contribution to achieving these objectives, since most countries had set themselves the goal
of drawing up this kind of legislation and of applying it as transparently as possible in terms of
national treatment.  This system had to be strengthened through international cooperation agreements,some of which had already been established regionally.  Noteworthy amongst these were the
recommendations of international bodies whereby Member countries had entered into commitments to
notify each other in order to coordinate their action a nd to respect principles such as comity.  In this
way, with better coordination and an attempt to achieve integration, the effectiveness of existing
national legislation had been maximized and efforts had been made to eliminate restrictions affecting
competition in markets, thereby ensuring the benefits of liberalization. Transparency, national
treatment and most-favoured-nation treatment were essential principles for such cooperation.  Hisdelegation believed that these principles were certainly  important, but that their achievements were
limited largely to procedural questions.  They could be particularly useful in solving coordination
problems in the application of competition laws.  Implicit in the most-favoured-nation concept was
the principle of reciprocity.  While linked to questions of procedure, this principle was understood by
Mexico to be fundamentally substantive in nature.  It needed to be expressed in substantive ways incompetition legislation.  This by no means implied a need for full convergence of competition law
among WTO Members.  His delegation believed that, in general terms, the legislation of most
Members covered the main types of anti-competitive conduct and arrangements, and was based on
essentially the same principles.  However, much remained to be done in promoting reciprocity in the
application of competition law and policy.  Perhaps the most problematic aspect concerned waiversand exclusions from the application of national laws.  To some extent, the differences that existed
among countries with reference to these matters diminished the degree of reciprocity that could be
reached through agreements among states.  Mexico believed that Members could achieve a sufficient
degree of coordination based on the principle of re ciprocity wherever possible, without being over-
ambitious in terms of harmonization of competition laws.  Basically, this would involve specifyingthe fundamental criteria to be used in competition legislation.  For example, it would be possible to
specify fundamental criteria used by Members in addressing vertical market restrictions and abuse of
a dominant position.  In addressing these practices, all countries, to some extent or another, made use
of concepts such as the relevant market(s) and market power.  Further exploration and analysis of
these concepts in the international arena would contribute to promoting the use of common analytical
tools across jurisdictions, which would promote reciprocity and the effective resolution of situations
in which anti-competitive practices distorted trade or impeded access to markets.
55. Another realm in which important progress had been made and further progress was desirable
was in the area of international cooperation relating to predatory pricing and price discrimination.
The framework for addressing such conduct intern ationally was contained in the Agreement on the
Implementation of Article VI of the GATT.  This Agreement set up a series of disciplines which
covered the fundamental concepts of transparency, national treatment and implied precepts orconcepts which, in one way or another, guaranteed reciprocity in dealing with these types of matters
among Member countries.  In this context, it was relevant to mention the objectives of anti-dumping
measures as he understood them.  The first objective was to protect the national firm from undue
displacement.  A second objective, and this had to be consistent with the previous criterion, was to
avoid undue displacement without affecting the functioning of other markets.  This necessitatedallowances for the necessary adjustment of markets.  This required an assessment of the costs and
benefits of possible interventions, as was familiar to persons involved in the administration of
competition policy.  To some extent, the costs and benefits were recognized in certain criteria which
were used in anti-dumping legislation.  From this, it might be inferred that the criteria specified
permitted the assessment of the minimum costs that would be acceptable in order to achieve marketadjustment which in the long term would be of benefit to the entire population.  However, as was
described in his delegation's written contribution to the meeting, the definition of dumping raised
problems in terms of its effective application under the criteria described.  First of all, the concept of
dumping, as it was reflected in the law, was based on price differentiation related to market power.WT/WGTCP/M/9
Page 25
However, the practice of price differentiation was difficult to fit into general concepts of protection of
competition since it did not necessarily involve the undue displacement of economic agents.  The
practice of predatory pricing was included in the broader concept of price discrimination.  Price
discrimination was, to an extent, defined in the Agreement on the Implementation of Article VI itself;
predatory pricing was not, although this was part and parcel of the concept of dumping.  Hisdelegation believed it was important to specify these concepts clearly in the Agreement, to provide a
more rational and economically sound basis for the administration of anti-dumping measures.  The
concept of price discrimination should be defined in terms of competition theory, with reference to
concepts of costs and market power.  Similarly, an effort would be made to properly define the
concept of predatory pricing, through specification of variables that would be considered and the
application of relevant tests.  A further element which merited consideration with reference to the
anti-dumping agreement and could help to refine the application of anti-dumping measures was thatof injury.  Rather than the mere displacement of competitors, this should be concerned with the
displacement of efficient competitors.  Furthermore, it should not be concerned with injury that was
manifested in other types of variables that reflected medium- rather than long-term changes.  Adverse
changes in market structure should be part and parcel of the assessment of injury, as should be the
consideration of net consumer welfare effects and the ability to abuse a dominant position.  Theconcepts of the relevant market and market power would also be relevant.  The former, in particular,
would facilitate assessment of the extent of whether a particular practice was affecting the efficient
functioning of markets in various ways that were  explained in his delegation's written contribution.
56. The representatives of Korea;  Hong Kong, China
;  Malaysia ;  and Japan  said that they shared
and supported most or all of the points that had been made in the presentation by Mexico with regard
to existing rules on anti-dumping.  The representative of Hong Kong, China said further that, with
regard to the question that had been raised concerning the venue for consideration of issues related totrade remedies, although Hong Kong, China had learned a great deal from the presentations made by
competition experts in the Working Group, the Group had been established to study the interaction
between trade and competition policy.  In this context, he felt it was appropriate that the Group giveconsideration not only to private anti-competitive practices but also to government measures,
including trade remedies, that affected competition.  The representative of Malaysia said that the
concerns that had been raised by Mexico would have to be addressed adequately in the WTO, thoughnot necessarily in the Working Group on the Interaction between Trade and Competition Policy.  Like
many delegations, Malaysia had found the work of the Working Group to be interesting and
educational, and felt that it should continue as the educational process was far from over.  His
delegation did not agree with the proposals that had been tabled earlier in the meeting for negotiationson rules in this area.
57. The representative of Argentina said that, although the discussions to date in the Group had
been very useful, his delegation questioned the advisability of the Group's putting forward a proposal
to the Ministerial Conference.  It was clear that no common view had emerged on many subjects.
Two broad perspectives could be identified on the scope and focus of the Group's work.  A firstperspective was that the Group should confine itself to a relatively narrow focus on competition
policy per se .  A second view was that the Group should follow a much broader concept of
competition policy which would include the subject of anti-dumping and many other subjects that had
an influence on the organization of markets.  If one took the latter view, one would also have to
consider the impact on trade and competition of matters as diverse as state assistance, subsidies,banking subsidies and subsidized interest rates.  Howe ver, he did not think that it was the role of the
Group to consider these matters.  In light of the divergence of views on these fundamental matters,
Argentina was inclined to the view that it would be premature for the Group to put forward a proposal
to the Ministerial Conference, though the life of the Group should certainly be prolonged.
58. The representative of Canada said that her delegation shared some of the concerns that had
been raised by various Members of the Working Group regarding the application of anti-dumping
measures and related WTO provisions regarding trade remedies.  Related discussions that had takenWT/WGTCP/M/9
Page 26
place within the WTO Committee on Anti-dumping Practices had highlighted certain aspects of the
anti-dumping provisions regarding which it might indeed be beneficial to seek some clarification.  Of
particular concern was the trend towards adoption of anti-dumping laws by an increasing number of
countries and the increasing number of actions which were being taken.  The current WTO Anti-
dumping Agreement provided considerable discretion to investigating authorities.  In this regard,
Canada had signalled that it supported a review of trade remedies within the WTO, including
consideration of the possibility of integrating competition policy and public interest elements into
trade remedies law.  Her delegation believed, however, that these issues would be more appropriately
addressed in a trade remedies forum than in one focused on competition policy.  Discussions within a
competition framework should focus on issues of competition law and policy.
59. The representative of Mexico said that it was important to note that, to a large extent, the
Members participating in the discussion felt that the topic that had been raised by Mexico was an
important one that merited consideration in the WTO.   This, rather than the choice of forum, was the
substantive issue.  Having said this, it was his understanding that the Working Group was intended to
address the interaction between trade and competition policy, and not just competition  per se .  From a
procedural viewpoint, the aim was to try to settle problems of international trade.  When one focused
on the ultimate objective of trade liberalization, the distinction between trade remedies andcompetition measures became increasingly artificial.
60. With regard to the Overview of Members' National Competition Legislation that had been
prepared by the Secretariat (WT/WGTCP/W/128), the Chairman reminded Members that a draft of
the overview had been circulated at the Group's meeting in April (Job 2223).  The current documentwas the same as the draft version circulated in Ap ril, except that it incorporated comments that had
been received by the Secretariat from a number of Members.   The representatives of Korea and
Romania requested two further corrections in the document (to be done in
WT/WGTCP/W/128/Rev.1).
61. The observer from the Russian Federation said that the main contribution of competition
policy to achieving the objectives of the WTO was to  ensure competition in international markets.  In
this connection, it was important to consider what might be achieved by the participation of
competition authorities in the implementation of trade policy.  The Russian anti-monopoly authorities
paid special attention to the impact of trade policy on competition.  At the moment, an important task
of the anti-monopoly body was to prevent trade policy from having a negative impact on competition
in the domestic market.  For a number of years, a high-level representative of the anti-monopoly body,
being a member of the Government Commission on Safeguard Measures and Tariff Policy, had
participated actively in decision-making processes on trade policy.  This permitted the anti-monopolybody to screen and, where appropriate, advise against, the imposition of restrictive trade measures that
would impact adversely on competition.  Recently, the role of the anti-monopoly body in providing
advice on these matters had been explicitly reflected in the Russian federal law governing the
imposition of safeguards, anti-dumping and countervailing measures.  She felt that the advice given
by the anti-monopoly body to the Commission on Safeguard Measures and Tariff Policy had had asignificant impact in minimizing the anti-competitive effects of trade measures and promoting the
overall pro-competitive character of Russian trade policy.
62. The representative of Australia, referring to her previous comments on the "markers" that had
been put down by Singapore (see paragraph 26 above), said that, while not wishing to indicate support
for any specific conclusions that had been reached by that delegation, the questions that had beenposed by Singapore and others, namely regarding the nature and scope of the problems in the WTO
on competition, the suitability of other approaches, and the costs and benefits of trade and
competition, were among the issues that needed to be examined in the consideration of a multilateral
framework on trade and competition.  While Australia's position on further work on trade and
competition in the WTO was still being refined, including through public consultations, the debate inthe Working Group had contributed greatly to its understanding of the issues.  She mentioned, further,WT/WGTCP/M/9
Page 27
that in Australia, the recent release of a draft report by The Australian Productivity Commission on
the impact of competition policy reforms in rural and regional Australia had generated a debate on the
appropriateness of competition policies.  One of the key recommendations of the report was that
governments should take steps to improve community understanding of competition policy including
clarification of how social considerations were to be taken into account on implementation.  In duecourse, when the report had been finalized, she intended to provide the Working Group with extracts
from it relevant to various aspects of the Group's discussions.  The report had highlighted the
considerable gains to the Australian economy from  implementing competition policy reforms.  In this
way, it reinforced the general point that the broader adoption of competition principles in other
economies would contribute to achieving the objectives of the WTO as well as the economic and
social objectives of individual Members.
63. The observer from the OECD drew Members' attention to a Conference on Trade and
Competition to be held in Paris on 29 and 30 June.
64. The observer from UNCTAD informed the Group on a meeting of UNCTAD's
Intergovernmental Group of Experts on Competition Law and Policy which had taken place from 7 to
9 June.  The session had served as the preparatory meeting for the Fourth United Nations Conference
to Review All Aspects of the Set of Multilaterally Agreed Equitable Principles and Rules for theControl of Restrictive Business Practices, which was scheduled for September 2000, and had also
helped to prepare the ground for the consideration of competition law and policy issues at
UNCTAD X, scheduled for February 2000.  In its Agreed Conclusions, the Expert Group had
reaffirmed the fundamental role of competition law and policy for sound economic development,
stressed the importance of the creation of a competition culture and recognized the need forstrengthened international cooperation in the area of competition law and policy.  It had invited the
Secretary-General of UNCTAD to continue c ooperation with the WTO and other organizations
working in this area.  It welcomed the convening of regional meetings in preparation for the Fourth
Review Conference, requested the UNCTAD secretariat to pursue its technical cooperation activities,
and invited the Secretary-General of UNCTAD to explore the feasibility of supporting training andcapacity-building on a regional basis.  The Expert Group had recommended that the Review
Conference consider the following issues rela ted to the better implementation of the Set:
(a) experience gained so far with the establishment of competition laws and competition authorities,
enforcement and competition advocacy, in developing countries, countries in transition, and relevant
regional organizations;  (b) organization and power s of competition authorities, including how to
determine enforcement priorities;  (c) treatment of  confidential information in competition law and
policy;  (d) the role of competition policy in economic development;  (e) competition policy issues intelecommunications;  and (f) competition policy and its implications for regulatory and legislative
reforms.  He also drew to the attention of Members a pre-UNCTAD X Seminar on the Role of
Competition Policy for Development in Globalizing World Markets to be held on 14 and
15 June 1999.
V. REQUESTS FOR OBSERVER STATUS FROM INTERNATIONAL
INTERGOVERNMENTAL ORGANIZATIONS
65. The Working Group agreed to revert to requests made by SELA, the Organization of the
Islamic Conference and the South Centre at its next meeting, having regard to the ongoing
consultations on related matters in the framework of the General Council.
VI. OTHER BUSINESS
66. Regarding the nature and process for preparation of the Group's report to the General Council
on its activities in 1999, the Chairman proposed that the Secretariat be asked to prepare a draft report
of the type that had been done at the end of  1998 (WT/WGTCP/2), but without any recommendation.WT/WGTCP/M/9
Page 28
A short meeting of the Group would be held in September, with the main item on the agenda being
the approval of the report.
67. Following discussion, and in the light of comments made by a number of Members, the
Group agreed that the Secretariat be asked to draft a report on the Working Group's activities in 1999
on the above basis.  The report was to be factual, descriptive, balanced and objective, and would be
based on the minutes of the Group's meetings.
68. Following suggestions made by Members, the Chairman noted, further, that the minutes of
the current meeting would be circulated in advance of the report.  The Group's meeting in September
would be held as close as conveniently possible to the meeting of the Working Group on the
Relationship between Trade and Investment.
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