WORLD TRADE
ORGANIZATIONWT/GC/W/191
2 June 1999
(99-2209)
General Council Original:  English
PREPARATIONS FOR THE 1999 MINISTERIAL CONFERENCE
EC Approach to Trade and Competition
Communication from the European Communities
The following communication, dated 28 May 1999, has been received from the Permanent
Delegation of the European Commission.
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Aim of this paper
1. The WTO has developed strict disciplines on different types of government obstacles to trade;
further progress as regards the liberalization of such restrictions can be expected as part of a
comprehensive new round.  At present, however, there is no multilateral framework relating to the
application of competition law to anti-competitive practices by business, which can also have a
significant impact on access to a market.  Competition-related disciplines have been included in a
number of WTO agreements, notably on services, but there is a need to consider a more horizontal
approach.  The EC and their member States are of the view that the time has come for the WTO to
begin negotiations on a basic framework of binding principles and rules on competition law andpolicy.
The WTO as a forum for negotiations on competition
2. The application of competition law supports the trade liberalization objectives of the WTO
and is essential to ensure equality of competitive opportunities.  There is therefore a close connectionbetween competition law and policy and the WTO ma rket-opening objectives.  WTO principles, such
as transparency and non-discrimination, also provide important foundations for the effective
application of competition law in a manner which complements and reinforces the process of trade
liberalization.  International cooperation to better address anti-competitive practices of an
international dimension needs to involve countries at all levels of development.  The WTO thereforeprovides a multilateral negotiating forum in which the interests of all countries can be reflected in a
common framework of rules, and where modalities of cooperation can be established for the benefit
of all countries.
3. Negotiations on competition should aim at establishing a basic framework of rules, relating to
the adoption and enforcement of a domestic competition law, and provisions on cooperation amongWTO Members.  This would provide an important foundation for better addressing the interaction
between trade and competition policy, while being an objective which can be realistically achieved
within the framework of a three-year negotiation.WT/GC/W/191
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4. Dispute settlement modalities will need to be further considered so that they are well adapted
to the specifics of competition law.  In any event, there should be no dispute settlement review of
individual decisions.
The development dimension5. There is a general recognition that competition policy should be considered as a tool for
development.  Many developing countries have introduced or reinforced a competition law framework
as a key component of domestic reforms aimed at fostering effective competition and hence
integration in a globalized world economy.  Developing countries have traditionally favoured
international cooperation on anti-competitive practices, notably in order to support their capacity to
effectively apply domestic competition law.  WTO negotiations provide an opportunity to ensure that
the interests of developing countries in enhanced international cooperation can be effectivelyaddressed.  In addition, transitional periods, together with flexibility in the rules, should be envisaged.
The EC and their member States therefore consider  that the development dimension must also be at
the centre of the considerations of a multilateral framework of competition rules within WTO.
Core principles and rules on competition law and policy6. An important element of a WTO framework on competition could be the development of core
principles and rules on domestic competition law and its enforcement.  In this connection, attention
should particularly focus on those aspects of competition law and policy which are more relevant for
the multilateral trading system, while fully recognizing the development dimension and differences in
domestic legal and institutional frameworks.  The WTO principles of transparency and non-discrimination would provide key f oundations for the development of such core principles and rules.
The EC and their member States have presented an outline of elements that could be considered as
such core principles in their submission to the WTO Working Group (WT/WGTCP/W/115).
A WTO focus on anti-competitive practices with a significant impact on international trade and
investment
7. WTO disciplines should be clearly geared towards the objective of better addressing those
anti-competitive practices which have a significant impact on international trade and investment and
therefore affect the WTO market-opening objectives.  We should, for instance, give priority to the
issue of hard-core cartels, which are of partic ular concern from both a trade and competition
perspective.  At the same time, we could explore the possibility of flexible common approaches in
relation to other anti-competitive practices which foreclose access to a market or severely limit marketentry.  International cooperation should also be promoted in relation to export cartels and
multijurisdictional mergers.
International cooperation
8. A growing number of competition cases now have an international dimension.  International
cooperation is essential to enhance the application of competition law and to limit the risk of conflict
arising form extraterritorial enforcement and fact-finding.  A framework of common rules and
principles would also contribute towards stimul ating trade and investment by reducing unnecessary
costs for business.  Competition policy is an issue of common concern and cooperation should not be
limited to OECD countries or bilateral agreements.  Developing countries should also benefit from aframework of cooperation, which contributes towards the objective of ensuring that all potential
entrants can fully exploit competitive opportunities.WT/GC/W/191
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9. There is a need therefore to consider, within the WTO, modalities for international
cooperation.  This should foster exchange of experiences among WTO Members, cooperation in
relation to competition cases affecting the interests of several WTO Members, as well as exchanges of
non-confidential information.  Positive comity could also be addressed in a multilateral agreement,
but there should be no binding obligation to investigate on behalf of a third country.  The effectiveapplication of competition law is a particular challenge for developing country administration.
Together with transitional periods and flexibility in  the rules, it would be essential to ensure that
developing countries can derive maximum benefits from modalities of international cooperation.
Consideration should also be given to how to  reinforce domestic capacity relating to the
administration and enforcement of competition law th rough enhanced and better coordinated technical
assistance.
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