WORLD TRADE
ORGANIZATIONWT/WGTCP/W/167
27 June 2001
(01-3219)
Working Group on the Interaction
between Trade and Competition PolicyOriginal:  English
COMMUNICATION FROM JAPAN
The following is the final text of a paper received from the Permanent Mission of Japan
which was circulated as an advance copy for the Working Group's meeting of 22-23 March 2001.
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The Needs of Developing Countries and an International
Framework of Cooperation in the WTO
I. GLOBAL REINFORCEMENT OF COMPETITION POLICIES AND IDENTIFYING
DEVELOPING COUNTRY NEEDS
1. Levels of achievement in the area of competition policy vary widely among countries.  While
some countries have had considerable experience in implementing competition laws, others are now
in the process of drafting such legislation.  At the same time, some countries have yet to recognize the
need for such legislation.  Even among those where such legislation exists, there is a marked
unevenness in the scope of the regulations and the stages of implementation.
2. When comparing the progress made by certain countries, the development of competition
laws and policies may be generally assessed with regard to the various stages.  In the first stage,
policies tend to focus on the administration of consumer-related affairs, the prevention of unfair
competition and government abuse, including the abuse of administrative powers and state monopoly.
In the next stage, the scope of competition laws and policies generally expands to cover such matters
as the prohibition of cartels and the regulation of corporate mergers.  Subsequently, in countries wherethe process of legal and institutional development has been completed, the focus of attention shifts to
systemic development.  This involves improving the power given to the competition authorities and
hearing procedures, developing the specific methods of market demarcation analysis, etc.  In the last
stage, among the developed countries, international agreements for anti-trust cooperation have been
concluded in order to counter anti-competitive practices in foreign countries having repercussions ondomestic markets.
3. Thus, as can be seen through these various stages, considerable differences exist in the
implementation of competition policies.  However, competition policies are being increasingly
recognized as a vital engine for domestic economic growth and there is a clear international trend
towards bolstering related initiatives.  While the developed countries have, in recent years, beendeveloping mutually cooperative relations, primaril y through OECD and bilateral channels, a growing
number of requests for cooperation are being received from developing nations.  In the case of Japan,
its own technical cooperation programs have been developed primarily targeting the countries of the
Asia-Pacific region.  Japan has been accepting foreign trainees from the competition authorities andWT/WGTCP/W/167
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has been dispatching experts in the field of competition law on long- and short-term assignments to
assist local authorities.  However, over the past few years, Japan has received so many requests for
cooperation that, at times, we have been unable to respond to all of them due to resource limitations.
It appears that Japan is not the only country in this situation, and that the other developed countries
and international organizations are confronted with similar cases.  We believe that, as a starting point,it is this growing international interest and mome ntum towards strengthening competition policies that
should be noted by the participants in this Working Group, especially as this trend should continue in
the future.  Through the ongoing initiatives and efforts being made by individual countries, we believe
that competition policies will come to play an even  more important role in the future world economy.
As such, countries world-wide must continue to  pay special attention to competition policies.
4. In this connection, it would be encouraging to see greater involvement by the competition
authorities of the various countries in the deliberations of this Working Group, as well as in thedomestic process of drafting each country's written submission.  We hope that those countries, where
no formal competition authority has been establis hed, will seek the advice of competition policy
experts inside, or even outside, the government.  We believe that such kind of experts, who are
instrumental in the development of competition policy, should exist in each country.  Although this
Working Group has expended considerable time to respond to such basic questions as to whydeveloping countries need to have competition policies, there is the question that their actual needs
may be something more advanced.  On several occasions, Japan and other developed countries have
suggested several types of technical cooperation that could be provided to the developing countries.  It
is now important for developing countries themselves to specify the kind of support that they actually
need.  This should not be limited to that in the conventional fields of development assistance, butrather, developing countries are encouraged to come forward to present their emerging and potential
needs in explicit terms, by reflecting the views of  their respective competition authority or experts.
II. THE ROLE OF AN INTERNATIONAL ORGANIZATION IN TECHNICAL
COOPERATION
5. For the developing countries, bilateral and regional activities offering technical cooperation
could provide valuable opportunities for obtaining skills and knowledge on competition policy.  Thus,
there is real significance to continue these efforts.  However, there does lie the risk of duplication,
when and if several similar activities are being conducted for certain developing countries, but
without adequate coordination.  Such lack of coor dination would lead to wasting the already limited
financial and human resources from the cooperating side.  Furthermore, it would be inefficient, and
even confusing, for those developing countries benefiting from these activities to have to listen time
and again to separate lectures on the same topic, but with a different emphasis or evaluation, simplybecause of the different approach of the cooperating country.
6. Thus, to prevent such a situation, efforts must be made to minimize any duplication and
confusion by improving the level of coordination among the existing cooperation programmes.  In
certain regions, we are in fact seeing signs of reform in line with this idea.  Such approach should,
ultimately, be extended to cover all geographical areas, via the active contribution of a globally-mandated international organization to this process.
7. The involvement of an international organizati on in the field of competition policy is also
desirable in view of the great diversity and the stage of progress of each developing country.  In
addition to their differences in the stage of legal development, as well as the experience of applying
competition laws, their general conditions, such as their socio-economic backgrounds, the scale oftheir economies and land area, vary widely among the participating developing countries.
Consequently, their needs for technical cooperation also differ considerably.  Furthermore, the
developed countries are hardly identical in terms of the substantive and remedial provisions of their
respective competition laws.  Cooperative activities should, therefore, be well balanced and tailor-WT/WGTCP/W/167
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made to the needs of an individual developing country in order to reflect the diverse circumstances
and the stage of progress of each country.  In view of these points, it can be considered that an
international organization, comprised of various developed countries on the supply side, can develop a
strong character in technical cooperation, which neither bilateral nor regional cooperative frameworks
can demonstrate alone.
8. Furthermore, there could be various concrete ways in which an international organization can
play a global coordinating role in the area.  For example, it can organize a multinational rota system
allowing a group of competition law experts to be dispatched to those countries in the process of
drafting competition laws.
III. THE ROLE OF AN INTERNATIONAL ORGANIZATION IN THE AREA OF
INTERNATIONAL  COOPERATION AND ITS SYNTHESIS WITH TECHNICAL
COOPERATION
9. The UNCTAD, the World Bank and the OECD automatically come to mind, when
considering the current activities of international organizations in competition law and policy.  The
UNCTAD hosts for all UN-Member countries an annual meeting of experts in Geneva, as well as a
series of regional seminars around the world.  The World Bank has also taken the initiative to offer a
comprehensive package of assistance programmes to specific developing countries, such as Indonesia.Likewise, the OECD regularly invites some developing countries to observe the deliberations of its
Competition Law and Policy Committee and also provides outreach activities to other countries to
share its knowledge and consideration of important and imminent policy issues.  It is our
understanding that the UNCTAD has made a particular point of disseminating knowledge on the basic
features of competition laws and policy to many developing countries. The World Bank has alsoachieved tangible results in specific developing countries and we expect that it will continue giving a
high priority to the area of competition policy.  Through its policy discussions, the OECD has been
effectively bridging the gaps between the developed and developing countries, and has been
responding to the immediate and specific needs of some developing countries and transitional
economy countries.
10. Thus, these international organizations have carried out cooperation activities in line with
their specific strength and strategies and have produced substantive results in their own particular
fields.  Notwithstanding the above success, I would argue that the time has come for us to seriously
consider a comprehensive framework for synthesizing and developing further these activities.  By
this, I mean a framework that would enable technical assistance to be extended to a broader range of
developing countries with more clearly defined objectives and directions.
11. Such a framework would be opportune for the following reasons.  Firstly, with the progress of
globalization, anti-competitive business practices are increasing across national borders, as are foreign
anti-competitive activities which affect the domestic markets and trade.  Thus, there is a real and
urgent need to respond to these problems.  While anti-competitive practices affect both the developed
and developing countries, it is, in reality, the developing countries that are more prone to be victims of
anti-competitive practices due to the weakness of their competition policies.  There is, therefore, apressing need to encompass the developing countries in a global framework of cooperation, with a
view to securing a Member country's capacity to combat specific anti-competitive activities for the
purpose of strengthening competition policies.
12. In recent years, we have been witnessing an increasing number of bilateral cooperation
agreements in the field of competition policy.  Since bilateral agreements are based on the principle ofreciprocity, they tended to be concluded between developed countries having a similar level of
development in their competition policies.  However, it is notable that some bilateral agreements have
recently been concluded between developed and developing countries.  In light of this development,WT/WGTCP/W/167
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one practical option could be to start with those countries now capable of making a bilateral
cooperative agreement, multiply the number of these agreements, and then gradually create an
extensive international network.  The provisions for technical cooperation could also be included in
such agreements.  For obvious reasons, however, this approach will take much time.  It is also
conceivable that countries having an important role to play in fighting against specific anti-competitive activities with international dime nsions may find themselves omitted from such
arrangements when their contribution is found critical.  Therefore, it is important to pursue a
multilateral approach in parallel so that such countries can share the benefits of the system at any time
if they so desire.
13. Secondly, after competition laws have been established, there is a need to gain and
accumulate practical knowledge on their application by, for example, sharing information and
expertise with other countries.  Multilateral fora would provide the most effective means for this.  Theagenda of this type of cooperation will be manifold, as the interests and needs develop in accordance
with the progress of individual laws and policy.
14. The promotion of such multilateral cooperation would also help accelerate the decision-
making process with regard to competition policy in individual countries.  Competition policies often
have a sensitive interface with various socio-economic issues, such as industrial development policiesand unemployment.  While pure technical cooperation does not readily facilitate domestic reform,
becoming more knowledgeable about the experiences of another Member country and being exposed
to its best practices through multilateral cooperation, a Member country may find an important insight
and have further incentive to pursue efforts for domestic reform.  This should be welcomed by the
competition authorities of all countries.  Needless to say, when promoting this type of cooperation, it
is important to constantly raise the standards of cooperation through continual technical cooperation.
IV. RELEVANCE OF THE WTO TO THE WORLD ECONOMY
15. Fortunately, the WTO has an appropriate foundation for engaging discussions on a possible
multilateral framework for competition policy.  Since July 1997, the WTO has already accumulated
more than three and a half years of experience of discussing over competition policies with a mandateon the analytical and educative tasks in the Working Group on Trade and Competition.  This
discussion has significantly contributed to enhancing the understanding of competition laws by
developing countries.  Furthermore, as we look at the existing WTO Agreements, we note that various
provisions against anti-competitive practices are already in place.  Discussion on this subject was
never regarded as premature at that time.  While different opinions remain at present concerning the
specific features and detailed contents of a framework on competition policy, we believe that
numerous countries have arrived at a broad-based consensus regarding the basic image or an outlineof a multilateral framework of cooperation.  As mentioned in the previous meeting of the Working
Group, it is the view of Japan that such a fr amework could comprise the following elements:
provision of technical cooperation; the sharing of information and experiences; international
cooperation in such areas as notification, cooperation and coordination; the adoption of core
principles with an appropriate flexibility clause; and various other matters which cannot be achievedother than through a multilateral agreement.
16. As the driving force in the pursuit of free trade, the WTO started in the classical field of tariff
reductions at the time of the GATT.  However, the scope of its activities has, over the years, come to
cover a much broader area, including, for example, trade in services, intellectual property, and
standards and certification.  By extending its jurisdiction to a broad range of activities, the WTO hasremarkably increased its relevance to the world economy.  There is no doubt that it will benefit the
future of the WTO and its Member countries to seriously consider a framework of cooperation to
address the issue of competition.  We must realize that competition policies can never be something
that a group of countries can impose upon the developing countries.  The most important point here isWT/WGTCP/W/167
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to open up an avenue where support and assistance can be found and organized for a number of
countries that are willing to come forward to adopt and enhance competition policies.  This approach
will enable the WTO to secure its relevancy and to contribute more effectively to the future world
economy.
17. The WTO Member countries are expected to find in competition policies a common point of
interest, which is to secure the full functioning of the market economy.  In the today's global
economy, this is a path that will promote greater international confidence in each country's.
V. CONCLUSION
18. At the General Council held on 8 May last year, the WTO Director-General reported on the
significance of capacity building in the least-developed countries through technical cooperation.  This
capacity building is deemed to be an essential measure for raising the confidence of the least
developed countries for the next round of WTO negotiations.  Its importance is widely recognizedamong WTO Members.  The question of whether to include the issue of competition in the next round
of multilateral negotiations lies beyond the mandate of this Working Group and awaits a political
decision.  However, as we progress with the tasks before the Working Group, we sincerely hope that
the WTO will be engaged in discussions that will contribute to developing in concrete terms an
effective framework for technical cooperation, as well as international cooperation, among membercountries in the field of competition policies.  We believe that the role to be played by the WTO will
naturally emerge through a process of free and frank discussions.  No doubt, there is an urgent need to
proceed with this initiative if the WTO is to maintain its relevance to the world economy during this
first decade of the 21st century.  The time for action is nigh.
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