RESTRICTEDWORLD TRADE
ORGANIZATIONWT/WGTCP/M/8
10 June 1999
(99-2334)
Working Group on the Interaction
between Trade and Competition Policy
REPORT ON THE MEETING OF 19-20 APRIL 1999
Note by the Secretariat
1. The eighth meeting of the Working Group on the Interaction between Trade and Competition
Policy took place on 19-20 April, 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 following Members introduced written contributions on this matter:  the European
Community and its member States (WT/WGTCP/W/115); Switzerland  (WT/WGTCP/W/117) and
Japan (WT/WGTCP/W/119 and WT/WGTCP/W/120).  In addition, the Group had before it a
background note by the Secretariat on the Fundamental WTO Principles of National Treatment, Most-
Favoured-Nation Treatment and Transparen cy (WT/WGTCP/W/114), and Korea; Canada ; Brazil ; the
United States; Norway ; Hong Kong, China ; India ; Malaysia ; Egypt ; Croatia ; the Dominican Republic ;
and Australia made oral comments.
3. The representative of the European Community and its member States , introducing document
WT/WGTCP/W/115, said that the main objective of the paper was to discuss the way in which the
principles of non-discrimination, including na tional treatment and most-favoured-nation (MFN)
treatment, and the principle of transparency, might be applied to competition policy.  In addition,
reference would be made to another dimension of this item, namely the question of what competition
policy might contribute to ensure that interna tional trade was carried out in an atmosphere of
transparency and non-discrimination (the vice versa aspect).  With regard to the note by the
Secretariat on the Fundamental WTO Principles of National Treatment, Most-Favoured-Nation
Treatment and Transparency, he noted that, as was pointed out in the note, nothing in the WTO made
it mandatory for a Member country to apply to its exports no a less favourable treatment than that it
applied to national sales.  It was important, however, to bear in mind one limitation on thisproposition as a matter of policy:  namely, the prohibition under Article XI of applying quantitative
restrictions to exports.  This was important because it demonstrated that the matter of non-
discrimination between domestic and export markets was not foreign to the WTO framework.
Second, he noted the Secretariat note had referred to Article XVII only with regard to the question of
MFN treatment.  With reference to national treatment,  the note did not refer to Article XVII but to the
provisions relating to state-owned enterprises.  He said that, in the view of his delegation, this was an
open issue in WTO - i.e., whether the non-discrimination principle referred to in Article XVII was
restricted to MFN treatment or, alternatively, also included national treatment.  With regard to the
general significance of the principles of non-discrimination, from the perspective of his delegation
they were undoubtedly basic to the WTO.  Although they had a series of objectives, in the context ofthe present discussion the main objective to which attention should be drawn was that of ensuring the
equality of competitive opportunities.  At the same time, it was important to note that the principles of
non-discrimination had been considered as applying across the board to both de jure  and de facto
discrimination.  Based on this observation, two comme nts were warranted.  First, it was absolutelyWT/WGTCP/M/8
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clear that non-discrimination in WTO did not imply, in any way, any obligation to produce results in
terms of market access.  This point was important because it showed that the multilateral trading
system, like competition policy, sought the avoidance of distortions in the competitive process.  It did
not seek to guarantee results in terms of access to the market.  Second, he suggested that there was an
intrinsic relationship between the objectives of competition policy and the WTO principles of non-discrimination.  In fact, competition policy was a necessary complement for the effective
implementation of the principles of non-discrimination.  Competition policy made it possible to deal
with discriminatory policies which denied foreign competitors equal competitive opportunities.  At
the same time, competition policy made it possible to prevent foreign competitors from acting in an
anti-competitive way in the national market.  There was, therefore, an intrinsic link between the two
policies.  Non-discrimination, in fact, was the very basis of competition policy.  This suggested that
the problems that might arise in this connection were not so much problems inherit in competitionpolicy as such, but rather problems that related to deficiencies or loopholes in domestic legislation or
in its implementation.  With regard to the principle of transparency, from the standpoint of the WTO
this was both a general principle and a principle that acquired special aspects when applied to specific
types of measures dealt with in the WTO framework.  In his delegation's paper, as well as in the note
by the Secretariat and in other contributions, reference had been made to three dimensions of thetransparency principle:  first, publication; second, uniform, impartial and reasonable administration of
measures that had an impact on trade; third, the rights that needed to be recognized under domestic
legislation for parties interested in legal proceedings that might lead to the adoption of measures that
had an impact on trade.  The right of parties to be  informed of the reasons for decisions and the right
of judicial review, in appropriate circumstances, was recognized at various levels and in differentagreements of the WTO.  Furthermore, it could readily be seen that the question of transparency also
had various dimensions with regard to the matter of competition policy.  These included transparency
with regard to legislation, regula tions and general criteria for the application of competition policy;
transparency with regard to procedures for the implementation of competition policy; and the matter
of the rights of private persons before administrative and legal bodies.  In terms of conclusions to bedrawn from the foregoing considerations, he suggested that a first conclusion was that the principles
of non-discrimination and transparency were common to trade and competition policy.  Furthermore,
these principles were closely intertwined.  Adherence to these principles in the framework of
competition policy contributed emphatically to the promotion of WTO goals.  His delegation believed
that, from a WTO standpoint, the major concern was that domestic competition legislation be able to
counter anti-competitive practices as they affected the interests of WTO Members and that such
legislation be applied in an efficient and non-discriminatory manner.  At the same time, transparency,both in the legal framework and in implementation procedures, was the best guarantee to prevent any
possible risk of discrimination.  Thus, in the opinion of his delegation, both principles were closely
linked together and were at the very core of the discussion as to how competition policy might
contribute to the promotion and achievement of the goals of the multilateral trading system.
4. He then turned to the question of specific elem ents of competition policy that were related to
the principles of transparency and non-discrimination, taking into account the experience of the
European Community and its member States, in this regard.  In the opinion of his delegation, it was
not the case that there was only a single model to apply the principles of transparency and non-
discrimination.  Rather, there were various ways and means, the relevance of which depended on the
legal framework and level of development of each country.  It was, therefore, important in his viewthat, rather than seeking a harmonization of domestic legislation, Members should seek to establish
common principles which would be favourable to high standards of non-discrimination and
transparency while at the same time not infringing on domestic legislation and frameworks.  A first
issue to be considered concerned the scope of application of competition legislation.  In order to
develop effective instruments to avoid discriminatory practices, it was important to be able to rely ona competition legislation that covered, at least, th e basic types of anti-competitive practices that had
an effect on international trade.  In this regard, an approach that was suggested by the experience of a
number of countries with experience in this area was that such legislation should cover, at a
minimum, anti-competitive horizontal, vertical restraints and abuses of a dominant position that had aWT/WGTCP/M/8
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negative impact on competition.  Another question that had been widely discussed in the Working
Group was that of whether special domestic legislation was needed regarding merger controls.  It
seemed that, under competition policy, there were many arguments in favour of the adoption of such
legislation.  But what was under discussion in the WTO was the interaction between competition
policy and international trade, not competition policy per se .  This suggested, though his delegation
was open-minded on the issue, that possibly the issue to be discussed was not so much whether
individual countries should have legislation to control mergers, but rather, where there was such
legislation, how it could be applied in a transparent and non-discriminatory manner and what the
requirements were in terms of international cooperation to guarantee this.  One important related
aspect was the scope to be given to the principle of transparency vis-à-vis  competition policy.  In his
delegation's view, it should not be strictly restricted to the legal and regulatory framework, since the
provisions of competition legislation were often very general.  Rather, measures should be consideredthat would make it possible to provide legal certainty and adequate information for producers and
consumers.  A third issue which had been discussed in the Working Group was the matter of
exclusions.  Clearly, exclusions could contribute to discriminatory practices and it was vital to restrict
such exclusions to a minimum, for the sake of both non-discrimination and transparency.  The
relationship between national regulation and competition policy had also been discussed in the Group,again with a view to avoiding broa d exceptions from the application of competition policy.  Fourthly,
there was the matter of export cartels which resulted in discrimination between the domestic and the
export market and, as such, could have a negative effect on other WTO Members.  His delegation
believed that the correct approach to dealing w ith this issue would be based on the principle of
cooperation, since there were jurisdictional limits to the solution of the problem solely through theapplication of competition legislation in the exporting country.  A fifth matter related to the
application of competition policy.  Here, several aspects were relevant.  First, undoubtedly it was
important to have not only a competition policy but also the means of applying it effectively.  This
was a matter that could be approached in a progressive manner.  It seemed to his delegation that the
progressive development of institutional capacities was vital here and that international cooperationwith developing countries could make a very important contribution in this respect.  Second, it was
important that competition authorities had sufficient power to investigate anti-competitive practices
and that the investigation procedures be characterised by as much transparency as possible while
ensuring the protection of confidential information.  An additional matter to be considered concerned
the rights of private parties.  Here, two facets should be highlighted.  On the one hand, the importance
of effective, transparent and non-discriminatory application of legislation giving the parties scope to
be heard in respect of actions taken by competition authorities.  This could include the possibility ofsubmitting petitions or complaints to administrative authorities but also the possibility of private
parties applying directly to the national courts.  He emphasized that he was not, in noting these
possibilities, suggesting that only one formula w ould work; rather, he recognized that there were
various possible solutions.  Finally, he referred to the guarantees that had to be accorded to the parties
in the course of investigation and decision-making procedures in the areas of anti-competition policy.In the United States, this was referred to as the requirement of due process.
5. The representative of the European Community and its member States then discussed the
possibility of developing common principles in the area of competition legislation and its
enforcement.  Three general considerations were relevant.  First, the purpose of developing common
principles was not to achieve harmonization but rather to establish a common framework of principlesthat would strengthen the effective enforcement of competition legislation, and therefore enable
competition policy to contribute to WTO objectives even more than it did at present.  Second, his
delegation believed that the principles of non-discrimination and transparency, as had also been
indicated in the contributions of Switzerland and other delegations, could serve as a basis for
developing specific adaptations to the area of competition policy.  Third, he believed that an approachon the basis of common principles and rules would provide appropriate flexibility; that is, on the one
hand, it would further the objectives of trade liberalization through the transparent and non-
discriminatory application of competition legislation, while on the other hand it would enable
Members to take into account differences in instit utional and legislative frameworks that existedWT/WGTCP/M/8
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within different countries as well as differences in levels of development.  His delegation's written
contribution also identified a number of further elements that could be adapted as common principles,
as a contribution to the Group's reflections on this matter.  The first referred to the adoption of
competition legislation which was of course, a commitment that could be achieved only gradually.
Second, it was important to consider the scope of competition policy in terms of anti-competitivepractices that had an impact on international trade.  In this regard, it would be helpful to enunciate
non-discriminatory principles as well as specific  transparency rules that would apply within the
framework of legislation and regulation.  It would be useful to discuss the question of exclusions, both
from the standpoint of transparency and from the standpoint of their gradual limitation, to the extent
that such exclusions affect international trade.  In this initial framework, it would be useful to consider
and clarify the difference between competition policy and regulation and to compare the roles of the
respective administering authorities in terms of competition advocacy.  A third series of topics to beaddressed referred to the administration and enforcement of competition law.  Here, there were
several topics that would benefit from further reflection.  The first concerned the establishment of a
competition authority with sufficient investigative powers as well as the guarantee of uniform,
impartial and non-discriminatory administration.  A guarantee of transparency in investigatory
procedures was very important as well as the provision of reasons for decisions taken and, finally,certain basic provisions in terms of remedies.  A third group of topics that merited further
consideration concerned the rights of parties.  Here, his delegation felt that there were a number of
issues to be considered, including access to competition authorities, guarantees of due process in the
conduct of the investigation and the adoption of decisions, the possibility of common standards for the
protection of confidential information and, an ack nowledgement of the role of the courts in the
implementation of competition policy.
6. Another representative of the European Community and its member States made a number of
comments on practical examples of discrimination that could be addressed through the principles that
had been outlined.  He said that it was essential, when a company decided to operate in a foreign
country, that its ability to compete not be affected by measures taken by the authorities of that countryor by anti-competitive behaviour on the part of firms that were already in the market.  WTO principles
would protect the company against discriminatory government measures.  Similarly, the right to
compete required protection against anti-competitive practices that had an impact on the basic
operation of the market.  This highlighted the complementarity of trade and competition policy.  He
noted, at the outset, that discrimination per se  was not prohibited by competition law.  Only abusive
discrimination was prohibited.  It would be difficult to imagine that discrimination would be
prohibited in principle when often it was merely a result of competitive negotiations.  In the law of theEuropean Community, for example, a company could, in principle, ask his supplier to offer a more
advantageous price (in effect, a discriminatory price).  The supplier could accept without falling into
the scope of abusive discrimination but the supplier would also be free to reject such an overture.
What was abusive and therefore prohibited under the law of the Community was discrimination that
resulted from an agreement or abuse of dominant position (i.e., discriminatory practices that affectedthe free working of the market).  He acknowledged that a number of countries participating in the
Working Group had rules that differed from those of the European Community.  For example, some
countries forbade discrimination even when there was no agreement or abuse of dominant position.
Other countries, sometimes the same countries, prohibited discrimination even when the market as a
whole was not affected, in other words when discrimination was unfair.  These different rules wereoften the result of local situations.  His delegation's contribution to the Group's meeting in March
1998 (WT/WGTCP/W/62) had already provided a number of examples of discriminatory practices
that affected trade.  Nonetheless, it was useful to consider some additional examples.  A first such
example was that of collective boycotts.  The competition laws of the European Community and its
member States had been applied to many such practices, a classic example being that of a companywhose access to the market was made difficult because it could not advertise in relevant professional
publications.  This would be the case if the editors of such publications, as a result of pressure from
existing companies, refused to accept advertising from  the new entrant into the market.  Details of this
example were contained in his delegation's contri bution to the meeting.  Another classic exampleWT/WGTCP/M/8
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would be a situation in which, to have access to a market, a firm must be a member of a professional
organization, and access to the organization is prohibited to certain companies, for example foreign
companies.  An example of such a case, where an association barred entry by two foreign companies,
was provided in his delegation's contribution to the meeting held in March 1998 (document
WT/WGTCP/W/62).  A third example related to the matter of discrimination which was a result of anabuse of a dominant position.  Such discrimination would be of concern because it involved a
company that was operating in a market where there was very little competition, and had a dominant
position, and it made use of that position to adopt behaviour that was designed to prevent the entry of
new competitors or to limit the development of existing companies.  In this regard, experience had
shown that such discrimination was often used in  newly liberalized sectors, for example in the
transportation sector.  In his delegation's contribu tion, there was an example of such discrimination
undertaken by a railroad company.  The prices charged by this company were higher when thetransport was to or from a foreign port.  Clearly, the foreign port was the victim of a disadvantage in
terms of competition vis-à-vis  other ports.  Discrimination was also quite common in airports; the
European Commission had had to intervene repeatedly in that sector.  For example, landing fees had
been calculated in a way so as to favour nationa l air transport companies.  Persons interested in
further details of these and other examples should consult his delegation's contributions to the currentmeeting and the meeting held in March 1998 (document WT/WGTCP/W/62).
7. The representative of Switzerland, introducing document WT/WGTCP/W/117, said that in a
previous contribution (WT/WGTCP/W/89), her delegation had provided a preliminary exposition of
concepts regarding the principles of national treatment under Article III of the GATT and
transparency under Article X of the GATT.  It had highlighted the differential applicability of theseprinciples in two situations, namely markets where there was a competition law that was effectively
enforced and markets where such a law did not exist or was not enforced.  The paper showed that, for
a number of substantive and procedural reasons, the applicability and relevance of these fundamental
principles in the latter type of market was likely to be limited.  In the former type of market, the paper
had shown that the relevance of WTO principles could be increased if they were adapted to thesubject-matter of competition law.  Her delegation's current contribution (WT/WGTCP/W/117)
extended and refined this initial analysis.  Specifically, it proposed possible adaptations of the
principles of national treatment and transparency with a view to enhancing their relevance in the field
of competition policy.  The proposals were based, in part, on relevant developments in the field of
intellectual property rights, including Articles 3 and 63 of the Agreement on Trade-Related Aspects of
Intellectual Property Rights.  The first part of her delegation's contribution, which was concerned with
national treatment, referred, once again, to both substantive and procedural elements.  It pointed outthat the initial question that needed to be addressed was the type of measure to which the principles
defined in Article III of the GATT applied.  Above all, these were government measures or actions by
private parties that could be attributed to the actions taken by governments.  The role of government
had to be clearly defined.  The recent Kodak-Fuji case had shown the difficulties of such an approach.
If one considered, however, the full range of anti-competitive practices, above all private practices, oreven the hybrid practices that were mentioned in the Symposium that had been organized by the
Secretariat on the preceding Saturday, the releva nce of Article III was very much  limited, possibly
non-existent.  These types of private measures were barriers to trade and it was important that WTO
Members be in a position to remedy them in the futu re.  The key element of national treatment, that is
the application of the principle of no-less-favourable treatment in relation to national products andservices should be accorded to competition and the treatment of anti-competitive practices as well.
Her delegation had provided the Group with a number of relevant examples in its contribution.  While
these were only preliminary examples, the Group c ould consider developing a principle that would
call for no-less-favourable treatment in terms of competition rights for citizens or firms of foreign
countries than that accorded to firms or nationals of the host country.  This could mean that thecompetition legislation of one country would also be applied to anti-competition behaviour that took
place outside its borders, on the basis of minimum st andards or  principles which would be agreed on
the basis of negotiations.  From a procedural standpoint, her delegation could also envisage the
granting of no-less-favourable treatment to a foreign product or company in the exercise of their rightsWT/WGTCP/M/8
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in legal or administrative proceedings in the field of competition law and policy.  Related discussions
had been held on a number of occasions in the OECD.  The national treatment principle would apply
in respect of any existing legislative provisions.  To give the principle more practical application in
this field, its application could be based on substant ive minimum standards or principles to be adopted
at the multilateral level.  In this regard, one could think in terms of substantive standards on matterssuch as the prohibition of hard-core cartels, the treatment of export cartels or an agreed set of factors
to be considered in the treatment of vertical market restraints.  She recognized that the Group was not
yet at this stage, and was aware of the challenge her proposal posed for the achievement of
substantive convergence in the area of competition law and policy.  At a minimum, the no-less-
favourable treatment principle would imply the adoption and implementation of effective national
competition laws.  It was understood that among WTO Member countries, more than seventy
countries already had such legislation and thirty counties were in the process of adopting relevantlegislation.  In parallel, the principle of transparency, which was addressed in the second part of her
delegation's contribution, could also be usefully adapted to the field of competition policy by, for
instance, requiring publication of decisions relating to anti-competitive practices such as cartels,
horizontal agreements, vertical restrictions, abuses of a dominant position and mergers.  In framing
any new provisions to enhance transparency, a key consideration would be to maintain appropriatesafeguards for the protection of confidential information whose disclosure would be prejudicial to the
interests of private companies.  The proposal that had been made by the representative of Brazil to
draw up codes and standards for the treatment of c onfidential information merited consideration.  In
conclusion, she wished to emphasize three points.  First, for the principles of national treatment and
transparency to be truly relevant to the field of competition law and policy, the principles would needto be adapted to the subject-matter and procedures contained therein.  Second, one of the essential
conditions for such an adaptation would be the adoption and implementation of effective legislation
dealing with anti-competitive practices, with a view to facilitating enhanced multilateral cooperation.
The idea would be to promote the adoption of competition laws that did not discriminate between
national and foreign companies, and to ensure transparency in the application of such laws.  Third, therelevance of these principles would be increased if they were applied in the context of an international
framework of minimum standards in the area of competition.  A simplistic application of these two
principles was no longer sufficient for systemic reasons of substantive and procedural law.  Her
delegation believed that a negotiation in this area should be seriously contemplated.  This was a far-
reaching but very broad proposal from which no specific subject would be excluded.  She looked
forward to hearing the initial response of Members of the Group.
8. The representative of Japan, introducing document WT/WGTCP/W/120, said that, through
the discussion in the Working Group, it had become clear that trade policy and competition policy had
not only complementary but also contradictory effects on each other.  The stage was now being
reached where consideration should be given to possible approaches to reduce the contradictory
effects and enhance the mutually complementary ef fects of these policies.  In this spirit, his
delegation's contribution considered how the basic principles of the WTO could be applied tocompetition policy in light of Japan's experience in this area.  The paper also considered implications
that the basic philosophy of competition policy had for WTO principles.  With regard to the
applicability of WTO principles to competition policy, application of the national treatment and most-
favoured-nation treatment principles to competition policy would mean that competition laws should
be applied and enforced in a non-discriminatory manner to all foreign and domestic firms, productsand services.  Any discrimination would be prohibited, not only that on de jure  basis but also that on a
de facto basis.  The fundamental concept of compet ition policy is respect for the market mechanism to
the maximum extent, to promote consumer interests and economic development.  Discriminatory
measures are recognized as a threat that undermines the market mechanism itself.  It should also be
noted, in this connection, that the national treatment principle should not be construed as a guaranteeof specific results.  This was not what was intended by the concept of the equality of competition
opportunities as this concept was debated in the Uruguay Round and established in relevant WTO
agreements.  Nor was it consistent with the philosophy of protecting competition rather than
individual competitors which was integral to competition policy.  With regard to the experience withWT/WGTCP/M/8
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this principle in Japan, he stressed that both national treatment and most-favoured-nation treatment
were fully guaranteed in the competition law and pol icy of Japan.  For example, section 45 of the
Anti-Monopoly Act of Japan, concerning the reporting of alleged violations of the Act, provided that
any person may, when he or she considered that a violation of the Act had occurred, report the
relevant facts to the Fair Trade Commission and ask for appropriate measures to be taken.Conversely, foreign firms and trade associations th at committed acts to restrain competition in the
Japanese market are in violation of the Anti-Monopoly Act.  He noted that the representative of
Switzerland had mentioned the Fuji/Kodak film case.  Although this case had been settled through the
dispute settlement understanding of the WTO and it was not his intention to reopen the discussion of
the case, since the case had been cited he wished to remind the Working Group of two points:  first,
no discrimination whatsoever had been found against any foreign film makers, including Kodak, in
the application of Japanese competition law.  Second, the said US film company (i.e., Kodak) hadnever filed a complaint with the Japan Fair Trade Commission (JFTC) before it filed complaints with
the United States trade authorities requesting unilateral measures under Section 301 of the US trade
legislation.  Having said this, he noted that, in many cases, foreign firms could be unfamiliar with the
Japanese system of competition law enforcement or have difficulty making use of the Anti-Monopoly
Act, mainly due to language problems.  In response, a specific Division had been created in the FairTrade Commission to provide consultation to foreign firms on any complaints.  Second, on the
principle of transparency, the application of the WTO principle on this matter to competition policy
would involve clarifying the requirements of national competition laws and the procedures that were
followed by competition authorities in responding to complaints relating to alleged violations.
Speaking again on the experience with this principle in Japan, the Anti-Monopoly Act clearly set outthe relevant definitions and conditions required to constitute violations, examination and hearing
procedures, measures to be taken in response to violations, and so on.  Concerning the enforcement of
the Act, the JFTC sought to clarify what kind of practices were deemed to violate the Act, through the
issuance of relevant Guidelines.  A wide range of Guidelines had been issued up to the present,
concerning distribution systems and other matters.  These Guidelines contributed to publicunderstanding of the Act and helped to deter violations.  The entire content of legal measures taken by
the JFTC in response to violations was made public, including the names of violators and the nature
and circumstances of violations.  Furthermore, m easures taken by the JFTC to protect competition
were published on a periodic basis.  Enforcement results were also published annually in order to
increase transparency with regard to enforcement activities.  With regard to exceptions to and
exemptions from the Anti-Monopoly Act, the scope of exceptions and exemptions was clearly
published and repeatedly reviewed so that they were kept to the necessary minimum.  Concerning thematter of "administrative guidance", since this ofte n lacked transparency and reduced foreseeability, it
could be an entry barrier for foreign firms.  In response to this problem, Japan had enacted in 1993 the
Administrative Procedures Act.  Following this legislation, in 1994, the JFTC had clarified its
interpretation concerning administrative guidance under the Anti-Monopoly Act.
9. On the relevance of competition policy to WTO principles, he said that competition laws were
based on a philosophy of protecting and promoting competition to enable the market mechanism to
fully function.  Concerning implications for WTO competition disciplines, the competition-oriented
principle was a concept that placed maximum emphasis on the market mechanism.  This concept was
of direct relevance to the WTO, whose primary objective was the optimal use of resources on a global
level through the reduction of tariffs and other trade barriers.  Considering the competition-orientedprinciple in the context of WTO competition discipli nes, four implications could be identified.  The
first implication was that the basic philosophy of a pro-active response to anti-competitive practices
would be assured.  The second implication was to extend the prevention of anti-competitive practice
across all sectors.  The third implication was to minimize sectors or areas exempted from national
competition laws.  The fourth implication was to introduce the competition policy perspective intogovernment regulations and industries.  Concerning the issues requiring further discussion in the
Working Group, two such issues were identified.  First, there was the question of which common
systemic and enforcement elements needed to be established by Member countries in order to ensure
national treatment, most-favoured-nation treatment and transparency in their competition policies.WT/WGTCP/M/8
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Second, what kinds of WTO principles and provisions should be examined from the perspective of the
basic philosophy of competition policy?
10. Continuing, the representative of Japan, introducing a second paper submitted by his
delegation (WT/WGTCP/W/119), said that, in this submission, Japan had set out possible elements of
a WTO framework on competition.  This was related to both the first and the third elements of theGroup's work programme for 1999.  In introducing this paper, his delegation intended solely to
facilitate the discussion of this matter by Member countries and by no means to commit itself to future
work in the WTO.  He noted that, as a result of globalization, markets were increasingly becoming
multinational if not global in scope.  As a result, there were an increasing number of occasions where
national markets were affected by anti-competitive practices that were international in nature or
originated in a foreign country.  The reduction of border measures had also highlighted the problem of
non-border barriers as a remaining obstacle to trade.  Anti-competitive practices that affectedinternational trade could be seen as one such obstacle.  Three possible approaches to deal with these
practices could be considered.  First, Members could attempt to eliminate these practices by making
use of national trade and competition legislation to the maximum extent.  This could be referred to as
the unilateral approach.  The second possible approach was the bilateral approach, which would
involve greater use of cooperation arrangements.  Both the unilateral and bilateral approaches hadtheir own problems.  In the case of the unilateral approach, this often resulted in jurisdictional
disputes or frictions as a result of  the unilateral enforcement of competition law by one state.  The
bilateral approach also had significant institutional constraints.  Bilateral arrangements tended to be
established only between countries with plenty of experience in competition policy.  In the light of
these considerations, his delegation felt that the Group should now consider the possibility ofintroducing a further approach, namely a multilateral framework on competition.  If one looked at the
history of the drafting of the so-called Havana Charter almost 50 years ago, there were, at that time,
only a few countries which had competition laws.  Today, however, more than 70 countries had
competition laws and many others were in the process of developing such laws.  This had helped to
establish a common background among WTO Members in this area, which would facilitate thediscussion of a more effective  multilateral framework on competition.  His delegation's paper set out
a number of basic principles and specific elements that could be incorporated in such an agreement.
In addition to these principles and provisions, enforcement procedures should be stipulated.  The
framework should also include provisions on coop eration and dispute settlement mechanisms.  He
suggested that the matter of the multilateral framework on competition be further discussed at the
Group's meeting in June.
11. The representative of Korea said that the paper by the European Community and its member
States, in particular, had identified in a well-structured manner the key elements of competition law
and policy that were relevant to the principles of  non-discrimination and transparency.  His delegation
agreed with the European Community and its member States that the adoption of a comprehensive
competition law with a minimum of exclusions from its application, an effective enforcement
structure and adherence to due process in enforcement proceedings were essential for the applicationof these fundamental principles.  He also agreed with Japan that the competition-orientated principle,
which was a concept that placed maximum emphasis on the market mechanism, also fitted the
primary objectives of the WTO.  Korea also believed that the principle of national treatment should
not be construed as a guarantee of specific competitive results.  This point was very important.  Korea
was also of the view that the rapid process of globalization and the resulting need for greaterharmonization of competition laws and policies between countries warranted serious discussions on
establishing a multilateral framework on competition.  Competition policy concerns such as economic
efficiency and consumer welfare had already become  concerns of trade policy, too.  To borrow the
terminology that had been used in the Symposium presented prior to the meeting, the two policies
were "isomorphic" (mutually reinforcing) although competition policy was basically consumer-drivenwhile trade policy had a producer bias.  However, given the complexity of the issue and the
difficulties of developing countries, it would not be appropriate to be too ambitious in efforts to work
out multilateral rules on competition.  The goal should be realistic; in this regard, full recognition ofWT/WGTCP/M/8
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the development dimension and differences in each country's legal and institutional frameworks
should be a starting point of work in this area.  Korea agreed that transitional periods together with
flexibility in the rules should be an integral pa rt of any multilateral framework on competition within
the WTO.  Another important aspect that should be reflected in future work in this area was that the
interaction of trade and competition policy was bi-directional.  Therefore, due consideration shouldalso be given to the matter of how competition law and policy could contribute to non-discriminatory
and transparent international trade.  In this regard, his delegation supported the suggestions made by
Japan in the concluding part of its paper WT/WGTCP/W/120 as items for discussions in the Working
Group.
12. The representative of Canada said that her country was currently engaged in an extensive
process of consultations with stakeholders on a wide range of WTO issues, in the time-frame leading
up to the WTO Ministerial in Seattle later in the year.  The competition policy agenda was a centralelement of those consultations, including explorin g with Canadians their views on possible elements
of and approaches to a multilateral framework on competition policy.  The suggestion had been made
to stakeholders that the WTO may be the most appropriate forum for a comprehensive discussion of
competition issues in a multilateral framework.  Views were being sought on the merits of exploring
inclusion, within such a framework, of  principles  such as transparency and non-discrimination in the
application of competition policy.  Core elements of sound competition policy including due process
in enforcement, approaches to enhancing cooperation among Members as well as the applicability of
dispute settlement to competition policy and the implications for domestic enforcement processes
might also be considered for inclusion in the fr amework.  The view was being put forward that a
multilateral agreement on competition policy could help to discipline anti-competitive actions thathave an international dimension and solidify the gains from trade liberalization, the fostering and
facilitating of cooperation and communication among Members on competition policy matters and the
promotion of greater certainty for firms operating in foreign markets.  Canada believed that such a
multilateral agreement on competition would help to strengthen markets and foster a more level
playing field for all competitors.  But that having been said, the process of domestic consultations wasone that was taken very seriously.  There were ma ny elements that would require extensive discussion
and development.  These were complex issues, and it was important to ensure that all the necessary
homework was undertaken and all options explored, so as to ensure that the most appropriate
instruments were advanced to serve the interests of both producers and consumers.  Her delegation
believed that several elements of the TRIPS Agreement were relevant to a possible multilateral
agreement on competition policy.
13. On the issue of transparency, Canada shared the view that the transparent and predictable
application of agreed competition principles and disciplines fostered confidence in an economy and
increased its attractiveness as an investment location.  Transparency was essential if players in the
market were to be confident in the decisions and decision-making processes of competition agencies.
Transparency elements should be a key consideration in an international agreement on competition
policy.  In this connection, she posed a number of questions that might usefully be considered as tohow rules on transparency might be incorporated wi thin an international agreement.  First, what
would be the appropriate scope of coverage for transparency provisions?  For example, a basic
transparency commitment might provide that parties ensure that all measures adopted or maintained
be made public, including laws, regulations, procedures and administrative rulings of general
application, and that there be prompt notificati on of any modification to those laws, including, if
possible, advance notification.  Beyond these basic aspects, Members might wish to consider whether
transparency provisions should also include discretionary domestic decisions in relation to these
regulations and procedures.   Another relevant question was to what extent should transparency
provisions extend to domestic enforcement policy?  How extensive should provisions be as to
requirements for publication of decisions following formal investigations, with explanations for the
decisions taken?  Various Members had stressed the importance of ensuring appropriate safeguards
for the protection of confidential information.  Wh at provisions should be incorporated in any
prospective multilateral agreement to ensure this?  In this regard, the TRIPS Agreement might provideWT/WGTCP/M/8
Page 10
some guidance.  The provisions of this agreement stated that Members were not required to disclose
confidential information which would impede law en forcement or otherwise be contrary to the public
interest or would prejudice the legitimate commercial interests of particular enterprises, public or
private.
14. With regard to the principles of non-discrimination, these were fundamental to the WTO.
The national treatment principle of Article III of the GATT had been refined in various other
agreements to take into account the particular issues in question.  The basic question for consideration
was how might the principles of national treatment and non-discrimination be incorporated in a
framework agreement on competition policy.  In this context, it was desirable to ensure that national
treatment and non-discrimination were applicable in all respects.  In the investment provisions of the
North American Free Trade Agreement, the concept of national treatment had been adopted so as to
capture the operations of international business in  all their aspects.  These provisions implied no
discrimination between foreign and domestic firms, products, services or investments.  Similar
provisions were accorded with respect to most-favoured-nation treatment.  Members might wish to
consider, in their discussions, the extent to which this very broad concept of international business
might be relevant to competition policy.  Members might also wish to consider the compatibility of
the WTO principles of national treatment and non-discrimination with the enforcement of competitionlaw and policy.  In this connection, it would be worth exploring the role of rights of private action in
guaranteeing the WTO principles of national treatment and non-discrimination.  Finally, most
competition laws had certain exemptions and excepti ons.  A key issue for consideration would be the
implications of sectoral or other exemptions for national treatment and non-discrimination.  Canada
believed that all of these areas merited consideration as the Group advanced its understanding of theinteraction of WTO concepts and the international dimensions of competition policy.
15. The representative of Brazil noted that various other delegations, in addition to the
Secretariat, had made useful contributions to this agenda item.  This, by itself, was a contribution to a
competition policy in the developing world in the sense that it facilitated reflection on important
policy issues.  He felt confident that, for many competition agencies in the developing world, it wasimportant to have this discussion.  The WTO principles that had been discussed, namely national
treatment, most-favoured-nation treatment and transparency, were necessary but not sufficient as the
core principles of a possible agreement on competitio n.  It would not be possible to conceive of a
good national competition policy without much attention being paid to them.  In this sense,  the strict
application of those principles would strengthen each country's national competition policy.  Those
principles had, however, to be complemented and adapted.  In terms of the adaptation of those
principles to competition policy, he wished to stress four aspects.  First, with regard to the application
of the principles to developing countries, it was important to take into consideration their different
economic realities and degrees of economic development.  This was relevant, for example, to the
question of the breadth of exemptions that would be  appropriate in particular economies.  The second
aspect was the different cultural conditions that prevailed in different countries.  As he had
emphasized in his presentation to the Symposium which had preceded the meeting, theimplementation of competition policy involved far- reaching social and economic changes.  In this
regard, the diversity of cultural conditions had to be taken into account.  The third aspect had to do
with differences in resource endowments in the sens e that certain applications of competition policy
required more human and material resources and, again, differences in levels of development had to
be taken into account.  The fourth aspect concerned the different degrees of institutional developmentthat were present in Member countries.  In particular, it had to be recognized that the more than 80
countries that had been referred to in the meeting as having, or being in the process of introducing,
competition laws were at many different stages in their institutional development.  All these aspects
needed to be considered when the fundamental WTO principles of national treatment and most-
favoured-nation treatment were adapted to competition policy.
16. The principle of transparency was also of great importance for competition policy.
Experiments were under way in various countries on how to enhance transparency, and there wasWT/WGTCP/M/8
Page 11
much to be gained by providing opportunities for bench-marking in the sense of allowing countries to
observe and learn from the experiences of other countries and thereby to improve the transparency of
their own operations.  For instance, Brazil had had good experience not only with the publication of
its regulations but also with discussions that had been held with private parties and the public in
general regarding those regulations through the internet.  Reflecting this experience, he felt that themost important role that could be played by the WTO and other multilateral organizations was the
educational role.  In terms of the kinds of activities to which the transparency principle would apply, a
concrete proposal that merited consideration would be a system of voluntary notification for countries
regarding national legislation and regulations.  A system of voluntary country reviews could also be
very useful especially for benchmarking and for sharing different national experiences.  It would also
help to demonstrate the advantages of competition, and show how good competition laws and good
enforcement of such laws can help countries to achieve improvements in economic welfare.  Perhaps,the publication of world reports on competition on a regular basis would also be a good idea and a
good activity that would fit into this concern with the central educational role that the WTO has to
have in this area.
17. The representative of the United States indicated that she had fundamental questions
regarding the other delegations' contributions.  It seemed that the representatives of the European
Community and its member States were asserting that the very essence of competition law was non-
discrimination and that they had never seen a comp etition law that was not non-discriminatory and not
transparent.  Given this, it was unclear why the discussion on this item was necessary and where it
was leading.  She also did not understand the basis for the Community's suggestion that, for mergers –
suddenly the delegation was now talking about the el ements of a competition law - pre-notification
was not required, and countries could address this later on.  With reference to the Boeing/McDonnell
Douglas case, there would have been little recourse  for other countries if they had simply let the
merger pass and then decided, years later, to take a look at it.  They would be faced with a
fait accompli , and she could not imagine a European or other national court being in a position to
"unscramble the egg".  If developing countries were to participate more effectively in decisionsregarding important competition policy issues, they would need the tools to make their concerns
known at the right time, before the decisions were taken.  But even more fundamentally, she felt it
was unclear which laws countries were being encouraged to enact.  In this regard, she suggested, the
representatives of the European Community and its member States, Japan and Korea had all stated
that the Group should be concerned with anti-competitive practices as they affected trade.  Yet in her
view, it was perhaps most important for developing countries to have a vigorous competition law to
address anti-competitive practices in their domestic markets, since other countries would not be in aposition to help them in this respect.  If firms in  developing country markets were required to operate
in competitive conditions, they would become better able to compete worldwide.  With regard to the
suggestion by the representative of the European Community and its member States that the matter of
export cartels could be addressed through expanded international cooperation, the delegation of Korea
had suggested in a paper to be presented later in the meeting (document WT/WGTCP/W/124) that, ina situation where they were affected by an export cartel originating in a foreign jurisdiction, they did
not believe that, if they referred the matter to the competition authority in that jurisdiction, that it
would be vigorously pursued, since there would be no impact on the market of the home jurisdiction.
How did the European Community and its member States reconcile their suggestion with Korea's
point?  Finally, she did not understand what was meant in the conclusion of the paper by Japan whenthe question was posed as to what common systemic and enforcement elements would need to be
established by Member countries in order to ensure national treatment, most-favoured-nation
treatment and transparency in their competition policies.  On the other hand, she could understand
Brazil's suggestion that measures such as voluntary notification of national laws so that other
governments, businesses and consumers could better  understand them and voluntary country reviews
could contribute to more effective application of competition policy, and thereby to promoting trade
and open markets.  The other suggestions that had been put forward and their rationales were
fundamentally unclear.WT/WGTCP/M/8
Page 12
18. The representative of Norway said that the basic WTO principles of national treatment, most-
favoured-nation treatment and transparency, to a large extent, also underpinned competition policies,
although they might not be explicitly reflected in all the relevant national legislations.  National
treatment and MFN principles implied that imported goods would not be discriminated against in
relation to locally-produced goods.  These two principles fitted very well with competition policies,since these policies – and this included the Norwegian competition legislation as well –based
themselves on the premise that the nationality of the actors in a market was irrelevant to the creation
and maintenance of conditions or free competition in the market.  The principle of transparency,
which meant that governments were required to disclose their policies and practices publicly, was also
relevant since in the competition field, it was essential for both national and foreign market agents to
be well-informed of competition disciplines.  It was equally important that national and international
frameworks for rules were stable and predictable.  The trading system had acquired solid experiencein handling information arising from Members' fulfilment of their transparency obligations under
various agreements, especially in the form of notifications and the follow-up of notifications in
various WTO fora.  In the light of this, his delegation also took the view that the principles of non-
discrimination and transparency could form part of a possible WTO multilateral discipline in the area
of competition policy.
19. The representative of Hong Kong, China said  that he shared some of the inability to
understand some of the points that had been made that had been mentioned by the United States.  In
particular, he did not understand why the question of the merits or otherwise of having multilateral
rules on competition laws would be raised under the present agenda item.  As he read it, the subject
was the relevance of the three fundamental WTO principles of national treatment, most-favoured-nation treatment and transparency to competition policy and vice versa.  He had two comments on the
note by the Secretariat:  first, he wished to put down a marker that his delegation would also
appreciate the Secretariat's preparing a similar contribution on the "vice versa" aspect, for the Group's
consideration at its next meeting.  Another comm ent was that an important exception to the two non-
discrimination principles had been omitted, namely Article VI of the GATT.  In regard to the proposalby the European Community and its member States as well as certain other delegations for a
multilateral framework on competition policy, he said that it seemed that these delegations were
suggesting that it would somehow be a mandatory  requirement for each and every WTO Member to
introduce a comprehensive competition law.  His delegation found that this was a little far-fetched.  It
was premature to talk about such a proposal at this juncture, especially in this Working Group.  In this
regard, he offered three counter-arguments.  First, the paper by the European Community and its
member States seemed to suggest that having a comprehensive competition law was the only way toenact competition principles and to have a competitive market.  Certainly, this was not the case in
reality.  In this regard, he referred to the example of two WTO Members, Hong Kong, China and
Singapore.  Neither of these countries had a comprehensive competition law.  But these two WTO
Members had been consistently regarded, for years, as being among the most, or perhaps the most,
competitive markets in the world.  Second, since the proposal for a requirement for a comprehensivecompetition law did not take into account the diversity of legal systems and the state of development
of individual WTO Members, it did not take into  account whether and how individual WTO Members
could exercise their own discretion, in fact exerci se their sovereign right to decide how best to
promote competition principles.  Third, the culture of the WTO was not as had been proposed by the
European Community and its member States.  In the WTO, the requirement was always for individualMembers to ensure that their laws, regulations and restrictive procedures, etc., were in conformity
with the rights and obligations in the relevant Agreements.  Subject to this, it was up to individual
Members to see whether and how they should put the rights and obligations into effect in their own
domestic legislative or administrative processes.  Some of the Agreements did not require any
legislative means whatsoever.  For example, the Anti-Dumping Agreement prescribed the principlesand steps and the requirements for individual Me mbers who had or who wished to introduce anti-
dumping legislation, but it did not require th at individual Members introduce anti-dumping
legislation.  Hong Kong, China did not have an y anti-dumping legislation. The delegation of Hong
Kong, China could envision three alternative approaches to a mandatory requirement for competitionWT/WGTCP/M/8
Page 13
legislation.  The first one was a sectoral approach.  He failed to understand why a sectoral approach
could not work equally as well as a comprehensive competition law approach.  Hong Kong, China
had adopted sectoral approaches in its legislation de aling with competition in individual sectors – e.g.,
in telecommunications, in broadcasting, and in many other sectors.  The second alternative was – if he
could put it as a marker here, perhaps prematur e again but just for educational purposes - a
multilateral framework that did not specify or require individual Members to introduce any
comprehensive competition law, it would prescribe principles to be followed if a Member wanted to
introduce competition law.  If a Member did not want to have a competition law, then it could just
ignore the multilateral framework.  The third alternative could be like Annex 4 to the Marrakesh
Agreement, it would be a plurilateral framework, like in government procurement.  It had been noted
that, so far, only about 70 WTO Members had a competition law.  There was no way that the other 64
or so Members could at this moment talk about a comprehensive, multilateral framework or anagreement on competition law.  In any case, before  talking about a multilateral framework agreement
on competition law, it was important to give further consideration to issues concerning the interaction
between trade and competition policy.
20. The representative of India offered preliminary comments, reserving the right to come back to
this issue that had been raised in future meetings.  He felt that the submission of the European
Community and its member States had reached premature conclusions.  It was his feeling that that
delegation wanted to conclude ab initio  that there was a necessity to have a multilateral framework of
rules on competition within the WTO.  This, in India's view, was inappropriate and posed a danger of
jumping the gun, by looking at certain conclusions without yet having arrived at them.  The Group
was in an exploratory and educative process and was still a long way off from the point where it couldbe in a position to gauge the need for multilateral rules.  It would be unfortunate to pre-empt the
discussions, because it was his delegation's firm view that it was only the openness of the discussions
to date that had encouraged fresh views to emerge.  For instance, in the Symposium that had been
held prior to the meeting, delegates had heard, perhaps for the first time, the manner in which the
principle of non-violation could impact on the issu es.  Similarly, the development dimension was also
only now gradually percolating into the discussions.  It would indeed be unfortunate if this process
were abruptly halted by prematurely talking of the development of multilateral rules as a conclusion
to this educative and exploratory process.
21. With regard to more specific comments on the points made in the paper by the European
Community and its member States, the paper took the view that non-discrimination – including both
MFN and national treatment – was the cornerstone of the multilateral trading system.  His delegation
entirely agreed.  It also agreed that there was a close connection between the WTO principle of non-discrimination and the basic objectives of competition.  However, it did not think that an effective
competition law regime was the only tool needed to combat anti-competitive practices.  In fact, there
were a number of existing WTO provisions, including those relating to anti-dumping, which similarly
denied to foreign producers the effective equality of opportunities, thereby undermining WTO
market-opening commitments.  Thus, while he agreed that it would be important to examine howdomestic competition policy regimes furthered the objectives of non-discrimination and national
treatment, the Group must at the same time also closely examine those trade instruments foreclosed
access to markets and thereby denied effective equality of competitive opportunities.  Section IV of
the paper by the European Community and its member States contained one observation to which
India did not subscribe to at all.  It is India's view  that, while an endeavour must be made to encourage
Members to ensure that they are committed to gradually introduce a comprehensive competition law
and an effective national enforcement structure, based on principles of transparency and non-
discrimination, it was not at all necessary to have a basic framework of multilateral rules to ensure
that the objectives of WTO were achieved.  In addition, the paper sought to drive home the point that
a WTO framework on competition would help developing countries to derive the full benefits fromenhanced international cooperation.  In fact, it has posed two specific questions, namely:  (a) how to
ensure that developing countries could derive maximum benefits from the modalities of international
cooperation, including sharing experiences, exchanges of non-confidential information, consultationsWT/WGTCP/M/8
Page 14
etc.; and (b) how to reinforce domestic capacity relating to the administration and enforcement of
competition law.  While he agreed that these were important issues, he felt that one did not need to
have multilateral rules to address them.  India, ther efore, rejected the hypothesis that these issues, so
critical from the development dimension perspective, could be addressed by developing multilateral
rules on trade and competition.  In fact, it strongly felt that these issues could, and should, be a prioritaken up as part of the future work of the Working Group.
22. Moreover, while his delegation appreciated the thought in the paper by the European
Community and its member States that transitional periods, together with flexibility in the rules.
should be an integral part of any multilateral framework on competition in the WTO,  it did not think
that this would allay the concerns that most developing countries had.  It should not be forgotten that,
in a scenario where a very large number of countries did not, as yet, have national competition laws,
to even talk of core principles or common objectives for a possible multilateral framework wasmeaningless.  Commenting briefly on the paper provided by Japan (WT/WGTCP/W/120), he
mentioned that India agreed with the point that had been made in the paper that trade and competition
policy had not only complementary but also contradictory effects on each other, and that due
consideration must be given to reducing the contradictory effects.  He, therefore, supported the
suggestion made by Japan in its paper that the Working Group should try and examine, in its futurework, possible elements which could ensure that the principles of national treatment and most-
favoured-nation treatment were adequately reflected in national legislation.  However, this would
have to be complemented by simultaneously examining, as stated by his delegation previously, those
trade instruments which had an anti-competitive connotation.  As far as the other Japanese paper
(WT/WGTCP/W/119) was concerned, he had already expressed his view on the development ofmultilateral rules.  In fact, the Japanese paper was well balanced because it also mentioned some of
the relevant concerns, namely that:  (i) only 70 countries had competition laws; (ii) a number of
developing countries were still considering the possibility of enacting competition laws; (iii) even
amongst countries having such legislation, there was a high degree of disparity in the scope and level
of national competition regimes and this would obviously reduce room for consensus on any possiblemultilateral disciplines; and (iv) a multilateral framework on competition in the WTO could put
constraints on national sovereignty and create difficulties in achieving the necessary balance between
competition policy and other economic policies and might also restrict the powers of competition
authorities.  Lest he leave the wrong impression, he stated that he shared, in its entirety, the
importance that those Members who had submitted papers had placed on some of the fundamental
WTO principles and the need to ensure that these formed an integral part of national competition
policy regimes.  However, he felt that the issue need ed to be examined further.  He agreed with Brazil
that, even in the development of national competition policy regimes, Members needed to consider:
(i) the different levels of development; (ii) the different cultural context in which regimes would be
implemented; (iii) the difference in the availability of resources for this purpose; and (iv) the different
levels of institutional development.  It was clear that the issues were more complex and less easily
amenable to a multilateral solution than they had been made out to be.  India, therefore, lookedforward to further in-depth discussions, including  on the Secretariat paper, at the next meeting.
23. The representative of Malaysia, noting that the Group was still in an educative mode, posed a
question as to whether, if the Group was to consider whether there was a need for WTO principles on
competition policy, would it not also be appropriate to examine all of the existing WTO agreements to
evaluate their consistency with competition and competitiveness?  In his view, there were manyprovisions which were clearly anti-competitive.  For example, was the Group willing to look at and
call for an immediate elimination of export subsidies?  Before one could even talk about inscribing or
having some multilateral rules on competition, it was important to address provisions such these,
including also the anti-dumping provisions, which were clearly anti-competitive and/or not as
transparent as they should be.  A sign of willingness to address these matters would go a long way toencourage his delegation to look at the matter of WTO rules on competition.  At the same time, he
also wished to state that, if the WTO were to adopt such rules, simply providing developing countries
with a longer time-frame would not be sufficient.  He agreed with the representative of Brazil thatWT/WGTCP/M/8
Page 15
social/cultural aspects would have to be considered, as well.  There was a serious need for S&D
treatment.  In the light of this, his delegation remained convinced that the best approach would be to
encourage the implementation of domestic legislation – with the domestic legislators of each country
to come up with their own domestic competition law, the elements of which should be completely
within their purview and discretion.  It was not for the WTO to decide and he had not seen anyconvincing arguments for multilateral rules on competition law.
24. The representative of the United States, noting that the US was not a demandeur on this
matter, said that much of what was in the papers from the European Community and its member
States, Japan, Korea and the Canadian statement – certainly on the fundamental WTO principles –
were points with which the US was in agreement, at least in terms of their relevance to antitrust
enforcement.  However, it seemed to him, from the standpoint of antitrust enforcement, that if a high
degree of transparency was achieved, this would make it very difficult for a competition agency todiscriminate in any consistent way over any length of time, since, if it did, this would become publicly
known, and it would not be a sustainable position.  In this context, he understood the point that was
being made by the representative of Brazil regarding the overriding importance of transparency.  He
also recalled that as recently as five years ago, it had been difficult for the US competition agencies to
obtain basic information on competition law and policy in many countries.  However, the internet hadhad a stunning effect in enhancing transparency.  While it was no doubt true the case that Brazil was a
pioneer in this area, many other countries had also implemented websites that had proved to be
extremely useful in enhancing the transparency of national competition laws, enforcement policies
and procedures.  He felt that the proliferation of websites had had an enormously positive effect not
only in enhancing transparency but also in making it more difficult for agencies to engage indiscriminatory practices.  This was an important consideration in assessing any perceived need for
competition rules.
25. The representative of Egypt said that he shared some of the difficulties that the representative
of the United States had indicated she had encountered in attempting to understand the debate.  When
the report of the Working Group had been approved in 1998, the hope had been expressed that therewould be a more focused discussion, though of course everyone had his own interpretation of what
focus meant.  He had found that the discussions had been confusing, and were far from being focused.
He believed that, if the opportunity had been available to continue discussions on the basis of the
Checklist of Issues that had guided the previous  work of the Group, the meeting would have been
much more fruitful.  He noted that, though he had found the recent Symposium to be useful and
constructive, he had found the list of speakers to be unbalanced:  ten out of the fourteen speakers were
from the Quad, including five from the United States.  Of course, he recognized that the Quadcountries had the most experience in this area.  Nonetheless, it would have been beneficial to have had
more diversified views.  On the matter of rules in the WTO, it was important to note, before broaching
this subject, that the Group had not reached a common understanding of what the role of the WTO
should be in the area of competition, if any.  Moreover, it was clear that those who were arguing for
rules were addressing the issue not necessarily from the perspective of trade and competition, butfrom a much wider perspective, that of competition issues per se , and with a prejudice that WTO
Members should have national laws in relation to competition.  His delegation had some difficulties
with this.  It believed that, if the issue of competition was to be addressed, it had to be done in a
balanced way considering both rules at the national level and, if necessary, rules at the international
level.  The issue required much further consideration before the Group could reach the conclusionsthat had been reached by the European Community.  He also believed that the presentations that had
been made by Brazil, including in past meetings of the Working Group and in the recent Symposium,
about adapting competition policy in accordance with different levels of development, were quite
important.
26. The observer from Croatia said that it had often been said that private barriers to market
access were not amenable to being handled within the rules of the GATT.  In this regard, the Kodak-
Fuji case had been mentioned several times during the meeting.  In that context, she wished to drawWT/WGTCP/M/8
Page 16
attention to Articles VIII and IX of the GATS which addressed monopolies and restrictive business
practices in the services sector.  She noted that the eleven services sectors that were addressed by the
GATS included distribution services.  Moreover, according to official explanations of the Agreement,
the distribution services that were within the regime of the GATS included agency agreements,
distribution agreements and franchising agreements.  Also, she had had occasion to consider thismatter in the course of the negotiating process since 1993 regarding the accession of Croatia to
GATT.  It was clear that the definition of distribution included distribution of goods.  And in all
distribution services, it was impossible to separate goods from services since they were highly
combined and made a package.  Thus, Articles XIII and IX of the GATS, might be able to address
private barriers to the market that could not be handled, at least not with enough efficiency, within the
GATT by itself.
27. The representative of the Dominican Republic said that the impact of the proposal made by
the European Community and its member States should be examined with reference to the the
services sector, given the limited coverage of the GATS with regard to competition and the idea of
limited graduation as had been floated this morning by the Community representative.  This approach
was close to that which had been followed in the Telecom negotiations, i.e., a deadline had been set
and gradual implementation provided for with respect to developing countries.
28. The representative of the European Community and its member States emphasized that it was
not the intention of the Community and its member States to use the Working Group, which was
carrying out valuable analytical work, to try to reach agreement on the desirability of a multilateral
framework.  Nevertheless, he felt that there was a general interest on the part of most delegations in
having those delegations which had views on the future role of competition policy in the WTO to beas clear and as transparent as possible, in terms of sharing the type of ideas that were being
considered.  The forum for discussing what could be negotiated in the coming round.  The forum for
this was the General Council.  The European Community and its member States had always said that
it was seeking a Round that was comprehensive and balanced, and incorporated the interests of all
WTO Members.  With regard to some of the more specific questions and comments concerning theideas that his delegation had floated, he was struck by the apparent puzzlement on the part of the first
delegate of the United States as to why the Group was talking about transparency and non-
discrimination if all Members felt that their competition laws were fully in conformity with
transparency and non-discrimination.  In that context, he had appreciated the comment of the second
delegate of the United States, who had noted that possibly the best guarantee that a competition law
would be applied in a non-discriminatory manner was precisely transparency.  This was a point which
he had tried to emphasize in his presentation.  Everyone who had a competition law was engaged in aprocess of trying to ensure that their framework was based on the highest standards of transparency.
He felt that no Member would assert that it had reached a perfect or ideal solution.  In this context,
there was a lot of merit in enshrining basic principles of transparency in a multilateral agreement; this
would only reinforce the effectiveness of competition law, and would be of particular value for the
multilateral trading system, since many of the concerns which had been expressed relating to theapplication of competition law in reality had to do with the transparency of the process.  The more
that countries were committed to working on the basis of principles of transparency, the fewer
concerns there would be of a substantive nature.  As had been said, competition law certainly was
intended to be non-discriminatory, but competition law, like any law, was subject to political
processes and pressures and therefore affirming clearly the principle of non-discrimination wassomething that would enhance the effectiveness of competition policy and reduce frictions in
international trading system.
29. As evidence of this, many delegates had talked about weaknesses in their respective
competition laws, in terms of exclusions and perhaps in the process of enforcement.  He had listened
carefully to the comments made by the representa tive of Brazil, felt that he could subscribe to
everything he had said in his intervention, and felt that it was in no way in contradiction with the
views of the European Community and its member States.  He had made it very clear that theWT/WGTCP/M/8
Page 17
European Community and its member States were not seeking any type of harmonization of
competition laws, that there were many different legal and institutional frameworks;  that there were
many different levels of developments, and that any framework of principles would have to
acknowledge this.  Consistent with the views expressed by the representative of Brazil, he felt that a
key function of a multilateral framework would be to provide, in a progressive manner, a process
which could support institutional-capacity building in relation to the application of competition law as
it relates to international trade.  He believed, howev er, that it could be helped and supported by the
development of some basic common principles which would help to guide everyone in the process of
institution-building and in the process of progressive strengthening of competition policies and their
ability to contribute to the international trading system.
30. In this connection, he also wished to comment on some of the remarks that had been made
about special and differential treatment, transitional periods, etc.  The fundamental objective of theWTO was development and it was very important to consider how competition laws could contribute
to the process of development.  But certainly it was not his view that this issue was something which
could be reduced to the question of transition periods.  Transition periods were something which
reflected the idea of progressivity which he wanted very much to emphasize, but this was by no
means the only type of issue which arose from the development dimension of discussions.  He hadalso mentioned the concept of flexibility.  This was something which had to be very clearly
acknowledged and recognized in the rules and that of  course included the concepts relating to special
and differential treatment.  The fact that, within the WTO, there were countries at very different stages
in terms of development of the competition law regime was a consideration that would be central to
the discussion of what type of framework of rules on competition should be developed in the WTOand he was very keen to listen to the ideas of developing countries on this matter.
31. In response to the question concerning whether what was being discussed centred on domestic
or international competition rules, he stated that  the reason why the matter of competition law and
policy was being discussed in the WTO was precisely because anti-competitive practices could have a
significant impact on international trade.  When on e considered matters such as basic elements for a
competition law, one would not imagine that a c ountry would introduce a rule which applied only to
those anti-competitive practices which had an impact on international trade.  The point he was trying
to make was that the type of rules that one woul d focus on in the WTO would be those dealing with
practices that had an impact on trade.  This was why he had expressed openness on the question of
whether it was strictly necessary for all countries to have a merger control system.  He had listened
carefully to the arguments which had been made by a number of developing countries that, for various
reasons, this was not their first priority in establishing their own competition law regime.  So it wasunderstood that, when one spoke about the advantages of a comprehensive competition law and a
possible multilateral framework, it was fully understood that there were many differences in terms of
domestic competition law regimes and priorities that would have to be respected.
32. On the matter of whether a comprehensive competition law was strictly necessary for a
competitive market economy, this had been discussed extensively in the Group and no one had putinto question that competition law was only a part of the picture, that there were many other policies
which could contribute to promoting competition and enhancing economic welfare.  He still believed
that a competition law had quite a significant role to play from the perspective of development and
from the perspective of international trade.  Whatever Members decided to do on the question of
competition policy was something that should be done together as the Members of the WTO, and itwould have to be done on the basis of consensus.  On the question of sectoral policies, it could well be
that in some cases competition policy considerations might also have to be discussed at the sectoral
level, but the question of the interaction between trade and competition policy in general was
something that had to be considered with reference to all sectors of the economy.  Finally, he wished
to emphasize that competition policy was now a global phenomenon.  It was something that affectedcountries at all stages of development and something on which there would, therefore, be benefits
from working  together at the multilateral level.  In this regard, many countries had pointed out theWT/WGTCP/M/8
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value, but also the limitations, of existing bilateral approaches and therefore the need to consider what
could be done at the multilateral level which would be of benefit to all WTO Members.  This was
what the Community wanted to pursue.
33. The representative of the United States wondered whether the Community was saying that
competition law would be non-discriminatory if it on its face it applied to all firms, foreign and
domestic, and treated all firms equally?  But if it was a question of non-discrimination in a de facto
sense, was it not also being said that the way to guarantee that a country was not discriminating was
either to provide reasons for everything that was being done, which actually flowed over into
transparency, or that there should be a private right of action giving direct recourse to the courts.  If
these were the practical measures to be taken, why was a multilateral principle or rule-making
exercise necessary to achieve this?  Or did the discussion not also implicate a deeper concept, of
substantive discrimination?  The representative of the European Community and its member Stateshad been eager to show the Group that competition law in fact stopped discrimination and therefore
promoted non-discrimination and furthered WTO goal s.  In defining what were discriminatory
practices, he had said that the law on abuse of dominant position prevented discriminatory practices,
presumably also the law on vertical restraints, as well.  She hoped the Community was not asserting
that if countries had somewhat different laws on abuse of dominant position or vertical restraints, thisin itself would be discriminatory.  Furthermore, she was not sure whether the types of discrimination
that were stopped by the law on abuse of dominance were really relevant to the WTO.
34. The representative of Australia said that the non-discrimination principles of the WTO and
competition policy were complementary in a conceptual sense, both encouraging competition and
contributing to greater economic and social benefits.  However, significant differences in approachcould arise in the application of related policies due to their differing focus for achieving results - on
the one hand, targeting actions of governments through the WTO, and on the other hand, targeting the
actions of private parties through competition regimes.  The question of exceptions was one way in
which the applications differed.  In the WTO, th e application of non-discrimination principles was
limited by the exceptions allowed under WTO agreements which included allowing Members toderogate from their obligation to extend national treatment or most-favoured-nation treatment under
certain conditions.  Examples included purchases for government purposes, and general exceptions
providing special and differential treatment to develo ping countries.  Many exceptions were related to
certain types of trade, goods, services, intellectual property, etc.  In regard to trade in goods, WTO
Members were allowed to apply safeguards or anti-dumping and countervailing duties.  In the area of
services, the obligation of national treatment only applied to service sectors listed in country
schedules.  While Members had a general obligation to apply MFN treatment, they were originallyallowed to list exceptions on a one off basis.  The requirements of national treatment and MFN in the
TRIPS Agreement were also subject to various exceptions, some of which were mentioned at the
recent Symposium.  In Australia, the National Competition Council was reviewing the relationship
between international intellectual property obligations and Australia's competition law.  It was
focusing primarily on (i) whether to retain existi ng exceptions from the law; or (ii) whether the
objectives of existing competition-restricting legislation could be achieved more efficiently by other
means, bearing in mind the overall aim that competi tion-restricting policies should be retained only if
the benefits to the community as a whole outweigh the costs.
35. The representative of Japan recalled that his delegation's purpose in submitting the paper on
"observations on the WTO framework on competition" (document WT/WGTCP/W/119) was solely to
facilitate discussion on this issue and among Members.  It was not his intention to set the agenda for
future negotiations in WTO, nor to commit his dele gation to future positions on work on competition
policy in the WTO.  Having said this, as had been said by other delegates, it appeared that there were
certain cases where the unilateral or bilateral approaches could not solve the issues.  At any rate, the
approach taken in Japan's paper was intended to be complemented by other approaches includingunilateral and bilateral approaches.  He looked forward to other comments on the ideas that were
under discussion.WT/WGTCP/M/8
Page 19
36. The representative of Switzerland, responding to questions that had been posed by various
delegates, emphasized the distinction that had been  drawn between substantive and procedural aspects
of national treatment that had been developed in her delegation's paper.  The paper had tried to show
that one could envisage no less favorable treatment of a foreign product or company within a national
competition law as being the same treatment that  was provided for a national product or company.
This was a question of procedure, of recourse to the national authority, as had been discussed in the
OECD.  The other, substantive aspect which was more complex and which was the heart of the
problem was how the concept of national treatment could be improved from the standpoint of
competition.  An initial consideration would be to adapt the concept of national treatment to apply to
the treatment of anti-competition behaviour that had an effect outside the domestic market.  That
meant, specifically, that the application of national treatment would have to be based on a certain
degree of convergence between different competition laws.  An example that had been cited was thesituation of exemption of export cartels from nationa l competition laws.  In other words, a link was
made between the concept of national treatment a nd the standards to be developed to expand the
relevance of this principle.  The conclusion was that a global view of the domestic market was
needed.  It was only a proposal to stimulate discussion and she understood that it raised questions that
would require further reflection.  She felt that the remarks by the observer from Croatia regardingArticles VIII and IX of the GATS were very relevant and more research was needed to see how those
articles were relevant to competition from a horizontal standpoint.
37. The representative of the European Community and its member States, responding to
questions that had been posed, said that said that discrimination within the WTO had essentially two
meanings – de jure  and de facto.  He felt it was very clear that a competition law only very rarely
would include an element that would be contradictor y with the principle of non-discrimination a in a
de jure  sense.  The question was what would constitute de facto discrimination in the context of
competition law and policy.  The point that he had tried to make, in this regard, was that the question
of de facto discrimination was linked to weaknesses in the domestic competition framework.  These
weaknesses might have to do, for example, either with exceptions and exemptions from the scope ofcompetition law and the consequent lack of effective remedies to deal with anti-competitive practice
in the affected sectors.  The other important point, which concerned the issue of procedural versus
substantive discrimination was that, at the end of the day, the best guarantee that competition law
would be applied in a non-discriminatory manner was transparency.  This was why measures to
promote transparency was likely to be a crucial consideration in any multilateral principles on
competition policy.  Though transparency could be achieved in various ways, for example by
providing reasons for decisions taken, the publication of enforcement criteria and rights of privateaction before the courts.  The goal was not to achieve forced harmonization but to recognize some
common standards of transparency and non-discrimination in this area.  Finally, he wished to
emphasize that it was not at all the intention of the European Community and its member States to
suggest non-discrimination in the field of compe tition law and policy would require harmonization of
substantive approaches to abuse of dominant position or other matters.  He had been careful in all thediscussions to say that substantive competition law was a very complex issue, there were many
legitimate differences in national approaches to these questions.  On the other hand, he believed that
there were some types of anti-competitive practices on which there was, in fact, a large degree of
common understanding, for instance on hard core cartels, regarding which it was possible to foresee
enhanced forms of cooperation.
38. The representative of Hong Kong, China said that the fundamental question to be addressed
under this agenda item was whether there was any relevance of the three basic principles of the WTO
in the context of any competition policy.  If the answer was no, then this would be the end of the
story.  But if the answer was yes, the next questi on would be how relevant were the three principles,
what was the current situation regarding applicability of the principles in the context of thecompetition policies of individual Members?  It  would be a truly educational process if the Group
could be shown how the three principles had been working in competition policy thus far.  If some
delegations felt that there were problems or gaps in their competition policies that could be helped byWT/WGTCP/M/8
Page 20
reinforcing or introducing these three principles, this would be a useful angle as well.  On this
particular point, it would be for individual Memb ers to see how they could incorporate these three
principles to the fullest extent in their own compet ition policies to improve these policies.  Certainly,
it was premature to jump into a discussion on the merits of multilateral rules.
39. The representative of the United States requesting more information on the recent Japanese
initiatives to help foreigners to better understand the Anti-Monopoly Act and how to bring
complaints, the representative of Japan said that a new Division had been created in the JFTC to deal
with complaints filed by foreigners.  Other divisions were involved as was appropriate to theparticular matter.  Whenever decisions were made, the contents of the decisions were issued.  The
main difficulty faced by foreigners seemed to be the language barrier.  Consequently, efforts were
made to translate particular decisions as well as all relevant guidelines into other languages.  As
described in the paper submitted by his delegation, another important element was that the JFTC hadclarified its interpretation concerning administrative guidance, since Japan had been criticized for
excessive reliance on such guidance in the past.
40. The observer from the OECD said issues regarding non-discrimination and transparency were
also under discussion at the OECD, but that the discussions were not yet ripe for presentation of the
results.  The observer from UNCTAD mentioned that pertinent discussion would take place at the
next session of the Expert Group on Compet ition Law and Policy which would take place on
7-9 June.
41. In reflecting on the discussion of this item, the Chairman reminded delegates of two
contextual points regarding the discussion:  first, that it was of an exploratory and pedagogical nature,
and second, that the mandate of the Group was precisely to study the issues, without prejudice as towhat might or might not eventually happen in the context of the WTO.  In this context, several
presentations had suggested that the fundamenta l WTO principles of non-discrimination, national
treatment and transparency were indeed relevant to the basic objectives of competition policy and
could provide a basis to promote effective cooperation at the multilateral level.  There had been less
discussion of the vice versa aspect.  Several delegates had made the observation that the principles ofnational treatment and most-favoured-nation treatment – which applied on both a de jure  and a
de facto basis - and the transparency principle were not only complementary but also necessary
elements to enable a competition regime to fulfil it s role.  It was pointed out, further, that transparency
contributed to preventing discrimination in the enforcement of competition law.  However, the point
was made that the fundamental WTO principles which were under discussion might need to be
adapted, at the procedural and substantive level, to become more relevant to the interface between
trade and competition policy.  For example, the view had been offered that the application of thenational treatment principle to competition policy raised the question of whether it should be applied
to practices having an effect abroad.  This question raised a further question as to whether it was
useful or necessary to have a degree of international convergence in substantive competition policies
to facilitate the sound application of WTO principles.  A question had also been raised as to the mode
of application of the transparency principle – whether it should be applied both ex ante  to competition
rules and ex post  to individual decisions.  Examples had been cited of provisions in other WTO
agreements incorporating these principles, for example the GATT, GATS and TRIPS Agreements, as
well as in provisions of the NAFTA Agreement relating to non-discrimination in the treatment of
investment.  A number of further dimensions relating to the inter-connections between non-
discrimination and competition policy had been explored:
• First of all, it had been suggested that discrimination could be understood in two
ways:  discriminatory enforcement of the law or the law as it applied todiscriminatory practices.  In this context, the question had been raised as to whether
the same substantive standards should apply in all competition laws.  Several
delegates had, however, pointed out that this was probably not the proper
interpretation of this discussion.  Rather, it was important to emphasize that theWT/WGTCP/M/8
Page 21
principles of non-discrimination were fundamentally consistent with and reinforced
the substantive concerns of competition policy in the sense that in competition policy,
the idea was to protect the competitive pr ocess rather than individual competitors.
Furthermore, non-discrimination principles did not imply an obligation to produce
specific market access results.
• It was said that, juxtaposed with the principles of non-discrimination, it was
important to consider competition principles which were reflected in the GATS and
TRIPS Agreement.
• With regard to the question of whether the application of the principles of national
treatment, most-favoured-nation treatment and transparency vis-à-vis  competition
policy required, in the international contex t, the commitment of countries to adopt a
competition law, or to harmonize their laws, or to adopt minimum standards orcommon approaches, two different sets of cons iderations had been put forward:  First,
some delegations offered the view that competition law was only an instrument and
that competition commitments – whatever they might be – could be fulfilled in ways
other than through the application of a comprehensive competition law, for example
through sectoral regulation, where appropriate, and/or through a high degree ofmarket openness.  In response to this, some other delegates emphasized that even if it
were true, a comprehensive competition law had distinct advantages that should not
be lightly dismissed.
• A second broad set of responses had concerned the merits of harmonization of
competition laws as such.  Some delegates felt that harmonization or, at least, a
commitment to common principles, would enhance the relevance of WTO principles
to competition policy in the multilateral context.  Others offered a word of caution:
the adoption of WTO principles should take into account not only that those
principles have to be adapted to competition policy, but also the fact that competition
law and policies must themselves be flexible, and should take into account theeconomic, social and political environment of the countries in which they are to be
implemented.  Some specific examples of factors that would have to be considered
were differences in the stage of economic development, cultural traditions, resources
and institutional capacity.  The question of flexibility, in sum, was really a question of
substance, and not only a question of timing; it was a question of what was the mostappropriate tool given the environment of the country.
• The issue had also been raised of whether the consistency of competition legislation
with WTO principles could be furthered by applying those principles not merely toprivate practices, but also to government regulations that foreclosed competition.
According to some delegates, this might include national regulations and internationalagreements that had the same effect.
42. The Chairman said that there had also been a wealth of proposals for future work on this
issue, which might merit consideration at a later stag e, and he looked forward to further discussion of
this topic at the next meeting of the Group.
II. APPROACHES TO PROMOTING COOPERATION AND COMUNICATION
AMONG MEMBERS, INCLUDING IN THE FIELD OF TECHNICALCOOPERATION
43. The representatives of the United States, Japan
, Korea  and Australia  introduced written
contributions on this agenda item (documents WT/WGTCP/W/116, 121,124 and 125, respectively).WT/WGTCP/M/8
Page 22
In addition, the representatives of Brazil; Peru ; Romania ; Egypt ; the European Community and its
member States; India ; and Hong Kong, China  made oral statements or posed questions on this item,
and the observers from the OECD, the World Bank  and UNCTAD  provided information on relevant
activities of their organizations.
44. The representative of the United States, introducing document WT/WGTCP/W/116,
presented an overview of his country's experience regarding cooperation among competition
authorities, and among trade authorities.  Falling trade barriers had led to greater globalization and
this had resulted in a greater need for cooperation and communication between WTO Members, on
both the competition and the trade fronts.  There were many reasons for cooperation among
competition agencies and they included promo ting a competition culture, institution building,
convergence both procedural and substantive, and facilitating effective and efficient enforcement.
The United States had had much experience with bilateral cooperation and such cooperation had takendifferent forms.  The simplest form of bilateral cooperation was ad hoc sharing of public information.
This involved cooperation without the need for a fo rmal agreement.  For instance, both the Federal
Trade Commission and the Department of Justice frequently responded to requests from competition
authorities in other countries regarding a variety of administrative, procedural and policy issues.
Another form of bilateral cooperation was the provision of technical assistance.  Competitionspecialists from the United States had assisted countries in issues ranging from drafting new laws and
amendments to specific case analysis, and had been made available on both short-term assignments
and long-term missions.  Such cooperation had proven very valuable for the United States as well,
because its antitrust specialists had increased th eir sensitivity to local conditions and concerns.
45. Another modality of bilateral cooperation involved formal cooperation agreements.  The
United States had signed bilateral cooperation agreements with Australia, Canada, the European
Community, Germany and, most recently, with Israel.  These agreements had dual motivations and
functions: one was to step up the level of cooperation per se , another was to avoid conflicts.  The
agreements had several common types of provisions; they included notification of the foreign
competition agency about actions taken by the United States competition authorities which wereimportant for the agency, sharing of information and coordination of investigations conducted by both
authorities, and consultations on various issues.  The cooperation provisions of these bilateral
agreements had been invoked in many instances, notably, merger cases.  However, there were limits
to cooperation through bilateral agreements.  A significant constraint was the need to protect
confidential information; for example, information submitted by parties as part of a merger review
process.  In certain cases, parties had facilitated cooperation between the two competition agencies by
waving this right, because they recognized that it was in their own interest to facilitate such
cooperation.
46. Positive comity was another instrument furthering cooperation, and this instrument had been
incorporated already into the United States' cooperation agreements with Canada, Israel and the
European Community.  Briefly, positive comity involved a situation where the competition agency in
country A concluded that there was a reasonable basis to believe that certain anti-competitivepractices, causing it harm, also constituted a violation of the competition rules of another country B.
In this case, the competition agency of country A would ask the competition agency of country B to
undertake an investigation of such practices and take whatever action was appropriate.  One important
advantage from "positive comity" was that it permitted accessing evidence available in other
jurisdictions.  Positive comity could also serve to  minimize tensions involving enforcement.  The
1998 cooperation agreement between the United States and the European Community had taken
positive comity one step further by introducing a presumption of deferral in certain types of cases.
Nevertheless, cooperation agreements with positive comity provisions were very clear that the
referring agency retained the right to act unilaterally as appropriate.  Positive comity was a useful tool
especially in situations where competition agencies had developed a relationship of mutual trust andconfidence, and it was important that agencies to which anti-competitive practices were referredWT/WGTCP/M/8
Page 23
implemented effectively principles like national treatment, had adequate investigation remedial
powers, and a sufficient degree of independence.
47. Beyond featuring provisions on positive comity, some cooperation agreements entered into by
the United States allowed the sharing of confidential information.  They included mutual legal
assistance treaties, or MLATS, and agreements pur suant to the International Anti-Trust Enforcement
Assistance Act. MLATS applied to criminal investigations and about 20 such agreements were
already in existence.  The first agreement of the la tter kind, allowing both the sharing of confidential
information and the mutual gathering of evidence, was about to be established with Australia.
Responding to a comment made by the delegate of Korea, the representative of the United States said
that he was not aware of any cases where countries had misused confidential information obtained
from another country through a bilateral cooperation agreement.
48. In response to a number of comments, another representative of the United States emphasized
the point that no legal rules were needed to activate the kinds of cooperation that typically took place
between competition authorities.  For instance, once a competition agency began to conduct
investigations, it would find it in its interest to consult other, more mature, competition agencies with
respect to the technical aspects of such investigat ions; for instance, whether there were any precedents
with respect to the practice concerned, how serious were barriers to entry into the relevant industry,etc.
49. The representative of the United States said fu rther that, in addition to engaging in bilateral
cooperation treaties, the United States also engaged in cooperation in various multilateral fora.  These
fora were helpful as they gave senior antitrust and trade officials an opportunity to share ideas and
understand each others' principles and analytical approaches.  Relevant examples of multilateralcooperation included participation in the Committee on Competition Law and Policy at the OECD,
and the competition in meetings held under NAFTA, the Free Trade Area of the Americas, APEC,
and the present group.
50. On the issue of cooperation between trade authorities, he stated that trade agencies had a
vested interest in encouraging the development and enforcement of sound competition policies as ameans of facilitating international trade in goods and services.  Areas of concern were anti-
competitive conduct by firms in foreign markets, in addition to anti-competitive market structures
fostered by government action or inaction.  Typical anti-competitive practices adversely affecting
foreign trade included vertical restraints and cartels.  Of course, not every market access problem
could be attributed to the presence of anti-competitive private practices, or to anti-competitive
regulatory structures.  However, where there had been a history of such conduct or structures,
cooperation with foreign competition authorities could be very productive.
51. The representative of Japan, introducing document WG/WGTCP/W/121, said that some
OECD member countries had extensive experience in cooperation relating to the enforcement of
competition law.  The main elements of international cooperation agreements on competition matters
could be outlined as follows: notification was the first element; bilateral consultation, the second;
multilateral consultation, often under specialized Committees, the third.  On the issue of bilateralcooperation, he said that Japan was currently conducting negotiations with the United States with a
view to concluding a cooperation agreement.  In addition, Japan had held bilateral meetings with a
number of countries including the United States, the European Community, Korea, and Canada for the
purpose of exchanging opinions on matters of competition law and policy.  Such meetings did not
specifically address trade problems, but they served to improve understanding of the competition lawsand policies of Japan's major trading partners.  Bilateral cooperation also took the form of technical
assistance and Japan had been very active in this regard.  Multilateral cooperation on competition
matters through discussions at WTO, the OECD, UNCTAD and APEC, had also proved to be highly
valuable.  Another important element of cooperation was public comments regarding competition law.
For instance, prior to publication in December 1998, Japan's guidelines on mergers and acquisitionsWT/WGTCP/M/8
Page 24
had been made public in draft form in June 1998, for the purpose of obtaining comments from
domestic and foreign parties.  Conversely, Japan had provided comments with respect to the draft
antitrust enforcement guidelines for international operations prepared by the United States in 1995.
52. The representative of Korea, introducing document WG/WGTCP/W/124, said that his
country's contribution addressed the benefits and the constraints of bilateral, regional and multilateral
approaches to competition policy.  While arguing that the multilateral approach was preferable,
Korea's paper did not suggest that multilateral cooperation should absorb or replace all bilateral and
regional cooperation schemes.  Rather, it argued  that all three approaches could and should develop
in a mutually complementary and reinforcing way.
53. In the view of his delegation, bilateral cooperation was the most common form of
international cooperation on competition policy.  For the most part, it took place through formal or
informal consultation mechanisms, as well as through exchanges of information  among competitionauthorities.  This type of cooperation was easier to develop among countries economically
interdependent and sharing a similar level of competition law enforcement.  Korea had engaged in a
regular policy dialogue with the competition authorities of a number of its major trading countries,
including the United States, France and Japan.  Cooperation agreements were another form of
bilateral cooperation, allowing for greater coordination on competition matters between two countries,thereby reducing potential tensions.  One problem with bilateral agreements was that they could open
the door for abuse, since countries could use such  agreements to obtain evidence and information
from foreign firms and governments, with a view to enforcing their competition law extraterritorially.
In response to a question from Egypt, the delegate from Korea said that this problem was not based on
actual experience and did not represent a general aspect of the operation of bilateral cooperationagreements.  It was important, however, to bear it in mind for analytical purposes.
54. While positive comity was a facilitating tool for international cooperation in competition law
enforcement, it had some inherent limitations.  There was a risk of inaction, since it was up to the
requested country to decide whether to initiate an antitrust investigation on behalf of the complaining
country.  The requested country could hardly be expected to enforce its competition law at theexpense of its own domestic industry and primarily for the benefit of the complaining country.
Differences in the coverage and application of competition law further constrained the effectiveness
of positive comity.
55. Regional cooperation provided a forum for discussions and opened the way for the provision
of technical assistance.  In recent years, Korea had accumulated experience with this kind of regional
cooperation and, since 1996, it had run every year the programme "International Training Programme
on Competition Policy" for developing countries.  In some cases, cooperative activities had growninto efforts to introduce competition law and pol icy into the frameworks governing intra-regional
trade.  For instance, in keeping with the Collective Action Plan, APEC members had recently
undertaken studies on competition laws and policies and were now working on a comprehensive set of
competition principles. In addition, many regional trade agreements such as the European Union, the
Australian- New Zealand Closer Economic Relations Trade Ag reement (ANZCERTA) and the North
American Free Trade Agreement (NAFTA) were concerned, to various degrees, with the
harmonization of competition policies.  The degr ee of harmonization was a function of the level of
economic integration.  For example, the EU had established a supranational body to enforce relevant
competition provisions under the Treaty of Rome.  In contrast, NAFTA did not set forth common
standards on competition policy, but simply required parties to adopt or maintain measuresproscribing anti-competitive business practices and to take appropriate action with respect thereto.  A
high level of economic integration had led the European Union and ANZCERTA to eliminate anti-
dumping laws in regional trade, while NAFTA, whose economic integration was at a lesser level, still
maintained anti-dumping laws.WT/WGTCP/M/8
Page 25
56. With respect to multilateral cooperation on competition matters, the representative of Korea
recalled that discussions concerning a multilateral agreement on competition policy had begun several
decades ago with Chapter V of the 1948 Havana Charter.  Several international fora, including the
OECD and UNCTAD, had explored ways to address anti-competitive practices beyond the border.
Both OECD and UNCTAD had issued non-binding guidelines and recommendations to whichmember countries voluntarily adhered.  But this was as far as they could go.  In contrast, the WTO
was equipped with legally binding rules and an effective dispute settlement system, and it had a long
experience with multilateral negotiations striking a balance of interests between developed and
developing countries.  Therefore, in the opinion of the Korean delegation, the WTO was the best
suited forum for undertaking discussions on multilateral competition rules.
57. The competition-related provisions of the WTO Agreements were inadequate for addressing
competition problems across-the-board, including private anti-competitive practices.  The Kodak-Fujicase had illustrated very well the lack of tools at the disposal of the WTO.  Hence, there was a need to
reinforce the WTO regime by the incorporation of competition-related norms.  The ideal model for an
international competition code would contain provisions on a supranational competition authority, as
well as unified substantive and procedural norms.  One model close to this ideal form was the 1993
Munich Code which had been proposed by the International Antitrust Code Working Group(IACWG).  However, a TRIPS-type agreement could be considered as more practical option. Under
this type of agreement, every Member would be re quired to commit itself to incorporate substantive
norms of competition into its domestic law, and to establish independent administrative and judicial
bodies to oversee implementation and guarantee greater uniformity in interpretation of the agreement.
The WTO dispute settlement procedures could be used as the appropriate mechanism for addressingviolations of the substantive norms.  This approach would not presuppose the existence of domestic
competition laws.  All that would be required is the incorporation into the national legislation of
provisions relating to competition; in fact, the absence of such provisions may render easier this
incorporation.
58. The representative of Australia, introducing document WG/WTCP/W/125, said that the paper
submitted by her delegation referred to Australia's experiences on this item of the agenda.  In the view
of her delegation, the effectiveness of technical assistance was related to the stage of development of
competition law in the recipient country.  For instance, local training in the foreign country appeared
to be most effective once that country had legislation in place and was actively conducting
investigations.  Prior to that, for countries at the ex ploratory stage, it seemed more effective to bring
officials to Australia to see legislative and regulatory structures first-hand.  Programmes grouping
together delegates from different countries tended to be very fruitful in terms of exchange ofinformation and experiences, and helped form specialists' networks.  Small delegations rather than
large ones were preferable as they were conducive to interactive learning.
59. The observer from the OECD presented an overvi ew of the activities of his organization with
respect to the provision of technical assistance to non-member countries.  Up to the end of 1998, the
OECD had conducted and participated in over 90 "outreach" events.  Most of these had beenorganized and led by the OECD itself.  The remaining programmes had been joint ventures, typically
with the World Bank, a single country such as Korea, or with a competition agency like the United
States Federal Trade Commission.  In other cases, the OECD had sent in experts to participate in
events such as APEC conferences, and training sessions organized by the Japan Fair Trade
Commission. For 1999, 17 programmes had been pl anned. In addition, the OECD had provided
technical assistance to non-member countries by way of preparing commentaries on draft competition
laws. This was often followed by case-study seminars.  Typically, new competition officers presented
cases and a panel of very experienced enforcers from a number of OECD countries discussed how
those cases might be better analysed.  Such seminars had proved to be one of the most effective ways
to convey the best competition practices.  Best practices were also disseminated through publications.The most recent one was a paper prepared jointly with the World Bank on the framework for the
implementation of competition law.WT/WGTCP/M/8
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60. Commenting on a number of remarks made by delegations, he said that regional technical
assistance had a feedback effect upon regional cooperation.  Through regional seminars, enforcement
officials in one country got to know enforcement officials in neighbouring countries, gained
confidence in each other and so on.  Hence, regional seminars could set in motion the building of
human networks of competition enforcement official s.  Close personal relationships were reinforced
by the fact that neighbouring countries tended to encounter similar competition problems.
Responding a question raised by the delegate of Egypt as to the availability of "models" for
cooperation in competition matters, he said that  the OECD had issued tw o recommendations in this
area that had been used and continued to be used by countries negotiating bilateral agreements.
61. He drew attention to an upcoming conference organized by the OECD on the coherence
between trade and competition policies.  This conference was intended to expand discussions on trade
and competition matters to developing countrie s, NGOs, and business and consumer organizations.
The OECD intended to place the agenda for the conference, as well as the conference documents, on
an internet site to facilitate dissemination.  Fina lly, the OECD had recently launched a journal as a
vehicle to make available to the public the extensive analytical work on competition issues carried out
by this organization.
62. The observer from the World Bank provided an outline of the Bank's cooperation
programmes on competition issues, including technical assistance.  The first kind of assistance
consisted of technical advice.  It was delivered on a country-specific basis as it was connected to
structural adjustment programmes.  For instance, in the past year the World Bank had focused quite
significantly in assisting the Korean Government, particularly the Korean Fair Trade Commission, in
addressing competition issues in the context of the economic crisis, with a view to strengthening therole that competition policy could play in the revival of the Korean economy.  The World Bank had
also played this role in other East Asian countries, including Malaysia and Thailand.  In addition, the
World Bank had provided technical assistance by organizing conferences, seminars and workshops.
The first residency course on competition law policy had recently been held in Washington DC, and
had been attended by around 45 people, who came from more than 20 countries.  Other seminars andworkshops had been organized specifically for the competition authorities of countries such as
Argentina and Colombia.  With respect to publications, the Bank's experience was that synthesis
reports were preferable to compilations of speeches and papers.  Such reports distilled the main
messages and lessons from the conferences, and were a handy reference source for users.  The
"Framework" book illustrated this approach, indicating how certain issues could be addressed, by way
of various options reflecting different country ci rcumstances.  This book would be supplemented by
future projects; for instance, a book by former competition officials reflecting on their experiences inimplementing competition law, particularly in developing and emerging market economies.
63. In performing its cooperation activities in the area of competition policy, the World Bank
increasingly tried to engage the private sector.  Thus, the Bank now strove to get the private sector
involved in conferences, seminars and workshops, as well as in the provision of technical advice.
Brazil was a good example of these efforts.  The Brazilian consumer association had become veryactive in the Bank's conferences.  There were a number of problems that the World Bank confronted
with respect to the provision of technical assist ance.  The Bank needed to recover the costs of
providing technical assistance but countries were not willing to borrow money for this purpose.  Thus,
technical assistance was often funded indirectly as an appendage to a structural reform loan.  This
posed a problem because competition officials were not at the negotiating table and thus the agenda ofthis appendage did not necessarily reflect their particular mandate and responsibilities.  Another
problem related to insufficient funds and he urged competition officers from advanced countries to
build up their resources for technical assistance.
64. The observer from UNCTAD spoke on the subject of preparations for the next meeting of the
Intergovernmental Group of Experts on Competition Law and Policy (IGE), preparations for
UNCTAD X, and the provision of technical assistance.  He noted that the next IGE was also going toWT/WGTCP/M/8
Page 27
act as the preparatory group for the fourth UN conference, scheduled for September of next year,
concerning the review of the United Nations Set on Restrictive Business Practices.  Additionally, the
work to be performed by the IGE included the review of studies prepared by the UNCTAD
Secretariat, consultations on important aspects of competition law and policy, and the review of the
Model Law and the Handbook on Competition Laws.  One of the above studies focused on theexperiences gained so far with international cooperation on competition matters.  Details regarding
this study were provided by another UNCTAD representative.  In response to a question posed by the
delegate of Egypt, the representative of UNCTAD indicated that, while their study did not set forth
any models per se , it presented an extensive analysis of cooperation agreements, bilateral and other,
and of cooperation agreements arrived at as a result of trade agreements, including free-trade
agreements, customs unions and common markets.  Another preliminary report referred to how
competition policy addressed the exercise of intellectual property rights.  The second area of reviewby the IGE concerned consultations, including:  (a) the relationship between the competition
authorities and relevant regulatory agencies, especially in respect of privatization and
demonopolization processes;  (b) international merger controls, in particular where they had an impact
on developing countries; and (c) the creation of a culture of competition.  As the Model Law and the
Handbook were permanently updated, the review by the IGE related to the latest updates.
65. As part of the preparatory process for UNCTAD X, UNCTAD was planning to hold a
seminar in late June 1999 to analyse issues of competition policy relating to development.  Specific
issues to be taken up at this seminar included the current situation facing developing countries with
respect to competition in global markets, challenges and opportunities involved in promoting a
competition culture and building an equitable playing field in developing markets, and appropriatemeasures addressing the specific needs of develo ping countries.  This pre-UNCTAD X seminar would
serve as a basis for further thought and discussi on of the programme to be decided at UNCTAD X.
UNCTAD IX had called for UNCTAD to make a special effort for Africa, and in line with this
mandate several seminars on competition policy had been held in this region.  Other programmes
were in the planning stages and involved coopera tion with institutions such as the OECD and the
World Bank. UNCTAD had received regularly many requests for national technical assistance.  In
some cases, UNCTAD had been requested to assist countries in the process of drafting and adopting
competition legislation.  He concurred with the view that cooperation through educational and
training efforts should not be limited to assisting national competition authorities; in parallel, broader
efforts were needed to help national competition authorities educate all constituencies, including
consumer organizations and businesses, with respect to the benefits of competition policy.
66. The representative of Brazil said that cooperation on competition matters should have at its
heart an educational purpose, instead of being driven by a results-oriented agenda.  Competition
policy, despite its positive effects on welfare, was not supported by strong constituencies.  As a result,
the world was getting less than the optimum in terms of competition policy.  This "political market
failure" could be remedied by educating the public on the benefits of competition policy.  Multilateral
cooperation could be helpful in this regard.  Further, the implementation of competition policyinvolved very large economies of learning and hence multilateral cooperation was bound to be very
productive especially for countries beginning to operate competition regimes.  The nature of
cooperation on competition matters tended to vary with the degree of institutional development.
Cooperation in this area seemed to follow a pattern consisting of three stages.  At a very early stage,
cooperation focused on the provision of technical assistance.  The comments made in this regard bythe Australian delegate had been very instructiv e.  In a second and perhaps intermediary stage,
cooperation could take the form of relatively simple agreements not requiring the exchange of
confidential information.  At a more advanced stage, cooperation could take place through
sophisticated agreements, including provisions on the exchange of confidential information.  Some
sort of international standards for cooperation agreements, or model notifications for merger control,would be helpful. Brazil had taken full advantage of the technical assistance provided multilaterally
through the World Bank and the OECD.  It had also been very active in the area of bilateral
cooperation. A bilateral agreement had been established with Argentina.  Further, the BrazilianWT/WGTCP/M/8
Page 28
competition agency was developing, together wi th its Argentine counterpart, guidelines for
conducting cases, and this was indicative of the common understanding that had been reached with
respect to certain issues.
67. The representative of Peru said that it was very important to encourage discussions on
international cooperation concerning competition policy since this would help identify the specific
areas and instruments that could make a positive co ntribution in assisting Members to enforce their
competition legislation more effectively.  Two comm ents were in order.  First, according to Peru's
recent experience in applying competition policy,  there was a need to develop mechanisms, both
regional and global, for cooperation and communication with other competition agencies.  The future
design of international cooperation mechanisms should be directed at meeting four specific needs:
(i) technical assistance to Members, especially those that still did not have competition systems in
place or were at the initial stages;  (ii) promotion of a culture of competition, in view of the fact that
national competition agencies and competition legislation were necessary but not sufficient to
accomplish this objective;  (iii) the identification of priority areas with respect to which the efforts of
competition agencies could be more effective;  and (iv) the dissemination of information concerning
best practices in applying competition policy, including institutional transparency.  Some of these
ideas had been reflected already in a Declaration of Principles issued in October 1998 by the countriesparticipating in the Free Trade Area of the Americas.  The generalized adoption of specific
cooperation mechanisms, such as positive com ity, or the OECD Recommendation on Hard Core
Cartels, could require some prior efforts at harmonization.  This was the case because cartels, for
instance, could be treated under the per se  rule or under the rule of reason depending upon the
jurisdiction.  These differences of approach could not always be attributable to situations consideredto be exceptions, such as export cartels or groupings of small producers.
68. The representative of Romania said that, from a trade perspective, the purpose of cooperation
in competition matters was to ensure that anti-co mpetitive practices did not adversely affect the
commercial advantages resulting from elimination of tariff and non-tariff barriers.  Of course, the
final objective of cooperation in competition matters remained promoting and protecting publicwelfare in general and consumers' interests in particular.  Cooperation could materialize in the
following steps: (i) setting up structures favouring the international exchange of information;  (ii)
setting up consultation procedures;  and (iii) disseminating experiences to those engaged in the
process of improving the implementation of comp etition policy.  Cooperation could also envisage
other instruments such as positive comity, or bilateral notification.  Romania's competition law had
entered into force two years ago.  The elaboration of the law itself had been the first step in
implementing competition policy and certainly not the most difficult one.  An adequate competitionpractice had been built through technical assistance and exchange of information provided by several
foreign competition agencies and international organizations.  In the recent past, Romania had become
very active in merger control and was of the opinion that that this task could be facilitated and
accelerated by obtaining information from countries where the companies intending to merge
originated.  The increasing globalization of the world economy and the process of regionalizationwere the driving forces for examining and developing mechanisms to undertake regional and
multilateral cooperation.
69. The representative of Egypt said that getting the private sector to understand the merits of
competition was crucial for the successful implementation of competition policy.  Competition was
not that popular, and as a general rule some elements of the private sector were reluctant to supportcompetition policy either because they themselves profited from anti-competitive practices, or
because they were not fully convinced what the benefits would be.  It was noteworthy that the World
Bank was expanding its efforts in this direction. In the view of the Egyptian delegation, the upcoming
conference at the OECD on trade and competition was timely.  He also wished to raise a number of
questions arising from the presentations.  First, could examples be provided illustrating the abuse ofbilateral cooperation agreements?  Second, to what extent was the concept of positive comity
practicable?  Third, did cooperation on competition matters in fact tend to occur only with respect toWT/WGTCP/M/8
Page 29
countries at similar levels of economic development and similar levels of experience in applying
competition law?  Fourth, had international organizations such as the World Bank, the OECD, or
UNCTAD conducted any work sketching out models for cooperation agreements?
70. The representative from the European Community recalled that his delegation had developed
a number of ideas for setting up an international framework of competition policy rules.  This
suggested framework could be structured around three points.  First, each WTO Member would
commit itself to adopting domestic competition rules.  Second, such rules would be based upon
common principles.  Third, there would be some rules for cooperation.  His statement discussed a
number of questions with respect to the third point.  The first question in this regard was what the best
approach was to set up an international framew ork for international rules.  There were two
alternatives.  Under the first approach, favoured by many in the business community, one would seek
convergence and subsequently one would envisage cooperation.  Under the second approach, lack ofconvergence would not delay cooperation; rather, the degree of cooperation would be tailored to the
degree of convergence already achieved. In the view of his delegation, both approaches could be
applied concurrently.  In fact, a 1994 study commissioned by the competition authorities of the
European Community concluded that future efforts be carried out on two fronts.  First, extending
existing forms of bilateral cooperation, and second, developing a multilateral framework forcompetition rules.  This gave a good illustration of the complementarity between bilateral and
multilateral approaches to cooperation.  Limitations to bilateral cooperation should not be
downplayed.  For instance, it had been recognized by several Members that bilateral agreements
tended to engage countries that had the same perspectives on competition policy.  This meant that
quite a few countries were left out of the process.  Furthermore, bilateral agreements were not suitedto meet the challenges of globalization since they involved case-by-case progress.  If the benefits from
the globalization of the economy were to be fully exploited, one had to have a broader approach to
cooperation.
71. A second question was what were the tools of bi lateral cooperation that one could use in a
multinational context, particularly in the context of the WTO. Of course, there were many lessonsfrom bilateral cooperation that could be taken as reference material.  For instance, the 1995
recommendation of the OECD on Hard Core Cartels could be a valuable source of inspiration.
Bilateral experience had also shown the useful ness of exchanging information, even if such
information was not confidential; for example, information concerning the schedule adopted by
different competition authorities when investigating the same practices by the same actors.  For
instance, if two competition authorities deemed it necessary to search the premises of firms under
investigation, their effectiveness was noticeably increased by taking action in both countries at thesame time.  If one of the two authorities waited, the evidence available to that authority could
disappear from sight.
72. Positive comity was another helpful tool derived from bilateral cooperation.  However, it was
important to recognize that experience in the ap plication of positive comity was very limited.
Furthermore, even conceptually, there were clear limits to the effectiveness of positive comity.  Forinstance, positive comity was not an appropriate tool for dealing with an export cartel.  In particular,
the exporting country would not find in its interest to combat the export cartel, and even if it did, its
legislation might not allow it to take measures against it.  Given this limitation, the argument had been
made that there were limits to the role that positi ve comity could play in a multilateral agreement on
competition matters.
73. A third question was whether there were any instruments of bilateral cooperation, which
could find a place in a bilateral agreement, but would not be part of a multilateral agreement.  The
exchange of confidential information seemed to be one such instrument.  The exchange of
confidential information worked well under bilate ral agreements because such agreements allowed
parties the opportunity to learn to trust one another.  However, this degree of confidence could not beWT/WGTCP/M/8
Page 30
extended to parties outside the bilateral agreement,  which suggested that in a multilateral context a
rule on the exchange of confidential information was not feasible.
74. The representative of India said that, even at a basic level, bilateral cooperation on
competition matters helped increase the expertise of national authorities and therefore played an
important educational role.  At a more formal level, bilateral cooperation, ranging from requests forassistance in obtaining evidence to joint action in trans-border cases, could also be very useful.
Increased cooperation could also contribute to shaping gradually some common views about
competition issues.  Cooperation had a bilateral, a regional or multilateral facet.  Each of these
approaches had some advantages and some inherent shortcomings.  Thus, in the opinion of the Indian
delegation, none of these approaches was preferable over others.  Countries would tend to adopt one
or more of these non-exclusive approaches, depending on their own experience in implementing
competition law and their level of economic development.
75. From the foregoing presentations, it appeared that bilateral cooperation tended to take place
between countries with similar competition policy regimes.  Since competition policy regimes were
closely linked to the level of economic development of Member countries, this implied that bilateral
cooperation, or at least formal bilateral cooperation, was taking place predominantly between
developed countries.  This also seemed to be the case for regional cooperation.  It was important forthe Working Group to examine more closely how cooperation could be fostered amongst countries
with different competition regimes.  This would make cooperation a global tool.  In fact, enhanced
cooperation with countries with nascent competition policy regimes would provide these countries
with valuable insights.  Similarly, enhanced communication with countries which did not yet have a
national competition policy regime would go a long way in convincing them of the benefits ofadopting such a regime.  The Working Group must focus therefore on this aspect of cooperation.
Further, multilateral cooperation on competition matters did not have to be based in a multilateral
framework of rules, unlike what had been suggested  by other Members.  Thus, in the view of the
Indian delegation, the existence of multilateral competition rules was not a prerequisite for
strengthening multilateral cooperation.
76. He added that it was imperative to ensure that global welfare, and not national welfare, was
used for evaluating anti-competitive practices.  A national welfare standard implied treating anti-
competitive behaviour in the home market differently from anti-competitive behaviour in foreign
markets.  This would be retrograde to the whole issue of cooperation.  Further, priority in international
cooperation should be accorded to the control of anti-competitive behaviour of firms with
international market power.  Responsibility for su ch control would tend to befall on large economies,
since firms with international market power tended to be based in large economies.
77. The representative from Hong Kong, China said that mutual cooperation required mutual
understanding of each other's different stages of economic development and different needs.  It also
required mutual recognition of, and mutual respect for, the existence of such differences.  Given this
situation, a progressive approach to cooperation seemed to be warranted.  This step-by-step approach
could be roughly divided into four stages.  The first stage would be educational, in broad terms.  Thesecond would involve the provision of technical training, in order to allow a lesser developed
competition regime grow into a mature and sophisticated system.  The third would involve voluntary
cooperation among competition authorities regarding, for instance, the exchange of ad hoc
information.  The fourth stage would involve formal cooperation on the basis of legally binding
instruments.  This progressive approach would be reflective of reality and would best address theactual needs of individual Members.
78. On the basis of the foregoing discussion, the Chairman made the following remarks.  There
appeared to be a problem concerning terminology.  Cooperation on competition matters could be
defined in a variety of ways.  This was not surprising, however, given that the presentations on this
topic had shown that there were innumerable forms of cooperation on competition matters, rangingWT/WGTCP/M/8
Page 31
from bilateral meetings to the exchange of inform ation, the principle of positive comity, etc.  A
distinction had been made between general cooperation in competition law, on building institutions,
and cooperation directed at specific cases.  In addition, voluntary cooperation had been distinguished
from legal cooperation – which would involve some legal obligation to cooperate in certain matters.
An additional distinction had been made between bilateral, regional, and multilateral cooperation.Further, one delegate had offered a progressive classification of types of cooperation, starting with
basic educational cooperation, continuing into cooperation by way of technical assistance, moving
next into voluntary cooperation, and eventually into legal cooperation.  There had also been a
discussion of the benefits and weaknesses of different types of cooperation, but mostly of bilateral,
regional and multilateral cooperation.  With respect to the benefits from cooperation, it had been
argued that cooperation contributed to capacity building for tackling competition problems, and could
help create a constituency for competition in countr ies where this constituency had not yet come into
being.  It had also been mentioned that bilateral or regional cooperation could contribute to the
elimination of trade frictions, as well as misconceptions about a trading partners' application of its
competition policy.  Two weaknesses had been identified.  The first was that informal cooperation,
either at the bilateral or regional level, was voluntary in nature.  If the other country lacked the will to
do its share – for strategic behaviour or any other  reasons – the process stopped.  However, it hadbeen said that it was unlikely that strategic behaviour would develop in this context.  A second
weakness was that, to the extent that cooperation mainly took place between advanced countries, and
developing countries participated only marginally in it, cooperation was not reaping its full potential.
But it seemed difficult to be too definitive in this regard.  The Working Group would benefit from
examining situations where a certain degree of harmony or homogeneity between the countries wasnecessarily useful for cooperation, and cases where such similarities were not called for.  Discussions
had moved then to cooperation at the multilateral level.  The argument had been made that there was a
complementarity between bilateral, regional, and multilateral cooperation.  For instance, multilateral
cooperation could eliminate some of the weaknesses of bilateral or regional cooperation.  Further, the
view had been expressed that multilateral cooperation would be or could be a complement tomultilateral rules on competition – whatever they could be – although others had been of the opinion
that multilateral cooperation did not necessarily require the definition of multilateral rules on
competition.  A number of questions had been raised which could be of interest to the Group.  The
first question was whether "models" or formats for cooperation activities were useful.  Some
observers noted that in some cases such efforts had already been undertaken and were publicly
available.  A second question was whether some coor dination in the provision of technical assistance
was called for, since many events were taking place and there was an obvious risk of duplication.  Athird question was whether cooperation at the multilateral level should obey some criteria, and if so,
whether the underlying concept should be global welfare, and what would be the relationship between
the concept of global welfare and WTO principles.  Finally, a fourth question was whether
cooperation on competition policy helped eliminate trade frictions or trade problems, or whether its
benefits were circumscribed to competition policy matters.  This was a crucial issue given themandate of the Working Group.
III. THE CONTRIBUTION OF COMPETITION POLICY TO ACHIEVING THE
OBJECTIVES OF THE WTO, INCLUDING THE PROMOTION OF
INTERNATIONAL TRADE
79. The representatives of Hong Kong, China; and Japan
 introduced written contributions relating
to this agenda item (document WT/WGTCP/W/118 in the case of Hong Kong, China; and documents
WT/WGTCP/W/119 and 122 in the case of Japan).  In addition, Hungary; Korea ; the United States ;
Norway; Malaysia ; India ; Pakistan ; Egypt ; the European Community and its member States ;
Switzerland; and the Dominican Republic  made oral statements or posed questions on this item, and
the observer from the OECD provided informa tion on relevant activities of his organization.
80. The representative of Hong Kong, China,  introducing document WT/WGTCP/W/118, said
that the application of certain WTO rules benefited import-competing producers rather thanWT/WGTCP/M/8
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promoting competition and consumer welfare.  This was an anomaly, particularly in an increasingly
globalized economy.  To ensure that WTO rules remained valid, credible and up-to-date, there was a
need to introduce a competition-oriented reform of the WTO system.  The focus of this reform should
be to link WTO rules and the broad competition principles of open markets, non-discriminatory
conditions of competition, and consumer welfare.  Along with the implementation of the "WTOapproach" that his delegation had consistently advocated, due attention needed to be directed at
governmental restraints.  As long as trade authorities restricted and distorted import and export
competition, and competition authorities exempted, for instance, export cartels from competition
rules, economic efficiency would not be maximized, nor could competition policy be truly regarded as
consistent and non-discriminatory.  Further, if any multilateral competition principles/standards were
to be developed, such principles/standards had to be flexible enough to accommodate the differences
in objectives, priorities, rules, procedures and institutions in the competition regimes of Members.This diversity called for the adoption of a broad competition perspective rather than for
harmonization.  A WTO framework imposing rigid requirements would undermine not only the
specific development needs of developing countries, but also the more sophisticated competition
policies/rules of developed economies.
81. The representative of Japan, introducing documents WT/WGTCP/W/119 and 122, said that
one of the major objectives of the WTO was "expanding the production of and trade in goods and
services" for the development of the global economy.  The paper presented by his delegation
considered how competition policy could contribute to this objective through helping shape trade
policy.  Competition policy perspectives could be brought into sectoral regulatory schemes by
including the competition agency in policy-makin g, enabling it to play the role of competition
advocate in the sector concerned.  Conversely, competition laws had no power to affect trade-
restrictive measures taken by the government itself directly impeding competition with foreign
competitors.  The paper focused on anti-competitive trade measures, trade remedies such as anti-
dumping in particular, and examined the possibility of introducing competition policy perspectives
into the Agreements governing such measures.  It was important to analyse anti-dumping measures incomparison with safeguard measures. Article XIX of the GATT set forth rules on safeguard measures
as emergency actions to prevent serious injury to the domestic industry from a sudden surge in
imports.  Safeguard measures required offsetting concessions.  In contrast, Article VI of the GATT
(which defined dumping as exportation at prices below normal value) allowed Members to apply anti-
dumping measures if dumping caused material injury to the domestic industry (a lower requirement),
without providing any offsetting concessions.  Further, safeguards required adherence to the WTO
principles of MFN treatment and non-discriminatory administration of quantitative restrictions.  Onthe contrary, anti-dumping measures were selective, departing from the MFN principle.  Hence, anti-
dumping measures had a greater distorting effect on trade than safeguard measures.  Anti-dumping
measures had been originally intended to regulate "p redatory pricing" in international trade, just like
competition laws did with respect to the domestic market.  Article VI of the GATT, however,
restricted "price discrimination" in general, instead  of regulating specifically "predatory pricing" in
international transactions.  Thus, there was a dispar ity between the wording of this provision and the
original objectives of anti-dumping measures.  This meant that certain kinds of market conduct were
controlled but should not be. In addition, anti-dumping had serious trade effects.  Such effects resulted
from the anti-dumping measures themselves, but they could originate as well from the filing of a case.
82. In Japan's view, therefore, there were two problems with anti-dumping: one was that its
philosophy posed a problem from the point of view of competition, the other was that it generated
serious distortions in international trade.  The abuse of anti-dumping measures could be remedied by
bringing in line its purpose, as reflected in the wording of Article VI, with its original function.
Accordingly, the stated purpose of anti-dumping measures should become the regulation of
"predatory pricing", instead of the regulation of "international price discrimination". The abovestandard would require consideration of the following.  First, the concept of "marginal cost" or
"average variable cost" could be used as the basis for the definition of normal value.  The reason for
this being that, according to the Areeda-Turner test in the antitrust practice of the United States, salesWT/WGTCP/M/8
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at prices below marginal cost or average variable cost suggested predatory intent. Second, the
probability of future success in predation should be verified prior to the application of anti-dumping
measures.  This would require considering in the course of an anti-dumping investigation the
conditions of competition in the domestic market of the importing country.  Third, when considering
the application of anti-dumping measures. one should examine not only producer interests (reflectedin injury to the domestic industry), but also the benefits to consumers that arose from low-priced
imports and would be curtailed following the application of such measures. In other words, the
application of anti-dumping measures should be assessed from the viewpoint of the economy as a
whole.
83. The representative of Hungary, also speaking on behalf of Bulgaria
, the Czech Republic ,
Poland, Romania , the Slovak Republic  and Slovenia , delivered a joint statement on the interrelated
issues of investment and competition.  He said th at the rapidly increasing globalization of the world
economy was driven not only by cross-border trade in  goods but also, to an increasing extent, by
international investment, which in recent years had grown at a much faster pace than the former.
Although it was widely recognized that the beneficiary effects of international investment in terms of
its contribution to economic development and the optimal allocation of resources were largely
identical to those of international trade in goods and services, there were no comprehensivemultilateral rules in place for investment.  Such a comprehensive set of rules would bring needed
transparency, predictability and security for firms operating in the global market, whatever their
ownership structure or place of incorporation.  In turn, the lack of multilateral rules and insufficient
cooperation among the relevant authorities in the field of competition affected negatively both
international trade and investment, since the anti-competitive practices of private or regulatory naturecould seriously restrain market access and market presence.  Open policies toward foreign direct
investment and properly constituted and functioning competition policies were mutually supportive.
On the one hand, liberal investment rules, by making the market contestable, could challenge
domestic oligopolies and reduce the likelihood of cartels and monopolies.  On the other hand,
effective competition policies could safeguard against possible abuses of market power by foreigninvestors.  The work of the two Working Groups established in Singapore had been highly valuable
and had greatly improved Members' understanding of the interlinkages between trade, competition
and investment.  The decision of the General Council taken in December last year to extend the
mandates of the Working Groups was welcomed.  This gave Members an opportunity to embark upon
a more focused discussion in the course of the present year that could usefully prepare the ground for
opening negotiations on establishing multilateral sets of rules for investment, as well as for
competition.  These two important issues had to form part of the new global round.
84. The representative of Korea said that his delegation had very similar opinions to those held by
Japan and Hong Kong, China. Korea also was of the view that certain WTO rules and provisions
needed to be reformed in a competition-oriented  manner. It would be unproductive to introduce into
the WTO system a multilateral framework of competition policy, without addressing the anti-
competitive elements built into the current WTO disc iplines.  Korea fully supported what Hong Kong,
China had called the "WTO approach", and from this perspective there was no question that
competition policy must be concerned with both governmental restraints and private practices
restricting competition and trade.  The six elements identified in Hong Kong, China's paper were
illustrative examples of ways to reform certain WTO provisions.  His delegation proposed, therefore,
that more substantive discussions on these elements be undertaken at the next meeting of the Group.In turn, Japan's paper had drawn attention to the anti-competitive aspect of anti-dumping measures.
Korea shared Japan's concerns regarding anti-dumping.  Economists generally agreed that, absent
predatory intent, dumping was basically harmless for the importing country, because the benefits
consumers gained from dumping were greater than  any harm undergone by producers.  Anti-dumping
laws were not the optimal response to predatory dumping; therefore, it was necessary to introduce acompetition policy perspective into the WTO anti-dumping rules.  The proposals outlined in Japan's
paper were valuable in this regard.WT/WGTCP/M/8
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85. The representative of the United States said that the approach his delegation took to this
agenda item was fully consistent with the mandate set for the Working Group in the recommendations
approved by the General Council; that is, in the view of the United States, this item concerned the
contribution of competition policy to the objectives of the WTO.  The term "contribution" was
important because the mission of the Working Group was not necessarily to turn the WTO systeminto an international agreement on competition. In addition, if the Working Group were to make a
decision to consider how competition elements could be infused into WTO provisions, his delegation
would only ask that this examination be holistic.  For instance, a theoretical argument could be made
that this review should include the issue of how competition elements could be infused into the WTO
provisions regarding special and differential treatment, among many others.  This would be a gigantic
exercise that would have to be undertaken with gr eat care. In response to a number of comments, he
clarified that his delegation was not endorsing the review exercise outlined by Hong Kong, China; orJapan.  Rather, if the Working Group contemplated to undertake such an exercise, it was difficult for
his delegation to see why this exercise had to be discriminatory in approach.  Apart from that,
identifying WTO provisions solely on the basis of their alleged anti-competitive effect was too narrow
a perspective.  There were broader substantive considerations explaining why certain provisions
existed within the WTO system and such considerations should not be ignored in the discussions ofthe Group.
86. The representative of Norway said that, in view of his delegation, to ensure that trade policy
and competition policies became mutually supportive, it was important to examine, inter alia , the
formulation of national competition policies, and whether such policies were designed to address both
government restraints on competition as well as private anti-competitive behaviour.  If nationalcompetition policies addressed these key problems, they paved the way for well-functioning domestic
markets, and made a contribution to facilitating market access and promoting international trade, one
of the objectives of the WTO.  Such considerations had underlaid the Ministers' decision in Singapore
to establish the Working Group.  Most competition laws applied to market behaviour having effects
within domestic markets, independently of the location where such behaviour occurred; this wascalled the "effects doctrine".  Thus, anti-competitive behaviour taking place outside the country
concerned still fell under the purview of that country's competition law when such behaviour had an
impact upon domestic markets.  That being said, actions to curb anti-competitive behaviour
originating in a foreign country were difficult or at  times impossible to enforce.  In such cases, the
competition authorities of the country concerned had to request the assistance of the competition
authorities of the country where the anti-competitive behaviour took place.  For a variety of reasons,
however, such assistance was not always forthcoming.  These competition cases, having aninternational dimension, were relevant for market access and thus for achieving the objectives of the
WTO.  Importantly, they were bound to increase in numbers as globalization proceeded, posing a
major challenge to the WTO.  WTO disciplines in the area of competition policy were likely to
enhance the consistency of national competition laws , which would facilitate cooperation amongst the
competition authorities of trading partners.  Well-functioning markets, supported through theimplementation of national competition policies and a possible multilateral framework, would in
Norway's view be of benefit to all Members, in cluding developing countries.  The specific needs of
less-developed WTO Members would have to be duly taken into account, e.g., in the form of
technical assistance to less developed countries engaged in the process of building up their
competition regimes.  Finally, his delegation was attracted to many of the views presented in thepapers by Japan and Hong Kong, China.
87. In response to the statement by the representative of the United States, the delegate of
Malaysia expressed his disagreement with the notion that revisiting in the Group certain WTO
Agreements, such as the Anti-Dumping Agreement or  TRIPS, necessarily suggested the inclusion for
review of other subjects.  Besides, this expansion could not possibly encompass themes such as labouror the environment, since both themes were clearly unrelated to the mandate of the Group.WT/WGTCP/M/8
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88. The representative of India said that his delegation concurred with the thrust of the papers
presented by Japan and Hong Kong, China.  The intention of the Working Group was to examine the
interaction between trade and competition policy, with the long-term goal of seeing how the WTO
could strive towards a greater convergence between these two areas.  Discussions in the Group had
shown that, while trade and competition policies had a lot in common, in certain cases their objectivesdid not point in the same direction.  India agreed therefore with the statement by Hong Kong, China
that the application of certain WTO rules generated anomalies in the sense that such rules protected
import-competing producers, rather than furthering competition and consumer welfare.  India
favoured the suggestion to re-direct such rules by way of introducing a competition-driven reform of
the WTO, focusing on the linkage between WTO rules and the broad competition principle of
promoting non-discriminatory open markets.  India re jected the idea that a competition-driven reform
of the WTO implied turning the WTO into an inte rnational agreement on competition.  Simply put,
discussions in the Group had shown that certain WTO instruments had an anti-competitive
connotation, and it was important to address this problem in the Working Group with a broad and
open mind.  India agreed that the examination of anti-competitive WTO instruments had to be
holistic, going beyond anti-dumping.  In fact, the paper presented by Hong Kong, China was a good
platform for a holistic approach, because it was not re stricted to this issue.  However, it would not be
sensible to sweep under this examination all kinds of WTO provisions, independently of whether they
were perceived as anti-competitive or not.  On a related point, India fully supported the statement by
Malaysia that issues relating to environmental standards and core labour standards were beyond the
purview of any discussion within the WTO.  Finally, suggesting that WTO provisions on special and
differential treatment had an anti-competitive connotation was totally unacceptable to any developingcountry Member.
89. The representative of Pakistan said that his delegation was to a large measure in agreement
with the views presented in the papers by Japa n and Hong Kong, China.  Hong Kong, China and
Japan had looked at the WTO rules as a whole, and addressed, where relevant, the anti-competitive
effects of such rules on the basis of competition principles.  This was a good approach.  As a generalobservation, some of the basic terminology used in the presentations; for instance, the terms
"cooperation" and "communication", remained undefined and this called for clarification.  More
specifically, Hong Kong, China had suggested applying competition policy in a non-discriminatory
manner. In examining this proposal, the developmenta l caveat would have to be firmly borne in mind.
His delegation also concurred with Norway in that national competition policies directed at curbing
anti-competitive behaviour originating outside domestic markets were difficult or at times impossible
to enforce.  This was an area of concern for developing countries and merited further discussion bythe Working Group.  Further, the holistic approach favoured by the United States suggested bringing
in for review notions which were not part of the WTO.  In addition, the idea that provisions in the
WTO system concerning special and differential treatment had an anti-competitive effect and could
therefore be subject to review showed a lack of clarity about what those provisions did, and how they
contributed to increasing the competitiveness of developing countries.
90. The representative of Egypt said that his delegation was of the opinion that the papers
presented by Hong Kong, China and Japan were very valuable and then went on to make a number of
comments with respect to both.  First, he said th at the first paper suggested that there was a choice
somehow between the harmonization of compet ition policies and a rigid multilateral –WTO-
competition framework.  However, in his opinion the situation facing Members was much morecomplicated and allowed for a spectrum of possibi lities between these two extremes.  Second, the
paper by Hong Kong, China indicated that trade policies tended to be producer-driven rather than
consumer-driven.  The Egyptian delegation had some reservations about this statement.  It was clear
that the objective of anti-dumping measures and safeguard measures was to protect import-competing
producers; nevertheless, trade policies and liberalization in general tended to benefit consumers.  Thiswas an important controversy that merited further attention not only by the Working Group, but also
by the WTO as a whole.  Third, the discussion of market-access commitments, private market access
barriers, and national treatment commitments in the paper by Hong Kong, China was very useful, butWT/WGTCP/M/8
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it was important to consider how the development di mension could come into play in this context.
Further, Japan's proposals with respect to anti-dumping, redefining the concepts of normal value and
injury, for instance, were very interesting.  Since Egypt was one of the countries that had suffered
from the abuse of anti-dumping, his delegation strongly supported proposals such as Japan's to further
discipline the use of this instrument.  Finally, Egypt concurred with the delegations of India, Malaysiaand Pakistan in that there were clear limits as to where a comprehensive review of the WTO system
could go.
91. The representative of the European Community  offered a number of comments with respect
to three issues: the relationship between competit ion policy and government measures, the prospects
for a multilateral framework on competition policy, and the development dimension.  With respect to
the first issue, he recalled that his delegation had tabled at an earlier meeting a paper on how
competition policies related to different types of government measures.  He wished to underline twoof the conclusions outlined in that paper.  First, the Group should not look into how competition law
could substitute the WTO provisions relating to trade remedies, given that there were important
differences in the legal economic and institutional se ttings underlying these two regimes.  Second, this
did not mean that competition policy perspectives could not be brought into play with regards to
domestic regulatory measures or indeed other trade policy measures.  With respect to the secondissue, he said that one should not underestimate the degree of convergence which had been achieved
in the competition laws of WTO Members.  There was a significant convergence already, at least with
respect to the issues of competition law that were central for the international trade system.  At any
rate, it was possible and feasible to come up with some common principles of competition law which
took into account the differences in legal settings and in levels of development among Members.Hence, discussing the harmonization of national competition laws was unnecessary.  Further, the
Working Group should focus on anti-competitive practices with a significant impact on the
international trade.  For example, many interventions had signalled a common understanding that hard
core cartels were of special significance both from  the point of view of international trade and from
the point of view of competition law.  Further, he said that Members could focus their modalities ofcooperation on anti-competitive practices with a significant impact on international trade, because
these were the types of practices which were of particular concern in the context of the WTO.  It was
clear, nevertheless, that this basic criterion needed to be broadened, given that if one considered
cooperation from the point of view of the development dimension, there might be some desirable
modalities of cooperation which might not have a direct impact on international trade.  For instance,
presentations by Brazil and others had illustrated how cooperation could support capacity-building in
developing countries.  With respect to the third issue, he said that progressivity and flexibility wereimportant elements of the development dimension in the context of the mandate of the Group.
Progressivity related not only to the introduction of competition law but perhaps even more
importantly to development of the structure which could ensure effective enforcement thereof.  Other
important elements of the development dimension were cooperation and technical assistance,
including efforts at capacity-building.
92. The representative of Switzerland said that her delegation concurred with the proposal by the
European Community to direct the attention of the Group to studying the types of anti-competitive
practices that were particularly harmful to trade.  There were of course other topics that also merited
examination, but the issue of, for instance, how hard  core cartels adversely impacted international
trade, seemed to have special relevance for the deliberations of the Group.  Another importantsuggestion was the adoption of a flexible approach that would take into consideration the sensitivities
that had been expressed in the discussions of the Working Group and development problems more
generally.  The analysis undertaken in this regard by the delegation of the European Community and
its member States seemed very helpful.  Her delegation welcomed other efforts in this direction.
93. The representative of Hungary said that his delegation was in agreement with the suggestions
for organizing the work of the Group contributed by the European Community and its member States
and Switzerland.WT/WGTCP/M/8
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94. The representative of the Dominican Republic drew the attention of the Group to instruments
under trade agreements that prevented trade from one region to another, thus making integration
between two trading blocks impossible.  He cited as examples in this regard restrictions affecting the
inter-regional trade of products such as tobacco and alcohol.  Such restrictions were of importance in
regions such as Latin America, particularly the Caribbean.  Abuse of rules of origin posed a similarproblem and hampered the access of developing countries to international markets.
95. The representative of the OECD drew the attention of the Group to four papers that had been
prepared in the context of the OECD's Joint Group on Trade and Competition.  All four papers were
available at the OECD's website.  The first paper was on Vertical Restraints and Market Access.  The
second focused on complementarities between Trade and Competition policies.  The third studied the
Consistencies and Inconsistencies between Trade and Competition Policies.  The fourth paper was
entitled Competition Elements in International Trade: A Post-Uruguay Round Overview of the WTO
Agreements.
96. The Chairman offered the following reflections on the foregoing presentations.  He began by
pointing out that substantial work had been undertaken by other organizations, in particular the
OECD, on the topic of the contribution of competition policy to achieving the objectives of the WTO,
including the promotion of international trade.  The Group had been informed that a number of papershad been prepared on this topic, which were certainly not the definitive view on the subject, but could
possibly constitute useful input for the deliberations of the Group.  There were several angles to
discussing the contribution of competition policy to achieving the objectives of the WTO.  Two key
questions lay at the heart of these discussions.  The first question was: did competition policy
contribute to the objective of facilitating trade liberalization and, if so, under what circumstances or
under which conditions?  The second question was: can one draw any lessons from competition policy
to better support the objectives of the WTO?  One had different visions depending upon which of the
two questions one tried to answer.  Delegates addr essing the first issue had emphasized the mutually-
supportive goals of trade and competition policies. In a globalizing economy, the adoption of
competition law at a national level not only helped alleviate market access problems, and thereforeadvanced the goal of trade liberalization, but also contributed to achieving well-functioning domestic
markets.  This task could be supported by international cooperation among countries at different
levels.  For instance, in the context of this cooperation, countries could confront anti-competitive
practices affecting international trade, which otherwise no one country could solve by itself.  There
had been repeated references that such practices should become the focus of discussions.  One
delegate had underlined that there was a double or reciprocal relationship between competition policy
and the objectives of the WTO.  In his view, the application of WTO principles such as transparencyand non-discrimination to competition law raised th e quality of competition law enforcement, which
itself facilitated the trade liberalization process.  Other delegates had emphasized that anti-competitive
practices restraining trade were not exclusively pr ivate practices, and that this called for the
examination of governmental policies with an anti-competitive impact.  There had been a question as
to how effective competition law could be this regard, since usually it did not tackle this sort ofproblem.  When looking at the supportive nature of competition policy in meeting WTO objectives,
the point had been made that harmonization of competition policy principles or standards – if they
were to be developed at the multilateral level – was not an absolute necessity.  In fact, great flexibility
was required to accommodate differences between countries.  Delegates addressing the second issue –
the lessons in competition policy to better support the objectives of the WTO - had focused on therelationship between competition policy and the instruments of trade policy used in the context of the
WTO.  The view had been expressed that it was useful to think about how those instruments could be
made more consistent with the underlying principle of competition.  Several ideas had been proposed
regarding the improvement of specific WTO provisions, going from broadening the scope of such
provisions – for example, extending market access commitments to private barriers – to revising theirunderlying principles.  When discussing such proposals, reference had been made to the development
dimension, pointing out that no unique solution was acceptable or useful.  Along this line of analysis,
there had been a sub-discussion on certain WTO tr ade measures.  The argument had been made thatWT/WGTCP/M/8
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trade remedies, for instance, could have an anti-competitive effect, and that they may be over-used for
reasons which had to do with the internal mechanics of the relevant WTO Agreements.  The view had
been expressed that, to alleviate this problem, it would make sense to make such trade instruments
more compatible with the principle of competition, either by introducing some principles which were
familiar to competition policy, such as consumer benefit, or some elements of analysis which wouldmake sense from a competition point of view; fo r example, consideration of the conditions of
competition in the domestic market of the importing country in order to establish the possibility of
predation.  A counter-argument to the above view had been that the trade instruments in question had
a logic of their own and should not be seen in the narrow context of whether or not they affected
competition.  According to this approach, competition policy instruments, possibly at the multilateral
level, should be regarded as complements to trade poli cy instruments, rather than substitutes.  Finally,
there had been an extended discussion as to whether an examination of trade instruments in light ofcompetition policy should be broad ("holistic") or narrow and what the parameters for that
examination should be.
IV. OTHER ISSUES RAISED BY MEMBERS RELATING TO THE GROUP'S
MANDATE TO STUDY THE INTERACTION BETWEEN TRADE AND
COMPETITION POLICY
97. Japan introduced a written contribution on this matter (WT/WGTCP/W/124).  In addition, the
Group had before it an Overview of Members' National Competition Legislation (Job No. 2223)
prepared by the Secretariat.  The representatives of Mexico; the United States ; the Dominican
Republic; Hong Kong, China ; India ; Singapore ; and Korea  made oral comments or posed questions
on this item.
98. Introducing document WT/WGTCP/W/124, the representative of Japan said that it responded
to views presented by the United States at the Group's meeting on 27 and 28 July 1998.  The paper
made four main points.  First, regardless of the original intention, the current WTO rules allowed anti-
dumping measures to serve as protection for domestic industries.  In particular, anti-dumping
measures permitted under the current rules prohibited low price sales which were completelylegitimate under domestic competition law.  Second, the current anti-dumping system did not
correspond with the United States' views on it.  The paper provided by the United States to the
meeting on 27-28 July (WT/WGTCP/W/84) had asserted that that the main objective of the anti-
dumping system was to protect domestic industries against exports by foreign competitors that had
unfair advantages in their home markets.  However, there was no requirement for an anti-dumping
authority to stop the existence of such unfair advant ages or to identify a cause and effect relationship
in this regard.  Third, the potential problems in the home markets of exporting countries which theUnited States paper identified as justifying anti-dumping measures did not, in fact, justify such
measures since they could either be addressed by other WTO rules or were matters that should not be
addressed by trade rules.  For example, government subsidies and price controls could be and were
properly dealt with under the Subsidies Agreement.  Clearly, international economic rules should not
in any was allow the invocation of sanctions based on differences in national economic systems.Fourthly, while noting the existence of domestic political realities regarding anti-dumping in some
countries, imperfections in the current WTO rules should not be used as an excuse for imposing anti-
dumping measures, given the magnitude of the market-distortive effects of the anti-dumping
measures.
99. The representative of Mexico said that his country shared the comments made by several
delegations on the previous agenda item, in particular those of Hong Kong, China; India; Pakistan;
Egypt; and the Dominican Republic, among others.  His delegation hoped to present a written
contribution on these matters at the next meeting of the Working Group.  The document envisioned
would be on the need to improve and rationalize Arti cle VI of GATT, in particular, in connection with
the following aspects:  market power, predatory practices, relevant markets and price-discrimination.In the planned document, Mexico would develop ar guments along the following lines.  There was noWT/WGTCP/M/8
Page 39
economic justification for anti-dumping measures when the goods were traded freely, free of trade
barriers and restrictive practices.  Competition legislation should be applied to practices that
genuinely impede free competition.  The existing Anti-Dumping Agreement should be amended to
include elements based on efficiency, which would make it more pro-competitive, as well as to
include measures to decrease the discretionary power of authorities in connection with these matters.
100. The representative of the United States said that the Working Group had been formed with the
aim of exploring, in a pedagogical way, a set of issues with which the trading system had had very
limited experience and understanding, primarily w ith respect to the structure, operation and
implications of competition law and policy for trade in the broadest context.  Its purpose was not to
provide a focus for anti-dumping.  The rules on anti-dumping had been negotiated at length and the
question of any renegotiation was something that could not be taken up in this Group.  The Japanese
suggestion to mutate anti-dumping rules into a diff erent set of rules to govern predatory pricing was,
in the view of his delegation, misplaced and misguided.  It gave short shrift to the legitimate
differences that existed between trade policy and competition policy objectives with respect to those
issues.  As had been said previously, anti-dumping and competition rules had different objectives –
they were founded on different principles and they sought to address different problems.  Anti-
dumping rules were not intended to address predatory pricing.  Article VI of the GATT had never hadanything to do with the issue of predatory pricing, even in 1948 when it had been concluded.  If the
anti-dumping rules were eliminated in favour of co mpetition laws or if they were modified to reflect
competition principles, it was the view of the United States that the problems which those rules had
sought to address would go unaddressed.  They we re a remedial mechanism which was necessary to
the maintenance of the multilateral trading system, and they also reflected a broad consensus amongMembers – developed and developing – which had been refined over many years.  The overall
understanding embodied in the WTO Agreements was achieved, in the perspective of his delegation,
only because Members, particularly those with rela tively open markets, had recourse to instruments
like anti-dumping laws.  He recalled a comment that had been made previously by the European
Community and its member States, that competition laws had been established in the context of asingle integrated market, and had no applicati on in the domain addressed by anti-dumping rules,
which were aimed at far different considerations that came into play when multiple national markets
are involved.  He recognized that neither the GATT nor the Anti-Dumping Agreement specifically
referred to the types of practices that the United States had referred to in the paper that it had tabled
last summer (WT/WGTCP/W/84) as a prerequisite for defining dumping.  That was why the United
States had described anti-dumping measures only as an indirect response to those policies, and not a
remedy to them.  Moreover, as had been stated previously by his delegation, there was a forum inwhich WTO Members could take up these issues if it wa s judged that they were worthy of being taken
up, and that forum was the Anti-Dumping Committee.  The Committee was in a position to address
alleged abuses of the anti-dumping rules, and for that matter a future work programme that might be
developed to address the implementation of WTO Agreements, perhaps more generally.  These were
more proper fora for expressing and discussing concerns about the existing rules.  He noted that theUnited States itself had certain concerns about the proper implementation and interpretation of the
provisions of the Anti-Dumping Agreement, and beyond that it had additional concerns about what
seemed to be a tendency of some Members to resort to the use of less transparent responses to address
alleged dumping problems with respect to their valuation practices and the institution of minimum
import pricing which on occasion had been referred to as being necessary to deal with dumpingproblems.  Therefore, it was an issue for a different forum in the WTO to address, as to what might be
the appropriate approach to take in the context of preparing for the Ministerial later this year and the
future agenda of the WTO.  He hoped that the Working Group could remain focussed on the
educative work that had been mandated for it and on which, as was evidenced by the Group's
discussions over the last couple of days, it had barely scratched the surface of understanding.
101. The representative of the Dominican Republic said it would be worthwhile to explore the
points that had been made regarding the impact of anti-dumping on competition, as had been
suggested by Japan.  In addition, the suggestion that had been made by the United States, that certainWT/WGTCP/M/8
Page 40
issues concerning anti-dumping could be discussed as implementation issues, in the context of the
preparatory process for the next Ministerial Conference, also merited consideration.  In regard to the
Overview of Members' National Competition Legislat ion that had been provided by the Secretariat
(Job. 2223), he said that a related document had been prepared for the Working Group on
Competition Policy for the Free Trade of the Americas, and was available on the internet page of theOrganization of the American States.  The relevant web sites provided more detailed information on
the legal systems prevailing in countries in Latin America, the Caribbean, and North America, and
could be of interest from the perspective of the WTO Working Group, as well.
102. The representative of Hong Kong, China said that the problem with the paper by the United
States on which Japan had commented (WT/WGTCP/W/84) was that it did not correspond to reality.
For example, the paper made reference to structur al problems, distortive governmental industrial
policies, etc., as the rationale for anti-dumping measures.  The first problem was there was no suchreference in Article VI of the GATT, nor in the Anti-Dumping Agreement.  The second problem was
that there was no such reference in the anti-dumping law of the United States, nor in the way that the
law was administered.  There also was no statutory requirement within the relevant United States law
that a finding of, say, structural problems or dist ortive governmental industrial policies in the
exporting countries, was a prerequisite for the starting of investigations, or the imposition of anti-dumping duties.  There was only a mechanical comparison of artificial figures.  A further problem
was that anti-dumping actions were routinely taken by  countries with relatively closed markets against
relatively open economies, such as the United States itself.  Another key argument in the paper by the
United States was that anti-dumping addressed market failures.  If that was the case, how could it be
explained that the United States did not attempt to tackle market failures at their source, rather thanjust to impose anti-dumping duties at entry points in the United States?  Lastly, he noted that anti-
dumping measures were envisaged by some delegations as a kind of relief measure.  But the
implementation of such measures could itself create additional distortions to trade and competition,
which were more serious than the original problems that anti-dumping allegedly addressed.
103. The representative of India said that this agenda item was, in the view of his delegation,
extremely important.  The interaction between trade and competition, including anti-competitive
practices were fundamental to the work in which the Group was engaged.  The Group had been told in
more than one meeting how competition policies co uld augment the benefit of trade liberalization.  It
had also seen that was a wide variety of issues that were encompassed by the expression "trade and
competition policy".  However, it was now clear that in some respects, the two policies were
contradictory and therefore were a source of friction in the international trading arena.  In the context
of an increasingly globalized economy, any form of policy intervention in  economic matters as wellas the absence of intervention could have an effect on both international trade and competition within
national markets.  Thus, policies motivated by trade concerns would potentially have an impact on
competition and, conversely, policies motivated by competition concerns would potentially have an
impact on trade patterns.  This view of trade policy and competition policy was, of course, general but
it was useful since it captured some of the difficul ties involved in examining the interaction between
the two policies.  Given the differences between  the underlying assumptions and perspectives of
competition policy and trade policy, it could be useful to consider the contrasting approaches of the
two disciplines to several issues that had a bearing on both trade policy and competition policy and
that had been the subject of some discussion in the meeting.  His delegation hoped, therefore, that in
its future work on this agenda item, the Working Group would consider the competition and tradepolicy perspectives on some of these issues, including export cartels, extra-territorial enforcement of
competition laws and anti-dumping.  This, in his view, would not detract from focus, but would be
part of the focus that the Group had mandated itself.  With regard to the suggestion that had been
made by the European Community and its member St ates in past discussions, that the Group address
those anti-competitive practices that had a significant trade impact, his delegation agreed.  However,any such examination had to be carried out with a simultaneous analysis of trade instruments that had
a significant anti-competitive connotation.WT/WGTCP/M/8
Page 41
104. The representative of Korea said that, as had been elaborated in the document submitted by
Korea at the Group's meeting on 27-28 July 1998 (document WT/WGTCP/W/90), when assessing
anti-dumping rules from the competition perspective, it could not be said uniformly that a dumping
case was unfair or not.  Rather, a case-by-case examination was called for.  Furthermore, as had been
pointed out by Hong Kong, China at that meeting, it was important to search for ways to addressdistortions of competition directly at their source, so as not to create further distortions of trade and
competition.  Where appropriate, distortions could and should be addressed at source from the
perspective of competition policy.  By nature, anti-dumping rules were not so much related to
industrial policies of governments as they were to allegedly abusive international pricing practices of
private firms.  To the extent that industrial policies subsidised specific enterprises or industries and
thereby created market distortions, they could be addressed under the Agreement on Subsidies and
Countervailing Measures.  Other unfair industrial policies could be addressed through WTO disputesettlement procedures.  In addition, WTO rules did not regulate the common aspects of national
economic systems which could not directly distort trade.  Finally, at the meeting in July 1998, the
United States had asserted that only fair trade practices were subject to the national treatment
principle and unfair trade practices were excluded.  However, as had been pointed out in the paper by
Korea, the unfairness of a certain dumping case could not be determined uniformly and had to beevaluated on a case-by-case basis.  He saw no reason why allegedly unfair price discrimination should
be treated differently in the domestic and international settings.
105. The representative of Japan said that his delegation did not agree with the United States that
the impact of anti-dumping on competition was not an appropriate subject for discussion in the Group.
In addition to the impact of anti-competitive practic es of enterprises on trade and competition, it was
important to consider, in parallel, the impact of gove rnment measures.  In this regard, he referred to a
speech made recently by the Chairman of the Federal Reserve Board in the United States,
Mr. Alan Greenspan, which had noted that anti-dumping measures could have anti-competitive
effects.
106. The representative of Singapore, commenting on the Overview of Members' National
Competition Legislation that had been prepared by the Secretariat (Job 2223), said that in paragraph 3,
a question has been posed as to how inclusive this document should be.  In this regard, he noted that
because of its focus on competition legislation as such, the document had not made reference to the
competition policy of Singapore or, possibly, other countries, which was based on different
instruments.  He would favour a more inclusive appr oach.  On the issue that had been raised in the
paper submitted by Japan on this item (WT/WGTCP/W/124), he observed that, for his delegation, the
focus of the Group still remained on the interaction between trade and competition policy, and to that
extent anti-dumping remained on the table.  The points raised by Japan were worthy of consideration
by the Group.
107. In response to the suggestion by Singapore regarding Job 2223, the representative of
Hong Kong, China suggested that this might be addr essed by including, in the introductory section of
the document, appropriate cross-references to Members whose national competition policies were not
based on comprehensive competition laws.
108. In response to the suggestion that had been made by Singapore and the related comments by
Hong Kong, China, the Group agreed that the Secret ariat would be asked to prepare a revised version
of the Overview of National Competition Legisl ation (document 2223) and to include, in the
introductory section of the document, appropriate cross-references to Members whose nationalcompetition policies were not based on comprehensive competition laws.  In addition, any further
comments provided by Members on their national legislation would be incorporated in the document.WT/WGTCP/M/8
Page 42
V. REQUESTS FOR OBSERVER STATUS FROM INTERNATIONAL
INTERGOVERNMENTAL ORGANIZATIONS
109. The Working Group agreed to revert to reques ts 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
110. The Chairman suggested that, in the course of its next meeting, to be held on
10-11 June 1999, in addition to carrying forward the work undertaken at the current meeting, the
Working Group might wish to consider how it should report to the General Council on its activities
this year.
111. In response to a suggestion by representative of  Hong Kong, China, and following discussion,
the Group agreed that the Secretariat would be asked to provide a note setting out factual background
on the fundamental principles of competition policy, as an input to the Group's further work on the
relevance of the fundamental WTO principles of national treatment, transparency, and
most-favoured-nation treatment to competition policy and vice versa.  In selecting the principles on
which to focus, the Secretariat would seek guidance from such diverse sources as observations made
by Members in meetings of the Working Group, guidelines, policy statements and analyses preparedby other international organizations, national laws and guidelines, and academic analyses.
112. To maximize the usefulness of the meeting, the Chairman encouraged delegations to provide
written contributions to the Secretariat as soon as possible, and preferably no later than 27 May 1999
(two weeks in advance of the meeting), to facilitate their translation and distribution to delegates.
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