RESTRICTEDWORLD TRADE
ORGANIZATIONWT/WGTCP/M/3
26 February 1998
(98-0777)
Working Group on the Interaction
between Trade and Competition Policy
REPORT ON THE MEETING OF 27 AND 28 NOVEMBER 1997
Note by the Secretariat
1. The Working Group on the Interaction between Trade and Competition Policy held its third
meeting on 27 and 28 November under the Chairmanship of Professor Frédéric Jenny.
2. The substantive agenda for the meeting comprised items I and II of the Checklist of Issues
Suggested for Study prepared by the Chairman (document WT/WGTCP/M/1, Annex 2).  As decided
at its previous meeting, the Working Group divided its discussion of item I into two components:  the
relationship between the objectives, principles, scope and instruments of trade and competition policy;
and the relationship of trade and competition policy to development and economic growth.  The
Group also considered two requests for observer status from intergovernmental organizations, and the
organization of its work for the coming year.
I. THE RELATIONSHIP BETWEEN THE OBJECTIVES, PRINCIPLES, CONCEPTS,
SCOPE AND INSTRUMENTS OF TRADE AND COMPETITION POLICY
3. Representatives of the European Community and its member States, Japan , Mexico  and
Canada introduced written contributions that had been prepared for the meeting (documents
WT/WGTCP/W/45, 52, 58 and 57, respectively) relating to this item of the agenda.  In addition, the
representative of Turkey introduced a non-paper, and representatives of Thailand on behalf of
ASEAN WTO Members, Singapore , India , Egypt , Nigeria , the Dominican Republic , Australia , Brazil ,
the United States, Columbia  and Norway  re-introduced earlier written contributions or made oral
statements or posed questions relating to this item.
4. A number of representatives, including those of the European Community and its member
States,  Japan , Mexico , Turkey , Singapore  , India , Nigeria  and Norway , said that the overall goals of
trade liberalization and competition policy were essentially the same.  These goals were primarily
those of efficiency and consumer welfare.  Trade policy sought to achieve these objectives primarily
through the reduction of government-imposed barriers to international commerce, while competition
policy addressed private anti-competitive practices of enterprises that impeded access to, or the
efficient functioning of, markets.  The representative of the European Community and its member
States said further that a central function of the WTO was to ensure equality of competitive
opportunities for Members in the world trading system.  This illustrated the interdependence of tradeand competition policy.  The two policies were complementary in the sense of being mutually
supportive.  Neither one could fully achieve its objectives without the other.
5. A number of representatives, including those of Japan, Mexico
, Thailand on behalf of
ASEAN WTO Members, Singapore , India , Nigeria  and Norway , said that elements of existing trade
instruments could, at least in their application, be inconsistent with the goals of competition policy.
These included, for example, some applications of anti-dumping measures, and the treatment of
subsidies/countervailing duties.  The representative of Mexico said further that the relationship
between trade and competition policy in fact had three aspects:  those which were complementary,WT/WGTCP/M/3
Page 2
those which were antagonistic or in conflict, and those which were actually or potentially
substitutable.  An example of a complementary aspect was the prohibition, under competition law, of
predatory practices that deterred access to markets in which conventional trade barriers such as tariffs
or quotas had been eliminated.  An example of th e second aspect, namely that of conflict between
trade instruments and competition policy, was provided by anti-dumping measures, to the extent that,
at least in some cases, such measures could be triggered by prices that were not actually harmful tocompetition in the importing country.  As an illustration of the third aspect, competition law
provisions relating to price discrimination might serve, in some circumstances, as a substitute for anti-
dumping measures.  He also suggested that elimination of existing trade barriers would have the effect
of removing the incentive for enterprises to engage in dumping, in that goods exported at dumped
prices could be shipped directly back to the country of export.  Egypt and the Dominican Republic
said that they shared Mexico's perspective on the need for the Group to examine in detail the areas of
conflict or divergence between competition and trade policy.
6. The representative of Singapore emphasized that, despite the overall similarity of ultimate
goals which had been ascribed to trade and competition policy in the Group, there remained
significant differences in the practical orientation of the two policies.  Whereas competition policy
focused on the effect of enterprise behaviour on the welfare of consumers, trade policy tended to
focus on producer interests, and was amenable to capture by special interest groups.  He said further
that competition policy was also susceptible to application in ways that gave excessive weight to theinterests of national producers - as evidenced, for example, in the exemption of export cartels from
many countries' competition legislation.  India said that an overall goal of competition policy was to
establish the primacy of the consumer.  Building on these viewpoints, Singapore, Mexico  and India
said that it would be desirable to introduce elements of competition policy thinking into trade policy
formulation.
7. The representative of the United States said that the goals of trade and competition policy
would not always be the same, and that insistence on a convergence of objectives would obscure
understanding of the issues.  While competition policy indeed focused primarily on the goals ofefficiency and consumer welfare, trade policy often sought to protect or advance the interests of a
country's individual producers.  There was nothing intrinsically objectionable to this, and it would not
be realistic to expect that this apparent tension between the objectives of trade and competition policy
could be eliminated.  Different policy instruments often served different objectives.  For example,
with regard to the matter of market access, depending on the facts in a particular market, it could bethe case that the use of vertical market restraints by firms would be considered acceptable from the
standpoint of competition policy, perhaps due to the existence of a sufficiently large number of
competing domestic firms.  The same situation coul d, nonetheless, give rise to legitimate concerns
from a trade policy point of view, if it was deemed to impede access to the market by foreign firms.
Another distinguishing feature of competition and trade policy was that, in many cases, competitionpolicy issues could be resolved through private actions by firms, whereas this was not true of trade
policy.
8. The representative of Nigeria, referring to related observations by the representative of
Mexico, noted the need for coherence between competition policy, trade policy, and policy toward
foreign direct investment.
9. In response to a question from the representative of Nigeria, the representative of the
European Community and its member States also discussed the application of competition policy vis-
à-vis market access.  He said that, while enhancing market access for foreign firms was notconsidered to be a goal of competition policy per se , the application of competition law could, in
particular cases, help to address concerns relating to market access that arose from restrictive practices
engaged in by incumbent domestic firms. In order for competition law to serve this function, however,
effective arrangements for international cooperation in enforcement of the law had to be in place.WT/WGTCP/M/3
Page 3
10. The representative of the European Community and its member States said further that, in
evaluating the relationship between trade and competition policy at a conceptual level, a distinction
should be made between trade liberalization as a process or direction of policy and specific trade
measures that remained in place.  There was no doubt that trade-restricting measures which remained
in place could have the effect of limiting competition.   Nonetheless, the point remained that the goals
of trade liberalization as a process and those of competition policy were consistent and mutuallysupportive.
11. With regard to the scope and content of competition policy, the representative of the
European Community and its member States said that  competition policy could be analysed from the
perspective of three elements:  (i) the types of anti-competitive practices that were dealt with by such
policy, including the existence of an international dimension to such practices;  (ii) the application of
competition law vis-à-vis particular economic sectors;  and (iii) institutional issues relating to
enforcement, including matters such as access to justice and the consistency of institutional practiceswith general requirements of transparency and non-discrimination.  Egypt, India
 and Japan  expressed
general agreement with this approach and particularly with the importance of questions relating toenforcement.
12. The representative of Thailand on behalf of ASEAN WTO Members said that, in addition to
the traditional concept of domestic regulation or competition legislation, competition policy could be
viewed as comprising the full range of government measures that impacted on market structure and
conduct, including trade liberalization measures.  In fact, competition policy might or might not
include the existence of a traditional competition law.
13. The representative of the United States said that competition policy would normally include a
national competition law, as a central element of such policy.  The representative of Japan indicated
general agreement, while also emphasizing the close relationship between economic deregulation and
the strengthening of competition law enforcement.
14. Canada said that an issue meriting attention by the Working Group was the consistency of
national competition legislation with traditional WTO principles relating to non-discrimination, in
particular national treatment.  Canada, working toge ther with its partners in the North American Free
Trade Agreement (NAFTA), had conducted a study of this question with reference to the competition
legislation of the three NAFTA partners (Canada, the United States and Mexico).  The study
considered both the scope and content of the three countries' competition legislation, and had found
that, in general, such legislation was consistent with the principle of national treatment.  In response to
a request to elaborate on what was meant by non-discrimination in the context of competition lawenforcement, and to indicate what recourse would be available if a non-member of NAFTA
experienced what it felt to be discriminatory treatm ent with regard to the application of competition
law by a NAFTA member, the representative of Canada replied that the study he had mentioned had
been concerned principally with the content of the NAFTA partners' legislation, and that it had not, onits face, revealed significant concerns vis-à-vis the principle of non-discrimination.  The
representative of the European Community and its member States said that, in reflecting on this
general issue in the Group, it would also be important to consider a range of institutional questions
relating to access to courts or other adjudicatory authorities and the exercise of enforcement
discretion.  The OECD had undertaken a study of these questions which was relevant to the work of
the Group.
15. Several representatives, including those of the European Community and its member States,
Japan, Mexico , Turkey  and India , referred to the importance of enhanced international cooperation
mechanisms for competition law enforcement as a response to developments such as globalization and
trade liberalization.  In particular, globalization and successive rounds of trade liberalization in the
post-World War II period had enhanced the risk of anti-competitive practices that could impact
adversely on international trade.  This created a need for consideration of the benefits of strengthening
international cooperation mechanisms.WT/WGTCP/M/3
Page 4
16. The representative of Brazil said that it was desirable to discuss institutional linkages between
trade and competition policy, and the feasibility and desirability of expanded cooperation in
competition law enforcement, at three levels.  First, within individual countries, much would be
gained through closer institutional linkages and dialogue between institutions responsible for trade
policy and competition law enforcement.  This could proceed immediately.  Second, at the regional
level, a significant strengthening of cooperative ap proaches to competition law enforcement, coupled
with selective substitution of competition law for ex isting trade instruments, could also be envisioned
over the medium term.  At the multilateral level, a more cautious and gradual approach was
warranted.  This could involve two elements:  (i) the fostering of shared understanding and voluntary
convergence through the sharing of national experi ences, legislation and jurisprudence;  and (ii)
deliberations on possible basic standards to be incorporated in Members' competition legislation.
17. A number of representatives made suggestions for further work by the Group in the context of
their statements regarding this item of the agenda.  The representative of the European Community
and its member States emphasized the need for further and more explicit consideration of the
international dimension of competition law enforcement, with reference to actual cases dealt with byenforcement authorities.  Their submission for the next meeting of the Group would address this
matter.  He also suggested that the Group identify the specific elements of competition policy that
were important for the world trading system, while also considering how strengthened arrangements
for international cooperation could assist in applying those elements.  Representatives of somecountries, including Egypt, Nigeria
 and the Dominican Republic , indicated broad agreement with this
approach, while also emphasizing that it would be important to consider areas of divergence inaddition to areas of harmony between competition policy and existing WTO provisions.  The
representative of India said that analysing areas of divergence between competition policy and trade
policy should be an important focus of the Group's work.  In this regard, it was important to consider
regional arrangements which illustrated the potential substitutability of trade and competition policy
instruments.  The representative of Japan said that  further consideration was needed of key concepts
of competition and trade policy, including possibly those of market and product definition,
competitive prices and costs and injury to domestic industry, to ensure the existence of a common
vocabulary within the Group.  The representative of Canada, as noted, suggested a need for
consideration of the applicability of basic WTO principles and requirements such as non-discrimination, in particular national treatment, vis-à-vis Members' competition legislation.  Therepresentative of Singapore said there was a need for better understanding not only of the analytical
concepts but also of the political economy underpinnings of aspects of trade and competition  policy,as a prerequisite for evaluating the scope for convergence.  The representative of Thailand on behalf
of ASEAN WTO Members recalled the educational nature of the Group's mandate, the need for a
balanced approach to consideration of the issues, and the fact that the work of the Group was withoutprejudice to the question of whether there would eventually be negotiations on competition policy
issues in the WTO.
18. In concluding the discussion on this item of the agenda, the Chairman noted that the point had
been made that there were at least three aspect s to the relationship between trade and competition
policy: complementarity, antagonism and possible substitutability of particular instruments.  With
regard to the complementarity aspect, in addition to the ultimate goals which were an importantelement, it had been said that trade and competitio n policy were also complementary to other policies
such as investment liberalization and deregulation.  Taking a dynamic view, the tendencies toward
trade liberalization and the strengthening of competition policy were mutually reinforcing.  He also
noted that there had been a sub-discussion on the question of national treatment, which was an
example of a particular trade policy value, and whether competition policies were always consistent
with this.
19. The Chairman further noted that some delegates had suggested that the Group should also
look at the divergences between trade and competition policy.  These divergences seemed to be partlya question of the criteria used, in particular the importance attached to firms' profits versus consumerWT/WGTCP/M/3
Page 5
welfare.  Possible contradictions would become more obvious to the Group at the next meeting and
the following meeting when it looked at anti-co mpetitive practices that restricted trade and
government measures that might restrict competitio n.  A question to be asked was what, if anything,
could be done about the differences.  In this regard, a natural tendency was to try to see whether trade
and competition concepts and values could be brought together.  On the other hand, it had been
suggested that these divergences in the underlying values, criteria and instruments were to beexpected and perhaps should simply be accepted.  The need for discussion of enforcement
mechanisms and practical examples of the use of competition law instruments or the use of trade
instruments had also been referred to, with emphasis put on the desirability of this discussion being as
concrete as possible.  In regard to the issue of substitution, he noted that several dimensions of the
matter had been outlined.  One of them was whether a competition provision could be substituted for
a trade provision or vice versa.  A second one was whether the development and implementation of
competition policies across a broader range of countries could have the effect of diminishing theproblems that led to the taking of trade policy  measures.  The Chairman emphasized that these
thoughts were only his personal reflections, and that they had no official status.
II. THE RELATIONSHIP OF TRADE AND COMPETITION POLICY TO DEVELOPMENT
AND ECONOMIC GROWTH
20. The representatives of the European Community and its member States and Japan
 introduced
written contributions that had been prepared for the meeting (documents WT/WGTCP/W/45 and 52,
respectively) relating to this item of the agenda.  In addition, the representative of Turkey introduced
relevant portions of her delegation's non-paper for the meeting, and representatives of Thailand on
behalf of ASEAN WTO Members, Norway , Brazil , Korea , the Dominican Republic , Morocco , India ,
Tunisia, the United States , Argentina  and Romania  re-introduced earlier written contributions or made
oral statements relating to this item, and the observer from UNCTAD made an oral statement
regarding relevant activities of his organization.
21. With regard to the general importance and benefits of competition policy as a tool of
economic development, representatives of a number of countries, including the  European Community
and its member States, Japan , Turkey , Norway , Brazil , Korea , Morocco , India , Tunisia , Argentina  and
the United States, said that competition and competition policy could play an important or, in the view
of some of these countries, even a central role in facilitating development.  Among other benefits,
competition policy could:  (i) prevent or eliminate anti-competitive practices of enterprises that
impeded the efficient functioning of markets;  (ii) reinforce the benefits of privatization and
deregulation programmes and initiatives;  and (iii) enhance the attractiveness of an economy toforeign investment, by providing a transparent a nd market-oriented framework for the resolution of
disputes involving multinational enterprises, which would reduce uncertainty and transaction costs.
In addition, a national competition agency or council could serve as a focal point for advocacy efforts
to promote market-oriented economic reforms and a national "competition culture".  The benefits of
competition policy would be maximized if it was adopted as one element of an overall development
strategy which encompassed trade liberalization in addition to other market-oriented reforms.
22. The representative of the European Community and its member States said further that
competition policy had gained importance in recent times, as a tool of economic development.
Whereas, in the past, countries could achieve development through other tools and approaches, these
approaches were no longer workable in light of the extent of trade liberalization and globalization of
business activities that had taken place and the increased importance of foreign direct investment as
an engine of growth.  As a result of these developments, anti-competitive practices of enterprises wereincreasingly international in scope, and appeared to be relatively more significant than in the past.  A
vigorous competition policy was necessary to respond appropriately to these concerns and to establish
a climate that was conducive to investment and economic growth.WT/WGTCP/M/3
Page 6
23. The representative of Japan discussed the importance of competition policy in the context of
his country's development.  He highlighted the importance of structural deconcentration measures
taken in the immediate post-World War II period (the "zaibatsu deconcentration"), which had
provided an important basis for subsequent economic development and growth.  More recently, in the
past decade there had been a strengthening of competition policy in Japan, due in part to pressures
emanating from his country's trading relationships.  Specific measures had been taken by the JapanFair Trade Commission to improve access to markets.
24. Elaborating on remarks made in his country's contribution for the September meeting of the
Group (WT/WGTCP/W/56), the representative of Korea  discussed the role of competition policy in
his country's economic development.  He said that Korea's experience demonstrated the desirability ofthe early and effective application of competition policy in conjunction with other measures to
promote development.  A more effective competitio n policy would have prevented structural rigidities
and inefficiencies due to excessive concentration, as well as wider problems linked with inequality inthe distribution of wealth and income.  He pointed out, however, that effective application of
competition policy depended on appropriate public education measures.
25. The representative of Thailand, speaking on behalf of ASEAN WTO Members, said that
ASEAN countries were well aware of the benefits of competition and competitive markets in
fostering development and economic efficiency in both its static and dynamic senses.  Nonetheless,competition was only one factor underlying a successful development strategy;  before its benefits
could be realized, sufficient supply capability must be present in an economy.  It was also important
to recognize that parastatal institutions and conglomerates, or in some cases even monopolies, in
addition to special regulatory regimes for the exploitation of natural resources, could all play an
important role in the development process.
26. The observer from UNCTAD described several recent meetings, initiatives and studies of his
organization which were relevant to the matter of competition policy and economic development,
including the Expert Meeting on Competition Law and Policy which had taken place on 24-26
November.  The resolution adopted at the Expert Meeting had referred to the Singapore Ministerial
Declaration and had called for continued cooperation between UNCTAD and the WTO in the area ofcompetition law and policy (see UNCTAD, Agreed Conclusions of the Expert Meeting on
Competition Law and Policy, 26 November 1997).  The meeting had reviewed a study by the
UNCTAD secretariat entitled Empirical Evidence of the Benefits From Applying Competition Law
and Policy Principles to Economic Development in Order to Attain Greater Efficiency in International
Trade and Development (TD/B/ COM.2/EM/10, 18 September 1997).  Based on practical examples
and relevant economic literature taking into consideration the experience of both developed and
developing countries, the study found that a well-constituted competition policy could yield
significant benefits for developing countries, in promoting efficiency and dynamic change.  The
UNCTAD Expert Meeting had also included informal consultations on the subjects of:  (i) the
international dimension of competition and competitio n policy;  (ii) the treatment of non-price vertical
market restraints under competition legislation;  and (iii) promoting a "competition culture" in a
developing economy setting.  The next meeting of the UNCTAD Expert Group on Competition Lawand Policy would take place on  29-31 July 1998.
27. Continuing, the observer from UNCTAD said that other recent UNCTAD meetings that were
relevant to the interests of the Working Group included a High Level Segment of the Trade and
Development Board, on the subject of Globalization, Competition, Competitiveness and
Development, and the Commission on Investment, T echnology and Related Financial Issues, which
had held a debate on the subject of the usefulness of introducing competition policy when liberalizing
investment policies.  The debate had yielded a consensus that a properly-constituted competition
policy was helpful in enhancing an economy's attractiveness to foreign investment.  The 1997 World
Investment Report, entitled Transnational Corp orations, Market Structure and Competition PolicyWT/WGTCP/M/3
Page 7
(Geneva:  UNCTAD,  1997), was also relevant to the issues, and particularly to the benefits of
competition policy in creating an environment conducive to foreign direct investment.  A general
view which emerged from the various studies, meetings and reports was that competition policy could
play a very useful role in furthering economic development, but it was also important that countries
have some flexibility so as to design legislation, enforcement policies and institutions appropriate to
their needs.  He said further that it could be advantageous for countries to begin by implementing themore basic aspects of competition law (e.g., provisions dealing with horizontal cartels and abuse of a
dominant position), and then progress to more complex aspects such as the treatment of vertical
market restraints.
28. The representative of Norway said that, for a small country, the introduction of competition
policy, while certainly desirable in its own right, could also entail a trade-off with the achievement of
economies of scale that were desirable to enable firms to produce and market their products
efficiently.  This dilemma could be resolved if competition policy was implemented in the context ofregional or multilateral trade liberalization initiatives that would permit firms to achieve economies of
scale through specialization while still being subject to effective competitive disciplines.  He also said
that, even in a small, open economy, trade liberalization, by itself, was not sufficient to prevent
harmful anti-competitive practices.
29. The representative of Brazil said that it was important to consider the question of the
sequencing of the introduction of competition policy with trade liberalization and other economic
reforms in the context of developing economies.  He rejected two views which he considered to be
extreme:  (i) the view that countries should liberalize first and implement competition policy at a later
stage of development;  and (ii) the view that countries should first industrialize their economies
through government targeting of industries, and im plement competition policy later.  While the first
view reflected an underestimation of the possibilities for private market failures, the second was based
on an underestimation of the likelihood of government failures in targeting industries and firms for
support.  In his view, a better approach was to adopt competition policy simultaneously with trade
liberalization and other economic reforms such as privatization and deregulation.  In this way,
competition policy would act as a catalyst for economic reform and development based on market-oriented principles.  The representative of the European Community and its member States said that
he agreed with these observations.  In particular, he said that the Community's experience had beenthat trade liberalization and competition policy should proceed together, and that neither one could
succeed fully without the other.
30. The representative of Brazil said further that the implementation of competition policy in
developing countries should also take account of the institutional endowments of such countries.  In
particular, some such countries might lack the expertise and other resources to implement a
comprehensive competition policy all at once.  In the light of this, a phased approach to the
implementation of competition policy might well be warranted.  Under this approach, a national
competition authority would first focus on the suppression of horizontal cartels (the most
unambiguously harmful type of enterprise practice) and on basic competition advocacy activities
relating to essential market reforms.  After gaining adequate experience in these areas, it would thentake on additional responsibilities for matters such as merger review and dealing with anti-competitive
vertical restraints.  In the last stage, it would take on more sweeping responsibilities for competition
advocacy activities relating to all aspects of the interplay between competition policy and regulation.
31. The representative of India said that, while it was possible for a country to have a competition
policy without actually having a competition law, having a law gave the policy statutory character,
enforceability and stability.  He said further that, in applying competition policy, it was important to
take into account the impact on existing economic structures of releasing market forces, and the
special needs of developing countries.  The representative of Tunisia said that there was also a social
dimension to the application of competition policy in a developing country setting, including possibleWT/WGTCP/M/3
Page 8
effects on employment and the survival of firms and industries, which could merit consideration in the
Group.  There was an important link between the application of competition policy and the mobility
of labour.  The representative of the United States said that it had to be recognized that competition
policy did not, by itself, address all possible concerns relating to economic adjustment and adaptationto change; these might need to be addressed through other policies or measures relating to
unemployment and related matters.
32. The representative of Argentina said that, in reflecting on the role of competition policy in
economic development, there was a danger of attrib uting to competition policy social costs that were
really the result of more systemic changes relatin g to a movement away from pervasive regulation and
state ownership.  These changes, while no doubt generating short run costs, were necessary toachieving sound development.  Moreover, competition policy was important to ensure that the
benefits of privatization and related policy initiatives were passed through, at least partially, to
consumers.
33. In reflecting on concerns raised by various delegations regarding the implications of
competition policy for the survival and competitiveness of domestic industries, the representative ofthe European Community and its member States said that, in the view of his delegation, the
application of a well-constituted competition policy was more likely to promote than to undermine theefficiency of domestic firms and industries.  This was essential if they were to succeed in overseas
markets.  Nonetheless, he also accepted that there was a need for flexibility, and pointed out thatcompetition policy was not opposed to all forms of interfirm cooperation.  For example, cooperative
arrangements between small and medium-sized enterprises might be considered acceptable if they
served a useful, pro-competitive function.
34. With regard to the responsibilities and priorities of competition agencies in developing
countries, the representative of the United States  suggested that, at least in its initial stage,
competition advocacy work might be the most important and useful activity that an agency could
undertake, given its limited resources.  Of course, the extent and focus of such work would depend on
a variety of factors.  She also mentioned the desirability of systematically informing the public of the
benefits of specific competition law enforcement actions.  The representative of Argentina said that a
key consideration in framing an agency's activitie s in its early stage should be to establish and
preserve its independence from the domestic political process.  A focus on developing and enforcing
an appropriate competition law would facilitate this.  The observer from the OECD said that he
believed that high priority should be attached to advocacy work by competition agencies indeveloping and developed countries, in conjunction with appropriate enforcement initiatives.  Arecent OECD report on regulatory reform highlighted the useful role that competition agencies can
play in this area.  The representative of Romania said that, in practice, it might not be possible for
newly-established agencies to take up a comprehensive set of responsibilities;  in his view, a keypriority in the early stage was to address behavioural matters such as the anti-competitive agreements
between firms, rather than more structural matters and concerns.
35. Representatives of several countries, including the European Community and its member
States, Turkey , Brazil , Morocco  and Tunisia , expressed interest in or support for an enhanced
framework for international cooperation in competition law enforcement, to facilitate the effective use
of competition policy as a tool of economic development.  Brazil suggested that an appropriate focus
at the multilateral level would be on facilitating the exchange of national experiences and
jurisprudence relating to competition law and policy, and on the development of basic international
standards to be reflected in countries' competition legislation.
36. In concluding the discussion on this item of the agenda, the Chairman noted that the debate
had started from the idea that neither trade policy nor competition policy alone was enough to ensure
efficiency and that therefore there was some kind of complementarity between the two policies.  TheWT/WGTCP/M/3
Page 9
basis for these thoughts was that there was also an important relationship between efficiency and
economic growth and development.  The benefits of avoiding excessive concentration had also been
mentioned.  This, it had been asserted, could forestall wider problems linked with inequality in the
distribution of wealth and income and pressure from economic forces on the political or decision-
making level. Additionally, it had been noted that the existence of competition policy could be a
favourable factor in attracting foreign investment.
37. Against those advantages or expected benefits of applying competition policy as a tool of
economic development, there had also been mention of some reservations or concerns about possible
disadvantages.  One of them had to do with possible trade-offs between competition and efficiency in
small countries.  The issue was whether there could be a conflict between the application of
competition policy and the building-up of supply capabilities to get ready for international
competition, or enabling firms to achieve a necessary critical mass.  In response to this concern, it had
been argued that the trade-off could be resolv ed by implementing competition policy in conjunction
with trade liberalization initiatives that would permit firms to reach an efficient size.  Some
representatives had also pointed out that competition generated winners and losers.  This led to social
consequences that had to be faced.  In this respect, a sub-question was whether the major costs
experienced by countries were associated with competition policies themselves, or with the more
general transition to a market-based economy.  An additional question concerned the institutionalcapacity of developing countries to establish a competition law and a competition authority.
38. Another point to which several delegates had attached importance was the fact that, in any
case, competition policy had to be implemented gradually and with due regard to local conditions.
Others had said that exemptions and exceptions could be considered depending on the local
circumstances of the country.  There had also been a sub-discussion on whether competition policy
would always include a competition law.  The poin t had been made that, although one could conceive
of a competition policy which consisted of something different and possibly wider than competition
law, there were definite advantages to having a law - it was enforceable and therefore it offered a
higher level of legal and institutional certainty. A related question concerned the independence of the
competition agency as opposed to a situation where, perhaps, competition policy was enforcedthrough a more politically responsive organ of government.  It had been suggested that the existence
of a law might be one factor, perhaps not sufficient but at least helpful, that would give some
independence to the competition agency and therefore would reassure everybody that it was acting in
a neutral manner.  There had also been a discussion on the respective roles of a competition agency in
enforcing a competition law and in engaging in advocacy work.  It had been suggested that part of theusefulness of having a competition law and policy was in reinforcing this advocacy role.  The
Chairman emphasized that these were merely his personal reflections and they had no official status.
III. STOCKTAKING AND ANALYSIS OF EXISTING INSTRUMENTS, STANDARDS AND
ACTIVITIES REGARDING TRADE AND COMPETITION POLICY, INCLUDING OF
EXPERIENCE WITH THEIR APPLICATION
39. Discussion of this item was organized under the three tirets corresponding to this item in the
Chairman's Checklist of Issues, in the following order:
(a) national competition policies, laws and instruments as they relate to trade;
(b) bilateral, regional, plurilateral and multilateral agreements and initiatives;
(c) existing WTO provisions.WT/WGTCP/M/3
Page 10
(a) National competition policies, laws and instruments as they relate to trade
40. With respect to this part of the agenda, the representatives of Colombia;  Kenya ;  Japan ;
Hong Kong, China;  and Mexico   introduced written contributions (documents WT/WGTCP/W/44,
46, 52, 53 and 54, respectively), while the delegation of Turkey introduced a non-paper.  The
representative of Canada submitted a written contribution (WT/WGTCP/W/51) as a follow-up to its
oral presentation at the September meeting.  In addition, the representatives of Australia, Brazil ,
Chile, Egypt , the European Community and its member States , India , New Zealand , Nigeria , Peru ,
Singapore, the United States , and the observer from the World Bank  made oral remarks relating to
this topic.
41. The representative of Hong Kong, China recalled that, in a previous paper, his delegation had
proposed the preparation of a dedicated study on the relationship of trade and competition policy to
development and economic growth to cover anti-competitive government and business measures and
practices that may distort competition in developing countries and the competitive conditions ofproducts originating from these economies.  The proposal for a study on competition policy and
development was subsequently supported by the representative of Nigeria.  The representative of
Hong Kong, China said further that, although there was, as yet, no international consensus on core
competition principles for the formulation of competition policy, his delegation was not opposed to
looking into the need to develop any such principles, with an open mind and on a non-prejudicialbasis.
42. In introducing the paper submitted by her delegation (WT/WGTCP/W/53), another
representative of Hong Kong, China said that its trade and competition policies were grounded on the
economic philosophy of free and open trade and minimum government intervention.  Competition
was promoted as a means to enhance economic efficiency, which was the ultimate objective of bothtrade and competition policies, through making markets accessible to and contestable by foreign
exporters and investors.  As exposure to foreign trade and investment rendered most markets
competitive, it was felt that there was no reas on to establish a comprehensive, across-the-board
competition law.  Nevertheless, in special situations where some degree of government involvement
was called for, sector-specific regulations had been adopted.  This was the situation, for example,where markets required a high level of investment (as in the broadcasting industry), prudential
supervision (as in banking and finance) or the prot ection of the longer-term interests of consumers (as
in the provision of utilities services).  Sectoral measures were reviewed periodically to ensure that
they still met the needs of prevailing circumstances.  Where possible, liberalization initiatives were
undertaken to introduce competition to sectors under regulation;  recent policies concerningtelecommunications and broadcasting illustrated the latter approach.  There was a preference for
avoiding regulation where this was possible.  In some cases, binding codes of conduct had been used
as an alternative.  Moreover, following a recently completed review, it had been decided to adopt a
comprehensive competition policy for Hong Kong, China.  This would involve development of a
policy statement to guide government units on competition policy matters, a requirement for them to
review critically their areas of work from this perspective and a requirement for them to undertake
competition impact assessments of all major new policy proposals.  A high-level group was beingestablished to coordinate this work.  She believed that differences in approach to competition policy
among countries should be respected, provided that the basic tenets of the multilateral trading system
were not put in jeopardy, for example through discrimination.
43. Introducing the paper submitted by his delegation (WT/WGTCP/W/54), the representative of
Mexico observed that the new competition regime of his country dated from 1993 and had been put
into operation concurrently with other policies supporting economic reform, such as trade
liberalization, privatization and deregulation.  Competition law had actually been introduced later than
trade liberalization, but this had not been a deliberate act or preferred way of proceeding, since trade
liberalization had come at the outset of the programme of economic reform.  With respect to the scope
of Mexico's competition law, he said that, in principle, the law was applicable to all economic agents,WT/WGTCP/M/3
Page 11
whether public or private, national or foreign and virtually all economic sectors, although there were a
few exemptions in this regard related to strategic areas reserved to the state.  These strategic areas,
however, had been shrinking over time.  The competition law also applied to natural monopolies
placed under a sectoral regulator as in the case, for instance, of telecommunications.  The objective of
Mexico's competition law was to protect and promote the competitive process in the economy.
"Monopolistic practices" threatening the competitive process were either prohibited or regulatedaccording to the circumstances involved.  The compet ition law also included provisions on mergers,
and review of pre-merger notifications had become increasingly important in the workload of the
competition agency. The competition agency was heavily  involved in regulatory reform, as well as in
advocacy activities intended to instil a pro-comp etitive culture in the economy.  Transparency in
competition practice was important as a means to gain credibility.  Competition practice in Mexico
had undertaken a wide-ranging learning process benefiting private parties, government agencies and
the staff of the competition agency itself.
44. In presenting the paper submitted by his delegation (WT/WGTCP/W/46), the representative
of Kenya observed that the period after independence had been marked by a deliberate policy of direct
government intervention in the economy to achieve a variety of social and economic goals.  In the1970s, however, there had been an increasing realization that state involvement in the economy had
grown beyond the government's original intentions and by the 1980s Kenya's development strategy
had shifted to a more free market orientation.  Competition policy was seen as a major tool within thisnew development strategy and therefore in 1989 a competition law had been introduced and a
competition agency had been formed to administer th e law.  He outlined the main features of Kenya's
competition policy as described in the paper.  He also said that his delegation believed that
competition policy was in the interests of developing countries' trade and development, and hoped that
both the WTO and UNCTAD would do further work on the interaction between trade and competitionpolicy, especially as it related to developing countries.
45. Introducing the non-paper submitted by his delegation, the representative of Turkey said that
in the early 1980s Turkey began an economic transition from import-substitution to a more market-
oriented development strategy, featuring privatization and liberalization of foreign trade and
investment. Competition policy, along with the protection of intellectual property rights, were two of
the latest policies adopted as part of this new development strategy.  In 1994, a competition law had
been introduced, although the 1982 Constitution already required the government to take measures to
ensure and promote the proper functioning of markets and to prevent the formation of monopolies andcartels.  An independent competition agency had been established in 1997 to administer the law.  The
purpose of the law was to maintain "workable competition".  More specifically, it sought to regulate
all agreements and practices resulting in the prevention, distortion, or restriction of competition, and
mergers and takeovers through which competition wo uld be significantly impeded.  The law applied
to all undertakings either operating in Turkey or affecting markets for goods and services in thiscountry.
46. Introducing the paper submitted by his delegation (WT/WGTCP/W/44), the representative of
Colombia explained that the contribution by his country was divided into two parts:  the first
described Colombia's competition regime and the second discussed a number of significant cases
investigated by the Colombian competition agency.  The latter included cases related to commercial
practices restricting competition as well as cases concerning reviews of mergers and market
concentrations.  Competition policy had been promoted especially since the end of 1992 as an integral
part of an overall policy to strengthen the proper functioning of markets.  He also said that hisdelegation found the educational process undergone by Mexico when applying competition law very
instructive and observed that the Colombian competition agency was engaged in a large number of
investigations.
47. The representative of Peru said that the opening of markets made it necessary to discuss the
harmonization of national competition policies with a view to making them compatible withWT/WGTCP/M/3
Page 12
international trade rules.  Therefore, it was important to study all aspects of competition policy,
including those related to merger provisions.  In particular, the question of whether merger control
should be a part of a competition regime needed to be assessed.  In this connection, he noted that the
competition laws of both Peru and Argentina lacked general provisions regulating mergers.  The
Peruvian delegation intended to submit a paper on the issue of mergers and competition policy.
48. The representative of Singapore presented an overview of Singapore's competition policy.  He
said that for a couple of decades already the Singaporean economy had functioned under an outward
orientation and the absence of trade and investment barriers and exchange controls.  The value of
external trade amounted to two and a half times gross domestic product.  Domestic and foreign goods
had proven to be fully substitutable, to the point that Singapore imported most consumer and producer
goods.  This large degree of substitutability between domestic and foreign goods, together with low
freight costs brought about by efficient  transport, and almost non-existent tariffs, meant that domestic
prices were kept in line with those of imports.  Thus, in the case of Singapore, the "import-disciplinehypothesis" had ceased to be a hypothesis and had beco me a fact.  In light of this situation, Singapore
subscribed to a broader definition of competition policy encompassing the gamut of government
policies affecting the competitive environment within which firms operated in an economy including,
inter alia , a liberal trade regime.  Hence, Singapore had not adopted a competition law but had put in
place alternative policies that promoted competition in the market-place, given the characteristics ofthe economy.  Competition was pursued through an inherently pro-competitive general economic
policy.  In addition, there were various regulatory mechanisms that served to preserve competition at
the sectoral level.  These regulatory mechanisms  applied, for instance, to maritime transport and
telecommunications.  The free-market philosophy, exposure to international competition via
unimpeded trade and investment, and sector-specific regulatory mechanisms formed the basis forSingapore's approach to competition policy.
49. The representative of Brazil said that many aspects in Mexico's experience in applying
competition law were similar to Brazil's.  In his view, the concern with transparency in competition
practice was very valuable as this helped minimize  the risk that competition agencies were captured
by special interests.  To provide for maximum transparency, decisions made by CADE, Brazil'scompetition agency, were taken in sessions open to the public.  This gave legitimacy and strength to
the decision-making process at CADE.  Other useful instruments promoting transparency were annual
reports and public hearings.
50. The representative of Egypt explained that Egypt did not have a competition law but a draft
law had been prepared.  It would cover both goods  and services.  The law would provide a general
framework for the maintenance of competition.  Details concerning actual application would be
developed in the regulations implementing the law.  In the process of drafting the law, Egypt had
benefited from the assistance of UNCTAD.  He posed several questions relating to how market
imperfections, structural imbalances, and subsidies, such as those granted for social reasons, could be
dealt with in the context of competition policy.  He said that Egypt had encountered some resistance
when discussing the implementation of competition policy - from the business community in general,
which feared being hindered by a new regulatory body introducing an additional layer of bureaucracy,and from firms benefiting from anti-competitive practices.  Further consideration was needed in the
Group of means of addressing such private sector concerns and resistance.
51. The representative of India described India's competition law.  He explained that the
Monopolies and Restrictive Trade Practices Act dated from over 25 years ago.  The promotion of
competition was one of the objectives of the Act, to gether with the defence of consumer interests and
the protection of the public interest.  Initially, the Act had only applied to private enterprises but from1991 all government undertakings had become subject  to it.  The rationale for this extension in scope
was the recognition that a government firm can impact adversely on consumers as much as a privateWT/WGTCP/M/3
Page 13
firm.  The Act made a distinction between practices considered detrimental per se  to its objectives,
and practices that needed to be tested as to whet her they were detrimental.  It featured so-called
"gateways" that could be invoked as defences by alleged offenders.  One such "gateway" was a " de
minimis " provision whereby firms holding market shares below certain levels were deemed not to be
able to materially affect competition in the market.
52. The representative of Chile presented an overview of Chile's competition law.  He said that
the competition law dated from 1973, although an earlier law had been established in 1959, and was
administered by a specialized agency.  The present law basically protected the right to engage in any
legal economic activity.  Under certain circumstances, it provided for criminal sanctions, althoughthese had rarely been applied.
53. Introducing the relevant portions of the paper submitted by his delegation
(WT/WGTCP/W/52), the representative of Japan  said that this contribution described the Japanese
experience with the application of competition law, addressing specifically the points raised byMembers at the September meeting.  Therefore, it focused on issues such as the role of guidelines and
official policy statements, and the optimal balance between enforcement and non-enforcement ofcompetition laws.
54. The representative of the United States made  several comments with respect to the issues
discussed in the foregoing presentations.  She considered that there was a broad commonality of
views internationally with respec t to how to treat agreements and single-firm conduct.  Horizontal
agreements, including price fixing, the allocation of markets and bid rigging were generally regarded
as the most pernicious practices.  In the United States, these were treated as illegal per se , and in these
cases there was no need to prove an anti-competitive effect.  Vertical agreements and single-firm
conduct were generally evaluated under a "rule of reason" or similar approach, balancing their pro-competitive and anti-competitive effects.  Mergers, and the need for competition law provisions to
deal with them, seemed to be the main area where there were differences between countries.  While
the United States had adopted basic provisions dealing with some types of anti-competitive
acquisitions early in the century, it did not adopt legislation requiring compulsory pre-notification of
mergers meeting specified thresholds until 1976.  Pre-notification of mergers was important because itwas difficult to unscramble them ex post .  Merger control might be the most important part of
competition law because it prevented markets from becoming too concentrated or oligopolistic.  Once
a market became heavily concentrated, it was easy for firms to limit competition through signalling or
"conscious parallelism" between each other's actions, but such actions were difficult to restrain under
competition laws because they did not necessarily constitute collusion or illegal agreements.  Incountries with relatively unconcentrated markets seeking to attract foreign investment maybe the
introduction of merger laws could be postponed to a later date, but in countries with highly
concentrated markets, the introduction of merger laws was essential to avoid having markets become
even more concentrated.  Similarly, in countries where state monopolies were being privatized, the
break-up of such monopolies to create many entities was worth considering.  Experience in the United
States had also shown the desirability of framing competition laws in general terms.  Laws which
were too specific were often easy to circumvent.  Moreover, in the application of laws of a moregeneral nature, advances in economic understanding could more easily be accommodated.  She further
highlighted the importance of the issue of enforc ement for further analysis by the Working Group,
including the respective roles of public authorities and private parties in initiating action and what
remedies were appropriate.
55. Commenting on the use of sector-specific as opposed to general competition laws in the light
of the presentations by Singapore and Hong Kong, China, the representative of the United States drewattention to the risk of industry capture of the sectoral regulator.  She also expressed a concern that
use of industry codes of conduct could lack transparency and might not always be conducive to public
confidence.  Self-regulation could cross the borderline into cartel activity only too easily.  The
representative of New Zealand said that, in New Zealand, the competition law applied to all sectorsWT/WGTCP/M/3
Page 14
virtually without exception and featured very little in the way of sector-specific regulations. The
experience of New Zealand in the 1980s had been that there were large benefits to be gained from
maintaining a high degree of coherence and consistency of approach across all sectors.  A single,
comprehensive competition law had been passed in 1986 and this had proven to be an enormous aid in
the process of reform.  Sector-specific regulations were to be avoided since they opened the way to
special pleading from individual sectors, and led to issues of why one sector should be treateddifferently from others.  New Zealand had found that competition law was easier to sell politically if
its principles were applied consistently and without exception.  Consistency in competition law was
important even from a trade perspective, because commerce was facilitated by having a secure,
predictable and transparent legal framework;  conversely, a variety of regulatory regimes was
confusing for business. In addition, sectoral regulations ran the risk of industry capture.  Finally, there
was a question as to how conflicts or tensions between the regulation of a particular sector and
competition law could be dealt with.  The representative of Australia said that the chief objection to
general regulators was that they were not able to acquire all the necessary technical expertise to
adequately perform their role.  In Australia, areas  such as telecommunications were subject to a
sectoral regulator, with specialized technical res ponsibilities.  Access to the sector, however, was
supervised by the national competition authority on the basis of the overall competition law.  The
representative of the European Community and its member States said that, in principle, the
Community favoured general over sectoral competition policy;  competition policy should be
universal and therefore it should be applicable to all in an equal manner, even if this had not yet been
fully achieved.  The representative of Mexico, addressing the issue of possible frictions between
sectoral regulations and competition law, said that the Mexican competition law applied to all areas ofeconomic activity, including sectors that had their own regulatory regime;  the role of the sectoralregulators was complementary, to do the fine-tuning.
56. The representative of Hong Kong, China said that it was wrong to characterize
Hong Kong, China's approach as simply being sector-specific.  Rather, Hong Kong, China considered
it had a single coherent competition policy framework and a number of tools within that ambit.
Sectoral regulations were one of these tools, and they were used only where warranted.  Furthermore,measures were taken to ensure that sectoral regulations were consistent with the overall policy
framework.  With regard to concerns regarding capture and lack of transparency with respect to
sector-specific regulations, he said that, while these were potential problems, whether in reality they
came into being depended upon factors such as the accountability of regulators.  In Hong Kong,
China, regulators were subject to close scrutiny by the legislature, the media, consumer watchdogsand relevant industry commissions.  The small geographical size of Hong Kong, China meant that it
was difficult to hide anything.  With respect to se lf-regulation, he acknowledged that this would not
always be the answer, but the experience of Hong Kong, China had been that it could work and was
one of the tools through which competition policy could be implemented.  In his view, it was
interesting that the two economies with the greatest e xposure to foreign trade, that is Singapore and
Hong Kong, China, seemed to share a rather common philosophy in this area.
57. The representative of Nigeria said that, in his view, the topics under discussion could be
classified into four sets of issues:  the first concerned "key ingredients", the second "approaches", the
third "concepts", and the fourth "powers of enforcem ent".  With respect to "approaches", he observed
that sector-specific regulations tended to conflict  with an all-encompassing competition law, and
inquired whether these two approaches could be reconciled.  He also asked whether Members could
give some sense of priority as to which sectors should be placed under a regulatory regime.  Withrespect to "concepts", he asked for a clarification of the meaning of the term "natural monopoly"
within the context of the present discussions.
58. The representative of the World Bank said that the Bank provided technical assistance to
countries drafting or amending their competiti on laws.  When performing this function, the BankWT/WGTCP/M/3
Page 15
always made a point of explaining the merits of competition law to allay any misconceptions about
this sort of legislation.  An important consideration in this connection was that businesses were the
main victims of anti-competitive practices since the great majority of cases (80 per cent plus) involved
intermediate products.  With respect to rules regulating horizontal agreements, he said that one should
not lose sight of the fact that certain cooperative agreements, such as R&D joint-ventures, setting of
standards and exchange of statistics,  tended to be, and were treated as, pro-competitive.
59. The representative of Australia said that the behaviour of private firms was only one of the
many factors that could have a negative impact on competition;  competition could also be adversely
affected by measures such as import restrictions, regulations restricting prices, regulations on
professional associations, restrictions on advertising, monopolies in the provision of utilities and other
services.  Thus, in countries where such restrictions were pervasive, competition laws, even if
enforced strongly, could lose much of their effectiveness, as firms behaving anti-competitively could
hide behind any of these barriers to competition.  Dealing with problems of this kind required a muchwider perception of competition policy.  The fundamental requirements were to remove government-
imposed impediments to competition and to promote access to all areas of economic activity.
Australia had recently adopted a competition policy aimed at promoting the achievement of a single
market within the Australian Commonwealth of states, a task in some ways similar to that within the
European Community.  His delegation intended to submit a paper to the Group, which would describehis country's policy in greater detail.
60. The representative of the European Community and its member States provided answers to a
series of questions posed by Members at the September meeting of the Working Group, which he
undertook to provide in written form.  The representative of the United States also offered to provide
in writing replies to questions posed by Members at that meeting.
61. Responding to a question posed to him, the representative of Mexico commented on the use
of the term "natural monopoly" in the context of the present discussions.  He said that, according to
economic theory, having many players in the market was not always optimal.  Thus, in markets where
only a few players could operate efficiently, restraining consolidation by way of protecting small
firms could well go against progress.
62. Concluding the discussions, the Chairman said that the issues covered had been very varied,
ranging from philosophical questions, such as where does legitimate market intervention stop, to
discussions of different types of competition policy.  Within the latter topic, he had found the debate
concerning sectoral versus general approaches very useful.  Another important question in this regard
had been whether the size, or the particular set-up of an economy might make a difference withrespect to the kind of competition policy one should adopt.  Other issues relating to the design of
competition regimes had been needs for technical expertise, the need for legal certainty, the risk of
regulatory capture and consistency.  The issues of transparency, the relationship of the competition
regime with the judicial system and the advocacy aspects of competition policy had also been
highlighted.  Key questions with respect to th e latter issue were how to build a constituency
supporting the implementation of competition policy, and what steps needed to be taken to make the
competition regime more easily accepted.  Problems resulting from concentration had also beendiscussed in detail:  they tended to worsen in th e absence of a competition regime but dealing with
them through compulsory pre-merger reviews involved administrative burdens.  Finally, there had
been some discussion concerning how the international context may impact on the operation of
competition regimes;  in particular, there was a qu estion as to the implications of having trading
partners which lacked competition regimes or had different competition regimes.WT/WGTCP/M/3
Page 16
(b) Bilateral, regional, plurilateral and multilateral agreements and initiatives
63. New Zealand and Mexico  introduced written contributions relating to this part of the agenda
(documents WT/WGTCP/W/47 and 54, respectively).  The United States submitted a written
contribution (WT/WGTCP/W/48) that elaborated upon an oral presentation made at the September
meeting.
64. The representative of New Zealand said that the contribution by his delegation outlined
experiences with trade and competition policies under the Closer Economic Relations Agreement
(CER) between Australia and New Zealand.  More sp ecifically, the paper discussed the rationale for
dispensing with anti-dumping provisions within this  trade agreement, and the changes that resulted in
competition law in both Australia and New Zealand from this decision.  He began by describing how
the legal instruments eliminating anti-dumping measures  came into being.  He said that the CER came
into force in 1983 and laid out the framework for the accomplishment of a free-trade area between the
two countries.  In 1988, a major review of the CE R was undertaken and the agreements resulting from
the outcome of the review pushed forward the impl ementation of free trade in goods.  Article Four of
the "Protocol on the Acceleration of Free Trade in Goods" called for the removal of anti-dumping law
between the two countries and the application of competition law to relevant anti-competitive
conduct, starting from July 1990, the date when fr ee trade between the two countries was to be
achieved.  In the 1980s, anti-dumping actions between Australia and New Zealand had been of someimportance  -a dozen cases opened by New Zealand against Australian goods, and about 30 cases the
other way around. Although anti-dumping may arguably be necessary to reduce distortions in
international trade, as a single market developed, trans-Tasman trade became more typical of
domestic trade than international trade, and hence the retention of anti-dumping provisions in this
context seemed anomalous.  In any case, the establishment of free trade between the two countries, byfacilitating arbitrage, substantially reduced the incentives for and the ability of exporters to dump.
Once free trade was achieved, the real concern was predatory behaviour by firms with market power
located on one side of the Tasman or the other.  Therefore, it was not a question of competition law
replacing anti-dumping law;  rather, the trans-Tasman market had reached the stage where anti-
dumping was no longer appropriate and competi tion law had become the right mechanism for
protecting the competitive process.  Although the co mpetition laws of Australia and New Zealand had
already been similar, both laws were amended to en sure that they fully covered trans-Tasman trade, in
particular to ensure that there was no kind of conduct that could fall into a jurisdictional hole between
the two markets.  Changes were made so as to put in place symmetrical jurisdictional, procedural and
evidentiary provisions in the two countries.  Thes e changes enabled each country's courts to sit, for
certain prescribed purposes, in the other country and facilitated enforcement of orders and judgements
by them in the other jurisdiction.  Since the changes, no successful action had been brought on
grounds of unfairly low prices.  In his view, two key factors had facilitated this particular regime:
first, Australia and New Zealand had similar competition laws to begin with;  and, second, there was a
high degree of similarity in the legal processes and institutions of both countries.
65. The representative of Mexico described the operation of the NAFTA Working Group on
Competition.  He said that this Group had a mandate for five years, extending through the end of
1998. Its purpose was to study the relation between competition policy and trade in the context of the
free-trade area created by NAFTA, and was required to make recommendations to the NAFTA
Commission by the end of its mandate.  This NAFTA Group held regular meetings twice a year,
which were supplemented with informal contacts as needed.  It had produced a number of
comparative studies on the competition laws of each NAFTA member:  specific themes had beenselected and comparisons had been made regarding those themes.  Issues studied by this Group
included horizontal restraints, export cartels, merger control, and abuse of dominance.  Other
contributions submitted to this Group related to national treatment and private right of action.  More
recently, this Group had turned to studying competition cases with a transborder dimension, for
instance, monopolistic practices impeding market access.WT/WGTCP/M/3
Page 17
(c) Existing WTO provisions
66. The representative of Hong Kong, China introduced a written contribution by his delegation
(WT/WGTCP/W/50) relating to this part of the agenda.  He said that his delegation had tabled this
paper on competition-related WTO provisions in an attempt to ensure that the stocktaking by the
Working Group was reasonably comprehensive and balanced.  In the view of his delegation,
discussions on the interaction of trade and compet ition must recognize the role of GATT and WTO
provisions in protecting non-discriminatory conditions of competition from anti-competitive
government trade measures.  Adherence by Member governments to the fundamental principles of
national treatment and most favoured nation and strict observance of any rules permitting limited
departure from these principles were central to this role.  The Working Group should examine
whether the rules governing such allowable departures from fundamental principles were consistent
with the overall need to safeguard competition at the international level, as well as consistent with the
principles by which Members regulated domestic competition.  In other words, trade and competitionpolicies should be mutually consistent.  It was not sufficient to concentrate the work of the Working
Group on those WTO provisions concerning practices of  enterprises that might distort trade.  Such an
approach would neglect the importance of competition concepts for the mainstream GATT/WTO
objective of liberalizing government market access barriers and market distortions.  With respect to
the consideration of anti-dumping by the Group, he said that Hong Kong, China recognized thatMembers were entitled to use Article VI measures.  However, as a matter of principle, Hong Kong,
China regarded this situation as less than idea l, capable of producing inappropriate results and
therefore in need of improvement.  The Working Group offered a unique opportunity to discuss in a
relatively low-key, non-negotiating format the relation between WTO provisions, including
provisions for trade remedies, and competition and the liberalization of trade.  While Hong Kong,China had no unrealistic expectations, it saw no inconsistency between accepting the legal status quo
on the one hand and contemplating longer-term improvement on the other;  indeed, this was a normal
practice at the WTO and this was the way progress was made.
67. The Chairman said that, due to the fact that little time was left for concluding the meeting,
comments regarding the presentations by New Zealand and Mexico and the paper by Hong Kong,
China would be presented at the next meeting.
IV. REQUEST FOR OBSERVER STATUS
68. The Working Group agreed to renew SELA's invitation to attend its next meeting on an
ad hoc basis.  The Group also received a request from the Islamic Conference to attend its meetings
and decided to revert to this matter at its next meeting.
V. OTHER BUSINESS
(a) Organization of future work
69. The representative of Hong Kong, China said that the Checklist had been accepted because it
provided a balance of interests, and his delegation hoped that this would also translate to some degree
into a balance regarding the allocation of time for discussing items.  In the opinion of his delegation,
the time devoted so far to discussion of the second and third tirets under item II, relating to
agreements and existing WTO provisions, had been less than adequate.
70. The representative of Egypt requested that, at the next meeting, the Group discuss the
relationship between competition policy and development briefly, if needed, in order to consider the
possibility of asking the Secretariat to prepare a study on this subject.WT/WGTCP/M/3
Page 18
71. In light of informal consultations held with Members, the Chairman made a number of
suggestions for the organization of the Group's future work.  He first recalled that the work
programme that the Group established at its first meeting provided for the consideration of item III of
the Checklist at three meetings in 1998.  In order to fulfil this task, to consider item IV of the
Checklist and to be in a position to prepare and adopt a report to the General Council by the end of
next year, he suggested that the Group hold four meetings in 1998, on the following dates:  11-13 March, 27-28 July, 23-25 September and 17-19 November.  At the first three of these meetings, the
Group would consider the various elements of item III, as set out in the work programme established
by the Group at its first meeting.  It would be understood that the Group would do this with the degree
of flexibility necessary to ensure that all the elements of item III of the Checklist would be adequately
discussed.  It would also be understood that, at the third and the fourth meetings, an opportunity
would be provided to revisit any elements of the work programme on which Members felt that further
work was necessary and also to have a general revi ew of the work of the Group with a view to the
preparation and adoption of the Group's report.  He noted that he was suggesting that most of the
meetings in the coming year be scheduled for thre e days, rather than two as had been the practice
hitherto.  He said that he believed this was necessary given the Group's experience so far and the work
to be done so as to be in a position to report in time.  However, it was understood that, should the
Group be able to complete its work at any given meeting without using the full three days, it would doso.
72. Turning to the next meeting of the Group, the Chairman said that the principal and the first
points on the agenda would be the two items provided in the work programme adopted earlier, namely
a general discussion of item III and consideration of the impact of anti-competitive practices of
enterprises and associations on international trade.  He also proposed adding as the third point thestocktaking item with the order of the tirets reversed;  that is, starting with WTO competition-related
provisions, bilateral and regional agreements and, finally, if there was interest, national competition
regimes.  As a fourth point on the next meeting's agenda, the Chairman proposed a short discussion on
the relationship between trade and competition policy and development.
73. The Chairman said that the basis for the Group's work would continue to be written
contributions from individual Members.  As the Group took up the specific elements of item III, it
would be important that delegations present inputs characterized by a greater degree of specificity
than hitherto and illustrated by concrete examples.  With regard to the first point on the next meeting's
agenda, he suggested that Members gave consideration to covering issues such as:
- the types of enterprise and association practices that impacted on international trade,
and the way in which they did so.  If Members wished to offer typologies in this
connection, he suggested seeking to relate the categories to the nature of the impact
on international trade, rather than simply using traditional competition law categories;
- any empirical data relating to the number or economic importance of such impacts;
and
- the types of remedies that already existed for combating such enterprise and
association practices as well as the gaps perceived to exist in the available remediesfrom the perspective of international trade and of trading partners.
74. The Chairman also suggested that the Working Group agree to a target date for the
submission of contributions, so as to provide an opportunity for such contributions to be translated
and studied prior to the meeting.  He suggested a target date of no later than 25 February, with an
optimal date from the viewpoint of translation and distribution of 13 February.
75. The Working Group agreed to proceed as proposed by the Chair.WT/WGTCP/M/3
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(b) Adoption of the Working Group's Report 1997
76. The Working Group adopted a report to the General Council on its activities in 1997
(WT/WGTCP/1).
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