RESTRICTEDWORLD TRADE
ORGANIZATIONWT/WGTCP/M/14
2 July 2001
(01-3295)
Working Group on the Interaction
between Trade and Competition Policy
REPORT ON THE MEETING OF 22-23 MARCH 2001
Note by the Secretariat
1. The fourteenth meeting of the Working Group on the Interaction between Trade and
Competition Policy took place on 22-23 March 2001, under the Chairmanship of Professor Frédéric
Jenny.
2. At the outset of the meeting, the Chairman not ed that, as had been agreed at the informal
meeting of the Working Group on 29 January 2001, the purpose of the meeting was to carry forward
the work of the Working Group as provided for by the General Council in its decision in December1998 (WT/GC/M/32, page 52).  That decision read as follows:
"The General Council decides that the Working Group on the Interaction between Trade and
Competition Policy shall continue the educative work that it has been undertaking pursuant to
paragraph 20 of the Singapore Ministerial Declaration.  In the light of the limited number of
meetings that the Group will be able to hold in 1999, the Working Group, while continuing ateach meeting to base its work on the study of issues raised by Members relating to the
interaction between trade and competition policy, including anti-competitive practices, would
benefit from a focused discussion on:  (i) the relevance of fundamental WTO principles of
national treatment, transparency, and most-favoured-nation treatment to competition policy
and vice versa;  (ii) approaches to promoting cooperation and communication among
Members, including in the field of technical cooperation;  and (iii) the contribution of
competition policy to achieving the objectives of the WTO, including the promotion ofinternational trade.  The Working Group will continue to ensure that the development
dimension and the relationship with investment are fully taken into account.  It is understood
that this decision is without prejudice to any future decision that might be taken by the
General Council, including in the context of its existing work programme."
3. Following the approach used by the Working Group in its meetings in 2000 and as had been
agreed at the informal meeting of the Group that took place on 29 January 2001, the Chairman
suggested that the Group organize its work at the current meeting as follows:
- first, to take up the relevance of the fundamental WTO principles of national
treatment, transparency, and most-favoured-nation treatment to competition policy
and vice versa;
- then, to examine approaches to promoting cooperation and communication among
Members, including in the field of technical cooperation;
- next, to consider the contribution of competition policy to achieving the objectives of
the WTO, including the promotion of international trade;WT/WGTCP/M/14
Page 2
- and finally, to look at other issues that Members wish to raise that are relevant to the
Group's mandate to study the interaction between trade and competition policy.
In addition, he referred to the Guideline provided in the above-noted decision of the General Council
that the Working Group should ensure that the development dimension and the relationship with
investment should be fully taken into account.  Fo llowing the Group's past practice, it seemed that this
was something which should be done in relation to each of the above four work elements.
4. He noted, as well, that, as was reflected in the Airgram, in framing their interventions,
delegations might wish to bear in mind the points noted in the Updated Checklist of Questions Posed
by Members in 2000 (Job 520) that had been circulated to Members by the Chairman on 24 January
2001 and the additional points that had been brought to his attention by Members in the consultations
that he had held with individual delegations prior to the Informal meeting on 29 January 2001, and
which he had brought to the attention of the Workin g Group at the Informal.  At the Informal it had
been agreed that these points, in addition to any others that Members considered to fall within the
terms of the December 1998 decision of the General Council, including those raised in the Updated
Checklist of Questions Posed by Members in 2000, could be addressed by delegations, to the extent
they desired, in their written and oral contributions to the Group during the year, within the terms of
General Council's decision.  The points were as follows:
- first, it had been suggested that it would be useful for the Group to continue to place
emphasis on addressing the concerns that had been expressed by some developing
country Members regarding both the general impact of implementing competition
policy on their national economies and the particular implications that a multilateral
framework on competition policy might have for development-related policies andprograms.  In this regard, it had also been suggested that it would be helpful if
countries having these concerns could be as specific as possible about the possible
conflicts or constraints as well as the synergies that they perceived to exist, in order
that they could be addressed as fully as possible in the Group.  For example, any
problems that Members continued to see arising from the application of the principleof national treatment within the field of competition law and/or policy should be
raised and discussed.
- second, interest had been expressed in continuing exploration of the implications,
modalities and potential benefits of enhanced international cooperation, including in
the WTO, in regard to the subject-matter of trade and competition policy.  In fact, two
dimensions to this interest had been noted.  The first concerned the modalities,
benefits and limitations of cooperation between national competition agencies.  Thesecond concerned the issue of possible cooperation/interaction between trade and
competition agencies/authorities in dealing with issues that sat astride the two
disciplines.
- a third suggestion had been that it would be useful for the Group to have a continuing
focus on the issue of capacity building in the area of competition law and policy.Two specific suggestions as to issues that could be addressed under this rubric were:
(i) the process of competition law enforcement, including alternative
investigatory/decision-making models and the role of judicial review; and (ii) the
design of remedies in individual cases.  In addition, there should be a continuing
focus on stocktaking of national experience and legislation.WT/WGTCP/M/14
Page 3
II. THE RELEVANCE OF FUNDAMENTAL WTO PRINCIPLES OF NATIONAL
TREATMENT, TRANSPARENCY AND MOST-FAVOURED-NATION TREATMENT TO
COMPETITION POLICY AND VICE VERSA
5. The representatives of the Czech Republic and the European Community and its member
States introduced written contributions relevant to this item (documents WT/WGTCP/W/165 and 160,
respectively).  In addition, the representatives of Brazil; Canada ; Hong Kong, China ; the Philippines;
the Russian Federation; Switzerland ; and the United States ; made oral statements or posed questions
on this item.  The representatives of UNCTAD and the OECD  provided updates on relevant activities
of their organizations.
6. The representative of the Czech Republic, introducing document WT/WGTCP/W/165, noted
that competition policy in the Czech Republic was built around the fundamental principles of the
WTO, namely, the principles of non-discrimination and transparency.  These principles shouldconstitute key elements of a WTO framework on comp etition policy.  A binding principle regarding
non-discrimination on the basis of nationality in the application of competition law framework was
important since a fair approach towards foreign investors would help to attract foreign investment.
The Czech Republic had applied such an approach since 1991.  With regard to transparency, this was
the best guarantee of the non-discriminatory appli cation of competition law and should, in any case,
be a primary concern of competition authorities.  For example, publication of the basic legal
framework that applied in a jurisdiction was essential to provide legal certainty for undertakings.  His
delegation believed that the proposed WTO framework agreement should also ensure effective
deterrence of the most serious breaches of competition law.  Particular priority should be given to
hard-core cartels, especially to agreements on price-fixing, bid-rigging and market allocation ordivision.  On the other hand, in relation to certain other types of anti-competitive practices, such as
abuse of a dominant position, it was necessary to engage in a case-by-case assessment of the situation
in the domestic market.  Therefore, the adoption of a common principle prohibiting these types of
practices would be too rigid.
7. The contribution by the European Community and its member States (WT/WGTCP/W/160)
and the oral statement by Canada addressed specific questions that had been included in the Updated
Checklist of Questions raised by Members.1  In response to question 2 in Section III of the Checklist,
which raised the matter of whether it was necessary to incorporate principles such as non-
discrimination and transparency into a possible WTO competition agreement or whether it was
sufficient to rely on existing general provisions such as GATT Articles III and X or on domestic
competition laws in which such principles were, to varying extents, already reflected, the
representative of the European Community and its member States said, firstly, that although
experience in the WTO had shown that the principles of non-discrimination and transparency had
general application, when it was considered particularly important to emphasise such principles in a
particular context, they had been incorporated into individual WTO Agreements.  Moreover, the
principles had been adapted to ensure that they we re well-suited to address the specific issues that
arose in a particular policy area.  A good example was the Agreement on Technical Barriers to Trade,which dealt with technical regulations and standards.  Most would agree that such measures were
already covered, implicitly, by Articles III and X of the GATT.  However, insofar as the Members of
the WTO had considered that the issues raised by this particular policy area were of sufficient concern
for them to be addressed at the multilateral level, it had been considered important to emphasise the
principle of non-discrimination and to have detailed, specific provisions relating to transparency vis-à-vis the particular concerns that were raised in relation to technical barriers to trade.  His delegation
believed that similar reasoning applied in the area of competition policy, insofar as WTO Members
considered that it was an area that was important for realizing the benefits that were intended to be
provided by the multilateral trading system.  More particularly, given that more and more Members
were adopting domestic competition law regimes, and were applying their laws to domestic and
                                                     
1 Updated Checklist of Questions Raised by Members (Job 520) dated 24 January 2001.WT/WGTCP/M/14
Page 4
international firms, it had become important to agree on some basic rules to which all participants
could adhere.  This did not imply that it wa s necessary to harmonise domestic competition
frameworks – in his view, this should not be the objective of possible negotiations in the WTO.
However, it was necessary to agree on some core principles to which all Members adhered and which
could also be the basis for facilitating cooperation among WTO Members.  In the view of hisdelegation, to a large extent, the necessary principles were those relating to non-discrimination and
transparency.
8. Continuing, in response to question 3 in Sect ion III of the Checklist, namely whether the non-
discriminatory application of competition policy gave rise to conflicts with economic development
and/or policies favouring the advancement of part icular social groups, he said that a commitment to
ensure that a domestic competition law regime did not allow discrimination on the basis of nationality
of firms did not imply anything whatsoever in rega rd to other instruments of government policy that
were not part of a competition law regime.  Normally, the instruments that were used by governments
in order to promote specific developmental and social objectives (as opposed to the efficient
functioning of markets, which could also bring developmental benefits) had nothing at all to do with
competition law as such.  Therefore, they would not be affected by provisions regarding non-
discrimination in relation to domestic competition law regimes.  He noted, as well, that, in the view ofhis delegation, the application of a general principle of non-discrimination in the field of competition
law and policy was separate and distinct from the question of sectoral exclusions from national
competition regimes.  The latter was known to be a sensitive issue in respect of which there were
many different approaches among WTO Members.  His delegation's view was that the right approach
in relation to the issue of sectoral exclusions would be to permit them, subject to appropriatetransparency requirements.  For these reasons, a commitment to non-discrimination in the application
of domestic competition law would not conflict with the pursuit of other domestic policy objectives,
such as, for instance, the promotion of small and medium sized enterprises.  The representative of
Canada also emphasized that a commitment to the implementation of competition law, in compliance
with the principle of non-discrimination, left open the possibility for a government to provide specific
exceptions or exemptions to the law.  For exam ple, it was not uncommon for a competition law to
contain provisions exempting the activities of state-owned enterprises from the coverage of the law.
Similarly, certain competition regimes included aspects that gave preference to small and medium
sized enterprises.  As such, it was clear that commitments regarding non-discrimination in the field of
competition law and policy in a multilateral agreement on competition policy would not conflict with
domestic policies relating to economic development or the promotion of particular constituencies, to
the extent that these were embodied in policies other than a national competition regime.
9. In response, the representative of the United States suggested that it was possible to imagine a
situation where, in the course of enforcing a non-discriminatory competition law, a company might
raise a defence that it was acting pursuant to and in reliance upon another national policy that
happened to be in some way discriminatory, for example, a policy favouring certain depressed
regions.  A question could then arise as to what the national competition agency should do -- should itreject the company's defence on the ground that it would violate the non-discrimination obligation
under the competition agreement or accept it on the basis of equity, fairness and legislative intent,
even if it led to a discriminatory result?  A decision might have to be made as to which policy would
be given priority.  In addition, he suggested that the EC had, in its paper (WT/WGTCP/W/160, page
3) stated that a WTO agreement on competition policy would have no impact on existing WTOAgreements.  However, while in a narrow legal sense that might be true, it might not be true in a
broader sense in which the language could be interpreted.  To the extent that there were provisions in
one WTO Agreement that were in conflict with other WTO Agreements, the conflict might,
eventually, have to be resolved by the WTO dispute settlement mechanism.
10. In response to the argument put forward by the United States, the representative of the
European Community and its member States reiterated that, according to the suggestion of his
delegation, the principle of non-discrimination in an Agreement on Competition Policy would beWT/WGTCP/M/14
Page 5
defined solely in relation to the context of domestic competition law.  It was not a question of the
extent to which the law was being applied or enforced in a manner that could be considered
discriminatory or non-discriminatory.  The hypothetical example raised by the United States raised
could only be answered in a hypothetical manner.  He assumed that if a domestic firm in a court
proceeding raised a defence that was based on a policy objective other than competition law, it wouldhave to be because that policy objective was recognised under the law as an available defence.  The
issue was whether the competition law allowed for such a defence.  The question would then be
whether that defence was available to all firms, regardless of nationality.  If that was so, the case did
not raise a question of discrimination.  If that was not the case, then it would be necessary to discuss
how the principle of non-discrimination should be defined, when Members entered into negotiations.
11. The representative of Hong Kong, China sought clarification from the representative of the
European Community and its member States as to the level at which the principle of transparency
would apply.  Specifically, would it apply only to  laws or would it apply to laws, regulations,
administrative procedures and guidelines?  How would it apply in individual cases?  Should the
transparency principle only apply to competition law per se  or should it also apply to other domestic
laws which might be relevant to competition such as in the areas of telecommunications, banking and
broadcasting, etc.?  How would it apply to sectoral regulators?  Responding to Hong Kong, China and
to question 2 in Section III of the Checklist as to whether a transparency obligation in the area of
competition would apply to states, institutions or to private sector entities, the European Community
and its member States commented that transparency was a key principle both for competition policy
and for the multilateral trading system and that it should apply to a domestic competition law
framework.  The obligation would cover laws but also regulations, guidelines and due processguarantees relevant to the enforcement of domestic competition policy.  It would not apply to the
activities of private enterprises as such.  Adherence to the principle of transparency would serve to
enhance predictability and allow business and industry as well as consumers to know exactly what
their rights were under the domestic competition law.
12. The representative of the Philippines referred to the notion of flexibility that had been referred
to in the paper that had been submitted by the European Communities and its member States
(WT/WGTCP/W/160).  He understood that the EC was proposing a principles-based approach.  Those
principles were the same principles that were contained in existing WTO Agreements and were well
known.  On the other hand, the Working Group was talking, in many cases, about anti-competitive
practices that were related to government policies.  Government policies, measures and regulations
were already covered in most WTO Agreements.  Furthermore, confirmation had been provided by
the representative of the OECD that in the survey that the OECD had conducted,2 most of the existing
Agreements, with very minor exceptions, did not display any discrimination.  In this context, what
was the need for incorporating these principles in the proposed framework?
13. In response, the representative of the European Community and its member States said that
each WTO Agreement had to be interpreted within the context of the particular agreement.  It was
only when a case of clear conflict had been identified that the question of coherence or therelationship between different agreements could arise.  It was possible that such situations could arise,
in which case, they would need to be discussed.  However, domestic competition laws were the
subject of discussion.  Therefore, his delegation did not see a priori  any reason why there would be
any implications in relation to areas that were covered by other WTO Agreements, such as the
Subsidies Agreement.  While it might also be wo rthwhile to improve existing WTO Agreements, that
was not the subject of the debate.  Subsequently, he  noted that it had been questioned as to why a
multilateral agreement was needed to nail down the principles of non-discrimination and transparency
if they were already part and parcel of the vast majo rity of existing competition laws.  In this regard, a
second argument in favour of the inclusion of those principles in a framework agreement on
competition policy was explained on pages 2 and 3 of the paper that had been submitted by his
                                                     
2 See below at paragraph 18.WT/WGTCP/M/14
Page 6
delegation (WT/WGTCP/W/160), namely that the inclus ion of the principles would serve to enhance
trust between competition authorities and would in turn help boost further cooperation between these
authorities.  Another reason for their inclusion in domestic competition laws and an argument for their
inclusion in a framework agreement was the fact that there were, in fact, still some WTO Members
who did not have domestic competition laws in place as yet.  Their inclusion would provide aroadmap for such Members, since those basic princi ples were found in most other competition laws.
Lastly, the inclusion of those principles would also serve to prevent, in the future, the introduction of
discriminatory treatment in competition laws.
14. The representative of the United States noted that there was broad agreement on the
importance of the fundamental WTO principles, including in the context of competition law and
policy.  However, when those principles were applied to particular contexts, it was necessary to be
careful about how they were articulated in relation to the underlying foundations of the area ordiscipline that was the subject of discussion.  To some extent, he had been reassured by the comments
made by the representative of the European Community, insofar as it had been stated that in respect of
principles such as non-discrimination, the starting-point should be to make reference to domestic
competition law.  Such reference needed to be made to determine how to give life to those
obligations.  It was also clear from the discussion regarding the notions of transparency and non-discrimination that practical judgements would need to be made along the way, if Members decided to
negotiate an agreement.  In referring to the principle of non-discrimination, the EC paper stated that
that principle "would mean an obligation not to formally  discriminate against firms on the basis of
their corporate nationality".
3  Based upon his understanding of the EC position, the representative of
the United States assumed that the use of the word "formally" did not mean that informally it wouldbe appropriate to discriminate on the basis of nationality.  Perhaps, a more precise articulation of the
notion would be on the exclusive basis of nationality.  In other words, by reason exclusively of the
nationality of a firm, there should not be any discrimination.  This would better recognize the wide
range of circumstances that arose when one properly applied a competition law.  These were the kind
of questions that had to be resolved in coming to a common understanding of what the nature ofobligations might be in the area.  In that light, the representative of the United States was troubled by
the EC suggestion that such matters could be resolved once negotiations were underway.  Obviously,
every negotiation sorted such matters out.  However, there was a need to pursue the area with more
specificity in order to understand and to advance the negotiating process, should one eventually
develop.  The direction that the WTO in general and individual Members would want to take in
making sure that the principles of the system were respected at the same time as supporting the basic
objective of promoting the sound application of competition law and policy was to ensure that theunderlying foundations of competition law were being respected and that the ability to apply laws in a
responsible way was unfettered.  The representative of the European Community and its member
States agreed that the word "formally" had been inappropriately used in his delegation's proposal.  To
be clear, if there was a provision in a domestic competition law which implied differential treatment
either between domestic producers and foreign producers or between different nationalities, thatwould be a breach of the principle of non-discriminati on.  The more difficult issues that needed to be
considered were cases where conditions existed in the domestic law which, as such, did not refer to
nationality, but which, by definition, could only be met by domestic firms.
15. The representative of Brazil, affirming that a previous contribution by his delegation
(WT/WGTCP/W/100) remained a valid statement of Brazil's views on the subject, said that his
delegation continued to view in a positive light the discussions on the interaction between trade and
competition policy in the WTO.  With the reduction of trade barriers and the increase of globalisation,
the safe-keeping of world trade was correlated with the repression of acts that were aimed at limiting
competition such as the practices of dividing markets and price-fixing through international cartels
that had the effect of greatly restricting the benefits derived from trade liberalisation.  In that light,Brazil advocated the application of the three WTO principles in the area of competition policy -
                                                     
3 WT/WGTCP/W/160, page 2.WT/WGTCP/M/14
Page 7
namely, transparency, national treatment and most-favoured-nation treatment.  For Brazil, the notion
of transparency should entail access to all relevant laws, regulations and documents of each Member.
Such access was crucial in order for private actors to determine how they should behave.  The
principle of transparency was a key underpinning of competition law and policy in Brazil; it covered
laws, regulations and administrative procedures.  Everyone had access to the Internet, whichcontained information regarding Brazil's procedures and details of law suits that had been instituted.
Nonetheless, it was understood that there should be some provisions on confidentiality.  By national
treatment, it was understood that Members should assure foreign firms the same rights and obligations
in respect of its domestic legislation, authorities, and proceedings as applied to domestic firms.  For
Brazil, cooperation between competition authoritie s was also of the utmost importance.  That
cooperation could vary depending upon the degree of development of each country and could range
from technical assistance to technical cooperation.  Another representative of Brazil stated that Brazilhad, in the last few years, significantly enhanced its commitment to prosecute hard-core cartels and
had associated itself with the OECD Recommendation on Hard-Core Cartels.  This reflected the
perception that cartels were more common than had previously been realized and imposed substantial
costs on developing as well as developed economies.  As part of this effort, Brazil had enacted a law
that would take effect in October 2000 and would establish a leniency programme, to facilitateprosecution of cartels and other anti-competitive practices.  The US Department of Justice had helped
Brazil prosecute the vitamins cartel for activities within the Brazilian national jurisdiction.
16. The representative of the Russian Federation said that the principle of non-discrimination
should play the same role in the area of competition as it currently played in trade policy.  The
principles of national treatment and MFN should also be included as key principles of a multilateralagreement on competition.  Globalisation and increasing international competition meant that national
competition policies were subjected to pressure by national industrial lobbies and national industrial
policy to provide more favourable conditions  for national companies.  Analysis of cases involving
foreign firms in Russia indicated that, currently, foreign companies were not discriminated against in
gaining access to and in the enforcement of competit ion policy in Russia.  Nonetheless, a commitment
to non-discrimination in a WTO framework on competition policy could play an important role in
ensuring the sound application of competition law and policy in the future, in Russia and elsewhere.
17. The representative of Switzerland said that due to constraints in human capacity, it would not
be possible for all requests for cooperation on specific cases to be met.  Therefore, it was important
that, as the EC and Canada had mentioned previously, cooperation would be voluntary.  That is,
countries would not be required to provide enforcement assistance in all circumstances.  This entailed
a potential for discrimination with regard to the MFN principle.  Guidelines would need to beestablished to ensure that the principle of MFN w ould be complied with.  For instance, reasons would
need to be given in cases when cooperation was declined.  In whatever way that would be formulated
in eventual negotiations, in Switzerland's view, the possibility of consulting and the commitment to
sympathetically consider such requests for cooperation would be remarkable progress as compared to
the situation that currently existed.  The possibility of building up informal contacts was important tocompetition authorities in smaller countries like Switzerland and probably also to many developing
countries.  According to Switzerland's experience, it would be tremendously beneficial for
competition authorities to meet regularly within a solid institutional framework such as an eventual
multilateral agreement on competition policy.
18. The representative of the OECD informed participants that the Joint Group on Trade and
Competition had taken up the subject of "rights of firms under competition laws".  It was considered
possible that a firm could be harmed by anti-competitive conduct in an export market yet lacked the
same ability as domestic firms to pursue remedies under domestic law.  However, a survey of
procedures applicable to the pursuit of private interests under competition laws of Member countries
established that foreign firms were generally not subject to differentiated treatment under thecompetition laws of responding countries.  With minor exceptions, foreign firms enjoyed the same
rights and privileges as domestic firms to pursue private remedies before national competitionWT/WGTCP/M/14
Page 8
agencies or courts.  However, the means by which firms, domestic or foreign, could act in their
private interests under competition laws varied substantially across countries.  Those differences
reflected a variety of policy choices and fundamental differences in national legal systems.  As a
result of the survey, the Joint Group had elaborated, in co-operation with WP3 of the OECD
Committee on Competition Law and Policy, principles  regarding private remedies under competition
laws.  Among others, the principles of non-discrimination and national treatment applied to all aspects
of private participation in competition enforcement.4
19. The representative of UNCTAD stated that UNCTAD was also concerned with the
fundamental principles of international trade an d believed that non-discrimination was an important
principle in the implementation of competition law.  Transparency and the implementation or
application of legislation according to the due process of law were also vital.  Developing countries
should have the possibility of adopting legislation or laws that corresponded with their level ofdevelopment.  In other words, there was not a single model for all countries.  Convergence should
occur after a certain period of time and legislation should be amended and improved.  However,
legislation should be introduced in a gradual way in  developing countries.  This meant that those
countries that had not yet looked into the matter were given the opportunity to adopt legislation at a
later stage.  From a development perspective, exemptions were important for developing countriesand needed to be considered in depth.  The principle of special and differential treatment had not yet
been dealt with sufficiently in the Working Group discussions.  It was a principle to which developing
countries attached signficant importance.  This could seem contradictory with the principle of non-
discrimination.  However, in a nutshell, what was being discussed was flexibility.  Greater flexibility
should be granted for least developed countries in the area of exemptions and exceptions.  Suchcountries should be allowed to adopt a general competition law progressively over time.  National
legislation could be amended to become stricter , slowly removing exemptions and exceptions, as
countries moved forward.  In relation to cooperation, it was difficult to require countries to cooperate
and, consequently, cooperation should, at least at the outset, be voluntary.  However, it was possible
to imagine cases where countries such as least developed countries or poorer countries made justifiedrequests but in respect of which no replies were received.  It was necessary to consider further the
extent to which treatment granted to the more developed countries in international cooperation should
be the same as the treatment granted to least developed countries or poorer countries and the
application of the principle of non-discrimination in that respect.  Further cooperation between
international organisations such as OECD, UNCTAD and WTO and Members that were in a position
to offer their experience and know-how was extremely important and welcome.  The next UNCTAD
Intergovernmental Group of Experts on Competition Law and Policy would take place alongside the
next WTO meeting, from 2-4 July 2001.  An important item that would be dealt with at that meeting
was international cooperation.
III. APPROACHES TO PROMOTING COOPERATION AND COMMUNICATION
AMONG MEMBERS, INCLUDING IN THE FIELD OF TECHNICAL
COOPERATION
20. The representatives of Colombia; Czech Republic
; the European Community and its member
States; Japan  (two contributions); Korea ; Romania ; the United States ; and Uruguay   introduced
written contributions on this agenda item (documents WT/WGTCP/W/162; WT/WGTCP/W/165;
WT/WGTCP/W/160; WT/WGTCP/W/167 and WT/WGTCP/W/168; WT/WGTCP/W/166;
WT/WGTCP/W/161; WT/WGTCP/W/164 and WT/WGTCP/W/169, respectively).  In addition, therepresentatives of Canada; Ecuador
; Egypt ; Hong Kong, China ; Guatemala ; India ; Korea ; the
Philippines; the United States  made oral statements or posed questions on this item.  The
representative of the OECD provided an  update on relevant OECD activities.
                                                     
4 See  "Remedies available to private parties under competition laws ", in Trade and Competition
Policies – Options for a Greater Coherence , OECD, 2001.WT/WGTCP/M/14
Page 9
21. The representative of Japan, introducing document WT/WGTCP/W/167, said that
competition policies were increasingly recognized as a vital engine for economic growth.  While in
recent years, developed countries had established mutually cooperative relations primarily through the
OECD and bilateral channels, developing countries were making a growing number of requests for
cooperation, that were mainly requests for technical cooperation.  In the case of technical cooperationactivities engaged in by Japan, most programmes had involved countries in the Asia-Pacific region.
The Japanese competition agency, the Fair Trade Commission of Japan, had hosted trainees from
foreign competition authorities and had despatched competition experts on short and long-term
assignments to assist foreign competition authoritie s.  However, over the past few years, a number of
requests for technical cooperation had been declined due to resource limitations.  It appeared that
other developed countries and international organizations were confronted with the same situation.
Bilateral and regional technical cooperation activities provided developing countries with valuableopportunities to obtain skills and specialized knowledge in the area of competition policy.  Therefore,
the continuation of such activities was entirely justified.  However, it was necessary to recognize that
there was a risk of duplication since technical cooperation was provided through many sources.  Lack
of coordination would lead to wasting limited human and financial resources.  Duplication could be
minimized by improving coordination among existing cooperation programmes.  In certain regions,such efforts were already proving successful - for example, technical cooperation activities among
members of APEC.  In the opinion of his delegation, this approach should ultimately be extended to
cover all geographical areas through action in the WTO.  The involvement of an international
organization in this area would also be desirable in  view of the significant diversity among developing
countries.  Certain advantages were associated with a multilateral cooperative framework that did notexist in relation to either bilateral or regional frameworks.  Although UNCTAD, the World Bank and
the OECD automatically came to mi nd with respect to the provision of technical cooperation in the
field of competition law and policy and notwithstanding their achievements on this front, in the
opinion of his delegation, the time had come to give serious consideration to setting up a multilateral
framework that would provide technical assistance to a broader range of developing countries and thatwould identify more clearly the objectives and direction for the provision of technical cooperation.
Such a framework was necessary for at least two reasons.  First, globalization meant that trans-border
anti-competitive business practices were increasing.  Second, while anti-competitive practices
affected both developed and developing countri es, developing countries tended to have weak
competition regimes and this made them more prone to anti-competitive practices.
22. Continuing, he recalled that there was an increasing number of bilateral cooperation
agreements in the field of competition policy.  Since bilateral agreements were based on the principleof reciprocity, they tended to be concluded between developed countries that had similar levels of
sophistication in terms of their competition regimes.  It was notable, however, that some bilateral
agreements had recently been concluded between developed and developing countries.  In the light of
this development, one option was to create an international network of bilateral cooperation
agreements in the hope that the number of such agreements would eventually multiply.   Technical
cooperation could be provided for in those agreements.  However, in the view of his delegation, such
an approach would take too much time.  Further, such an approach might exclude countries that had
an important role to play in fighting specific an ti-competitive activities with international dimensions.
In contrast, a multilateral framework for cooperation on competition matters would offer countries the
opportunity to share in the benefits of the system, if they so desired.  Another justification foradopting a multilateral approach was that, following the introduction of competition law, there was a
need to gain practical knowledge regarding the app lication of such law through, for example, sharing
experiences with other countries.  A multilateral framework could create opportunities for these kinds
of exchanges.  In addition, the promotion of multilateral cooperation could have a positive impact
upon domestic decision-making processes regarding the implementation of competition policy.  Byincreasing awareness regarding other Members' experiences and by being exposed to best practices,
Members would gain important insights that would strengthen domestic reforms efforts.WT/WGTCP/M/14
Page 10
23. Continuing further, he said that, since its inaugural meeting in July 1997, the Working Group
had engaged in more than three-and-a-half years of discussions that had contributed to materially
improved understanding of competition laws by developing countries.  Further, the WTO system
already contained a series of provisions that addressed anti-competitive practices, albeit in an
unsystematic way.  In the opinion of his delegation, many Members had arrived at a commonunderstanding regarding the main elements of competition policy and the basic outline of a
multilateral framework of cooperation on competition matters.  As stated by his delegation previously,
such a framework could comprise the following elem ents: (i) provision of technical cooperation; (ii)
sharing of information and experiences; (iii) cooperation regarding notification and coordination; (iv)
the adoption of core principles; and (v) a clause to ensure an appropriate level of flexibility.  The
GATT had been the driving force for free trade.  Its mandate had focused, first, on tariff reductions.
However, over the years, the scope of the activities of the GATT and its successor, the WTO, hadcome to cover a much broader area including areas su ch as trade in services, intellectual property and
standards in certification.  The question of whether the issue of competition should be included in the
next round of multilateral negotiations lay beyond the mandate of the Working Group and awaited a
political decision.  However, his delegation was of the view that a sound foundation for negotiations
had been established and that there was an urgent need to proceed with a multilateral competitioninitiative if the WTO was to maintain its relevance to the world economy.
24. The representative of the European Community and its member States requested the
Secretariat to make available informally to the Working Group two background papers prepared by
the European Commission.  The two papers summarized the main points that had emerged at two
seminars on "new" WTO issues, including competition, recently held in cooperation with the Chileanand the South African Governments respectively.  He also requested that the Secretariat make
available to the Group a report from the WTO Regional Workshop on Competition Policy, Economic
Development and the Multilateral Trading System that had taken place in Cape Town, South Africa
on 22-24 February 2001.  The Secretariat responded that an informal Report on the Workshop was
being prepared and that, when completed, it would be made available to the Group, as requested (done
in Job 3935, dated 31 May 2001).
25. Continuing, and introducing document WT/WGTCP/W/160, the representative of the
European Community and its member States said that, in the view of his delegation, the WTO could
and should take on an active role regarding international cooperation on competition issues.International cooperation in the context of a WTO agreement would benefit all WTO members.  As an
example, the contribution submitted by his delegation made reference to the French/West African
Shipowners Conference to illustrate not only the harmful effect that hard-core cartels could have on
developing countries' trade, but also the need for cooperation between the competition authorities of
developed and developing countries.  Evidence docu menting that particular hard-core cartel, which
had fixed rates in freight routes between 12 West-African countries and a number of European ports
and thereby adversely affected exporters and inhibited trade, was predominantly located within the
jurisdictions of a number of West African countries.  As the European Commission's competitionauthorities did not have any formal cooperation agreements with the competition authorities of the
countries concerned, it had been difficult for the former to gain access to the relevant evidence, and
this had led to a lengthy and cumbersome investigation.  The process would have been less arduous,
benefiting both developed and developing countries, had a multilateral cooperation mechanism been
in place.  By proposing the inclusion of international cooperation in a WTO agreement oncompetition, his delegation was not in any way suggesting that existing bilateral or regional
cooperation agreements should be abandoned.  The European Community already had cooperation
agreements with the United States, Canada and several other WTO Members, and it fully intended to
continue to engage in such cooperation.  Rather, his delegation was of the view that there was a clear
need for multilateral cooperation to bring the benefits of cooperation to other Members of the WTOand that this kind of cooperation could be complementary and should supplement existing bilateral
and regional cooperation.WT/WGTCP/M/14
Page 11
26. Continuing, he said that, in the opinion of his delegation, international cooperation in the
context of a WTO agreement on competition should focus on three aspects.  The first would be the
exchange of experiences; the second would consist of discussions on areas of common interest; and
the last would involve case-specific cooperation.  Pursuant to this approach, every competition
authority, whatever the level of sophistication and detail in its competition law, would have thepossibility to liase and interact with the competition authorities of other Members.  Although, up to
now, his delegation had identified hard-core cartels as the only substantive area to be covered in a
WTO framework agreement on competition, cooperation under such an agreement could also take
place with respect to other substantive issues.  Furt her, in the view of his delegation, the exchange of
information under a WTO agreement on competition would encompass factual as well as legal
information.  While the exchange of information would be limited to non-confidential information,
the usefulness of non-confidential information should not be underestimated.  As the contribution ofthe Czech Republic had made clear, there was an abundance of information in documentation relating
to actual competition cases that was not available elsewhere.  These types of information were very
valuable for newly-established competition authorities.
27. Another representative of the European Community and its member States recalled that the
contribution submitted by his delegation at the previous meeting of the Group (WT/WGTCP/W/140)
had listed a number of concrete cases indicating the potential effects of international cartels on
developing countries.  The paper presented by the delegation of Japan at the current meeting
(WT/WGTCP/W/168) made reference to a number of historical examples of international cartel cases
that had had an adverse impact on developing countries.  Further, a recent paper prepared by two
academic economists as a background study for the World Bank had provided an important newassessment of the impact of private international cartels on developing countries.  The paper was
available on the Internet at the following address http://www-
unix.oit.umass.edu/~maggiel/WDR2001.pdf .  It was built around case studies of cartels that had been
uncovered in five industries:  bromine, citric acid, graphite electrodes, and seamless steel tubes.  It
assessed the direct effects of these cartels on consumers in developing countries, in terms of priceincreases, as well as the indirect effects on producers in developing countries.  One of the paper's
findings was that, according to data for 1997, developing countries had imported US$81 billion of
goods from industries that had been involved in price-fixing conspiracies during the 1990s.  This
figure was equivalent to 6.5 per cent of  the total imports of developing countries and 1.2 per cent of
their GDP.  These different sources showed that international hard-core cartel activity posed a
demonstrable and significant threat to the welfare of developing countries, more so than had
previously been understood.  As more facts became available regarding the impact of cartels ondeveloping countries through studies such as this, the need for effective competition policies and for
international cooperation to facilitate the implementation of such policies would become ever more
clear.
28. The representative of Romania, introducing document WT/WGTCP/W/161, said that, in the
view of his delegation, competition laws, policies and institutions played an essential role in
strengthening the private sector as an engine of growth and development and in preventing restrictive
practices that would otherwise impose heavy costs on consumers.  They were particularly important
for developing and transition economies since they could help to establish the foundation for a healthy
market economy.  Taking account of the globalization process and the fact that undertakings were
more and more involved in international operations, competition authorities needed to have the powerto require such undertakings to observe national competition laws.  Existing cooperation arrangements
between developed countries such as the United States and the European Community could serve as
an example when trying to set the basis for cooperation between developing countries.  When
considering the design of a possible multilateral framework for cooperation in the competition area,
the following main types of anti-competitive pr actices would be relevant: (i) anti-competitive
practices with a similar impact on several markets and on world markets, such as international cartels;
(ii) anti-competitive practices affecting market access, such as import cartels, abuses of dominant
positions and certain forms of vertical agreements -- cases in which, under general jurisdictionWT/WGTCP/M/14
Page 12
principles, only the importing country would normally be in a position to apply its competition law;
and (iii) anti-competitive practices, the effect of which was felt primarily in a different market from
that in which it was conceived, such as export cartels.  In order to address such anti-competitive
practices in an effective manner, there was a need for both effective national competition policies and
enhanced international cooperation at the bilateral, regional and multilateral levels.  An importantelement to be included in a multilateral framework on competition policy would be support for the
process of institution-building.  In particular, a multilateral framework in the WTO would provide the
opportunity for countries with less experience in this area to be in contact with more experienced
countries and to benefit from their experience.  A multilateral framework on competition policy would
have to be characterized by:  (i) progressivity in any commitment relating to the introduction of a
domestic competition law regime; and (ii) flexibility with regard to the diversity of national
approaches to competition law and policy, taking into account the differences in both the competitionlaws of WTO Members and in the institutional procedures for the enforcement of such laws.  The
WTO fundamental principles of transparency and non-discrimination should also be reflected in such
a framework, as these were important underpinnings of an effective competition policy.  Such a
framework would offer important benefits in facilitating cooperation in the fight against restrictive
business practices, for example through:  (i) enhanced availability of information on cases involvinganti-competitive practices; (ii) consultations among competition agencies in order to better address
anti-competitive practices of common concern and to manage jurisdictional conflicts through the
application of positive comity principles; and (iii) new procedures for the exchange of national
experience and perspectives on competition policy such as peer review.  A multilateral competition
framework could also play an active role in strengthening the effectiveness of technical assistance inthe area of competition policy (that is, assistance for drafting competition laws, strengthening the
institutional capacities to deal with complex cases, etc).  Within such a framework, technical
assistance programmes could be better focused on the needs of recipient countries.  Reference was
also made to the Romanian Competition Council's e xperience in the field of international cooperation,
details of which were noted in the paper.
29. The representative of Colombia, introducing document WT/WGTCP/W/162, said that, while
her country had a sound competition regime in place, it lacked the tools to effectively control anti-
competitive practices that arose outside its own jurisdiction.  A multilateral framework on competition
policy that could help to provide such tools would be of great interest.  Such a framework would also
make it possible to design instruments that would allow international anti-competitive practices,
especially those affecting the competitiveness of developing countries' exports, to be tackled at a
global level.  In the view of her delegation, coor dination between national authorities could also play
a fundamental role in dealing with the new challenges created by globalization.  A regular and
permanent exchange of information, together with enhanced technical assistance for capacity
building, should be important features of cooperation under a multilateral framework.
30. The representative of the United States, introducing document WT/WGTCP/W/164, said that
the paper focused on the mechanics of setting policy goals and priorities with respect to the
administration of competition law, and that it had been written  on the premise that every Member had
at its disposal finite rather than unlimited resources.  Taking the example of Argentina, it was noted
that, two years ago, the Argentine Congress gave the Argentine antitrust agency the authority to
conduct pre-merger notification reviews and some standard merger reviews.  Through this legislative
reform, the Argentine antitrust agency gained an important power that it did not previously have.
However, since merger reviews (particularly reviews of pre-merger notifications) were highly
resource-intensive and additional resources were not allocated to the Argentine antitrust authority
when the new powers were bestowed, it found itself having to devote a large proportion of its
resources to that task and, consequently, less were devoted to other functions.  In the case of the
Netherlands, up until 1997, the year in which the new Dutch antitrust law was enacted, theNetherlands had a regime according to which cartels were legal provided that they were registered.
The shift from a system of legalized cartels to a system of illegal cartels proved difficult.  The
Parliament of the Netherlands had provided the national antitrust agency with the power to grantWT/WGTCP/M/14
Page 13
individual exemptions, which generated a flood of applications for exemption.  In contrast to the
situation in Argentina where much of the antitrust agency's resources were absorbed by a new task, in
the case of the Netherlands, resources were freed up by the creation of the new task and it was unclear
how those resources would be utilised.
31. Continuing, he said that the EC Commission had also faced the necessity to re-direct its
resources as a result of a shift in priorities.  For many years, the Commission had spent a large
proportion of its resources on authorizations and that had prevented it from spending more resources
on investigating cartels.  Subsequently, the Commission had decided that this system had outlived its
usefulness and generated heavy administrative costs. For these reasons, the system had been changed.
In the United States, the large number of mergers that both the Federal Trade Commission and the
Justice Department had to review necessarily required a heavy investment of resources.  However, the
revelation in the last seven or eight years that international cartels were far more common than one
would have expected had called for greater emphasis to be placed on prosecuting such cartels.  Under
United States' law and established custom, the antitrust agencies had absolute prosecutorial discretion
in the sense that they had the power to decide which cases would be prosecuted and which would not.
In so deciding, those agencies considered a number of factors,  including the quality and quantity of
available evidence, the nature and amount of professional resources that would be consumed by aparticular case, and whether the competitive climate in the United States was to be significantly
improved by actually prosecuting and winning  the case.
32. The representative of the Czech Republic, introducing document WT/WGTCP/W/165, said
that, in the view of his delegation, strengthening international cooperation in the fight against cartels
and other anti-competitive practices would be a key benefit of a WTO framework on competitionpolicy.  Such a framework should also contain pr ovisions concerning the exchange of information.
On the one hand, the extraterritorial application of competition law was becoming increasingly
widespread.  A multilateral framework gave force to national regulations, regardless of whether anti-
competitive practices were carried out within or beyond the relevant countries' borders, as long as
those practices had an effect upon the domestic market.  The extraterritorial application of thecompetition law gave rise to considerable problems, including the problem of state sovereignty.  In
the view of his delegation, the exchange of info rmation, even if restricted to non-confidential
information, would make the application of competition law smoother when anticompetitive practices
originated abroad given that any factual and lega l information collected by a foreign competition
authority would be helpful to a domestic comp etition authority dealing with such cases.
33. The representative of Korea, introducing document WT/WGTCP/W/166, said that advanced
countries had adopted competition policies in the late nineteenth century when consolidation was the
norm and attempts were being made to form trusts in several industries.  During that period, the key
objective of competition law had been to lessen the concentration of power in the hands of a few
companies.  Decades later, many developing countries introduced competition policies with the
explicit aim of making the domestic economy more market-friendly by dismantling business
concentrations that had been created as a result of industrial policies.  Korea's economic developmenthad surged ahead in the early 1960s and, at that time, it had been mainly based on an export-oriented
growth strategy that sought to nurture specific industries by giving them preferential treatment in
terms of financing and taxation.  This strategy, coupled with a number of other factors, including the
favourable international trend towards freer trade, allowed Korea to achieve a stunning 7 per cent
annual growth rate during three decades.  However, this strategy also had heavy costs, particularly in
relation to Korea's long-term economic potential.  In particular, effective and competitive financing
mechanisms did not develop in an appropriate fa shion, industry grew in an unbalanced way, and
excessive economic power was concentrated in a few conglomerates.  The Korean Government made
several attempts to introduce a competition regime.  The Monopoly Regulation and the Fair Trade Act
of 1981 represented an important conceptual overhaul of the economic growth strategy that had beenfollowed until then given that it envisioned market mechanisms as the key instruments that would lead
to economic development.  Nevertheless, the introduction of a fully-fledged competition policy didWT/WGTCP/M/14
Page 14
not take place until the 1990s when the public became much more aware of the importance of
maintaining an effective competition regime.  Following this mandate, the Korean Fair Trade
Commission began to take measures intended to reduce the concentration of economic power and to
remove obstacles to market entry and exit.  It also took measures to regulate natural monopoly
sectors, such as telecommunications and gas.
34. Continuing, he said that various developing countries had already embarked on the
enforcement of competition policy and that many benefits had been observed.  For instance, the
introduction of competition policy could prevent government monopolies from being converted into
private monopolies.  Another benefit from the enforcement of competition policy was the possibility
of preventing the abuse of monopoly power by multinational corporations that were operating in
developing countries.  For instance, developing countries could use competition policy to prevent the
abuse of intellectual property rights.  It was difficult to precisely determine the stage of economicdevelopment at which it was most appropriate to introduce competition policy given the differences in
the social and economic backgrounds of each country.  However, in the view of his delegation, it was
certain that the later the adoption of competition policy, the more difficult it would be to remedy
market distortions brought about by the absence of  competition policy.  Evidently, it was easier to
introduce competition regulation before monopolies became entrenched through the acquisition ofpolitical and economic power.  Korea had significantly suffered for its failure to reconcile industrial
policies with an active competition regime.  Having  learnt from its lessons, the Korean Government
was currently making a concerted effort to establish pro-competitive market structures in the Korean
economy.
35. The representative of Japan, introducing document WT/WGTCP/W/168, said that this paper
presented some concrete examples of internatio nal cartels and illustrated how cross-border anti-
competitive practices could erode the welfare effects of trade liberalization.  International cartels were
a prime example of cross-border anti-competitive practices with an adverse impact upon international
trade, as well as the welfare of consumers.  However, since the parties to such anti-competitive
practices were typically located in multiple countries, it was difficult for any one country to respondadequately to such behaviour.  Some international cartels had a serious impact on developing
countries and they, therefore, undermined the development policies and economic health of those
countries.  A developing country affected by international cartels could only mount an appropriate
response if it had strong competition laws that could be adequately enforced.  If, however, the country
concerned did not have adequate competition laws, or if such laws were not supported by adequate
enforcement, that country would be victimised.
36. Continuing, he said that the paper submitted by his delegation provided an analysis of
international cartels involving six different products, namely:  synthetic fibers, photographic
equipment (that is, prisms, lenses and lightening equipment), television equipment, chemical textile
products, micro-crystalline cellulose, and food preservatives.  These cartels had been prosecuted and
dismantled by the competition authorities of several developed countries.  The cartel involving
synthetic fibers had operated in the 1970s.  It had come into being as Japanese and German companiesformed a cartel to divide the international markets for synthetic fibers such as acetate, rayon, staple
fibre and nylon on a geographical basis.  Under the terms of the cartel, Asian markets were allocated
to the Japanese companies and African markets to the German companies, with parties to the cartel
agreeing not to export to the others' markets.  The cartel concerning photographic equipment involved
three companies, one each in the United States, the United Kingdom and France, which divided up theglobal market among the cartel participants also on a geographical basis.  The cartel concerning
television equipment involved a company from th e United Kingdom, the US subsidiary of that
company, and other American corporations.  This cartel had also functioned on the basis of
geographical allocation of markets.  The cartel for chemical textile products divided up the
international market by using a number of cross-li cencing agreements.  This cartel was not based
upon geographical allocation but, rather, it designated regions and then stipulated which of the parties'
patents would have exclusive application in that region.  The cartel for micro-crystalline cellulose (anWT/WGTCP/M/14
Page 15
adhesive for medical tablets) involved a US company, which sought to eliminate two Taiwanese
competitors by proposing exclusive contracts to those companies.  It also offered a market share in the
North American and European markets to another US competitor.  The cartel involving food
preservatives, which lasted around 17 years among a US company, a German company and a
Japanese company, involved price-fixing as well as market sharing.  While these cartels had, in somemeasure, been dealt with through enforcement actions by major developed countries, it was important
to note that such actions, by themselves, would not necessarily alleviate or prevent the re-emergence
of cartel activity in developing countries.
37. Continuing further, he said that a number of disturbing effects arose from the existence of
international cartels.  First, such cartels signif icantly undermined the benefits arising from trade
liberalization by impeding the efficient flow of goods and services on a global scale.  Second, these
cartels were, by definition, international in scope and there was a high probability that such practiceshad a detrimental impact on developing countries.  However, as it was impossible for any one country
to deal adequately with such problems alone, a global approach was much more likely to prove
effective.  Given that international cartels and other cross-border anti-competitive practices eroded the
benefits from free trade, it seemed logical for the WTO to take action to deal with these practices.
One particular advantage of the WTO in this regard was that the WTO had the ability to providetechnical assistance and other capacity-building support for developing countries, making it possible
for such countries to learn from the experience of developed countries and to gradually enhance their
own competition regimes.
38. With respect to the nature of cooperation that was envisioned by the proponents of a
multilateral framework, the representative of Canada, commenting on question 7 in Section III of the
Checklist, said that, in the view of his delegation, cooperation, by definition, it could only be
voluntary in nature.  It was clear that countries co uld not be required to cooperate.  The question was
then why a multilateral framework was necessary to  pave the way for cooperation.  The resolution to
this apparent paradox lay in the realization that, while cooperation had to be voluntary, it was founded
upon a degree of mutual trust.  Trust was something that could not be mandated by an internationalagreement nor could it be subject to specific rules.  Nevertheless, an international agreement could
play an important role in facilitating trust.  The key element in this process was to encourage
convergence with respect to some basic competition principles and to ensure that such a process was
linked to aspects such as having a competition law with appropriate scope, administrative and
enforcement provisions, due process, etc.   To the extent that relationships of trust were established
between competition authorities from different coun tries, the question of disparity between Members
in terms of bargaining power or resources would become irrelevant given the mutuality of benefits
arising from cooperation in specific cases.  A case in point was Canada, which had already cooperated
on competition matters with both the likes of the United States and a number of countries in Latin
America and the Caribbean, even if this cooperation took place in the face of considerable disparities
in size and differing competition regimes.  It was possible to envisage that cooperation under a
multilateral agreement could operate in two phases.  The initial phase could be educational and wouldconcentrate on the development of institutional support and enforcement capacity in the Member
countries, backed up by technical assistance and the exchange of background information.  The
second phase would have as its primary feature the development and implementation of notification
procedures, its objective being to ensure a minimum level of awareness about the activities of other
competition authorities.
39. Continuing, he said that, as the work of the Working Group had revealed, there were a
number of cross-border anti-competitive practices which had had a direct impact on trade and
development.  Notably, hard-core cartels could si gnificantly distort the price of key products and
preclude trade beyond the geographic boundaries that had been set by a cartel.  There was evidence
that these cartels were having a substantial detrimental impact on developing as well as developedcountries.  However, many such countries lacked adequate tools to deal with the impact of such
arrangements on their economies.  While cross-border anti-competitive practices had a clear impactWT/WGTCP/M/14
Page 16
upon international trade, the question still remained as to why they should be addressed at the
multilateral level, and why within the WTO rather than some other multilateral organization?  As
certain commentators had pointed out, WTO rules were, for the most part, targeted at governmental
behaviour rather than private behaviour.  However, it was also true that no other international
organization provided a more appropriate institutional setting for a multilateral agreement oncompetition policy.  What other organizations were critically lacking, and what the WTO brought to
the table, was the ability to require Members to implement a competition law.  In addition, in certain
cases, governmental measures were to be found at the root of specific anti-competitive behaviour.  Of
course, there were already some limited competition-promoting provisions in existing WTO
agreements – the GATS addressed competition que stions in Articles 8 and 9 and the related
Telecommunications Reference Paper featured provisions prohibiting anti-competitive cross-
subsidization.  However, a problem associated with the existing provisions was that they onlyaddressed a portion of the normal coverage of competition policy.  In sum, it was clear that the WTO
had a unique role to play in dealing with some of  the international issues facing competition policy,
but that new provisions would need to be negotiated in order to allow the WTO to fulfil this role.
40. The representative of Uruguay, introducing relevant portions of document
WT/WGTCP/W/169, stated that the paper dealt wi th Uruguay's understanding of the development
dimension in the area of competition policy.  Reference was made to the Secretariat Synthesis paper
on this subject (WT/WGTCP/W/80).  It was recalled that the Working Group had agreed on the need
to engage in a more concrete debate on the development dimension and that it was necessary to
analyse the advantages and difficulties associated  with the enforcement of competition policy in
developing countries, as well as the problems related to the setting-up of bodies or agencies that werein charge of competition.  It was well-known that trade liberalisation inside and outside the WTO had
sped up globalisation.  This, together with technological progress meant that transnational
corporations were able to act globally and to achieve dominant positions in the global marketplace
through mergers, acquisitions, strategic alliances, investment or commercial operations.  In this
context, developing counties had encountered difficulty in drawing up and enforcing competitionpolices and laws so as to safeguard the interests of consumers and the efficient functioning of their
markets.  During an experts' meeting at UNCTAD in June 2000, it had been said that the value of
mergers and acquisitions in the world had grown in spectacular fashion during the period 1980 to
1999.  The rate of increase was around 42% per year.  The statistics also indicated that, in relation to
the mergers and acquisitions, developed countries were primarily the sellers and purchasers.
Nonetheless, a large proportion of these mergers had a significant, sometimes anti-competitive,
impact in the developing world.  The sectors mo st affected included the automobile, pharmaceutical,
chemical and telecommunications sectors.  In ma ny of those sectors, a quasi-monopolistic situation
existed where only a limited number of companies operated and their strategies were aimed at the
international market.  With regard to the issue of  special and differential treatment in the area of
competition policy, it was well-known that the principle of special and differential treatment was one
of the fundamental principles of the multilateral trading system.  It could be instrumental in protectingthe interests of developing countries and in ensuri ng the flexibility of commitments in the form of
different transition periods, etc.  As to the form that the principle of special and differential treatment
should take in relation to competition rules or policies, he recalled that during the 1970s, UNCTAD
had adopted a set of principles and rules that had been agreed multilaterally for the control of
restrictive business practices.  While there were other relevant instruments, the UNCTAD "Set" wasthe only multilateral tool in the area of competition.  It was a voluntary set of rules that were not
binding.  However, the Set offered specific provisions on special and differential treatment for
developing countries regarding the development, financial and trading needs of developing countries
that developed countries needed to bear in mind when controlling restrictive business practices.
According to the 1999 UNCTAD report on trade and development, all multilateral agreements oncompetition should fully take into account the need for special and differential treatment of
developing countries.  Further, such treatment c ould cover the ability to exempt certain sectors from
the application of national competition legislation for development reasons and the establishment of
exceptions and exemptions that currently existed in nearly all developed countries.  The scope ofWT/WGTCP/M/14
Page 17
exceptions or exemptions from the application of competition law varied considerably from one
country to another.  Uruguay had conducted a comparative study of national competition legislation in
both developed countries and developing countries.  It had been seen that economic activities
including telecommunications, electricity, hydro-carbons, transport, water, fishing had been exempted
from the application of national competition legislation.  Different reasons had been put forward forthe various exemptions from national competition le gislation including, for instance, the stability of
sectors for the production of goods and services that were of importance for the general economy at
large, and the need to invest in research and development of new technologies.  Exemptions that
existed in developed countries applied in those sector s that were subject to special state regulation, as
had been mentioned in the 1997 WTO Secretariat Special Study on Trade and Competition Policy.
The conclusion that had been drawn by Uruguay on the basis of this study was that it was important
for the Working Group to continue to examine in depth the development dimension in relation tocompetition policy, with specific reference to the question of exceptions and exemptions from
competition law.  He suggested that the Secretariat be asked to update document WT/WGTCP/W/80,
the Synthesis Paper on the Relationship of Trade and Competition Policy to Development and
Economic Growth, which it had prepared two years previously (see related discussion in Section IV,
below).  More generally, he encouraged the Secretariat to work with other international organisationsincluding UNCTAD and the OECD, to complement the work that had already been undertaken on the
development dimension.  The representative of Guatemala expressed support for the comments made
by the representative of Uruguay.  Indeed, it would be desirable for the Group to discuss further theproblems associated with the setting up of compe tition agencies, especially in relation to the
management of scare resources.
41. With regard to the potential value-added of a multilateral framework on competition policy,
the representative of the Philippines noted that the discussion had clarified that cooperation would
occur among competition authorities in the various  jurisdictions, including the exchange of best
practices and effective ways of dealing with the broad spectrum of problems that arose in the area of
competition policy.  He stated that it was a logical objective but he did not see the validity ofincluding such an objective in international comm itments or negotiating the issue in a multilateral
process, thereby subjecting it to dispute settlement.  Since three delegations had alluded specifically to
a commitment to negotiate a competition policy framework, he wanted to share the difficulties that his
delegation had with this objective.  First, it had been said that competition policy covered a broad
spectrum of economic activity.  Trade liberalization, market opening, deregulation undertaken by
Members on an autonomous basis, bilateral agreements, OECD and other trade agreements, and most
of the new generation trade agreements, especially from a particularly big group, had imposedcompetition policy through trade agreements.  For developing countries, most especially, it could be
said that such commitments which had been inscribed in work schedules in trade in goods, trade in
services, intellectual property, TRIMs and the mandated negotiations that were currently underway,
had potentially exhausted the optimum levels of trade and trade-related commitments through trade
liberalization and market-opening.  This was particularly so in view of developing countries'fundamental financial trade and development needs and the fact that the imbalances and asymmetries
in the mentioned existing agreements had not yet been rectified.  The proponents of a competition
multilateral framework obviously intended to shift from focussed, sectoral issues to a precise
principles-based framework, with the fundamental WTO principles of MFN and national treatment
and non-discrimination as the basis for such a regime.  However, the existing structure of principles inthe WTO was such that they had been based or applied in relation to specific issues, measures,
elements or things.  This would be lost by a broad-brush application of principles which would then
encompass various trade and trade-related areas, and perhaps even environment, labour standards, and
other issues if they were part of the competition policy legislation of each country, based on their own
specific domestic problems.  The parameters associated with such proposals needed to be openlydiscussed.  In his view, competition policy fell outside the scope of the WTO.  There was deep
divergence in the OECD regarding the desired appr oach, as had been the case with respect to the
MAI.  A principles-based approach would also seem to cover developing countries' industrial policies;
that appeared to be the principal objective of such a broad-based approach now that all trade andWT/WGTCP/M/14
Page 18
trade-related measures had been exhausted and that developing countries and other countries were
already conscious of the difficulties associated with moving forward.  For these reasons, he was not
convinced that the issue was ripe for negotiations  in the WTO.  Although it had been stated that
commitments could take different forms, that is, that there would be flexibility, experiences in
implementing existing agreements including TRIPS a nd TRIMs, illustrated that developing countries
had been trapped in the short history of WTO.  There were other issues that needed to be discussed
such as scope, depth, timing and sequencing, coherence, government standards, relationship to dispute
settlement etc.  While he did not doubt the importance and validity of competition policy rules and
competition policy in the domestic context, it was necessary to take into account individual country
needs and priorities and allow countries to judiciously use and reconcile their scarce resources in ways
that they considered fit.  The representative of Hong Kong, China stated that, given that many
developing countries had had bitter experiences in dealing with the various obligations that emerged
from the Uruguay Round, there was a need to examine thoroughly and objectively the pros and cons
of any multilateral rule-making proposal.  The paper that had been submitted by Romania
(WT/WGTCP/W/161) focussed on the advantages of a multilateral framework but made no mention
of the possible burdens or obligations of such a framework.
42. The representative of the European Community and its member States said that the objectives
of the proposed multilateral framework on competition policy were being misconstrued.  In fact, they
were not really so sweeping as had been suggested  by some of the more reticent delegations.  The
application of the core principles that had been discussed would be based on the premise that there
would be clear parameters about the scope of application of those principles.  It was important to have
at the start a very clear recognition about what non-discrimination meant, how it related to particulartypes of policy measures and what were the particular modalities of transparency that were of
particular relevance in the context of a particular policy measure.  In particular, his delegation was not
trying to define in a multilateral framework on comp etition policy general principles that would apply
in an undefined manner to all kinds of government policies including industrial policies or other
policy objectives that were being pursued by nationa l governments.  Rather, the intent was that these
principles would apply in respect of competition law and policy as such, and not to wider economic
development policies.  The underlying intent was to assist all WTO Members to gain access to the
tools that would enable them to deal effectively with anti-competitive practices that posed a threat to
their trade and development prospects.
43. The representative of the United States noted that the proponents of a cooperation framework
in a multilateral agreement had stated that cooperation could not be mandatory; that it was to be
voluntary.  However, if MFN rules applied to c ooperation systems, how voluntary would the system
really be?  While the application of MFN to something like tariffs was clear, it was unclear how it
could apply to requests for cooperative assistance in antitrust cases.  What would happen if a country
received more than one request in relation to the same investigation but one request required a greater
use of resources than the other?  Were those like circumstances? Was it necessary to favourably reply
to both requests? What if the same amount of resources were required but one request was receivedwhen the agency was less busy and one when it was more busy and did not have the resources to
respond?  What if a country was one from which more mutual cooperation was expected as compared
to another?  The answers to these questions were unknown and for that reason, concern was expressed
about the idea of applying WTO rules to something that was being characterized as voluntary.  One
could answer that there was no obligation to cooperate but only to give sympathetic consideration torequests to cooperate.  Again, how could that be judged?  In fact, the possibility of being subjected to
those kind of WTO disciplines in relation to a supposedly voluntary exercise could chill the exercise
of cooperation and perhaps lead to less cooperation for fear that cooperating with one country would
imply a burden to cooperate with many more.  Arguably, this demonstrated the inappropriateness of
trying to set up a voluntary framework under the auspices of the WTO multilateral rules-basedsystem.WT/WGTCP/M/14
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44. The representative of Hong Kong, China asked why domestic competition law and domestic
competition authorities were seen as the backbone for successful implementation of a WTO
framework agreement on competition.  In response, the representative of the European Community
and its member States said that it was the view of his delegation that cooperation with respect to
competition matters was only possible when a competition regime was already in operation; that is,when there was a domestic competition law of some sort and a domestic competition authority existed
with sufficient powers to effectively enforce that law.  This, however, did not suggest that fully-
fledged harmonization of domestic competition laws  was desirable.  His delegation was aware that
significant differences existed between different competition regimes and that there were many
historical, economic and political reasons accounting for these differences which could not be treated
in a dismissive fashion.  His delegation had not suggested setting up a supranational competition
authority since the approach suggested by his delegation anticipated that domestic competitionauthorities would meet on a regular basis under the auspices of a WTO competition policy committee
that would administer the agreement.   
45. The representative of India stated that the need for and benefits of cooperation among
countries in the area of competition policy was well recognised.  However, significant differences of
opinion arose regarding the necessity for a multilateral arrangement to achieve those objectives.  Anymultilateral arrangement in the area ideally needed to evolve out of the experience gained at the
bilateral and the regional levels.  There were very few bilateral agreements in the area of competition
policy.  Agreements that already existed were largely between developed countries at similar stages of
development and were limited in scope.  Information-sharing arrangements among competition
authorities in the form of "positive comity" in  the existing arrangements excluded confidential
information, which rendered them ineffective.  Competition policy agreements as part of regional
trading arrangements (RTAs), though limited, were increasing.  However, in India's view, they had
not progressed to a stage from which lessons could be drawn for multilateral cooperation.
Competition policy was one area where convergence of economic and even political interests
appeared to be essential to persuade countries to share information with foreign competitionauthorities to enable them to investigate the prac tices of domestic enterprises that generated adverse
anti-competitive effects in foreign markets while th e gains of such practices accrued in the domestic
market.  He noted that the papers that had been submitted by the EC and Japan (WT/WGTCP/W/160
and WT/WGTCP/W/168, respectively) stated that the need for multilateral cooperation in the area of
competition policy was much greater in the case of small or developing countries.  India shared the
views that had been expressed regarding the adverse impact of hard core cartels on developing
countries.  However, the remedy would only be effec tive to the extent that multilateral rules could be
meaningfully enforced.  The proposals made in the Working Group by some Members envisaged
"positive comity".  The extent to which positive comity could be enforced, especially in view of the
exclusion of confidential business information from its purview, was subject to conjecture.  India
agreed with some of the views expressed within the Working Group that, in the light of the
independent and discretionary role of competition authorities, it would be difficult if not impossible tomake co-operation among competition authorities mandatory.
46. In response, the representative of  the European Community and its member States  said that,
while India had expressed the view that cooperation arrangements would be ineffective if they did not
provide for exchanges of confidential information, this was not the experience of his delegation.  His
delegation had been involved in cooperation agreements with several countries, including the UnitedStates, Canada and other countries, none of which provided for the exchange of confidential
information.  Despite this, it would certainly be misleading to suggest that this cooperation had not
been useful.  On the contrary, these countries were all of the view that such arrangements had been
highly useful, notwithstanding their limitations.  Moreover, it was important to bear in mind that it
would be difficult to embark on a situation in which all competition authorities in the world would beparty to bilateral cooperation agreements.  This was another reason why his delegation considered that
it was necessary to define, at the multilateral level, basic principles and modalities for cooperation.
These principles and modalities could be adapted to the need of countries at different levels ofWT/WGTCP/M/14
Page 20
development and at different levels in their own process of institutional consolidation of domestic
competition authorities.  Another representative of the European Community and its member States
noted that distinctions needed to be drawn betw een different categories of information:  non-public
information such as business secrets which could not be shared under most existing cooperation
instruments; non-public information which could  be shared under such instruments and was helpful to
law enforcement processes, such as legal or economic analysis undertaken by an agency relating to
the agency's assessment of particular practices or the fact that the investigation was proceeding; and
public information such as that available on the Internet which was available to everybody.  These
distinctions were well known to countries with experience in international cooperation in the field of
competition law and policy.  Regarding whether cooperation was "compulsory" or "voluntary", there
was a series of graduations that could be seen in existing cooperation instruments.  For instance, there
could be a requirement to give sympathetic consideration of a request or make best efforts to respondin a positive way.  These could be coupled, or not, with an obligation to provide a justification in the
event that a request was refused.  There could also be a stipulation written into the relevant agreement
that a request be compatible with the important interests of the participating countries – otherwise,
they would not be required to cooperate.  Another approach would be to make cooperation contingent
on the existence of a mutual enforcement interest between the requesting and requested agency.Other possible qualifications could include the availability of sufficient resources to respond.  In due
course, it would be important to discuss more specifically the parameters of cooperation provisions
that would be included in a multilateral framework on competition policy.  However, the point was
that appropriate qualifications could be built into su ch a framework to ensure that developing or other
countries were not obligated to cooperate where this was inconsistent with their important interests.Nonetheless, such a framework could still provid e valuable assistance to developing and other
countries in addressing anti-competitive practices that were genuinely harmful to them, in that it could
make routinely available information which, while not confidential in a legal sense, would, otherwise,
not be easily available.
47. The representative of the United States noted that the paper that had been submitted by the
European Community and its member States (WT/WGTCP/W/160) had identified the benefits of
case-specific cooperation and international cooperation in general terms.  For the most part, the US
was in agreement regarding the value of international cooperation.  However, the usefulness of
cooperation should not be overstated.  For example, he questioned the relevance of international
cooperation provisions in the WTO in relation to cases of cartels such as the first French West African
Shipowners Conference case that had been discussed in the paper.  The EC paper had noted the
difficulty in gathering evidence in international cartel cases such as this, but it was questioned how thetype of cooperation provisions that could be envisioned in the WTO agreement would be of
assistance.  There were indeed types of cooperation agreements such as mutual legal assistance
treaties and that between the US and Australia that  contained provisions for sharing of confidential
information.  However, it was not obvious how, in a cartel investigation, the type of provisions that
would encourage revealing non-confidential information would be of assistance.  They would notauthorize one country to gather evidence only for the purpose of assisting another country's
investigation, nor to share confidential information once gathered.  In relation to the intervention by
the representative of India, the US agreed with India's scepticism regarding the benefits of an
international agreement.  However, support was expressed for what had been said by the
representative of the European Community about the value of cooperation in information sharing,short of sharing confidential information.  Another representative of the United States stated that from
the point of view of an antitrust enforcement agency, the assurance of confidentiality of information
was at the core of the integrity of its processes.  If that could not be guaranteed to the businesses from
whom information was obtained, then it would be mu ch more difficult to obtain that information in
the first place.  Either the information would not be obtained at all or it would not be obtained withouta court case.  In the US, requests for confidential business information were almost never litigated
since companies knew that the agency had a good tr ack record in dealing with that information in
enforcing the law.  The information would not be leaked to newspapers, nor would it be provided to
competitors.  As long as that record was maintained, the agency would continue to do its job.  ThatWT/WGTCP/M/14
Page 21
was why the EC and some of the other proponents had emphasized that the sharing of confidential
information was not being discussed.  The US shared that concern.  However, if cooperation was
limited to non-confidential information, why was an  agreement needed?  Proponents had argued that
efficiency would be enhanced through a multilateral obligation to cooperate.  However, it was unclear
where that efficiency would come from.  Some had argued that the negotiation of a single multilateralagreement was less costly than a number of bilateral agreements.  However, the cost of formal
cooperation was not relevant if the various bilateral agreements were very much alike.
48. In response, the representative of Japan stated that the advantages of multilateral as compared
to bilateral approaches to cooperation were discussed in the first paper that had been submitted by
Japan (WT/WGTCP/W/167).  First, it would take some time to conclude new bilateral agreements
since each took at least half a year.  The United States had the largest number of bilateral agreements
but it would still be a burden for it to conclude a number of bilateral agreements with many morecountries.  Secondly, unless a global or multilateral network existed, a key country involved in
international anti-competitive practices may not be party to the framework of bilateral arrangements.
Therefore, a WTO multilateral framework was a type of safety net.  Developed countries had bilateral
cooperation arrangements and an arrangement for notification, coordination, cooperation and possible
negative comity under the auspices of the OECD also existed.  However, not all countries were partiesto such mechanisms.  Regarding the issue of conf idential business information, most countries had
restrictions on disclosure of confidential business information not only to foreign agents but to
domestic agents as well.  However, it was also thought that in the future, there would be
improvements in the domestic legal regimes of WTO Member countries.  One day, it might be
possible to share confidential business information.  The representative of the European Community
and its member States said that his delegation had benefitted greatly from existing bilateral
cooperation agreements.  However, huge costs were associated with those agreements, which tendedto be concluded almost exclusively between countries that were, if not at the very same technical level
and level of sophistication, then at least at roughly comparable levels.  A multilateral agreement was
needed to share the benefits of existing bilateral arrangements with a broader group of countries.
49. Delving further into the potential benefits and costs of enhanced cooperation in the area of
competition policy and responding to question 1 in Section III of the Checklist as to what extent
international cooperation would require a common basis in terms of shared principles, enforcement
structure and machinery and legislative provisions, the European Community and its member States
commented that the harmonisation of substantive competition law was certainly not the objective ofthe exercise.  Competition law varied from one country to another and it evolved over time.
However, there was one area of substantive competition law for which there was a strong case todevelop a common principle in the WTO.  This was the area of hard-core cartels - that is, agreements
to fix prices, to share markets, bid-rigging, output restrictions etc.  That type of agreement had a clear
and unambiguously hamrful impact on international trade.  During subsequent discussions regarding
cooperation, there would also be an opportunity for developing countries to discuss the negative
impact of such agreements on trade.  The paper submitted by Japan (WT/WGTCP/W/168) contained anumber of interesting examples in this respect.  There was also strong, consistent and long-standing
consensus among competition authorities that hard-core cartels were the most pernicious competition
law offence and that they should be considered a serious offence under domestic competition law
regimes.  Therefore, the area of hard-core cartels was an appropriate one to be the subject of a
common commitment in the WTO.  Beyond this, his delegation did not believe that it was feasible orpossible to envisage a common principle in relation to abuses of dominant positions or mergers with
transboundary effects since there were too many  differences among national competition laws in
terms of how those areas were dealt with.  However, other anti-competitive practices with an
international dimension could still be the subject of the cooperation provisions in the proposed
multilateral competition framework.  His delegation believed that in relation to those issues, it wasnecessary to progress in terms of gaining a better understanding and to focus efforts in ensuring better
cooperation among competition authorities to deal with those anti-competitive practices.WT/WGTCP/M/14
Page 22
50. Responding to the same question, the representative of Canada stated that it had become
increasingly clear from recent deliberations of the Working Group that the establishment of certain
common approaches would be required in a multilateral agreement on competition policy.  Most
obvious amongst those would be a commitment to transparency and non-discrimination, which as had
been noted, were in fact intrinsic to the effective pursuit of competition.  Which forms of anti-competitive behaviour would be addressed by a multilateral agreement was a matter for negotiation.
Canada had in the past suggested that general obligations on hard-core cartels or on mergers that had
an impact upon multiple jurisdictions might be relevant.  However, other options clearly existed.  A
multilateral agreement would also have to include general provisions requiring a competition law and
an independent authority to administer it in or der to provide the practical means for Members to
respond to their undertakings.  The aims of those various common approaches would be to encourage
a degree of compatibility between Members in the application of their respective competition laws.Beyond those common approaches, it was Canada's view  that an agreement would have to provide for
considerable flexibility as had been referred to by the representative of the EC.  For example, while a
multilateral agreement with some common standards would require a Member to have a competition
law, the particulars of that law would have to be defined by each Member as it saw fit.  Such an
agreement would not, however, require a Member to have a particularly sophisticated competitionbureaucracy in place in order to be able to enjoy some of its benefits.  As an illustration of this,
Canada had already cooperated in a variety of different ways with a wide range of countries, some of
which had extremely sophisticated competition regimes and others of which were just beginning.
51. The representative of the United States commented that although the representative of Canada
had stated that a WTO agreement would need to include common approaches, that was not the same
as the EC's position.  Further, it was unclear what was meant by a "common approach".  In addition,
Canada's proposal seemed to go beyond the EC's proposal in relation to hard-core cartels.  In
response, the representative of Canada stated that  although the positions encouraged by Canada and
the EC in the Working Group had been similar, th ere was no necessary identity between one and the
other.  There could easily be some differences of view in certain areas and one should not be assumedto be the same as the other.  As to what Canada meant by "common approaches", it was a term that
had been used before.  In practice, Canada had in mind an agreement that would establish certain
common substantive minima, that is, a list of the main areas of competition law that would be relevant
to the agreement.  "Common" in this respect did not mean harmonised, nor did it mean detailed
requirements.  It merely meant having a common basic list of elements in national law.  As for the
appropriate form of dispute settlement for common substantive minima, Canada had in mind peer
review as opposed to application of the Dispute Settlement Understanding.
52. The representative of the United States sought clarification as to whether common approaches
might impinge upon the independence of competition agencies.  In response, and commenting on
question 5 in Section III of the Checklist as to how the independence of national competition
authorities could be reconciled with a multilateral agreement, the representative of Canada stated that
the fact that a multilateral agreement would require a Member to have a competition law which would
address certain agreed upon norms, did not impinge upon the operational independence of the relevant
national competition authority.  As had been noted previously, the proper functioning of such an
agreement was founded on the ongoing independence of national authorities.  While it might be
suggested that there was an apparent paradox in countries being obliged to meet certain competition
norms while also being required to maintain the independence of their competition authority, this wasreadily resolved when one realised that the obligations that would flow from a multilateral agreement
would be general in nature and would not and should not speak to the details of competition
enforcement in specific cases.
53. The representative of India noted that, in general, the competition policies that had been
enacted by more than 80 countries already embodied the principle of non-discrimination.  If that was
the case, it was questioned what a multilateral competition policy agreement was needed for.
Harmonisation of competition principles assumed advanced levels of integration of the cooperatingWT/WGTCP/M/14
Page 23
economies.  WTO Members, on the other hand, were heterogeneous, at different levels of
development and with diversity of interests.  Accordingly, approaches to competition policy by
countries at different stages of development would be different.  He referred in this regard to a learned
author who had recently argued that until countries could work out what was feasible and successful
on a bilateral basis, they would not have a sound basis to adopt competition rules at the WTO or othermultilateral organization.  According to this author, even proposals which limited multilateral rules to
requirements concerning adoption and enforcement of domestic competition laws had to, at some
point, address the substantive content of the laws to be accepted.
54. In response, the representative of the European Community and its member States stated that
the assertion that the framework that had been proposed by his delegation would require
harmonisation of national competition laws was not factual.  It was not intended to achieve this result.
Rather, what was sought were some basic common principles which would help different domesticcompetition law regimes to co-exist and to cooperate in an effective manner.  The principles of
transparency, non-discrimination and a common commitment to take actions against hard-core cartels
provided the basis for a common language and for common cooperation among different competition
policy regimes but in no way constituted a harmonization of competition law.
55. Continuing, he stated that the paper that had been submitted by Colombia
(WT/WGTCP/W/162) introduced some interesting perspectives on the experience of recently-
established authorities in the area of competition.  One point of particular note was the limitations of
national legislation to deal with anti-competitive practices that had a global dimension.  This was one
of the reasons why his delegation considered that a multilateral framework on competition policy was
essential.  His delegation also considered that a multilateral framework could respond to the needs ofdeveloping countries or transitional economies that had recently established competition legislation.
Even in cases of competition authorities that had a long experience in the area, cooperation was
essential in implementing competition law.  His delegation had previously mentioned in a paper
presented for discussion in the Working Group that the interests of developing countries affected by
anti-competitive practices could be resolved more effectively and to their mutual benefit throughcooperation mechanisms.  It was from this perspective that his delegation was proposing the
development of multilateral modalities for cooperation.  Another point of importance contained in the
Colombian paper was that cooperation had a dual function.  On the one hand, it was necessary to
build capacity in all countries in order to face up to anti-competitive practices globally.  On the other
hand, it was also necessary to foster progressive strengthening of national competition institutions.
These two functions of a multilateral framework on competition policy should be its underlying
objectives.  The representative of Ecuador stated that for developing countries such as Ecuador, the
establishment of a general framework on competition would enable it to draft legislation in
accordance with its own principles on competition.
56. The representative of Hong Kong, China stated that, given the extent of diversity among
Members, account should be taken of the fact that Members might not be equally interested in
subscribing to the cooperation modalities suggested in the paper.  Information was sought on whetherand how the EC proposal would account for those Members wanting to opt-out of the cooperation
modalities from the outset.  The EC proposal clearly envisaged national competition authorities along
with domestic competition laws, which would be  the backbone for the effective operation and
implementation of a WTO framework agreement.  Given that one third of WTO Members had not yet
adopted a domestic competition law, what would be the optimal timing as envisaged by the EC?Would all Members be required to have competition law when negotiations started or at the end of
negotiations? Further information was requested on how flexible the notion of flexibility was.
Subsequently, referring to the paper that had been submitted by Romania (WT/WGTCP/W/161), she
asked what sort of flexibility and progressivity arrangements could be built in to cater for the specific
circumstances of those WTO Members yet to adopt a domestic competition law?WT/WGTCP/M/14
Page 24
57. In response, the representative of the European Community and its member States stated that
it was not the view of his delegation that in order to initiate the process of negotiations, all Members
needed to have a law in place.  In the context of discussions, it would be necessary to respect the
problems and needs of countries that did not have a domestic legal framework.  Specific responses
would have to be developed for those individual countries.  A "one-size-fits-all" approach should notbe adopted since one third of WTO Members did not have a competition law.  Regarding the
possibility of an "opt-out", his delegation was ready to look into that possibility.
58. Delving further into the implications of dive rsity in the institutional endowments and socio-
economic situations of Members, the representatives of Ecuador, the European Community and its
member States, Japan  and Korea  said that this did not pose an obstacle to the adoption of a
multilateral framework on competition policy, since: (i) much beneficial technical cooperation could
take place between countries notwithstanding differences in national endowments, stages of
development and other characteristics; and (i i) the proposed framework would not require a
harmonised approach and would explicitly provide for flexibility and progressivity.
59. Continuing, and commenting on question 4 in Section III of the Checklist as to how an
agreement on international cooperation would apply to and generate benefits for countries at different
stages of development and with differing degrees of experience and resources in competition andpolicy, the representative of the European Community and its member States noted that in the case of
those countries that, at the current point in time, did not have a domestic competition law framework,it was necessary to look into the question of what were adequate transitional periods before an
appropriate framework was introduced.  Secondly, capacity-building programmes were important so
that countries that needed to reinforce their domestic institutional capacity, either to make sure thatthey were in a position to comply with internati onal commitments or to make sure that they could
fully benefit from international cooperation, were able to do so.  Thirdly, Members should not try to
harmonise domestic competition laws.  The importance of flexibility had already been stressed as
regards sectoral exclusions.  Referring to the statement that had been made by the representative of
Uruguay, he agreed that a flexible approach was essential in the sphere of sectoral exclusions.  Forthat reason, his delegation had suggested that the proposed approach could essentially be based on
transparency in respect of the application of ex emptions.  The importance of recognising differences
in domestic institutional frameworks and capacities had also been recognised.  Those aspects were
often linked to different levels of development.  For example, some countries, particularly those that
were in the process of regional integration, had indicated that in their particular circumstances it might
make more sense for competition policy to be developed at the regional level rather than at the
national level.  In this respect, his delegation fully subscribed to comments contained in the paper thathad been submitted by Australia (WT/WGTCP/W/159;  introduced in Part III below) to the effect that
any possible agreement on competition should be adapted to differences in institutional capacities and
in levels of development.  A multilateral framework should have sufficient flexibility to be responsive
to those type of concerns.
60. The representative of Hong Kong, China stated  that Members who had put forward proposals
should define flexibility in concrete terms rather than just preaching it.  She noted further that the
existence of a WTO Antidumping Agreement did not mean that all countries had to have a law on
antidumping per se.  Actually, many did not have such a law and did not have an antidumping
authority.  Perhaps, parallels could be drawn between that area and the competition area.  The
representative Japan stated that if other Members were ready, Japan wanted to start a discussion of
what kind of progressivity or flexibility could be in order in the context of a possible multilateral
framework of cooperation in the WTO.
61. The representative of Egypt stated that developing countries were not yet fully informed
about the pros and cons of the proposed multilateral framework.  More technical work was needed
that would help provide countries with means to assess their needs, based on their economic anddevelopment conditions.  That implied that it was necessary to devote more time to the educationalWT/WGTCP/M/14
Page 25
process.  Further, in advance of deciding on the issue of concluding a multilateral framework on
competition, all Members needed to have domestic policies and laws.  Before moving into a debate
about a possible multilateral framework, it was necessary to note that competition policy might be of
importance to developing countries, taking into co nsideration the fact that some practices such as
mergers and hard-core cartels needed to be defeated.
62. The representative of the Philippines said that at the World Bank, a serious internal dispute
had occurred as to whether it was necessary for certain developing countries to adopt competition
policy and law.  It was impossible to say at what stage or under what conditions competition law and
policy should be adopted.  When the Philippines had been subject to a controlled regime, the World
Bank had recommended competition policy to mitigate the effects of corporate control that had
resulted from such a regime.  The problem was inte rnally rather than externally generated.  The plan
did not succeed since the absence of domestic political will to suppress a regime that controlled anti-competitive activity meant that external pressure or commitments under the WTO, for example, could
not compel countries to act.  Nevertheless, for th e past decade, developing countries on their own,
according to a regional arrangement or pursuant to WTO commitments had increased the level of
liberalisation, deregulation and openness.  Such countries had probably already attained a high degree
of competition but not full market contestability.  It was possible that developed countries did notreally desire full market contestability but sought to achieve it given the existence of private sector
anti-competitive activities such as hard-core cartels.  Such practices were probably not the principal
focus of the multilateral framework that had been proposed by the EC.  What was the need for, the
timing of and the precise focus of the proposed framework?
63. In response, the representative of the European Community and its member States said that
many developing countries themselves had indicated that they felt that competition policy should be
implemented at an early stage since developing countries were being negatively affected by anti-
competitive practices and, therefore, it was important for those countries to be able to benefit from
international cooperation.  Under the proposed framework, it would be for each WTO Member to
determine for itself how far it wanted to request cooperation in relation to different competition policyissues.  No one would be forced to seek cooperation in the WTO, or to engage in cooperation against
their own important interests.  However, WTO Members should be ready, if they received a request
for cooperation from another WTO Member, to give sympathetic consideration and to be ready to
enter into consultations with regard to the request.
64. Regarding the relationship between industrial development policies and competition policy,
the representative of India noted that papers that had been previously submitted by Japan and Korea
(WT/WGTCP/W/145 and 157; and WT/WGTCP/W/156 respectively) had emphasized that it was
important to introduce competition policy at an early stage of economic development, although
appropriate industrial policy measures could simultaneously be employed to promote economic
growth.  He referred to two learned authors who had noted that, in the days following the Second
World War, the national antitrust laws of Japan and Germany had permitted a number of restrictive
practices that would now be illegal.  These laws were considered to be powerless against nationalizedenterprises, private national champions protected by regulation and continuing broad industry self-
regulation which was felt to be justified by the imperatives of re-construction.  He suggested that the
needs and requirements of developing countries today might not be any different.  Even today,
developed countries resorted to strategic trade polices in cases where competition policy principles
had been compromised.  For example, referring to the German experience, another learned author hadargued that the Airbus consortium showed that the German government supported a degree of
strategic trade policy.  Introduction of domestic competition policy at the early stages of development,
as had been suggested by Japan, certainly helped.  However, efforts to have minimum standards in
such policies based on international "best practice",  that is practices followed by some developed
countries, were something that many developing countries would find difficult to accept.  Therepresentative of the United States commented that it was important to bear in mind the risks ofWT/WGTCP/M/14
Page 26
delaying the implementation of sound competition laws and policies and that there was no need to
wait for a WTO agreement to accomplish this.
65. Responding to these comments, the representative of Japan stated that in the late '80s and
early '90s, a group called the revisionists had presented very different views regarding the Japanese
economy and Japanese government economic policies from those that had been referred to by thedelegation of India.  For example, Professor Michael Porter had made the case that the interventionist
Japanese industrial policies referred to by the delegate had been a failure.  The paper that had been
submitted by Japan (WT/WGTCP/W/167) was the product of a joint exercise between the Japanese
government and academics in an effort to present a balanced and modest view of the impact of
Japanese economic policies.  That study had encompassed various factors in almost all industrial
sectors and had concluded that it would have been better to introduce a more effective competition
policy at an early stage of Japan's development.  This would not have made it impossible for thegovernment to intervene in other ways but it would have helped to balance such intervention.  Japan
recognised that, even today, industrial policies could be utilised in order to respond to some of the
challenges faced by developing countries, but considered that competition laws and policies were still
important to allow countries to create competitive conditions, ensuring the sound development of
domestic industry and restricting the abuses of dominant positions of large companies includingmultinationals.  The outcome of such efforts woul d be greater international competitiveness for
domestic industries.  The evidence that had been provided by the delegation of Korea regarding that
country's experience suggested that Japan was not unique in this respect.
66. The representative of India referred to tw o additional authors who had argued that the
competition policy agenda of major OECD countries was dominated by market access and merger
control issues which were largely irrelevant for developing countries.  To the extent that market
access impediments resulting from anti-competitive behaviour by incumbent firms arose from time to
time, this could and should be dealt with by domestic competition authorities.  In many countries, this
was impeded by institutional weakness but this was a matter for technical and financial assistance that
would not be solved by the adoption of international disciplines.  Those authors had concluded thatthe WTO process was driven by export interests or market access goals, not national welfare
considerations, and there was no assurance that the rules that would be proposed or agreed would be
welfare enhancing.  From this perspective, the authors had expressed doubts regarding the ability of
WTO-based negotiations to play as constructive a role in the area of competition law as they had in
the area of trade policy.  India also felt that it would be useful to share experiences in relation to
bilateral agreements in the area of competition policy.  Such sharing of experiences would provide
additional useful perspectives on the issue and enrich the discussions within the Working Group.
67. In response, the representative of the European Community and its member States said that
his delegation disagreed emphatically with the premise that the objective of the WTO was merely to
guarantee market access.  The objective of the WTO system was not to guarantee market access as
such, but to promote the equality of competitive opportunities.  This was the basic principle of the
WTO as reflected in GATT Article III.  This principle was fully consistent and compatible with theobjectives of competition policy.  Furthermore, it was manifestly not accurate to say that the current
proposals focused excessively on market access to development-related goals.  His delegation had
been clear, when discussing a multilateral agreement on competition policy, about the need to follow
a balanced approach which placed emphasis on practices that adversely affected economic
development as compared with those which predominantly affected market access.  This was why, indiscussing international cooperation, it had been suggested that the type of issues that should be
addressed through cooperative frameworks would in clude export cartels, abuses of dominant positions
including those undertaken by multinational enterprises, and other practices having a detrimental
effect on trade and/or development.  These were  not practices whose primary impact would be on
market access as such.  In addition, he suggested that the one practice that his delegation suggestedshould be the subject of a common principle – namely, hard-core cartels -  was one which, again, wasWT/WGTCP/M/14
Page 27
not particularly related to market access but undoubtedly had serious adverse consequences for
development.
68. On the matter of technical cooperation, the repres entative of the OECD said that, for the sake
of clarity, technical assistance and technical co-operation should not be used interchangeably.
Technical assistance related to assistance provided, directly or indirectly, by countries that hadsubstantial experience and expertise for the drafting of law or creation of enforcement institutions.
Technical co-operation, on the other hand, related to law enforcement co-operation among countries
such as under bilateral antitrust agreements  or under the OECD 1995 Recommendation.  She
presented an extensive survey of technical activities in 1999-2000 done by CLP/WP3
5.  The survey
examined issues relating to the need for assistance,  the most effective means of providing assistance,
the extent of co-ordination in delivering assistance, and the costs and benefits of increasing co-
ordination on planned or contemplated events.  Am ong others, responses to the survey suggested the
following.  First, more competition policy technical assistance was needed and more resources
altogether were necessary.  Second, even if there was no sign of duplication, an increased co-
ordination between providers of assistance would further enhance the efficiency of the programmes.
Third, heavy co-ordination to stretch resources had limits both in terms of costs and country
sensitivities.  Fourth, the use by donors of current resources could be further improved with morepublic provision versus private assistance, notably to give competition authorities a greater role in the
provision of technical assistance.  Competition authorities' enforcement officials were more qualified
to provide assistance than private contractors, especially if experienced former enforcement officials
were not heavily involved in private contractors' work.
69. Continuing, she also announced the creation by the OECD Council of a number of global fora
to achieve closer co-operation with non-Member countries than was possible through the current
observership system.  The Global Forum on Competiti on had been created in recognition of the vital
role of competition policy for growth and developm ent.  It would constitute a new way to interact
with non-Members, especially the economies with which OECD Member countries had a strong
mutual interest in a common agenda.  By inviting 15 to 20 non-Members to this series of events, theOECD's objective was to create an expanded network of high level officials who regularly met at CLP
meetings to share experiences on "front burner" issues.  Thus, the OECD Forum would not seek to
replicate the universality of UNCTAD or the WTO, but rather would be an extension of the OECD's
methods of promoting mutual understanding and an alytical convergence through informal, off-the-
record dialogue.  Representatives of international organisations such as the UNCTAD, the WTO and
the World Bank would also be invited to participate.  The first meeting of the Global Forum would be
held in October 2001, back-to-back with the meeting of the CLP Committee.
70. Referring to the paper that had been submitted by Japan (WT/WGTCP/W/167), the
representative of the United States  noted that his delegation was not convinced that there was
evidence that the current ad hoc system of providing technical assistance was problematic.  The US
was a significant provider of technical assistance and had not heard from recipients that they were
encountering problems with duplicative or uncoordinated assistance.  Japan, the EC and others hadproposed a role for the WTO in the provision of tech nical assistance in a multilateral agreement.  The
representative of the OECD had stated that the OECD had been carefully studying and gathering data
on the issue of multiple technical assistance providers.  Further, the so-called Global Competition
Initiative had as one of its major priorities taking stock of and perhaps thinking about some kind of
coordination for technical assistance.  It seemed that more was being spent on studying thestreamlining of technical assistance than actually providing it.  It was not clear that a multilateral
agreement on technical assistance would be a panacea or even an improvement on the current system.
                                                     
5 Note by the OECD Secretariat circulated at the WTO March 2001 meeting: "Experiences of OECD
outreach and Members' technical activities in 1999-2000", OECD, March 2001.  The survey covers 17 Membercountries, OECD outreach activities as well as information from or about UNCTAD, the World Bank and theWTO.WT/WGTCP/M/14
Page 28
It was always easy to point out inefficiencies in an ad hoc system but Members should not ignore the
possible inefficiencies of a centrally-planned system, the administrative cost of setting up such a
system or the possibility of incorrect decisions being taken by central planners.
71. In response, the representatives of Japan and the European Community and its member States
said that what the proponents had in mind was not at all equivalent to a bureaucratic central planning
authority.  Continuing, the representative of Japan said that he was content with the national character
of bilateral technical cooperation programmes and it would be unrealistic to give a central planningrole to an international organization of such pr ogrammes.  What the proponents had in mind would
more appropriately be termed as soft coordination: sharing information about the cooperation
programmes engaged in by donor countries and sharing information on needs of particular developing
countries.  As had been made clear in Japan's paper (WT/WGTCP/W/167), there was a theoretical
advantage associated with a multilateral organization having a soft coordinating position in relation totechnical cooperation programmes.  Why the WTO in this regard?  There were a number of
specialized agencies in Geneva and, in most of them, technical cooperation was a major component of
their activities.  Currently, the WTO was somewhat of an exception in this respect but there was no
reason why it could not take on an enhanced role in this area, if there was a need for it.  The
representative of the European Community and its member States noted that his delegation did not
intend the WTO to become a developmental agency or a provider of technical assistance.  However,
his delegation was suggesting that given the fact that there was a real need for enhanced technical
assistance and capacity-building, that such assistance was already being provided but, in some cases,
in a duplicative and possibly even counterproductive manner, there was a need to better coordinate
and target it.  Given its near global membership and the clear linkages between trade and certain anti-competitive practices, the WTO would be the right and the proper forum to undertake that role.
72. With regard to the specific elements of a multilateral competition framework, the
representative of Hong Kong, China stated that the papers that had been submitted by Japan
(WT/WGTCP/W/167 and 168) had not gone far enough in proposing a concrete way to move forwardin the WTO context.  In particular, they were unclear with respect to whether Members would beobligated by WTO rules to establish a competition law or to establish a competition authority.  With
regard to the paper that had been submitted by Romania (WT/WGTCP/W/161), it had identified 3
types of anti-competitive practices which, it was argued, needed to be addressed by way of a
multilateral framework on competition.  However, it was not clear to what extent those kinds of anti-
competitive practices had been significant and had a demonstrable impact on world trade and
investment.  It was also unclear whether such anti-competitive practices affected a broad cross-section
of the WTO membership.  Answers to such questions would help to assess whether such anti-competitive practices were worthy of collective action by the WTO at all.  The paper that had been
submitted by Romania (WT/WGTCP/W/161) together with a number of other papers addressed only
one aspect of international cooperation - that is, cooperation modalities between competition
authorities.  However, they had not addressed other important aspects of cooperation modalities
concerning first, cooperation modalities between trade authorities and cooperation modalities between
trade and competition authorities domestically.  Vi ews were sought on how to promote international
cooperation not only in relation to cooperation between competition authorities but also between trade
authorities and as between trade and competition authorities.
73. In response, the representative of Japan stated that Japan was open-minded with respect to the
specific components of the proposed multilateral competition framework.  Before defining these, it
would like to have more input from developing countries regarding their needs.  The representative of
Romania stated that, as noted in the paper submitted by Romania, the competition authority
considered that the types of anti-competitive practices that had been identified in the paper - namely,hard-core cartels, import cartels, abuse of dominant position by an internal firm against exporters –
clearly had an adverse impact on international trade and development and that those practices couldbe usefully addressed in a multilateral agreement.WT/WGTCP/M/14
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74. The representative of Hong Kong, China questioned the existence of a broad-based consensus
regarding the key elements relating to a multilateral framework on competition policy, as was
allegedly posited in the paper that had been submitted by Japan (WT/WGTCP/W/167).  As had been
stated by the representative of India, many countries considered that different approaches would be
required for economies at different stages of economic development.  This had also been underlinedin the Australian paper (WT/WGTCP/W/159) and echoed by the EC during earlier interventions.
Clarification was sought from Japan on what wa s meant by broad-based consensus and on how broad-
based the so-called consensus actually was.  In response, the representative of Japan stated that while
he recognised that there were dissenting views on the subject of what should be done in the WTO, hisdelegation nonetheless considered that there was consensus on many of the underlying elements of
competition policy and of the aspects of cooperation that were necessary to respond effectively to  the
threat posed by international anti-competitive practices.  Some of the reasons had been explained inJapan's first paper (WT/WGTCP/W/167).  Through its technical cooperation programmes with the
competition officials of developing countries, Japan considered that there was a strong and broad-
based consensus on the possible need for a multilateral cooperation framework.  In addition, Japan
had had bilateral contact with the EC competition authorities and had been involved in regional fora
in the Asia/Pacific area and in other areas.  Throug h such involvement, Japan's sense was that perhaps
critical mass had already been acquired to promote a concrete framework of multilateral cooperation
in the competition field.  Identification of the needs of developing countries could be the starting-
point for devising a concrete mechanism for multilateral cooperation in the WTO.
75. The representative of Hong Kong, China stated that his delegation had tremendous difficulties
with the approach suggested in the paper that had been submitted by the Czech Republic
(WT/WGTCP/W/165).  First, while the paper had put forward some reasons for pursuing a
multilateral approach to international cooperation, it was totally silent on the possible onerous
obligations such an approach could impose upon many WTO Members.  The feasibility and
desirability of other alternatives to a multilateral route had not been adequately addressed.  The
proposed multilateral framework would impose an obligation on all Members to adopt a domestic
competition law.  Hong Kong, China did not consider that such an approach had adequately taken
account of the divergence and the diversity in terms of competition policy objectives and
implementation instruments across economies.  The ex perience of Members in complying with certain
Uruguay Round obligations should have taught Members a lesson, that is, the cost of compelling
WTO Members to take on obligations that they could not readily take on could be very high.  Another
element of the proposed multilateral agreement which caused Hong Kong, China concern was the
imposition of an obligation on all Members to set up an administrative authority.  Hong Kong, Chinarejected outright such a prescriptive approach, which did not provide any room for flexibility.  For
example, obvious problems arose given the differing institutional and constitutional endowments as
between Members.  The objective of proposed negotiations on competition was to impose the above-
mentioned unreasonable obligations on all Members, Hong Kong, China would strongly object to the
launch of such negotiations.  In response, the representative of the Czech Republic stated that  the
elements that had been proposed in his delegation's paper were needed to deal with anti-competitive
practices that posed a threat to trade and development.  Moreover, the elements would be
complemented by the principle of flexibility which would accommodate differences in institutional
and constitutional endowments as between Members.  For example, in relation to any obligation to set
up a competition authority, a flexible approach should be adopted so that different Members couldestablish their institutions in a manner that is suitable given their own particular circumstances.
IV. THE CONTRIBUTION OF COMPETITION POLICY TO ACHIEVING THE
OBJECTIVES OF THE WTO, INCLUDING THE PROMOTION OF
INTERNATIONAL TRADE
76. The representatives of Australia, Hong Kong, China
 and the Slovak Republic  introduced
written contributions on this agenda item (documents WT/WGTCP/W/159, WT/WGTCP/W/163 and
WTT/WGTCP/W/171 respectively).  In addition, the representative of the OECD provided an updateWT/WGTCP/M/14
Page 30
on the relevant activities of her organization.  The representatives of Chile; Colombia ; the European
Community and its member States; Hong Kong, China ; Korea ; the Philippines ; Switzerland ; and the
United States made oral statements, presented comments, or posed/responded to questions.  The
representative of the OECD provided an  update on relevant OECD activities
77. The representative of Australia, introducing document WT/WGTCP/W/159, noted that it
provided background on Australia's National Competition Policy (NCP), and highlighted the
complementarity between the NCP and trade liberalization.  In 1993, Australia had received a report
by the Independent Committee of Inquiry on National Competition Policy which was called the
"Hilmer Report".  It had recommended the creation of a genuine National Competition Policy
covering all of Australia and covering all trading entities regardless of their ownership.  Subsequently,
in 1995, all Australian governments had entered into three intergovernmental agreements which
established the National Competition Policy and included a number of reforms that were described inthe paper.  The concept of "competitive neutrality" was fundamental to the NCP.  It involved
removing any unfair competitive advantage resulting from government ownership.  In practice, not
only did this force government-owned businesses to implement private-sector disclosure and
accounting practices, but it also led to improved transparency, accountability, efficiency and
competitiveness.  Commercial activities – for example, exports of electoral consultancy services, hadto become self-supporting.  In some cases, universal service obligations were separated from core
business, where possible, to ensure a level playing field.  One of the practical challenges faced by
many government business activities as a result of NCP was the development of an entrepreneurial
approach, in other words changing the mentality of public sector officers to a more private sector
oriented approach.  When agreement on NCP was reached in 1995, all Australian governments hadundertaken to review and, where necessary, reform legislation restricting competition.  The guiding
principle was that legislation should not restrict competition unless it  could be demonstrated that the
benefits of the restriction to the community as a whole outweighed the costs and that the objectives of
the legislation could only be achieved by restricting competition.  Legislation reviews generally
involved calling for submissions from the publi c, releasing "issues papers" for comment, and
producing a final inquiry report.  The relevant government was then required to respond to the report
with action.  The process was due to finish in June 2002.  The review had, in many cases, gone
beyond strict competition-related matters, and had addressed the whole issue of regulation, seeking to
streamline, where possible,  the regulatory framework.  The legislative review process was delivering
a range of ongoing benefits, including lower prices, greater choice for consumers, a clearer operating
environment, and reduced compliance costs for businesses, details of which were provided in the
paper.  More information on how that system of  implementation worked could be found at the
following website:  www.nec.gov.au.  The National Competition Policy, while benefiting Australia
overall, could significantly impact on those directly affected by change:  for example, people workingin industries that were previously sheltered fro m competition or living in communities dependent on
such industries.  As a consequence, in certain circumstances, governments needed to consider
assistance to facilitate adjustment to reforms.  In most cases, generally available assistance measureswere the most appropriate form of aid.  General assistance measures had a number of advantages –
they were generally widely understood and already in place; they treated equally all people adversely
affected by changed circumstances; they addressed the net effects of reforms, concentrating on those
in genuine need; and they supported individuals and families, rather than a particular industry.  An
ever-present issue was whether the introduction of pro-competitive policies might have immediatenegative effects on certain parts of the economy, while the broader benefits to the rest of the
community would take longer to filter through.  This made a national competition policy politically
sensitive to implement, especially at times when external shocks were buffeting the economy, as was
currently occurring in Australia.  Therefore, it  was imperative that governments consulted widely
throughout the community and throughout the whole process to ensure that people understood theshort-term costs as well as the long-term benefits of a national competition policy.  Through the
process, Australia had learned the hard lesson over the years that protectionist and overly burdensome
domestic regulation stunted growth by restricting competition.  In the early 1960s, Australia had been
the third richest OECD economy.  However, throughout the 1960s and 1970s, large sectors ofWT/WGTCP/M/14
Page 31
Australia's  economy had been protected from competition, with little incentive to reduce costs and
prices and/or to produce new, innovative products and services.  As a result, by 1992, Australia was
only the 15th wealthiest OECD economy.  The turn around in Australia's productivity growth began in
the mid 1980s with the introduction of wide-ranging microeconomic and structural reforms.  The
introduction of the NCP in the mid 1990s further stimulated productivity growth, which had beenparticularly strong in the electricity, gas, water and communication services sectors.  From the end of
the 1990-91 recession, GDP grew over 4 per cent per annum for nine straight years, unemployment
fell steadily, and inflation fell to rates not seen since the early 1970s.  Moreover, the Australian
average income grew 2.5 per cent per annum in the 1990s, compared to 1.4 per cent per annum in the
1970s and 1980s.  This income growth was evenly distributed between labour (wages and salaries)
and capital (profits).  Microeconomic reform (including structural reform) and the NCP were key
factors contributing to this growth.  Overall, Australia's experience strongly supported the benefits ofcompetition policy in promoting greater productivity, efficiency and economic growth.
78. The representative of Hong Kong, China, introducing document WT/WGTCP/W/159, stated
that the main purpose of the submission was to stimulate more deliberation and discussion on how,
from a practical perspective, to promote coherence between trade and competition policies and also to
underline the need for a more balanced work programme.  Regarding the case for addressing theinteraction between trade and competition policies, paragraph 20 of the Singapore Ministerial
Declaration provided for the setting up of the Wo rking Group to study issues that related to the
interaction between trade and competition policies.   In Hong Kong, China's view, the Working Group
could best contribute to fulfilling WTO objectives by devoting its energy to issues lying at the
interface between trade and competition.  Over the past few decades, globalisation had resulted in aparadigm shift in international commerce.  That phenomenon posed many challenges to governments
all over the world.  First, it called for increased intergovernmental efforts to address issues with major
transborder consequences in pursuit of the common goal of global welfare maximisation.  Secondly,
the impact of globalisation also called into questi on the adequacy of traditional analytical tools and
policy instruments that were directed only at market conditions within national borders and not acrossnational borders.  Thirdly, the trend displayed the limitations of formulating or executing trade and
competition policies in a compartmentalised manner.  Fourthly, there was also a need to ensure that
the multilateral trading system would continue to be effective in promoting market contestability
world-wide.  Her delegation considered that a balanced work programme was the best approach to
fulfil the Singapore mandate.  In its view, a balanced work programme should encompass the
following four elements.  The first element related to the trade and competition interface.  Further
exploratory work by the Working Group should look at two aspects: (i) how trade policies ormeasures could impede the free play of market forces; and (ii) how the lack of a sound competition
policy could obstruct the flow of international trad e.  The second element concerned two aspects: (i)
anti-competitive governmental action; and (ii) private restrictive business practices.  Given that those
two aspects could work against the competition process, it was believed that both types of action
should continue to be covered by future WTO work on trade and competition.  The third elementconcerned policy coherence within and across borders.  As markets enlarged beyond their traditional
national boundaries, there was a need to ensure policy coherence across national borders through,
perhaps, international intergovernmental cooperative efforts to address competition issues with an
international dimension.  Equally important was the government's commitment to achieve policy
coherence within national borders through, perhap s, implanting a competition dimension in all
domestic economic policies.  The fourth element concerned the interests of both consumers and
producers.  With an increasingly integrated world economy, it was essential that both trade and
competition policies were grounded in welfare maximisation in the interests of both consumers and
producers alike rather than producers alone.  Hong Kong, China believed that past deliberations by the
Working Group reflected a broad recognition among Members of the importance of enhancingcoherence and consistency between trade and competition policies.  The conceptual significance of
policy coherence had to be backed up by coherence at the practical level.  The paper that had been
submitted by Hong Kong, China set out a number of real examples under three broad categories of
cooperation modalities.  The first concerned cooperation between competition authorities acrossWT/WGTCP/M/14
Page 32
national borders.  Further discussions on how to achieve the optimum results from cooperation with
due regard to diversity in socio-economic circumstances and competition regimes across economies
would be helpful.  The second type of cooperation modality was between trade authorities across
national borders.  In comparison to the first type, this type of cooperation was marked by a much
longer history and a much wider scope of applicat ion.  As Hong Kong, China saw it, the challenge
ahead for the Working Group was to explore what competition-friendly cooperation modalities
between trade authorities could be brought with in the WTO framework, similar to those pro-
competitive modalities established in free trade ag reements.  For example, contracting parties to a
number of free trade agreements had already undertaken not to apply to one another certain trade
defence instruments that were anti-competitive in nature.  The third type of cooperation modality
involved trade and competition authorities within national borders.  According to Members' previous
submissions to the Working Group, it was found that a number of economies including Hong Kong,China, Canada, Colombia and Mexico had put in place certain domestic institutional arrangements,
which were conducive to enhancing the consistency between trade and competition policies.  Hong
Kong, China believed that given the welfare enhancing effects of instituting cooperation modalities
between trade and competition authorities, that category of cooperation modality should be given
more prominence in the Working Group's future discussions.  Hong Kong, China believed that theinteraction between trade and competition policies was something that must be addressed in a
globalising economy.  Practical options to ensure consistency in the formulation and also application
of trade and competition policies including the three categories of cooperation modalities that had
been outlined merited further exploratory dialogue.
79. The representative of Slovak Republic, introducing document WT/WGTCP/W/171, said that
competition and trade policy should be mutually reinforcing.  Competition policy facilitated trade by
removing restraints to commercial flows.  In tu rn, trade policy encouraged competition by lowering
tariffs and eliminating non-tariff barriers.  Slovakia's competition policy regime was multi-faceted.
The Anti-Monopoly Office (AMO) not only dealt with actual competition cases, but also reviewed
public policies generally with a view to preventi ng government actions from adversely affecting
competition.  For instance, pursuant to inter-ministerial comment procedures, the AMO issued
opinions on the likely effects on competition of draft legislation.  In addition, the AMO provided
comments on the implications of privatization projects from the perspective of competition, and
issued opinions on the competition effects of anti-dumping and safeguard measures taken by the
Ministry of Finance and the Ministry of the Economy respectively.
80. The representative of the European Community and its member States observed that a
concern with the contestability of markets was common to the approaches espoused by a number of
delegations, including Hong Kong, China.  This could be achieved through trade liberalization and
through the application of competition law to deal with private anti-competitive practices.
Discussions that had occurred on this issue in the Working Group had indicated that everyone agreed
that both issues were important and that the contestability of markets had to be promoted through both
instruments.  Indeed, discussions in the Workin g Group had certainly made a contribution to the
growing recognition by governments in the WTO that the next phase of multilateralization should
effectively tackle those issues relating to further liberalization of government restrictions and the
development of the multilateral framework on competition policy.  His delegation shared the
sentiments of Hong Kong, China regarding the importance of cooperation at the domestic level
between trade and competition officials.  He could go further and support cooperation between trade,regulatory and competition officials.  This was a challenging process, although the years of
discussions that had taken place in the Working Group had helped all Members domestically to
establish better cooperation between trade and competition officials.
81. The representative from Hong Kong, China stated that the paper that had been submitted by
Australia (WT/WGTCP/W/159) had underlined the importance of mutually-reinforcing trade and
competition policies and echoed views that had been expressed in the paper that had been submitted
by his delegation.  Australia had made a strong case for promoting the complementarity of both setsWT/WGTCP/M/14
Page 33
of policies.  Particularly telling in this regard were the two economic studies that had been referred to
by Australia.  This meant that despite the many achievements of the GATT and the WTO in
dismantling trade barriers over the past decades, there was no room for complacence.  His delegation
also concurred with Australia's view that, wherever possible, any future multilateral rules on
competition should be adaptable to Members' different levels of development.  In the opinion of hisdelegation, any proposals to take forward WTO work on trade and competition should be evaluated in
terms of the extent to which such proposals could accommodate diversity, be it with regard to
economic circumstances, resources, endowments, or degree of institutional development.
82. Referring to the paper that had been submitted by Hong Kong, China
(WT/W/WGTCP/W/168), the representative of the United States stated that his delegation agreed that
increased participation of competition as well as trade officials in the Working Group meetings and inthe preparation of submissions for the Group should be encouraged.  Competition policies andagencies had significantly developed over the last 20 years, so that now there were in excess of 90
laws without any requirements or coercion from the WTO or any other body.  This situation had
evolved in response to domestic needs as countries had seen fit.  The overwhelming majority of
existing laws, if not all, were already characterized by transparency and non-discrimination.  Most, if
not all, contained some kind of ban against hard core cartels.  Extensive systems of technicalassistance provided by individual countries and international organizations already existed.  Extensive
cooperation occurred when agencies arrived at the stage when they felt ready to engage in those kinds
of arrangements.  Much had already been accomplished in an organic fashion without a formula from
an international organization and the end of that process had not yet been reached.  There were
countries at every stage of development, ranging from those having no competition law because theywere not ready or did not want one, to those in the early stages of development, to those at a very
sophisticated stage of development.  It was not clear that a rules-based approach in an international
trade body would be superior to this constructive, evolutionary process in promoting competition law
and policy.
83. The representative of Korea said that his delegation agreed with the comments made by the
representative of Hong Kong, China that trade policy as well as competition policy should be
grounded on the maximization of welfare for the eco nomy as a whole, considering both consumers
and producers, not producers alone.  Further, national trade and competition authorities should engage
in international cooperation, and that cooperation in the trade area should include a competition
dimension.  His delegation also agreed with Hong Kong, China's suggestion that Members should
continue to share their experiences with respect to the interactions between trade and competition
authorities.  The kind of empirical analysis that was provided in the Australian paper was useful todeveloping countries in that it provided solid evid ence of the catalytic role that competition policy
could play in enhancing economic growth and development.  The Korean Fair Trade Competition had
made efforts to calculate the effects of competition policies on economic growth for instance,  the
degree to which domestic prices had dropped as a result of the application of competition policies but
this work was very complex given the many variables at play.  It would be interesting to learn moreabout the principle in Australia's competition regime  regarding the elimination of any net competitive
advantage enjoyed by government businesses resulting from their public sector ownership.  The
representative of Colombia suggested that the principle of neutrality embedded in the Australian
competition regime could make an important contribution to create competitive conditions for allsuppliers in the provision of goods and services.  The representative of Hong Kong, China stated that
his delegation found instructive Colombia's remark about the role played by competition authorities in
that country's trade-remedy cases and wondered whether further details about this valuable national
experience could be provided to the Group.
84. The representative of the Philippines said that anti-dumping was an area that would merit
more emphasis when discussing how a competition policy regime in the WTO could relate to existing
trade rules.  Hong Kong, China apparently did not consider anti-dumping consistent with markets that
were fully contestable.  He wondered whether the competition policy environment in Australia hadWT/WGTCP/M/14
Page 34
advanced to the point where the domestic market had become fully contestable.  Was progress
regarding contestability related to the integratio n process with New Zealand? Regarding the features
of a possible multilateral framework in the competition area, he said that such a framework had to be
flexible enough to accommodate economic development objectives that may call for the use of
investment and industrial policy measures.  The representative of Australia said that the Australian
delegation would answer the questions posed by Korea and the Philippines bilaterally.
85. The representative of Switzerland said that his delegation could subscribe to most elements of
the paper that had been submitted by Hong Kong, China (WT/W/WGTCP/W/168), especially the
general analysis, although when it came to the co nclusions arising from that analysis, Switzerland
drew quite opposite conclusions.  For instance, the paper suggested that, due to globalization,
economies had become more intertwined, and argued on this basis that the adequacy of tools and
policy instruments directed at market conditions within national borders were called into question.
The considerations suggested that it would be important to develop tools enabling countries to address
competition issues at the multilateral level.  Fu rther, he stated that currently cooperation between
national competition authorities was generally governed by bilateral agreements or regional free trade
agreements.  Was this the optimal form of cooperation in the competition area or would it be
preferable to develop some commitments and guidel ines in this regard at the multilateral level?
86. The representative of Hong Kong, China said th at his delegation was of the opinion that the
Group should focus on anti-competitive governmental measures and that such measures could be best
addressed in a multilateral forum.  Regarding the optimal form of cooperation in the area of
competition, his delegation was of the view that, as one third of WTO Members did not have a
competition regime in place, there was no point in discussing the prospects for cooperation involvinga multilateral forum.  The representative of Chile said that his delegation agreed with Hong Kong,
China's view that the principles and objectives of trade and competition were exactly the same.  Morewelfare was needed through better allocation of productive resources.  Therefore, it was essential that
trade and competition authorities made efforts at making the two sets of policies consistent.  For this
reason, in Chile, as in countries such as Colombia and Mexico, the competition agency reviewed theapplication of anti-dumping measures.  More generally, Chile also favoured setting up a multilateral
framework for competition policy at the WTO.  Indeed, Chile expected greater liberalization in the
WTO context to be accompanied by a framework of competition policy.
87. The representative of Colombia said that the paper that had been submitted by Hong Kong,
China (WT/W/WGTCP/W/168) had offered the Wo rking Group a wide overview of what can be
understood by cooperation.  In the opinion of his delegation, Hong Kong, China's ideas deserved
careful consideration.  In Colombia's own experi ence, the competition authorities had played an
important reviewing role in anti-dumping and countervailing-duty investigations.  It was important to
strike a balance between the interests of domestic industry and those of consumers in trade-remedy
cases, and Colombia had developed the proper arrangements for implementing this goal.
88. The representative of the United States said that his delegation recognized that there was a
broad degree of complementarity between various aspects of trade policy and competition policy.
Hence, it was useful to look at how both sets of policies could be made more complementary.
Nevertheless, trade and competition policies had arisen in different historical and national contexts;
these differences should receive proper attention when looking at the issue of complementarity.  In
addition, it was important to consider the notion of sequencing when exploring further
complementarity between trade and competition policies.   Therefore, in the view of his delegation, the
complementarity of trade and competition policy with regards to competition-related issues adversely
affecting market access should be discussed well before exploring how trade policy and competition
policies could be made more mutually-supportive with respect to trade-remedy measures.  The notion
of sequencing made sense because, to the extent that uncompetitive market conditions could be
addressed through enhanced complementarity between trade and competition policies, there would beless scope and latitude for the practices offset by trade-remedy measures to emerge in the first place.WT/WGTCP/M/14
Page 35
His delegation intended to submit a paper for the next meeting delving into the area of possible
cooperation modalities between trade and competition authorities with respect to competition-related
problems impinging upon market access.  The representative of Hong Kong, China said that the idea
of having the Group discuss competition-related market access issues was a positive and constructivestep in the deliberations of the Group.  However, his delegation hoped that sooner or later the UnitedStates would  be in a position to engage in discussions regarding the latter part of the sequence.
89. On the question of whether the WTO is the ri ght forum for multilateral rule-making in the
area of competition policy, the representatives of Hong Kong, China and the United States
 sought
clarification as to why the WTO, which was a rule-making body in the area of international trade,would be equally competent as a rule-making body in  the area of competition?  Did the EC envisage
any limitations resulting from the WTO taking on the role of building a binding agreement on
competition policy rather than international trade? Clarification would place Members in a betterposition to assess the costs and benefits of the EC's  rule-making proposal, having regard to their own
unique domestic considerations.  In response, the representative of the European Community and its
member States stated that his delegation believed that competition policy was an essential guarantee
for the openness of markets to ensure the benefits  of trade liberalization.  The WTO offered the
advantage of a solid institutional framework in which developing countries and industrialisedcountries participated on an equal basis and could develop an agreement on the basis of equal
participation.  It offered a plateau of stability with the capacity to combine principles and modalities
for cooperation.  In any case, competition policy was already in the WTO – in the TRIPS Agreement
and the GATS Agreement, for example - and it would inevitably be included in some of the issues
that would be discussed in pending negotiations.  The time had come for a more comprehensive andhorizontal approach to the issue of anti-competitive practices.  Finally, it was necessary to be aware of
the backlash against globalization.  Given the criticism often made about the WTO that it supported
producers, it would be difficult to explain that wealthy Members had come collectively to the
conclusion that anti-competitive business practices that distorted international trade was not a proper
issue for the WTO to address.  He noted further that the type of anti-competitive practices that werebeing discussed had an international dimension such as international cartels, export cartels, import
cartels, abuses of a dominant position that had transboundary effects.  All of those practices had a
clear impact upon international trade and development and were trade distortive.  It would be
problematic if the WTO was not in a position to  develop a common framework containing basic
principles about how governments could better cooperate in order to deal with those practices.  As far
as his delegation was concerned, the question was why not the WTO?  In relation to what had been
discussed, what matters were considered inappropriate for handling by the WTO?
90. With regard to the question of whether the application of the Dispute Settlement
Understanding was a necessary component of action in the WTO framework,  the representative of
Hong Kong, China stated that the application of the DSU in the area of competition would cause a
compliance problem for those WTO Members that were not yet ready to take on obligations in thearea.  Given that more than one third of WTO Members had yet to adopt domestic competition law, itwas premature to develop multilateral rules requiring each and every Member to introduce such a law.
With more than one third of WTO Members yet to adopt a domestic competition law, what was
envisaged as being the optimal timing of establishing a WTO framework agreement with national
competition authorities and domestic competition laws as the backbone of the domestic competition
law regime? What flexibility arrangements were being proposed by the EC to accommodate thespecific circumstances of Members, particularly those without a general competition law so as to
forestall a possible glut of dispute cases pertaining to the adoption of competition statues?  Was the
plurilateral approach that had been proposed by the EC considered to be a possible means to
overcome the compliance problem that had just been mentioned?  The representative of the
Philippines also asked how the dispute settlement mechanism would apply in respect an approach that
was based on cooperation?  In response, the representative of the European Community and its
member States stated that when embarking upon negotiations on competition, Members needed to
know that they were committing to something that was predictable.  That was why it was felt that, asWT/WGTCP/M/14
Page 36
far as possible, the dispute settlement mechanism should only apply in the area of competition to
commitments regarding legislation.  If the dispute settlement mechanism applied to the way in which
the law was being enforced in individual cases, countries would not be in a position to say that they
had assumed clear commitments.  During negotiations, it was necessary to have an open mind and be
flexibile with regard to individual country situations.  He stated that he would not comment on thepossibility of an opt-out.  This was an idea that had been discussed informally and it was, therefore,
not something that had been put on the table for discussion in the Working Group.  Certainly, that was
an idea that his delegation was ready to explore and to consider in relation to the situation of
individual developing countries.  However, th e agreement should be flexible with a strong
development component and it was hoped that countries, in the process of negotiations, would come
to the conclusion that it was in their own interest  to subscribe to those commitments, including those
that related to the adoption of a domestic competition law.  In part, the process of negotiationsinvolved a process of discussing different views and trying to come, at the end of the day, to a
common conclusion.
91. The representative of the OECD mentioned two reports by the Joint Group on Trade and
Competition that were relevant to the issues under consideration, namely "Complementarities between
trade and competition policies" and "Consistencies and Inconsistencies between Trade andCompetition Policies".
6  She also briefly presented the Joint Group's work on "Options for a greater
coherence between trade and competition policies", which had just been published.7  F i v e
complementary options were identified in this report:  (i) enhanced voluntary convergence of
competition policies; (ii) enhanced bilateral co-operation between competition authorities; (iii)
regional agreements containing competition policy provisions; (iv) plurilateral competition policyagreements; and (v) multilateral competition policy agreements.  Without prejudging the desirability
of reaching a multilateral agreement, the report focused in greater detail on the fifth option,
identifying three possible categories of rules:  "core principles", "common approaches" and "common
standards" and elaborated on the possible content of a multilateral framework in that context.
Although the view of Member countries' remained th at dispute settlement should not be available to
review individual cases, the paper also explored  whether and how multilateral dispute settlement
provisions could eventually apply.  The paper concluded with an analysis of the relationship between
bilateral and multilateral options.  Two further papers also published elaborated on the possible
treatment of "core principles", "common approaches" and "common standard".
8
V. OTHER ISSUES RAISED BY MEMBERS RELATING TO THE GROUP'S
MANDATE TO STUDY THE INTERACTION BETWEEN TRADE AND
COMPETITION POLICY
92. The representative of Uruguay, introducing relevant portions of document
WT/WGTCP/W/169, noted that his country had a small market, relative to other countries in the
region.  Nonetheless, it considered that it was im portant to implement measures to deal with the
implications of corporate concentration and anti-competitive practices.  Rather than implementing a
single, comprehensive law, it had adopted two relevant statutes which were described in detail in thewritten submission.  These were:  (i) a law dealing with large retail outlets; and (ii) a law dealing with
the regulation of competition.  Under the first la w, outlets that exceeded certain thresholds were
subject to review by the authorities responsib le for the protection of small and medium-sized
                                                     
6 In Trade and Competition Policies for Tomorrow , OECD, 1999.
7 "Options for trade and competition policy coherence" and "International options to improve the
coherence between trade and competition policies" are published in Trade and Competition Policies – Options
for a Greater Coherence , OECD, 2001.
8 "Outline of (A) Core principles, common approaches and common standards and (B) Bilateral and
multilateral approaches" and "Note on Terminology: follow-up to work on international options to improvecoherence between trade and competition principles".  The two papers are published in Trade and Competition
Policies – Options for a Greater Coherence , OECD, 2001.WT/WGTCP/M/14
Page 37
enterprises.  The second law provided rules that were applicable to all firms.  It prohibited agreements
that restricted competition between firms and a number of other anti-competitive practices.  In
addition, recent financial legislation had incorporated provisions relating to fines and judgements
relating to instances of anti-competitive practices.  Uruguay was a party to the Mercosur protocol on
the protection of competition which had been adopted in December 1996, and which was alsodescribed in the submission.  Uruguay was also participating actively in the negotiating group on
competition policy that had been established in the context of the ongoing negotiations on the Free-
Trade Area of the Americas (FTAA).  The existence of the group recognized the need for measures to
ensure that the benefits of trade liberalization were not undermined by anti-competitive practices, and
the importance of competition policy for developing as well as developed countries.
93. The representative of Morocco, introducing document WT/WGTCP/W/170, said that the
transition in Morocco from an administered and protected economy to one that was liberalized and
open to the world necessarily implied increased competition.  Recent external liberalization efforts,
including at the multilateral and bilateral levels, as well as the progressive deregulation of prices had
created a need for rules to ensure that the benefits of these efforts were not undermined by anti-
competitive practices.  The Law on the Freedom of Prices and Competition of Morocco had been
adopted to meet this need.  It was both an important tool of state economic policy and a necessarycorollary of external liberalization and privatization.  The purposes of the law were to ensure freedom
of pricing; free access to markets; transparency and fairness in trade relations, and the strengthening
of consumer information rules.  Under the law, it was intended that prices would normally be set by
the free play of supply and demand.  This was subject to two limitations:  (i) the right of the state to
intervene for structural reasons, for example the ex istence of a natural monopoly; and (ii) for cyclical
reasons, such as a supply crisis in regard to energy supply.  Anti-competitive practices such as cartels
and abuse of a dominant position were prohibited.  The law also contained provisions for the
surveillance and control of mergers as well as provisions relating to transparency and fairness in trade
relations and other matters which were described in the paper.  It established a Competition Council
with appropriate powers.  The law represented an important step toward creating a culture ofcompetition in Morocco.
94. Pursuant to a suggestion by Uruguay, and foll owing discussion by Members, the Working Group
decided that the Secretariat would be asked to prepare a table or tables on the subject of exceptions
and exemptions from competition law, on the basis of:  (i) information that had been provided bymembers in their written and oral contributions; and (ii) the study that had been prepared by the
OECD on this subject, in 1996.  The tables would be similar to those that were contained in the
Overview of National Competition Legislati on prepared by the Secretariat (document
WT/WGTCP/W/128/Rev.1) and would be factual and descriptive in nature.
95. In addition, the Chairman informed the Group that the Secretariat was in the process of updating
the Overview of Members' National Competiti on Legislation (WT/WGTCP/W/128/Rev.1), which had
last been updated in October 1999, to reflect information that had been provided or was to be
provided by various countries since then.  In preparing the update, the Secretariat would be pleased totake into account any additional inputs on national legislation that would be received from delegations
by 30 April 2001.
96. The Chairman provided a number of personal reflections on the discussion that had taken place on
Agenda items I and II.  He drew attention, inter alia , to the following points, emphasizing that they
were not in any way implied to be comprehensive and were simply some select personal impressionswhich had no official standing:
- There had been a wide-ranging discussion of the ways in which the fundamental
principles of non-discriminations and transparency could relate to a multilateral
agreement on competition policy.  Two key questions which had been addressed fromWT/WGTCP/M/14
Page 38
various points of view had been the potential value added of an explicit WTO
discipline on this subject and the question of whether it could in any way spill over to
related areas of economic policy, such as industrial policy.
- A second set of questions which had been examined under agenda item I concerned
the scope of the principles relating to substantive competition law that would be
embodied in a multilateral agreement.  In answer to this question, a number of
delegates representing all sides of the debate had made the point that it would not be
desirable to attempt to harmonise competition law, that it was important to recognise
that there were important differences between countries and that all countries should
not be expected to necessarily have sophisticated competition laws.  Recognizing this,
in the view of most of the proponents of a multilateral framework on competitionpolicy, only one aspect of such policy, namely the treatment of hard-core cartels,
would be amenable to a common substantive commitment.  The treatment of other
practices, such as abuse of a dominant position or mergers, would be left to Members
to deal with in their substantive competition laws as they saw fit, so long as the
treatment was consistent with the fundamental principles of national treatment andtransparency.  Moreover, even with regard to the prohibition of cartels, it seemed that
considerable discretion would be left to Members as to how the prohibition would be
reflected in their national laws.
- With regard to the subject of approaches to promoting cooperation and competition
among Members, including in the field of technical cooperation, the point was made
that, unlike the area of substantive competition law, the scope of the proposed
provisions on cooperation in a multilateral framework on competition policy would
not be limited to cartels.  Hence, Members would be free to employ those provisions
in investigating cases of abuse of a dominant position or mergers, although theywould not be required to adopt a particular standard in the substantive treatment of
these categories of anti-competitive conduct.  Another point that was stressed was
that, under the proposed framework, cooperation would ultimately remain voluntary
in nature, since countries would not be subject to penalties for non-cooperation and
they would not be required to cooperate against their own important interests.
- With regard to the contribution of competition policy to achieving the objectives of
the WTO, a delegate had stressed the need to have a balanced agenda and a balanced
work programme in the Working Group, when addressing the interaction between
trade and competition policy.  In this view, equal attention should be paid to the
adverse impact of a deficient competition policy on trade liberalisation and to the
welfare-reducing effect on protectionist trade policy or trade measures on marketingstability.  Both anti-competitive governmental and business actions would be
examined.  Additionally, it was recognized that there was a need to promote policy
coherence both across and within national borders.  The point was also stressed that
trade and competition policy should be grounded on the welfare maximisation in the
interest of both consumers and producers.
- Another delegate had provided an interesting, empirically-based analysis of the
benefits that had been produced from the recent strengthening of competition policy
in her country.
- It was worth noting that, in the course of the meeting, answers had been provided to a
good number of the questions that had been included in the Updated Checklist of
Questions Posed by Members in 2000 (Job 520) that had been circulated to Members
by the Chairman on 24 January 2001.  In several cases, the answers provided had
generated further discussion.WT/WGTCP/M/14
Page 39
VI. REQUESTS FOR OBSERVER STATUS FROM INTERNATIONAL
INTERGOVERNMENTAL ORGANIZATIONS
97. The Working Group agreed to revert to reques ts made by SELA, the Organization of the
Islamic Conference, the South Centre and the United Nations Economic Commission for Latin
America and the Caribbean (ECLAC) at its next mee ting, having regard to the ongoing consultations
on related matters in the framework of the General Council.
VII. OTHER BUSINESS
98. The Chairman noted that the next meeting of the Working Group would take place on 5-6
July, back-to-back with the annual meeting of the UNCTAD Expert Group on Competition Law and
Policy which would take place on 2-4 July.  The substantive agenda of the Working Group's meeting
would be the same as the agenda for the current meeting.  Members agreed to provide written
contributions to the Secretariat not later than Friday 16 June, to permit their translation and circulation
to other delegations in advance of the meeting.
99. The Chairman suggested that, in the course of its next meeting, in addition to carrying
forward the work undertaken at the current meeting, it would be useful for the Working Group to
consider:  (i) whether it wished to hold a third substantive meeting following the summer break; and(ii) the process for preparation of its Report to the General Council for the year 2001.  In reflecting on
these matters, it should be borne in mind that the deadline for submission of annual reports to the
General Council by subordinate bodies had been set as 14 October 2001, to ensure that the reports
were completed and reviewed in advance of the Mi nisterial meeting which would take place in Doha
on 9-13 November.  The nature of the Working Group's Report should be discussed by the Group atits meeting in July but, if desired, it could be similar in style and approach to the Group's Reports for
1998, 1999 and 2000.
__________