RESTRICTED
WORLD TRADE WT/WGTCP/W/6
19June1997
ORGANIZATION(97-2511)
Original: English Working Group ontheInteraction
between Trade andCompetition Policy
COMMUNICATION FROM THE UNITED STATES
Thefollowing submission hasbeenreceived fromthePermanent Mission oftheUnited States
withtherequest thatitbecirculated toMembers.
_______________
AtSingapore, Ministers agreed toestablish aworking group ontradeandcompetition policy:
Investment andCompetition
"20. Having regard totheexisting WTO provisions onmatters related toinvestment
andcompetition policy andthebuilt-in agenda inthese areas, including under theTRIMs
Agreement,andontheunderstandingthattheworkundertakenshallnotprejudgewhether
negotiations willbeinitiated inthefuture, wealsoagree to:
• establish aworking group toexamine therelationship between trade and
investment; and
• establish aworking group tostudy issues raised byMembers relating tothe
interaction between trade andcompetition policy, including anti-competitive
practices, inorder toidentify anyareas thatmay merit further consideration
intheWTO framework.
These groups shall draw upon each other 'swork ifnecessary andalsodraw upon and
bewithout prejudice tothework inUNCTAD andother appropriate intergovernmental
fora. Asregards UNCTAD, wewelcome thework under wayasprovided forinthe
Midrand Declaration andthecontribution itcanmake totheunderstanding ofissues.
Intheconduct ofthework oftheworking groups, weencourage cooperation with the
above organizations tomake thebestuseofavailable resources andtoensure thatthe
development dimension istaken fully intoaccount. TheGeneral Council willkeep
thework ofeach body under review, andwilldetermine after twoyears howthework
ofeach body should proceed. Itisclearly understood thatfuture negotiations, ifany,
regarding multilateral disciplines inthese areas, willtakeplace only after anexplicit
consensus decision istaken among WTO Members regarding such negotiations."
This paper represents theinitial contribution oftheUnited States tothework ofthisGroup,
andprovides additional views astothemost fruitful scope fortheGroup 'swork beyond those initially
expressed bytheUnited States atSingapore.
TheUnited States agrees with thepoint made inthesubmission oftheEuropean Community
anditsMember States about rules relating togovernment subsidies andother trade remedies. TheseWT/WGTCP/W/6
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rules arealready addressed under theWTO andthere areexisting committees under whose purview
theimplementation andfunctioning ofthose rules lies. This Working Group should focus ontherole
ofcompetition policy inenhancing trade liberalization.
Therefore, theUnited States fully supports thiseffort tostudy competition lawandpolicy issues
asthey bear onthework andobjectives oftheWTO. Thedevelopment andenforcement ofeffective
competition laws andpolicies help ensure thatthegains oftrade liberalization arefully realized, and
thatcompetition-inhibiting private conduct, theregulation ofmarkets, andmarket structures donottake
theplace ofother more obvious governmental policies inrestricting entry (domestic orforeign) into
markets. Itisthislinkage totrade which makes thestudy ofcompetition intheWTO appropriate at
thistime.
Competitionlawshavebeenanincreasinglyimportantdriverofgrowth,efficiencyandinnovation
intheUnited States andother market economies over thepastcentury. Recognition ofthecentral role
ofcompetition laws inadvancing these objectives hasspread dramatically inrecent decades toallregions
oftheworld. Today approximately 70countries have competition laws -many ofthem enacted during
thepastfiveorsixyears -andthenumber ofcountries enacting new laws continues togrow. As
countries embrace competition principles, theyhave alsosought toderegulate markets where competition
canflourishorbefostered(e.g.therecentlyconcludednegotiationsonbasictelecommunicationsservices)
and, when itremains necessary, toregulate markets totheextent possible consistent with competition
principles. Increased competition andderegulation ofmarkets have ledtoaccelerating interaction among
countries thathave andenforce competition laws, inlarge partbecause theincreasing globalization
ofeconomicactivitycallsformorecooperativeandcoordinatedapproachesamongcompetitionauthorities.
TheUnited States, along with others, hasstrongly supported allofthese movements.
Atthesame time, there remain many WTO Members thatdonotcurrently have competition
laws. Among those thatdo,significant differences arefound intheterms ofthese laws, andinthe
way inwhich they areimplemented andenforced. These circumstances notonly canlead to
anti-competitive conditions within domestic markets, butalsocancreate orsustain barriers tomarket
access forexternal actors.
TheMinisters atSingapore recognized thatthese issues require further examination intheWTO,
andthatconsiderable additional study must occur before consideration isgiven towhether there are
issues thatareappropriate andripefornegotiation. Wesuggest inthispaper awork programme aimed
atadvancing thisprocess andlaying thegroundwork forfuture discussion ofconclusions ornextsteps.
Suggested outline forthework programme
While some Members have implemented andenforced competition laws fordecades, many
Members have only recently enacted competition laws, andstillothers donothave competition laws.
Given these circumstances andthenature ofthecompetition policy topic itself, anyreasoned approach
totheWorking Group 'sanalysis must beproperly structured andsequenced. Itisessential thatthe
work concentrate initially onananalysis offundamental concepts ofcompetition policy andhow they
areimplemented andenforced. After thatfoundation islaid, thediscussion could then proceed toan
examination oftheimplications ofthese concepts forthemultilateral trading system, withaview toward
reaching acommon analytical understanding oftheroleandrelevance ofthesubject ofcompetition
policy totheWTO framework.WT/WGTCP/W/6
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1. Competition intheWTO framework. This examination might begin with areview ofwork
relating tocompetition lawandpolicy thathasbeen done uptonow intheGATT 1947 andtheWTO:
(a) priorconsiderationgivenintheGATTcontexttodevelopingrulesoncompetitionpolicy:
theHavana Charter, the1960 Recommendation;
(b) competition provisions inexisting WTO instruments: TRIPS, TRIMs, theGATS and
therecent Reference Paper onregulatory principles incorporated intocountry schedules
asaresult ofthesuccessful conclusion ofthenegotiations onbasic telecommunications
services;
(c) consideration oftheprior GATT 1947 andexisting WTO dispute resolution mechanisms
from acompetition perspective.
2. Competition lawatthenational level. The above review could then beamplified and
complemented onthebasis ofpresentations andcontributions offered byMembers relating totheir own
perspectives andexperiences concerning thewayinwhich competition lawhasdeveloped atthenational
level, including:
(a) abrief history ofthedevelopment ofcompetition law;
(b) areview ofexisting competition provisions inWTO Members 'laws;
(c) thecoreelements ofcompetition law: cartels andother agreements among competitors,
distribution restraints andother vertical arrangements, monopolization ordominance
concepts, andmergers;
(d) theeconomic underpinnings ofcompetition law;
(e) thebenefits ofnational competition laws totrade liberalization;
(f) institutions ofcompetition law: how competition lawisimplemented andenforced
both administratively andjudicially.
3. International dimensions ofcompetition lawandpolicy. Finally, theWorking Group could
review theinternational dimensions ofcompetition lawandpolicy. Matters forexamination would
include:
(a) existing instruments forinternational cooperation, and their objectives: notice,
consultation, cooperation andcoordination, information exchange, comity andpositive
comity;
(b) areas where increased cooperation andcoordination could bring benefits: international
cartels, multijurisdictional mergers andcross-border practices;
(c) areas where market deregulation may beimportant forfurther trade liberalization in
theWTO.
With thisbackground, theWorking Group willbeinaposition tocarry outitsmandate "to
identify anyareas thatmay merit further consideration intheWTO framework". This work could lay
thefoundation foralaterdiscussion oftheroleofcompetition lawandpolicy andderegulation indealing
with public andprivate anti-competitive conduct thatimpedes trade liberalization. WedonotnowWT/WGTCP/W/6
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envisage what conclusions theWorking Group might reach. These decisions willbeinformed bythe
discussion thatoccurs inthecourse ofexamining thematters described above.
Working Group procedures
Thenature oftheWorking Group 'smandate, andthediscussions envisaged bythisproposed
work programme, suggest thefollowing procedural considerations:
(a) After aninitial organizational meeting, Working Group sessions should combine
presentations bynational governmental experts, invited experts, andrepresentatives
ofother international organizations, asappropriate, with discussion among Working
Group Members.
(b) Inviewoftheoftentechnicalnatureofcompetitionpolicyissues,maximumparticipation
ofofficials from capitals with relevant policy responsibility should beencouraged.
Meetings should bescheduled inaway thatfacilitates this.
(c) Totheextent appropriate, theWorking Group should take account ofrelevant work
being undertaken inUNCTAD, theOECD andother international fora.
Conclusion
Although theUnited States hasstated onother occasions, andcontinues tobelieve, thatthere
isnotthedegree ofconsensus today thatwould support negotiation intheWTO ofconstructive
competition policy disciplines, theproposed work programme isintended tofoster among Member
countries acommon understanding oftherelationship ofcompetition matters totheWTO framework
andtobeneutral regarding anyconclusions thatmaybereached. Whether ornotMinisters subsequently
decide towork toward anegotiation, theeducational andexploratory process theyhave mandated should
have independent value forallMember countries intheformulation oftheir own policies inrelation
tocompetition andtrade.