RESTRICTEDWORLD TRADE
ORGANIZATIONWT/WGTCP/M/11
15 September 2000
(00-3644)
Working Group on the Interaction
between Trade and Competition Policy
REPORT ON THE MEETING OF 15-16 JUNE 2000
Note by the Secretariat
1. The eleventh meeting of the Working Group on the Interaction between Trade and
Competition Policy took place on 15-16 June 2000, 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 27 March, 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 December 1998(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.
Following the approach used by the Group in its meetings in 1999, 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;
- 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.WT/WGTCP/M/11
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He noted, as well, 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
were fully taken into account.  It seemed that this was something which should be done in relation to
each of the above four work elements.  As agreed at the informal meeting of the Working Group on
27 March, he also read out a list of suggestions that he had mentioned at the informal meeting andwhich had initially been put forward to him by Members in the course of the consultations that he had
had with interested individual delegations and small groups prior to the informal meeting.  These
points, in addition to any others that Members c onsidered to fall within the terms of the December
1998 decision of the General Council, 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 the General
Council's decision.  The suggestions were as follows:
"- it was suggested that it would be useful if delegations could support the arguments
and proposals that they put forward in the Group with greater use of more concrete
examples.
- building in part on the previous suggestion, there was a plea, articulated by a number
of individual delegations, for a more concrete discussion of the development
dimension of the issues than had been undertaken to date in the Group.  This wouldinclude consideration of the benefits, challenges and the downsides involved in
implementing competition policy in developing countries, including the problems
involved in establishing competition agencies and organizing enforcement activities;
and the benefits and costs, particularly from the standpoint of developing countries,
of the proposals that have been put forward by some Members for enhancedcooperation on competition policy.
- the suggestion was made that it would be useful and appropriate for the Group to
consider ways of creating and maintaining a culture of competition.  This could
include, but would not be limited to, the exchange of national experiences in the field
of competition law and policy.
- it was also suggested that greater consideration be given to the practical aspects of
competition policy, including the role of  competition advocacy in market reform,
deregulation and privatization processes; and competition law enforcement processes
and priorities.
- in addition, a desire was expressed for a continuing focus on the interaction between
trade and competition policy and not merely on competition policy per se ."
I. THE RELEVANCE OF FUNDAMENTAL WTO PRINCIPLES OF NATIONAL
TREATMENT, TRANSPARENCY AND MOST-FAVOURED-NATION
TREATMENT TO COMPETITION POLICY AND VICE VERSA
3. The representative of India, introducing document WT/WGTCP/W/149 (to be issued), said
that India was of the view that much work remained to be done in broadening and deepening
understanding of the issues involved in the intera ction between trade and competition policy within
the mandate set out in paragraph 20 of the Singapore Ministerial Declaration and carried forward in
the subsequent decision of the General Council on the Group's work programme in 1999
(WT/GC/M/32, page 52, reprinted above).  The principles of non-discrimination and transparency
were fundamental to the multilateral trading system.  Competition policy, however, covered a much
larger canvass than trade policy and had implications for industrial policy and investment, amongother areas.  National treatment in the context of competition policy was, accordingly, more complex.
Besides, there was the question of the development dimension:  how were the concerns of developing
countries going to be met?  Proposals in previous meetings had included sectoral exemptions andWT/WGTCP/M/11
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transition periods.  Some delegations had stated that transparency was the most essential element and
that once transparency was ensured it would not be easy for Members to discriminate.  While
transparency could indeed be an essential first step, concerns related to the different stages of
development of developing countries, and differences in their endowments, needed to be considered.
It had been stated by many delegations that the objective of competition policy was to obtainefficiency enhancement, presumably including the concept of "allocative efficiency".  Liberalized
trade could certainly lead to better allocation of domestic resources in the trading countries.  However,
gains in allocative efficiency were once and for all and involved the outward shift of the "production
frontier".  What the developing countries were looking for was dynamic efficiency gains or gains in
productivity over and above those that were attributable to increases in the factors of production.  This
involved the concept of total factor productivity (TFP) growth.  TFP enhancement was possible only
through increased knowledge, technology upgra ding, better organizational and management
techniques in production and through general enhancement of education and skill levels.  Trade could
aid economic development only to the extent that  it helped to transfer knowledge, embodied or
otherwise, aided absorption of technology and en hanced technical and skills development, and
thereby enhanced TFP.  International trade was not a "zero sum" game, in that it could benefit both
players.  However, anti-competitive behaviour by either of the two trading entities could help it cornerthe gains from trade.  Much of the benefits of international trade over the last century had been made
possible through "beggar-thy-neighbour" policies pursued by countries in the absence of binding rules
restraining such practices.  Such practices had been promoted by making competition policy
subservient to industrial policies.  The essential focus of competition policy in advanced countries was
on the promotion of allocative efficiency and reduced price for consumers.  This static perspectivemight not aid economic development.  The debate related to "consumer welfare", "producer interests"
and "public interest" in the context of development was still alive.  Some academic analyses of the
Japanese experience in the period 1950 - 1973 had indicated that the high growth of the Japanese
economy during this period had been facilitated by the subordination of competition policy to
"industrial policy".  According to these analyses, the Japanese Ministry for International Trade andIndustry (MITI) had encouraged a variety of cartel arrangements in a wide range of industries,
including export and import cartels, arrangements to combat depression or excessive competition,
rationalization cartels, etc., in addition to mergers in key industries.
4. Continuing, he said that discussions on competition policy in the context of development
should also take into account the concerns of developing countries relating to the provisions of the
Agreement on Trade-Related Investment Measures (TRIMs).   Some TRIMs had been seen to be
useful  tools to control horizontal as well as vertical restrictive business practices of multinational
corporations (MNCs).  In the light of this, some analysts had called for removal of the prohibition of
such measures under the TRIMs Agreement.  Similarly, well-known trade authorities had shown that
TRIMs could be used by host countries in bargaining with multinational companies.  Their argument
went as follows:  FDI would take place only where there was a benefit (rent);  MNCs tended to utilize
their market power to appropriate most of the re nts to themselves; hosts responded with TRIMs and
performance requirements to capture the rents for themselves.  TRIMs could, therefore, be seen as
implicit bargaining over the allocation of rents from FDI:  whereas RBPs could nullify the benefits
arising out of FDI, TRIMs could counter such RBPs such as requirements to import from the parent,
market allocation, transfer pricing etc.  Some authors had argued that the pursuit of a market access
agenda in work on competition policy in the WTO might result in outcomes that were detrimental
from a welfare point of view.  On this basis, these authors had expressed doubts about the ability of a
WTO-based process to play as constructive a role in the area of competition law as it did in the area of
trade law.  The same argument could be used to indicate that TRIMs could be used to enhance the
gains from trade by developing countries.
5. Continuing further, he said that, in the course of past discussions of the options available to
Members in the area of competition policy, options such as unilateral, bilateral, regional and
international or multilateral routes had been mentioned.  Whereas bilateral agreements, regional
agreements or plurilateral agreements had found support from some Members, the feasibility andWT/WGTCP/M/11
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enforceability of any agreement on international competition policy that went beyond general
procedural cooperation and the introduction of transparency mechanisms had been questioned by
many Members.  The absence of competition law in approximately half of the WTO Member
countries, the difficulties involved in harmonization of competition policy principles, the non-
enforceability of the principle of "positive comity" in an effective manner especially from the point ofview of developing countries and the general lack of confidence in the ability of the system to build
the development dimension effectively into any competition policy agreement on a multilateral level
had resulted in a situation where his delegation did not, at least at the current stage of the educational
process, see any great advantage in having a WTO agreement on competition policy.  International
instruments such as the UN Set and the various OECD Guidelines, based on which the elements of a
multilateral arrangement were being worked out by some of the Members, were non-binding.   The
extent to which the elements identified in such instruments could be replicated in the WTO might be
limited.  This did not mean that enterprise practices having cross border effects and having a
significant impact on distribution of gains of international trade among developed and developing
countries should be left unbridled.  The Working Group process had contributed enormously to the
understanding of the subject by the Members.  During the discussion in the Working Group some
delegations had also raised the need to address governmental measures in a multilateral competitionpolicy framework.  Trade policy's concern was with governmental measures.  The very rationale of
talking about competition policy in the context of WTO was, in fact, the concern that once
government policy-induced restrictions were remo ved through the implementation by Members of the
Uruguay Round commitments, the vacated space might be occupied by private enterprise practices of
an anti-competitive nature.  Various experts had, however, suggested that, while the role ofcompetition policy was to curtail the misbehaviour of firms, that of trade policy was to prevent
misbehaviour of governments in the trade area.  Nevertheless, the two domains did overlap, for
example with respect to disputes over non-border trade barriers.  Furthermore, the international
aspects of competition policy were related not only to trade policy, but also with other important
questions such as cross border mergers and acquisitions, industrial policies of national governments,strategic business alliances, etc.  There was a danger that competition policy considerations, which
were broader and more complex than trade questions, could be submerged by trade policy
considerations and this should be guarded against.  In any case, it might be too early to rush to
conclusions on issues like this that were complex and for which the social and institutional support
systems in many countries were not yet well developed.
II. APPROACHES TO PROMOTING COOPERATION AND COMMUNICATION
AMONG MEMBERS, INCLUDING IN THE FIELD OF TECHNICALCOOPERATION
6. The representatives of Trinidad and Tobago; Australia
; Hong Kong, China ; Japan ; the United
States and the European Community and its member States  introduced written contributions on this
agenda item (documents WT/WGTCP/W/143, WT/WGTCP/W/148, WT/WGTCP/W/141,
WT/WGTCP/W/145, WT/WGTCP/W/142, WT/WGTCP/W/140, respectively).  In addition, therepresentatives of Brazil; Hong Kong, China
; Switzerland ; Pakistan ; Trinidad and Tobago ; Korea ; the
United States; Malaysia ; Japan ; Hungary ; Canada ; the European Community and its member States ;
Singapore; Venezuela ; the Czech Republic ; Norway ; Malaysia ; and India  made oral statements or
posed questions on this item, and representatives of UNCTAD and the OECD  provided updates on
relevant activities of their organizations.
7. The representative of Trinidad and Tobago, introducing document WT/WGTCP/W/143, said
that the paper outlined the competition policy of CARICOM, which was embodied in Protocol VIII
amending the Treaty of Chaguaramas by which CARICOM had been set up, and provided
information on the problems and challenges which were faced in implementation of the new regime,
including co-operation issues.  CARICOM had decided to introduce a competition regime as a part ofa wider policy framework to establish a Single Market and Economy in CARICOM.  Through the
implementation of competition policy, CARICOM e xpected to promote and maintain competition inWT/WGTCP/M/11
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the Single Market and Economy, to promote consumer interest and welfare and to enhance economic
efficiency in production, trade and commerce.  The government of Trinidad and Tobago was also
committed to developing a competition regime to support its extensive liberalization programme, and
was currently drafting a competition law.  The CARICOM competition policy incorporated most
conventional elements of such policy including provisions on agreements, concerted practices andabuse of a dominant position but did not include merger control regulation.  Member states were
required to enact harmonized legislation, to set up institutional arrangements for implementing the
rules of competition, to enforce the determinations of the Competition Commission, and to provide
penalties.  The CARICOM competition policy included protection of the confidentiality of
information, transparency, non-discrimination in the application of the law amongst members states
and exchange of information amongst the national competition authorities and with the CARICOM
Commission.
8. Continuing, she said that implementation of the new policy posed tremendous challenges for
small open economies.  These included the development of skilled human resources and a culture of
competition and finding the financial resources needed to administer and implement the competition
law.  Financial resources would be needed to fulfil the education and training programmes and to
house and equip competition authorities, as well as  to meet operating costs.  It was important, in thisregard, to convey to the Working Group the peculiarities of small, open economies.  CARICOM
economies were mainly monoculture producers.  Their major income-earning industries were subject
to the vagaries of the world economy, being commodity price takers.  For example, most of the
countries in the region were highly dependent on tourism as the major employer and income
generator.  A further defining feature of most of these economies was the domination of the majorproductive sectors by multinational corporations.  The high level of exposure of these economies to
competition from foreign-based multinationals raised concerns about the social and employment
effects of competition and the possibility of excessive market entry.  Nonetheless, there was no doubt
that a competition regime would yield important be nefits for CARICOM.  Given the high dependence
of these economies upon imports, CARICOM countries were exceptionally exposed to the negativeeffects of foreign-based export cartels and international cartels.  The presence of large multinational
corporations within CARICOM economies or the impact upon CARICOM economies through
imports meant that abuse of dominance could be pervasive.  However, there were a number of
concerns.  For example, could the welfare-creating effects of competition leak out of the economy if
new entrants were foreign firms and they displaced local incumbents?  Because of the smallness of
the economies, displacement effects could be widespread and there could be grave social
repercussions.  A further important question was whether smaller economies would be able toefficiently discipline multinational corporations, given the self-evident asymmetry of power?  A
crucial question was the extent to which economies such as those of the CARICOM region could use
competition law effectively to discipline abuse of dominance in those economies.  It might be the case
that smaller economies needed to introduce competition law on a phased basis, to make its
implementation manageable, and to make the law compatible with the level of development.
9. With respect to cooperation issues, she said that Trinidad and Tobago felt that cooperation at
all levels would be important to the successful implementation of competition policy.  In addition to
pursuing bilateral cooperation arrangements, at present, CARICOM was also negotiating at the
hemispheric level in the Free Trade Area of the Americas, and cooperation was an important aspect of
the proposed FTAA.  Such an agreement would pr ovide a framework for the region to develop a
greater understanding of each member's laws and its application, and the development of
jurisprudence.  Cooperation at the multilateral level could also be an important modality for
facilitating the application of competition law in the domestic market, particularly as it related to
cross-border effects, international cartels, or the abuse of dominance of multinational corporations.
However, for most developing countries and certai nly for CARICOM, the field of competition policy
was so new that not only was an intensive education process necessary, but also an in-depth study was
needed of the issues including the adequacy of cu rrent thinking and instruments for cooperation.  If
smaller economies were to gain from having a competition regime and cooperation arrangements, itWT/WGTCP/M/11
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would be necessary for the more experienced and powerful countries to go beyond the exchange of
information and assist in cases that affected those economies through positive comity.  It might be
necessary to extend this to the possibility of developed countries lending assistance and expertise to
guide investigations involving large multinational corporations, and to take action against export
cartels in their domestic markets.  The technical and financial assistance needed by the CARICOMcountries to develop a cadre of skilled human resources to administer and implement their
competition law/policy included the following aspects: (i) scholarships for academic/professional
training; (ii) internships at competition authorities to gain experience; (iii) visiting staff from
experienced agencies to guide and assist, particularly in procedural matters in the early years of new
competition agencies; (iv) resource persons/financial assistance for training workshops targeted at
specific groups, such as lawyers, economists, and judges; (v) assistance in the facilitation of
workshops for producers and consumers; and (vi) guidance in the development of an informationdata-base system in new competition agencies.  The continuing work of the WTO Working Group
would provide a tremendous amount of information and help to the CARICOM countries, since the
Group provided a framework for the exchange of information on national experiences which
broadened the scope of understanding in developing countries and contributed to their own efforts at
developing competition regimes.  Further, through this forum, developing countries could makeknown the serious constraints which they faced in administering and implementing competition law,
and thereby contribute to the development of new approaches to accommodate those needs.  It would
be useful if the Working Group could examine the relevance of the UNCTAD Set of Multilaterally
Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices.  This might
contribute to developing guidelines in a possibl e multilaterally-agreed competition policy framework,
should that be negotiated.  Some additional specific issues which would benefit from further reflection
in the WGTCP were as follows:  (i) the experience of industrialized economies in phasing-in aspects
of competition law and a framework for a managed a pproach to the introduction of competition law in
developing countries; (ii) the issue of cooperation initiatives that go beyond current agreements and
underlying principles and modalities which could deal more effectively with cross-border anti-
competitive conduct with effects in small economies, given asymmetric power relations; and (iii) the
question of whether there was an issue of excessive market entry in weaker economies?  What was the
experience of the weaker economies in the European Community, for instance?  Could special and
differential treatment be necessary in important socio-economic sectors in small and micro
economies?
10. The representative of Australia, introducing document WT/WGTCP/W/148, welcomed the
Group's focus on building the capacity and technical skills necessary to put in place effective
competition frameworks.  Building on a previous contribution (WT/WGTCP/W/125), her delegation's
current contribution provided updated information on the targeted assistance programmes that
Australia carried on aimed at strengthening the legislative and institutional frameworks for
competition policy in recipient countries and also at improving the skills base necessary to administer
the relevant frameworks.  A number of lessons which had been learned from Australia's activities incooperation and technical assistance were set out in the paper.  In addition, it was noted that Australia
had been closely involved in the development of a number of non-binding competition principles
called the "APEC Principles to Enhance Competition and Regulatory Reform" which were circulated
to the Group late in 1999 (see contri bution of New Zealand, WT/WGTCP/W/139).
11. The representative of Hong Kong, China,  introducing document WT/WGTCP/W/141, said
that it was intended as a response to the five points that had been highlighted by the Chairman of the
Working Group at the informal meeting held in March 2000 (noted above in paragraph 2).  Hong
Kong, China was fully committed to the promotion of competition.  The ultimate objective of its
competition policy was to enhance economic efficiency and the free flow of trade, thereby also
benefiting consumer welfare.  To realise this objective, Hong Kong, China had adopted a free marketand minimum interventionist approach which was described in the paper.  As a key step, the
Competition Policy Advisory Group (COMPAG) had developed and promulgated a policy statement,
The Statement on Competition Policy , which set out the objectives of Hong Kong, China'sWT/WGTCP/M/11
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competition policy and provided pointers to facilitate compliance with the competition policy by both
the public and private sectors.  All governmental bureaux and departments were regularly requested to
critically review their areas of work to identify and propose remedies to anti-competitive practices, as
well as to come up with new pro-competition initiatives.  With regard to restrictive business practices,
COMPAG worked closely with all government bur eaux and departments and the Consumer Council,
which was a statutory organisation responsible for protecting and promoting the interests of
consumers, in monitoring the state of competition in different sectors and in handling competition-
related issues.  The Council had become a full Member of COMPAG in April 2000.  In the interest of
promoting transparency of the work of COMPAG, relevant government initiatives had already been
detailed in annual reports published by COMPAG (copies of the COMPAG report were subsequently
provided to the Secretariat and are available to Members on request).  As reflected in the examples set
out in the Annex to its paper, Hong Kong, Ch ina had found that the needs, requirements and
characteristics of individual sectors varied extensively.  Accordingly, it had adopted a sector-specific
approach to safeguard competition, whilst maintaining a broad policy overview to ensure overall
consistency.  It was not averse to legislative measures per se , but considered that a sectoral approach
was more pragmatic and appropriate for promoting competition in Hong Kong, China.  Such an
approach allowed flexible, target-oriented and cost-effective means to be adopted to prevent oreliminate anti-competitive practices, without the risk of over-regulating or incurring excessive legal
and administrative costs.
12. Continuing, she said that to assess what could realistically be done within the WTO to
promote the coherence of trade and competition policies, Hong Kong, China considered it important
to recognize the diversity that existed among Members in this area.  First, there was diversity incompetition policy objectives.  A distinction could be drawn between competition policies focusing
on economic efficiency-based analyses and those with multiple objectives including non-efficiency
goals such as market integration, protection of small enterprises, and promoting personal and political
freedom.  Contemporary competition policies were often multi-faceted in nature in that they featured,
inter alia,  direct economic goals such as promoting competition, productive and allocative efficiency,
and consumer welfare and also exemptions for economic or other reasons and indirect political long-
term goals.  Second, there was diversity in approaches to promoting competition.  In fact, as was
reflected in the 1998 Report of the Working Group, the adoption of a horizontal legal instrument to
safeguard competition by almost half of the WTO me mbership did not necessarily mean a high degree
of commonality in their approaches to promote competition.  Salient differences included the fact that
there were two very different forms of competition law - the prohibition model  and the administration
model  – and that the scope and range of exemptions, which could be sector-related or restraint-related,
differed substantially across jurisdictions.  Third, some economies were more concerned about the
market effects of enterprise behaviour outside their territorial boundaries and hence had a higher
proclivity than others to apply their competition law extra-territorially.  In the view of Hong Kong,
China, these differences should be respected so long as they did not detract from the widely accepted
goals of promoting economic efficiency and market contestability.
13. Continuing further, she referred to a thr ee-step roadmap which was proposed in the last
section of her delegation's paper.  Rather than focusing from the outset on what instruments would be
optimal for achieving the end goal, the roadmap aimed to provide an action-oriented framework,
guiding Members to build consensus step-by-step.  Under step 1, Members would try to agree on the
scope of competition policy for the purpose of future WTO deliberations.  This should be done on thebasis of respect for the above-mentioned differences among Members and focusing on the objectives
and functions of competition policy rather than on the means to achieve such objectives and functions.
Past deliberations in the Working Group had shown that different Members attached different
meanings and expectations to the term "competition policy".  While some Members preferred to focus
on measures to tackle anti-competitive strategies and behaviour of firms, others contended thatgovernmental measures should be recognized as the major source of distortion of competition and
hence should receive the Working Group's priority attention.  Under step 2, it was proposed that
Members should identify the specific competition pr oblems that had direct relevance to internationalWT/WGTCP/M/11
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trade and the fulfilment of WTO objectives.  It was hoped that, with the help of the general guidelines
proposed in the paper, Members could collectively come up with concrete evidence and findings to
underline the priority problems to be addressed by the Working Group.  Under step 3, it was proposed
that Members should explore the feasibility of possible multilateral options to address the competition
problems identified in step 2.  It was suggested that the exploration of possible multilateral optionsshould be guided by the following considerations:  first, it was necessary to consider whether and the
extent to which the WTO was an appropriate organization to tackle the problems identified.  Second,
there was a need to maximize the synergies of prospective multilateral solutions and the existing
WTO framework.  This might call for an appraisal of, inter alia , how far the WTO Agreements as
they stood could tackle the competition problems uncovered in Step 2.  Third, it should also be
recognized that rule-making was just one of the many multilateral options available to Members.
Apart from imposing binding obligations on Members, measures such as enhanced technicalassistance and capacity building, a competition policy review mechanism, deepening exploratory
work, etc. might offer solutions to the problems identified in Step 2.
14. The representative of Japan, introducing document WT/WGTCP/W/145, said that the paper,
which was submitted without prejudice to the position of the Government of Japan, focused on the
following issues and concerns which were experienced by developing country Members, whether ornot they had already introduced competition laws, namely:  the relationship between competition
policy and competitiveness; the impact of competition policy on society; the relationship between
industrial development policy and trade liberalization; and limitations on the resources available to
competition policy authorities.  With regard to the first item, there was a concern that state-owned
companies that were created to provide the population with goods and services of equal quality atequal prices and which could play an important role in the economies of developing countries, could
be adversely affected by competition policy.  Such companies could also play a role in building
infrastructure for electricity, power, gas, water and canal industries, all of which were characterized
by natural monopolies, as the infrastructure required huge investments.  However, due to progress in
technological innovation and globalization of economies, it was now desirable to eliminateinefficiency in the operations of state-owned companies and private enterprises in regulated industries
by implementing competition policy, thereby improving economic welfare.  Secondly, there was a
concern that competition policy could be understood to hinder competitiveness in relation to efforts to
achieve economies of scale.  For example, expanding the scale of a company by way of merger might
be effective in increasing competitiveness in the inte rnational market as well as synergies between the
merged entities.  On this basis, it might be thought that restrictions on corporate mergers could hinder
economic development of developing countries.  However, in fact, no conclusive studies had beenconducted to prove that the expansion of companies improved performance.  It was also necessary to
comprehensively analyse how synergies associated with mergers would reduce costs.  Third, with
regard to the impact that competition policy had on society, concerns had been expressed that
competition policy could lead to social friction to th e extent that it forced inefficient companies out of
business, thereby causing bankruptcies and raising the unemployment rate.  However, it needed to beemphasized that if anti-competitive business practices were overlooked, this would not only impose
an unnecessary burden on consumers but would also lower the economic welfare of the country as a
whole.  A desirable approach, therefore, was for each government to minimize the adverse societal
effects that were created temporarily by competition policy by developing new industries, promoting
the mobility of human resources, implementing relief measures for the jobless and redistributingincomes.  At the same time, governments should actively promote competition policy by convincing
citizens and industries alike that the advantages of such a policy would override the drawbacks, if any,
in the mid- or long-term and that any costs could be addressed by implementing the above measures
without suspending implementation of competition policy.
15. Continuing, he noted that it had sometimes been said that industrial policy should precede
competition policy, to promote growth.  The Gove rnment of Japan had implemented as part of an
industrial development policy, measures such as tax privileges, loans and subsidies.  However, such
measures had not been aimed at restricting competition in the relevant sectors, and restrictiveWT/WGTCP/M/11
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practices had been strictly prohibited by anti-m onopoly law.  Accordingly, in his delegation's view,
industrial development policy and competition policy could be considered as compatible with each
other or complementary.  Similarly, it was sometim es argued that trade liberalization should precede
the introduction of competition policy.  This argument assumed that progress in trade liberalization
significantly reduced the risk of any anti-competitive practices, something which could be true if newplayers began to compete in a market as a result of trade liberalization.  However, it was evident that,
as tariffs and other measures at national borders had been significantly reduced as a result of trade
liberalization, there was a growing number of cases involving anti-competitive practices conducted
across national borders or abroad with adverse effects on competition in domestic markets.
Therefore, it was his delegation's view that trade lib eralization did not negate the need for competition
policy.
16. With regard to the resources available to competition authorities, he said that institution-
building and capacity-building were urgent tasks for new competition authorities in developing
countries.  Such countries would often need to implement competition policy on a step-by-step basis
in order to build the capacity of authorities and to ensure public trust in them.  Specifically,
competition authorities in such countries should gi ve priority to cracking down on the most blatant
anti-competitive practices, including cartels, joint refusals to trade, resale price maintenance, the
imposition of any exclusive conditions on trade and the obstruction of trade by competitors, following
which they might then consider regulating practices with less serious effects on competition and other
practices that call for consideration of policy goals other than competition, such as unfair restraints of
trade and mergers and acquisitions.  It was important to raise public awareness of the importance of
competition policy through advocacy and to gradually increase the resources for the implementationof competition policy and the establishment of competition authorities and to garner the support of
consumers, scholars and citizen groups, since competition policy was at risk of being politically
influenced by the opinions of small groups that had vested interests.
17. In conclusion, he emphasized that existing systems needed to be reformed in response to
changing times and circumstances with a view to achieving economic development and thatcompetition laws were increasingly important in that respect.  It was necessary to promote
competition laws and policy in implementing structural reforms and deregulation so that productivity
could be increased in response to globalization of economies.  In this context, the following six points
were put forward as a focus for future technical cooperation activities in competition law and policy:
first, construction of a network among competition authorities of Member countries for the efficient
and flexible exchange of opinions and information by using information technology; second, creation
of a database of competition law, enforcement, technical cooperation activities, etc. for each Membercountry; third, comparison of competition laws in each Member country and analysis of their
historical and economic backgrounds in addition to moves towards the convergence of competition
laws and the menu of options for economies poised to enact competition law; fourth, consideration of
measures to realize the early introduction of competition laws; fifth, compilation of data on
competition policy reflecting the development of competition laws and experiences with theirimplementation; and sixth, consultation and exchanges of opinions on how to address anti-competitive
practices that have international implications.  Some of these activities were already being carried out
at the bilateral or regional levels.  It was suggested that the WTO should cooperate with other
international organizations in order to enhance international cooperation in competition policy while
at the same time making full use of efforts made at the bilateral and regional levels.  The necessity fora multilateral framework on competition policy should also be considered in this context.
18. The representative of the United States, introducing document WT/WGTCP/W/142, said that
the Group's discussions had reached a point where it seemed appropriate to discuss some of the issues
and practical difficulties that governments faced in creating and maintaining a sound competition
policy, including through the adoption of competition (antitrust) laws and the promotion of a "cultureof competition".  He emphasized that, in putting forward these views, his delegation was not
suggesting that every country should be required to enact a competition law.  As the paper by HongWT/WGTCP/M/11
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Kong, China (WT/WGTCP/W/141) had shown, some Members that had chosen not to enact antitrust
laws had nevertheless found other ways to promote competition and deal with competition issues.
The paper by the United States was informed by two broad themes:  1) a recognition that the world's
antitrust laws and agencies were characterized by extensive diversity, such that a "one size fits all"
prescription for all 137 members would not be appropri ate, though of course it was still possible to
learn from one another; and 2) creating and maintaining a culture of competition was a challenging
exercise that required effort and commitment (this had certainly been the case in the United States).
From this perspective, the paper discussed a series of questions relating to the drafting of an antitrust
law, including with respect to the substantive provisions of the law; its objectives, scope and
coverage; the structure of national competition agencies; practical challenges confronting agencies
once they have been established, including with resp ect to funding, size and the hiring and retention
of staff; the importance of transparency and due process in enforcement processes, including ensuringaccess for private persons to the enforcement structure (he emphasized, in this regard, the role that the
Internet could play and the extensive information that was already available from this source on the
competition policies of many Members, including the United States); the importance of training
programmes for agency staff, drawing on both internal and external sources; and the value of
technical assistance on a bilateral and multilateral basis.  Finally, it addressed the setting of prioritiesfor new competition agencies.  Emphasis was placed on educating society about competition
(including the work of the agency); competition ad vocacy activities; specific enforcement challenges;
and the engaging of specific elements of the public (academia, consumer groups and the private bar)
in creating a culture of competition.
19. The representative of the European Community and its member States, introducing document
WT/WGTCP/W/140, said that it responded to the desire that had been expressed at the informal
meeting of the Group on 27 March for a more concrete discussion of the development dimension of
the issues, including consideration of the implications for developing countries of different proposals
which have been put forward.  It drew on past discussions in the Group, on comments that had been
made by a number of developing countries in the course of those discussions and on related work inUNCTAD.  A topic addressed in the first part of th e paper was the role of competition law in relation
to domestic economic reforms in developing countries.  As had already been discussed at some length
in the Group, trade and investment liberalization, regulatory reform and the implementation of
competition law were complementary in many respects.  Progress in each of these areas would be
reinforced by progress in the others.  This was particularly the case where there was an overall move
from a more highly-regulated and protected economic system toward a market-based economy.  A
related point that had emerged from the interventions of countries such as Korea and Argentinaconcerned the importance of introducing competition law at a relatively early stage in the
development process.  A competition law could also be seen a part of a broader effort aimed at
strengthening the private sector as an engine of growth and development.  This having been said,
competition law and policy also had an important equity-related dimension in ensuring access to
markets for new entrants including small and medium -sized enterprises and in controlling abuses of
economic power.  This could be particularly important in relation to foreign investment.  Whereas
many developing countries were in the process of developing more open investment regimes,
competition law was needed to prevent abuses of dominant positions by powerful multinational
enterprises and this had been an important motivat ion for the strengthening of domestic competition
law regimes in many countries.
20. Continuing, he said that the paper highlighted three particular types of cases in which anti-
competitive practices had had a detrimental impact on the trade interests of developing countries.  The
first concerned practices that affected markets internationally.  A prime example in this regard was the
impact of international cartels.  This had been  a very important focus of antitrust enforcement
activities in both the European Community and the United States in recent years.  There wereindications that such cartels were having a partic ular incidence on the trade of developing countries.
Developing countries confronted, however, major challenges in attempting to grapple with such
conduct on their own.  This was an important consideration underlying the need for enhancedWT/WGTCP/M/11
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international cooperation in competition law and policy.  A second type of anti-competitive practice
with particular implications for developing countries was abuses of a dominant position by
transnational firms.  Again, competition authorities in developing countries faced particular
difficulties in enforcing their domestic competition laws in relation to such practices.  This had been a
traditional concern underlying demands by developing countries for enhanced internationalcooperation.  His delegation felt that responding to this concern should be a key objective of a
multilateral framework on competition policy.  A third category of conduct involved cases which
were more directly related to market access in the sense of constituting a barrier to access for imports
or exports.  With regard to the impact of such practices on economic welfare and development, as had
been pointed out in the Working Group by a representative of the World Bank, a clear majority of
cases of anti-competitive practices concerned capital and intermediate goods.  This implied that cases
of this nature were important not only from the point of view of enhancing the welfare of consumersbut also from the point of view of enhancing in ternational competitiveness and the development
prospects of developing countries.  A related concern was that developing countries' firms were most
often new entrants in markets which meant that they could suffer particularly adverse consequences as
a result of anti-competitive practices that foreclosed access to markets.
21. Continuing, with regard to the difficulties faced by developing countries in implementing
competition policies and setting up effective competition authorities, he referred to the problems of
drafting a competition law which was well-suited to the institutional capacity of the country in
question; the process of setting up an effective domestic competition authority and reinforcing its role
at domestic level; and the continuous need to enhance the capacity of competition authorities to deal
with complex cases, in particular those that had international dimensions.  Concerning ways in whichthe development dimension could be reflected in an eventual WTO framework on competition, some
key considerations were as follows.  First, progre ssivity and flexibility would be essential elements of
such a framework.  To begin with, there would clearly be a need for progressivity in any commitment
relating to the introduction of a domestic competition law regime.  This would be particularly so in
relation to any commitments that entailed significant resource costs, although his delegation did notexpect that the type of agreement that was now under consideration would entail significant costs of
this nature.  A further, vital aspect of flexibility in a multilateral framework on competition policy
would be respect for the diversity of national approaches to competition law and policy.  There were
many legitimate reasons for differences in both the substantive competition laws of WTO Members
and in the institutional procedures for enforcemen t of such laws.  Rather than calling for the
harmonization of such laws and procedures, his dele gation was aiming at the elaboration of a number
of common principles which to a large extent w ould be based on the fundamental WTO principles of
transparency and non-discrimination and which could relate to diverse institutional settings.  With
regard to how far a WTO framework should deal with  issues of substantive competition law, he said
that his delegation had reached the view that a clear area of international concensus concerned the
need for measures to address the harmful impact of  ("hard-core") international cartels.  It did not,
however, consider that at this time it would be useful or productive to try to develop commonsubstantive rules in other areas of substantive compeition law such as vertical restraints or abuses of
dominant position where significant differences in national competition law regimes persisted that
went beyond the details of the law.  An additional area in which his delegation's thinking had evolved
concerned the question of sectoral exemptions from national compeition laws.  While his delegation
felt that the objective of limiting such exemptions was a worthwhile one, it had also noted that manycountries, including developing countries, had numerous such exceptions and that, at this point in
time, rather than seeking to reduce the number of ex emptions, priority should be placed on ensuring a
maximum degree of transparency in this area.
22. Continuing further, he said that a second way in which the development dimension could be
reflected in any multilateral framework would be the development of ways of ensuring thatdeveloping countries could partake in the benefits of cooperation among national competition
agencies, the elaboration of modalities for which would be a central element of such a framework.
Three specific ways in which this could be done were as follows.  First, there was a need to ensureWT/WGTCP/M/11
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maximum availability of information on cases involving anti-competitive practices.  This might be
achieved through some kind of information clearing-house mechanism.  Secondly, all WTO Members
should be prepared to engage in consultations whenever a competition policy issue raised the concern
of another WTO Member.  Thirdly, developing and other countries might benefit from new
procedures for the exchange of national experience and perspectives on competition policy, possiblyincluding peer reviews.  Many related ideas had been put forward on this in the Working Group, for
example by the representative of Brazil.  His delegation believed that this would be an important
function of a WTO Committee on Competition Policy, to be established pursuant to a multilateral
framework on competition policy.  A third way in which the development dimension could be
reflected in a possible multilateral framework would be the development of means to enhance and
better coordinate the provision of technical assistance in the field of competition law and policy.
While important work in this area had been done and would continue to be done by UNCTAD, theWorld Bank, the OECD and many national governments, his delegation believed that more could be
achieved with enhanced coordination of these activities.  A multilateral framework on competition
policy could play a catalytic role in this regard.  First, a multilateral framework would enhance the
priority that was attached to technical cooperation, on both the donor and recipient sides.  Secondly,
experience had shown that technical assistance was most effective if it was demand driven and if acoordinated approach was taken in responding to demands from recipient countries.  The role played
by the WTO in stimulating a more integrated and co ordinated approach to technical assistance in this
area would be along the lines of the ongoing work in the Committee on Trade and Development and
the General Council on enhancing the capacity of the WTO together with other organizations to
promote technical assistance linked to capacity building.  Thirdly, the effectiveness of technicalassistance could be enhanced through the establishment of monitoring mechanisms.  A WTO
Competition Policy Committee would be a natural venue for this.  Fourthly, important synergies could
be realized between technical assistance activities and the exchange of national experience and other
activities undertaken in the proposed Committee on Competition Policy.
23. The representative of Brazil reiterated the importa nce attached by Brazil to the role played by
the fundamental principles of the WTO such as transparency, non-discrimination and national
treatment in the context of an eventual multilateral framework on competition policy.  However, as
reflected in some of the papers that had been presented, further attention should be given by the
Working Group to the diversity in Members' competition laws as well as to differences in the level of
institutional development among Members, both of which drew attention to the importance of
flexibility.  Brazil agreed that industrial, trade and competition policies were, in general,
complementary; it nevertheless considered that this should be given further attention in the WorkingGroup.  He also reiterated the importance that Brazil attached to the issue of international cooperation,
which would be an important component of any eventual mechanism to address competition policy
multilaterally.  Such cooperation would involve the exchange of information between investigating
authorities, and would play an important role in fighting restrictive business practices such as hard
core cartels.  The approach to the implementation of cooperation mechanisms should be gradual,including with regard to the exchange of confidential information.
24. Delving further into the impact of anti-competitive practices on international trade and
economic development and possible measures to address such practices, the representative of Hong
Kong, China said that the paper by the European Community and its member States
(WT/WGTCP/W/140) had described comprehensively the potential threats posed by various kinds ofanti-competitive practices of enterprises and their implications for competition policy in developing
countries.  These issues were no doubt pertinent in an increasingly integrated world economy.
Members should be equally vigilant against anti-competitive governmental measures, which remained
a major impediment to the fulfilment of WTO objectives despite progressive dismantling of
governmental competition restraints over the past decades.  In the view of Hong Kong, China,initiatives to assist developing economies to upgrade or reinforce their competition policies were
worth supporting insofar as the initiatives did not impose onerous or burdensome obligations on the
target beneficiaries.  However, the various initiatives that had been proposed by the EuropeanWT/WGTCP/M/11
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Community and its member States and other delegations required careful examination because their
implementation would affect the balance of rights and obligations inherent in the existing WTO
Agreements (see related comments by the representative of Hong Kong, China, below).  The
representative of Switzerland said that the contribution by the European Community and its member
States (WT/WGTCP/W/140) cont ained a useful compilation of earlier inputs regarding the
development dimension of competition, and several interesting examples of anti-competitive
behaviour affecting developing countries, where cooperation could have facilitated addressing such
behaviour.  The representative of Pakistan said that a broad concern that had been manifested by
developing countries in the debate was to enhance their ability to address anti-competitive practiceswhich originated beyond their national borders but which had an effect on their economies.
25. The representative of Trinidad and Tobago, also commenting on the paper by the European
Community and its member States (WT/WGTCP/W/140), stated that the paper provided a useful
framework for exploring developmental issues in trade and competition policy.  She attached
particular importance to the concern noted in the paper that international cartels might seek to focus
their activities in markets with weak competition structures if they were subject to effective
disciplines in major jurisdictions.  She suggested, how ever, that the authors give further thought to the
concern that had been raised in the paper by Trinidad and Tobago regarding the potential adverseimpact of entry by foreign competitors on small, open economies.  Furthermore, while the paper
argued that increased competition would provide a strong incentive for investment in R&D, it was
noted that this might not be the case in small open economies where, due to structural rigidities and
the local business culture, the level of investment in R&D was minuscule.
26. Regarding the relationship between industrial development policies and competition policy,
commenting on the papers by Japan (WT/WGTCP/W/145) and the European Community and its
member States (WT/WGTCP/W/140), representatives of Korea asked whether there were any
conflicts between these policies?  If so, what coordination mechanisms existed in Japan relating to theimplementation of competition and industrial policy?  Their delegation believed that reconciling
industrial policy and competition policy could be a difficult task.  For example, policies thatencouraged monopolies could be dangerous, since once the monopolies were established, they
became entrenched.  In the medium and long-term, the existence of monopolies promoted by
industrial policy took a heavy toll on national economic welfare, a fact to which Korea's experience
testified.  Although industry policy in Korea had initially served to generate fast growth, it had also
set the stage for the 1997 financial crisis, in that it had contributed to a lack of competitive pressure in
major sectors of the economy.  The Korean economy was now paying the high price of the necessary
far-reaching industrial restructuring.  Korea's exampl e suggested that it would be more effective in the
long term to pursue economic policy within the basi c framework of competition policy from the initial
stage of economic development.  Furthermore, the presence of monopolies in developing countries
often conflicted with the objectives of efficiency and competition and had the effect of preventing
new entrants from entering emerging markets in which innovation and economic dynamism were
vital.  To address these concerns, Korea believed that competition policy should be introduced at anearly stage of economic development to prevent market distortion.  Their delegation also did not agree
with the argument that restrictions on anti-competitive corporate mergers were likely to hinder the
economic development of developing countries.  Gi ven the extent of trade liberalization, which had
had the effect of extending geographic markets, beneficial mergers could most often be approved
when the full range of factors considered by competition authorities was taken into account. In sum, itwas necessary to strike a balance between competition policy and other government policy.
Economic development grounded on fragile economic strengths was bound to reach its limits at some
point and to be vulnerable to external shocks.
27. Also commenting on the contribution by Japan (WT/WGTCP/W/145), the representative of
Switzerland said that it had pointed out correctly that no conclusive studies had been conducted which
proved that mergers actually improved performance.  In addition, it needed to be emphasized that
merger control did not at all mean that mergers were prohibited per se .  Rather, they would be subjectWT/WGTCP/M/11
Page 14
to a case-by-case review process.  Many competition laws incorporated gateways reflecting policy
goals other than competition.  The existence of merger review provisions reflected an awareness that
mergers could sometimes be a problem, and enabled the authorities to assess the issues raised in
particular cases on an appropriate basis.  With regard to the relationship of industrial policy, trade
policy and competition policy in the promotion of economic growth, as some delegates had suggested,
rather than a strict sequencing of these policies it was more a question of striking a balance between
them.  Certainly, having a competition policy did not prevent a country from also maintaining some
form of industrial policy.  The representative of the United States said that the work of the economist
Michael Porter suggested that the best way to impr ove international competitiveness was, in fact, to
promote vigorous competition at home.  As Japan had pointed out, clearly there was no inherent
conflict between the goals of trade liberalization and the pursuit of a sound competition policy and,
indeed, these were complementary in nature.
28. The representatives of Malaysia and Pakistan  said that it appeared that competition policy in
Japan had been subordinated to the role of industrial policy, at least during the early high-growth
period.  Malaysia was at a similar stage as the stage that Japan and Korea were at 30-40 years ago,
and therefore it could not subscribe to the prescriptions that were being offered by those countries
today.  Moreover, he was sceptical that the absence of competition policy was a principal factor in the1997 financial crisis.  The representative of Pakistan said that while some delegations were now
suggesting that it was beneficial for countries to have competition laws at all stages of theirdevelopment and indeed as a general proposition it seemed that industrial policy and competition
policy were not necessarily contradictory, it did not follow from this that a certain minimum degree of
homogeneity in countries' competition polices was desirable.
29. Responding to the above-noted comments, representatives of Japan said that the position of
their delegation with respect to the relationship between competition policy and industrial policy, the
risks of supporting state monopolies or of undue emphasis on economies of scale as an objective of
industrial development, and related matters, was essentially the same as that of the delegation of
Korea.  Any appearance to the contrary was due to the intention, in the paper, of presenting ahypothetical debate with supporting arguments on both sides.  They also emphasized that it was not
the view of the government of Japan that competition policy in that country had previously been
submerged by industrial policy.  In fact, anti-competitive practices had been strictly prohibited by the
Anti-monopoly Act for the past fifty years.  As had been mentioned in their delegation's written
contribution (WT/WGTCP/W/145), as a result there had indeed been active competition among
domestic companies.  While industrial policy had also played a role, competition in the domestic
economy and internationally had been vital to Japan's economic success.
30. The representative of Hong Kong, China sought  elaboration/clarification on various proposals
set out in the last part of the paper by Japan (WT/WGTCP/W/145), including the suggestion that
existing systems needed to be reformed in respons e to the changing times and circumstances, with a
view to achieving economic development, and that competition laws were increasingly important
today.  What was meant by this?  In response, the representative of Japan said that the sentence that
had been queried was basically a summary of what had been said in the preceding sections of the
Japanese paper.  If the question referred to the merits of a multilateral framework on competition
policy, Japan remained open to this.
31. The representative of Hungary, commenting on the contribution by the European Community
and its member States (WT/WGTCP/W/140), said that his delegation fully subscribed to the view
expressed therein that trade liberalization and competition laws were complementary elements of a
sound economic policy.  Even at the beginning of his country's process of economic transformation, it
had attached considerable importance to an appropriate competition law which, on the one hand, built
upon the basic similarity in approach and structure of competition legislation of other Members and,
on the other hand, took into account the specificities of the market and the country's level ofdevelopment.  Such a law was a pillar of a we ll-functioning market economy.  The adoption andWT/WGTCP/M/11
Page 15
enforcement of an adequate competition law had been seen as a prerequisite to overcome the inherited
inefficient structure of Hungary's economy and to set in motion the much-needed process of structural
adjustment.  Trade liberalization had proved to be a necessary but not a sufficient tool for ensuring
that the modernization of the economy really took place.  He assumed that this insight applied not
only to economies in transition but also to many other countries, including developing countries, sincestructural adjustment was one of the key factors promoting economic development.
32. With regard to the special problems of small, island economies, the representatives of Hong
Kong, China; Korea ; Japan ; the United States ; Canada  and the European Community and its member
States said that the paper by Trinidad and Tobago (WT/WGTCP/W/143) had provided a useful
clarification of the problems facing smaller economies in implementing competition law and policy.
The representative of Hong Kong, China said, furt her, that the paper had driven home the message
that the implementation of a competition regime was necessarily a long and complex process
involving a multitude of policy, legal, institutional and practical considerations.  The representative of
Canada said that it had highlighted the scarcity of human and financial resources for implementation
efforts.  This called for some sort of coordinated response among the countries that were able toprovide assistance required.  The representative of the European Community and its member States
said that the experience of CARICOM was a good ill ustration of the role of regional integration
initiatives vis-à-vis competition policy.  Clearly, in the case of small, open economies which were
engaged in a process of regional integration, it might well be advantageous to combine the role of
regional and national competition authorities and many different models could be considered in this
respect.  The representative of Japan said that many of the questions posed in the paper were common
to developing countries generally.
33. With regard to the extent and significance of diversity in Members' national competition
policies, the representatives of Trinidad and Tobago; Hong Kong, China;  Korea ; Japan ; the United
States; Canada ; the European Community and its member States  and Pakistan  said that the papers by
delegations such as Trinidad and Tobago (W/WGTCP/W/143); Hong Kong, China
(WT/WGTCP/W/141) and the United States (WT/WGTCP/W/142) had underscored the diversity ofMembers' economic situations, the resulting need fo r flexibility in national ap proaches to competition
policy and the possible interpretations of flexibility as a concept.  The representative of Canada said
that the concept of flexibility was relevant both to a country's approach to competition law and to itsenforcement structures.  The representatives of Hong Kong, China; Singapore
 and the European
Community and its member States said that the fact ors underlying this diversity and the resulting need
for flexibility included differences in Members' history and stage of economic development, socio-
economic circumstances, legal contexts and cultural norms.  The representatives of Hong Kong,
China said that the extent of diversity was an im portant factor to be considered in assessing the
viability, desirability and design of any new institutional arrangement at the multilateral level to
promote the common goal of ensuring the contestability of markets.  In view of the diversity of
Members' competition regimes both in form and in substance, sufficient time should be allowed for
individual economies to digest and internalize the complex concepts of competition policy in theirdomestic institutional frameworks.
34. The representatives of Japan, Korea
, Canada , the European Community and its member States
and Switzerland said the extent of diversity in national approaches, which was acknowledged by all
sides of the debate, did not create problems for a possible multilateral framework on competition
policy.  Rather, it highlighted the importance of flexibility as an intrinsic element of such aframework.  These delegations stressed that no need was foreseen for the harmonization of
competition rules among Members in any multilateral framework; rather, the objective was to
recognize certain basic principles which should be reflected in Members' policies.  The representative
of Korea stated that the emphasis on differences in national approaches in the paper by Hong Kong,
China (WT/WGTCP/W/141) underscored the need for a multilateral framework which could provide
a level playing field, securing legal stability, predictability and transparency thereby reducing
transaction costs and enhancing international trade and foreign investment.  In the view of hisWT/WGTCP/M/11
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delegation, a multilateral framework would make an important contribution to economic development
by taking into account differences in levels of development, competition law and policy.
35. Views were expressed on the question of how fa r the experience of Hong Kong, China with
respect to the constituent elements of competition policy could be generalized.  The representative of
Canada suggested that Hong Kong, China appeared to have achieved a vibrant competition regime
through a particular institutional set-up well adapted to its economic and other circumstances.
However, it was doubtful whether this approach could be generalized across WTO Members.  In
particular, some kind of administrative authority was normally required, for example to address the
practical needs of international cooperation in competition policy which was one of the more obvious
benefits which could be expected from an international regime on competition policy particularly by
developing countries.  In response, the representa tive of Singapore said that Hong Kong, China was
not alone in its approach to competition policy.  Like Hong Kong, China, Singapore did not have a
comprehensive competition law; it relied instead on free competition to bring about a competitive
market.  This had served Singapore well over the years as its economy was one of the most
competitive in the world.  However, it recognized that as the services sector, in particular, was
liberalized and former monopolies were eliminated, adequate competition laws would be needed to
ensure a level playing field for all.  While to date Singapore had done this through sectoral legislationand regulations, whether this approach remained adequate was currently under review.
36. The representative of Korea noted that the paper by Hong Kong, China (WT/WGTCP/W/141)
had suggested that the sectoral approach to competition policy in Hong Kong, China had provided a
flexible, target-oriented and cost-effective means to prevent anti-competitive practices without the
risk of over-regulating or incurring excessive legal and other administrative costs.  He asked how ithad been possible to avoid the danger of over-regulation?
37. The representative of Hong Kong, China said that, in addition to Hong Kong, China's own
experience, it also had to be recognized that certain other delegations had their own unique
experiences, for example the delegation of Trinidad and Tobago had emphasized the unique
characteristics of the CARICOM economies.  The experience of the European Community and its
member States, as a common market, was also uni que in some respects.  The extent of unique
experiences was the basis of Hong Kong, China's point regarding the diversity of approaches reflected
in national competition regimes.  The extent of diversity implied that any multilateral framework on
competition policy would likely embody a very lo w common denominator or standard.  He observed,
furthermore, that the argument for or against a multilateral framework was a secondary question
because this was only one possible option to pursue the substantive objectives of work on competition
policy in the WTO.
38. The representative of Pakistan said that developing countries were concerned to retain
flexibility in relation to the nature of competition rules or policies that they would pursue.  It was
obvious that countries at differing levels of development would have a different philosophy and a
different approach to measures to address anti-competitive practices in their respective economies,
and that this would evolve in the light of the development process.  Indeed, whenever notions ofstandardization or incorporating even certain principles or common standards were introduced, a
degree of caution was warranted, particularly for developing countries.  The remedies that had been
proposed by the advocates of a multilateral framework on competition policy required clarification in
this regard.
39. The representative of Hong Kong, China said that she was not sure if the obligatory approach
embodied in the proposal by the European Comm unity and its member States (WT/WGTCP/W/140)
to establish a multilateral framework on competition policy was the best way to foster the
development of a sound competition regime in developing countries, bearing in mind their varying
developmental needs, the divergence in institutional capacity and the context-specific nature of
competition issues.  In this respect, she emphasized the need for flexibility in any multilateralWT/WGTCP/M/11
Page 17
assistance programme to be developed by Members.  Her delegation would like to know more on how
progressivity and flexibility would be manifested in the multilateral framework on competition policy
that had been proposed by the European Community and its member States, particularly with respect
to:  (i) how the situations of those economies w ithout a comprehensive competition law/authority
would be dealt with; and (ii) whether mandating the establishment of effective enforcement structureswould affect Members' discretion to allocate public resources to suit their peculiar domestic needs.
She also found that the paper contained somewhat conflicting messages as to whether the European
Community and its member States were still envisaging an eventual harmonisation of substantive
elements of national competition regimes, in th e context of the proposed multilateral framework.
40. The representative of the European Community and its member States said that his delegation
agreed with the representatives of Hong Kong, China and other delegations about the extent of
diversity that was evident in the national compet ition regimes of WTO Members, but felt that this
would not create problems for a multilateral framew ork, since, in any case, harmonization of national
laws and policies would not be the goal of the framew ork.  Clearly, competition policy was not a field
in which "one size fits all".  At the same time, it would be a mistake to underestimate the degree of
convergence which had already taken place on the underlying principles or essentials of competition
law and policy.  This was clear from looking at the discussions that had taken place on this issue forsome time in the Working Group and from the record of experience of different WTO Members.  For
example, there was a high degree of convergence on the priority that needed to be given to the fight
against hardcore cartels.  This was significant because such cartels were undeniably the most
pernicious type of anti-competitive practice from the point of view of trade and development as well
as of competition law enforcement.  If one looked into different national competition law regimes, onewould also see wide agreement on the importance of the principles of transparency and non-
discrimination from both the competition and the trade perspective.  The contribution by the United
States (WT/WGTCP/W/142) had been most helpful in this regard, in that it revealed the extent of
common themes that would arise with respect to competition policies even in diverse institutional
settings.  Thus, if one defined the objective not as seeking harmonization but rather in terms ofidentifying certain common principles, he believed that there was already a good basis to build upon.
41. With regard to specific ways of ensuring the desired degree of flexibility in any multilateral
framework, commenting on the papers by Japan (WT/WGTCP/W/145) and the European Community
and its member States (WT/WGTCP/W/140), the representative of  Switzerland said that they had
raised the issue of special and differential treatment in any multilateral framework on competitionpolicy, without perhaps using the term.  In part icular, it was clear that such a framework should
incorporate a flexible and progressive approach to the implementation of competition policy and thattechnical assistance would be an important element of the package.  The representative of Venezuela
said that the principle of special and differential treatment for developing countries in the variousWTO Agreements was represented by longer time -spans for adopting the provisions of those
agreements.  The year 2000 was significant in that, during the year, the time allotted for the
implementation of numerous agreements by a large number of developing countries was due toexpire.  There was now a debate in the General Council on the implementation problems faced by
developing countries in respect of a number of agreements such as the TRIPS Agreement and the
Agreement on Customs Valuation.  For that reason, his delegation believed that new proposals and
solutions were needed so that special and diff erential treatment in any multilateral framework on
competition policy was not merely time-based.
42. The representative of the European Community and its member States said that he agreed that
the question of transition periods should not exhaust the issue of special and differential treatment in a
multilateral framework.  A way to approach this matter was to ask what, from a development
perspective, were the key benefits that could be obtained from a multilateral agreement in terms of
meeting their needs in the area of cooperation.  Seen in this light, the question was not so much one oftransitional periods or questions relating to other aspects of the Agreement, although his delegation
was open to all suggestions on this point.  In this  regard, there seemed to be at least two elementsWT/WGTCP/M/11
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relevant to many developing countries:  on the one hand, a desire to maintain a sufficient degree of
policy autonomy in the content and implementation of competition law; and on the other hand, a
desire to see how international cooperation could facilitate the effective enforcement of competition
law to meet the specific needs of developing countries.
43. The representative of Korea suggested that the following items could serve as incentives for
Members to engage in negotiations on a multilateral framework agreement on competition policy, and
to accept the outcome:  a grace period, exemptions from certain obligations, waivers, reservations and
technical assistance.  In addition, a multilateral framework on competition policy should reflect
economic and social structures of developing countries so as to contribute to economic development.
Finally, other means should be studied to achieve this goal, including the incentives in terms of rights
and obligations under the WTO Agreements.
44. The representatives of Trinidad and Tobago; Hong Kong, China ; Brazil ; Korea ; Japan ; the
European Community and its member States; the United States ; Switzerland ; Canada ; the Czech
Republic; Hungary ; Norway  and Pakistan  said that international cooperation in some form had an
important role to play in addressing anti-competitive practices in the emerging global economy,
provided that the actual means of cooperation were sufficiently flexible to accommodate the
divergence of policies, institutions and economic circumstances among Members.  The representativeof Switzerland said, further, that the gains from cooperation could perhaps be bigger, the smaller the
country and the less extensive its experience in tackling anti-competitive practices.  This was
illustrated well in the paper by Trinidad and Tobago (WT/WGTCP/W/143) which it referred to the
"asymmetric power relation" and made the observation that the existing models of cooperation
agreements were premised upon the exchange between competition authorities with equal strengthand experience.  Switzerland was sometimes also referred to as a small and open economy.  At least
with respect to the issue of cooperation in competition policy, it faced similar problems to Trinidad
and Tobago and other small economies.  In particular, it did not have any formal cooperation
agreements.  It would be useful if the Working Group could address in more concrete terms how
cooperation at the multilateral level could be managed, taking into consideration the large number ofcountries that would be involved, and the sensitivity of some of the information to be exchanged.  Due
to the fact that certain cross-border problems could only be solved in a satisfactory manner through
increased international cooperation, developing a multilateral framework for institutionalizing this
cooperation and setting certain guidelines on how to proceed was essential.  There appeared to be a
level of agreement in most of the papers presented for the meeting that cooperation would be
beneficial for everybody.  Switzerland shared the opinion expressed in the European Community
paper that in order to talk about cooperation between  competition authorities, it was also necessary to
place emphasis on the development of a competition culture and to discuss the adoption of a
multilateral framework agreement on competition.
45. The representative of the Czech Republic said that the experience of his country in the field of
competition policy had shown conclusively the necessity and utility of close cooperation between
national bodies in this area, regardless of the stage of development.  Ten years ago, when there hadbeen a centrally planned economy, there had been neither legislation on competition nor any national
authority.  With the transition to the market-ori ented economy, it had become clear that the State
needed to provide protection against unfair practices.  Before the law on the protection of economic
competition had been enacted in 1991, the competition law systems of existing market economies had
been studied.  While the help provided by those countries' national authorities had been useful andmuch-appreciated, the existence of a Group such as the present Working Group would have made the
job easier.  In the less than ten years of its functioning, the Czech Office for Protection of Economic
Competition had proved its value and now other countries came to seek advice from it.  More
substantive forms of cooperation including at the multilateral level would be a logical step.  The
Czech Republic supported cooperation between national authorities according to the principles oftraditional ("negative") and positive comity.  Those forms of cooperation between national authorities
should be supplemented by the exchange of information on national legislation, amendments andWT/WGTCP/M/11
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decisions adopted which could influence other countries' markets.  The Czech Republic's willingness
and readiness to cooperate with other Members had to be understood in the context of its overall
position in this area which was its firm support for a WTO framework agreement on trade and
competition.  Such a framework would contain, inter alia , provisions on prohibition of price-fixing,
allocation of markets and distribution of markets; a commitment to adopt national legislation incountries where such law did not exist yet; an obligation for all WTO Members to create a specialized
body responsible for proceedings in the area; cooperation between those authorities, perhaps through
the establishment of national enquiry points; and technical assistance.  The agreement should respect
the necessity of protecting confidential information and should not be an instrument for the review of
individual decisions of national authorities.
46. The representative of the European Community and its member States said that the paper by
Trinidad and Tobago (WT/WGTCP/W/143) had highlighted the need to develop cooperationmodalities which would assist developing countries in the task of competition law enforcement
including with regard to abuses of dominant positions by multinational enterprises, taking account of
factors such as unequal experience, skill levels and power asymmetries.  Both case-specific
cooperation and technical assistance would be important in this regard.  The paper had also raised the
question of whether merger control legislation was a necessary element of competition policy forcountries at all level of development.  In his view, the area of mergers was a prime illustration of the
need for flexibility and his delegation did not propose that merger legislation be treated as a required
element of competition policy.  The representative of Trinidad and Tobago said that she was pleased
that the European Community and its member States had accepted that there was a need to rethink the
modalities of cooperation in the context of unequal experience, skill levels and power asymmetry, toensure that developing countries benefited from su ch cooperation.  She noted, in passing, that the
problems of multi-jurisdictional merger review were largely felt by corporations in industrialized
countries.  Most developing countries, and certainly small open economies, did not have corporations
of a size that would trigger merger control scrutiny in several jurisdictions.
47. The representative of Hong Kong, China said th at her delegation believed that international
cooperation on competition policy could take many forms, including the establishment of channels of
communication between competition institutions; facilitating the dissemination and exchange of
information on competition policy; voluntary case-specific cooperation between competition
institutions; legal cooperation through bilateral and plurilateral agreements; and legal cooperation
through a multilateral agreement.  It appeared that the paper by the European Community and its
member States (WT/WGTCP/W/140) had focussed on the benefits of binding multilateral cooperation
without simultaneously examining other forms of international cooperation, which would be desirablefrom Hong Kong, China's point of view.  In the view  of Hong Kong, China, the diversity of objectives
and implementation instruments across economies in the area of competition policy suggested that
there was no single best means to pursue international cooperation.  She doubted that the time was
ripe for Members to establish modalities for international cooperation on competition policy by way
of a binding WTO agreement.
48. The representative of the United States said that, although the subject of cooperation was easy
to discuss in the abstract, it was complex and multi-faceted in practice.  Many types of information
could be involved.  An enormous amount of information relating to cases and enforcement policies
was already freely available to the public, for example on the websites of the established agencies.
With regard to the suggestion that had been put forward by the European Community and its memberStates for some kind of a clearinghouse of information, the Internet already served this purpose.
Moreover, a clear advantage of the Internet was the absence of bureaucracy.  It was difficult to
imagine that a superior clearinghouse could be devised, and it would be important to learn more about
this suggestion – what would be its purpose and how it would work.  With regard to non-public
information, much of this was subject to statutory protection.  This was true of the competitionagencies of the United States and all others with which he was familiar that had law enforcement
capabilities.  The reason for this was that business information was often sensitive and that it wasWT/WGTCP/M/11
Page 20
important that it not be divulged for improper purposes.  While he stood to be corrected, it seemed
that the sharing of information that was contemplated in the various proposals that had been discussed
concerned non-public information.  While the United States had agreements which provided for the
sharing of such information, subject to appropriate constraints, with a number of countries, it had tried
for a number of years and to no avail to enter into such an agreement with the European Community.The Community's response had been that the Eur opean business community would not agree to it
since it could be used for law enforcement purposes.  A further consideration was that, in any
cooperation arrangement, it should be expected that the United States would request information from
the other parties, in addition to providing information as required.  In addition, he noted that the paper
by the European Community and its member States referred to a cartel case brought by the United
States Department of Justice involving lysine and suggested that no cooperation agreements existed to
permit the passing on of relevant information.  In fact, the Department of Justice had discussed thecase with many countries and had provided them with as much information as it could within the
context of their requests.  Furthermore, a vast amount of information from the trial record and exhibits
was in the public domain and was readily available for public inspection in the court.  The
contribution by Trinidad and Tobago (WT/WGTCP/W/143) had raised some important related
concerns.  For example, how did new competition agencies, whether in small economies or in largereconomies like Pakistan, obtain the information they needed and if they could not get the information
themselves, were there other ways to get it?  These issues needed to be aired in the Group. In sum, it
was apparent that there was a need for internatio nal cooperation to address anti-competitive practices
with an international dimension.  However, a more focused discussion of the parameters of current
proposals and the practical aspects of cooperation and competition law enforcement was required.
49. The representative of the European Community and its member States said that his delegation
was not, in fact, contemplating or suggesting that th e exchange of confidential information would be
provided for in a WTO framework on competition policy.  This did not mean that there could not be
very useful exchanges of information between competition authorities under such an instrument.  As a
case in point, the European Community already had in place useful cooperative arrangements with theUnited States and other countries, and these were based entirely on the exchange of non-confidential
information.  The only exception was where the parties under investigation agreed to the exchange of
confidential information.  He saw no reason why this could not be done at a more general level and
believed that it would generate important benefits for competition authorities in developing countries,
as it had indeed done in the Community's experience.  On the question of what was meant by the
concept of a clearinghouse, in fact, this was a concept which had emerged from discussions in various
fora, including with the United States.  His delegation's key concern on this point was to avoid anysystem of exchange of information which was bureau cratic and which implied high notification costs.
It would be important, therefore, to reflect on the practices which were already followed by
competition authorities in terms of transparency and transmission of information by electronic means,
to consider how this could be supported and, if necessary, broadened.  Another element would be to
ensure that there would be contact points in compet ition authorities so that it was possible to raise
particular concerns relating to the exchange of information as they arose.
50. The representative of the United States said that the clarification that had been provided by
the European Community and its member States to the effect that it was not calling for the exchange
of confidential information tended to put matters in a different light.  The United States obviously had
no problems with sharing information that was in the public domain.  This was already a commonpractice.  As had been pointed out, differences could still arise in particular contexts as to the level
and type of information that would be shared.  Also, he still found it difficult to understand why a
multilateral framework was needed to exchange public information.
51. The representatives of the European Community and its member States and Switzerland
 said
that it was misleading to suggest that a framework was unnecessary on the basis that the purpose was
merely to exchange non-confidential information.  The representative of the European Community
and its member States said further that, even where non-confidential information was involved, it wasWT/WGTCP/M/11
Page 21
not quite as simple as picking up the phone and finding somebody on the other side with whom to
speak.  Rather, protocols regarding what kinds of information would be made available, with whom
contact should be initiated, etc., would still be of considerable value.  To be more specific, there were
various types of information that needed to be considered, ranging from information that was
available to the general public on the press of a button on a website to information that was notgenerally available but was not, in principle, confidential and on to information that was subject to
statutory protection.  Information could be treated as confidential for reasons of administrative
secrecy or due to its sensitivity for business-related information.  Another type of information to be
distinguished was so-called work product information which was compiled by the authority on its
own initiative by looking at the market and drawing results from price correlations and other data.  A
multilateral framework would facilitate meaningful cooperation by clarifying what types of
information were, in principle, available; what types could be freely exchanged; what types were notto be exchanged, or could be exchanged only subject to specific conditions such as authorization from
the company possessing the information, etc.  Wit hout some kind of framework, it seemed unlikely
that information of the type that was not widely available and yet was not subject to statutory
protection or otherwise confidential would be widely shared.
52. The representative of Pakistan said that there had been progress in clarifying the nature of
current proposals and the concerns that they were intended to address.  One thing that was clear was
that a major objective, at least for the demandeurs of multilateral framework, was to enhance or make
more effective international cooperation on competition policy.  Indeed, the need for cooperation
seemed clear – there was little dispute about that.  However, the current proposals raised certain
questions which had still to be adequately addressed concerning, for example, the scope andmodalities of cooperation.  On the scope of cooperation, it had been mentioned that countries needed
to exchange information, for example with respect at least to hardcore cartels.  It had been clarified
that the information involved would be non-confidential in nature – a response which begged the
question of whether elaborate mechanisms were needed to facilitate this.  The establishment of
contact points or a clearing-house, if this was still an objective, seemed unlikely to require a great dealof work by the Working Group.  Furthermore, it was important to ask how effective such cooperation
would be in addressing such matters as had been cited by the European Community and its member
States?  Would it be sufficient to exchange only non-confidential information or was something more
required?  The exchange of other types of information raised concerns which had been alluded to by
the United States.  A number of countries appeared to have legislative requirements regarding such
exchanges of information which would need to be studied.  Another question that required further
exploration was that of the degree of symmetry required if there was to be meaningful cooperation.  Ifprogress was to be achieved, it seemed important to move beyond speaking of broad general
principles.  The principles of transparency and non-discrimination had different meanings for different
parties.  Those who advocated the incorporation of these principles in a multilateral framework
needed to explain more clearly what they had in mind, and why it was important.  If indeed the
principles were already reflected in most existing national competition policies, what more was to bedone?  Greater clarity on these matters would assist developing countries in evaluating the apparent
trade-offs between the desired goal of enhanced cooperation in dealing with anti-competitive practices
and (perhaps) certain requirements in relation to enhanced symmetry.  A further question to be
answered in this context was, if the objective was to promote cooperation and, possibly, symmetry
with regard to competition policies, was the WTO th e appropriate forum?  In addition, it should be
recalled that, as had been pointed out by Hong  Kong, China, a multilateral framework was only one
possible instrument; other instruments could also be  considered.  Another core objective which had
been repeatedly mentioned by certain other Members was the question of the anti-competitive effects
of existing trade rules, which should remain a focus of the Group.
53. The representative of the European Community and its member States, responding to the
points that had been raised by the representative of Pakistan, said that in 1999, detailed and
substantive papers had been presented on matters such as the interpretation of the fundamental
principles of transparency and non-discriminati on, and their relationship to competition policy.WT/WGTCP/M/11
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Nonetheless, he accepted that it would be worthwhile for his delegation to be a little more specific in
terms of what was intended in both these areas.  On the matter of cooperation, he wished to be clear
that, although he had referred to the area of hard-core cartels as being the only area in which a
common enforcement principle was possible at this  time, there was no implication that the elements
of a multilateral framework relating to cooperation would be limited to this particular form of anti-competitive conduct.  For example, the paper by his delegation (WT/WGTCP/W/140) had referred to
three potential categories, including issues relating to transnational abuses of a dominant position, on
which cooperation could yield important benefits for developing and other countries.  Finally, with
respect to the question of the value of sharing non- confidential information pursuant to a multilateral
framework, he wished to emphasize that most cooperation carried on in the field of competition law,
including virtually all of the Community's cooperation with the United States, was limited to
exchanges of such information and that such cooperation had been of tremendous value for thecountries involved.
54. The representative of Pakistan queried whether, if international cooperation required a
considerable narrowing down of differences in substantive competition laws, procedures,
interpretations, was this not, in fact, a degree of harmonization?  A shared perception of common
interests and mutual benefit might also be required, though this did not necessarily entailharmonization.  He noted, as well, that the concerns articulated in the paper by Trinidad and Tobago
(WT/WGTCP/W/143) were shared by a number of economies, including ones which were perhaps
slightly larger and less open.  In regard to the comments that had been made concerning the role and
future work of the Working Group, it was evident that questions of capacity building, technical
cooperation, were not by themselves sufficiently material to constitute a work programme for theGroup.  International cooperation on competition matters was more substantive, but what did it entail?
What were the prerequisites?  Was there indeed a case for pursuing this at the WTO, or did this need
to be revisited?  These questions merited further study.  The matter of articulating certain common
principles which would be incorporated in a multilateral framework on competition, and the
implications of such principles for the mainte nance of flexibility in national approaches to
competition policy, would also require further consideration.
55. The representatives of the European Community and its member States and Switzerland
reiterated that cooperation did not require harmonization of competition policy or law but merely the
recognition and acceptance of common principles.  Another representative of the European
Community and its member States said, further, that the question of the relationship between
convergence in substantive competition rules and cooperation was a complex one.  A great deal of
useful cooperation on so-called horizontal issues su ch as legislative questions, market analysis and
exchanges of experience on best practices did not require harmonization of substantive rules or even a
great deal in the way of "commonality of approaches".  However, when it came to cooperation in
specific cases, some symmetry in rules and approaches was helpful.  For example, cooperation in a
case dealing with a maritime liner shipping cartel would be difficult in circumstances where one
country subjected such conferences to its national competition and another country had displaced theapplication of its competition law through legislation authorizing such conduct.  However, in the
important area of international cartels, a great deal could be done without much in the way of
substantive harmonization provided that the two side s viewed the conduct in question as harmful for
their consumers and economies in general.  In such cases, a window of opportunity for cooperation
existed in the opening stages of the inquiry, when the two authorities were preparing the investigation
and before the formal discovery process began, bringing with it possible concerns regarding
confidentiality.  In addition, cooperation could be useful following the laying of charges when certain
information again became public, at which time much could be gained from exchanges and assistance
on various aspects of the case.  To cite another example, the Commission had recently uncovered and
sanctioned a global cartel in the market for stainless steel tubes used in the exploration andtransportation of oil and gas – a market which, incidentally, was important for many developing
countries.  The cartel operated from 1990 to 1995 and the impact within the European Community
was relatively limited.  However, as the Commission had made clear in its press release on the case,WT/WGTCP/M/11
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the cartel had operated extensively in other parts of the world and it seemed that there was scope for
useful cooperation between the authorities concerned with such cases.  This was not an isolated
example.  Often, in decisions condemning interna tional cartels in both the European Community and
the United States, it was mentioned that the cartel had operated elsewhere.  His delegation believed
that such cartels had a serious, detrimental impact on developing countries and that a multilateralframework on competition policy would provide valuable assistance to such countries in addressing
such conduct.
56. The representative of Norway said that his country's experience during the past 40 years
underscored that a country did not necessarily need to have a strong national competition law in order
to enter into a legally binding international agreem ent on such law and belied the fears that had been
expressed by some delegations that a multilateral agreement on competition policy would necessarily
require harmonization of competition law.  Although the EFTA Agreement contained enforceableprovisions on competition policy, these had never been enforced through suspension of concessions.
However, the mere fact that discussions on competit ion policy issues could take place had contributed
to issues of anti-competitive practices being addressed.  A multilateral framework on competition
policy would serve to enhance the awareness of Members who did not have competition laws.  With
regard to the suggestion that had been made by Hong Kong, China regarding technical cooperation, itwas difficult to see how this would work without some form of framework at the multilateral level
relating to the objectives of substantive rules.  The issue of cooperation was sensitive, if the exchange
of privileged information was contemplated.  The paper by the European Community and its member
States had shown that cooperation could be valuable even if it did not involve the exchange of
privileged or confidential information.  It was important, in this regard, to understand that theprotection of sensitive information was taken very seriously by competition authorities, and was felt
to be essential to their effectiveness and credibility.  It might well be the case that authorities would
wish to contemplate this only in a regional context.  However, as had been stated, the exchange of
confidential information was not required for cooperation to be useful.  The roadmap that had been
suggested by Hong Kong, China was interesting and his delegation could align itself with thatapproach.  Finally, the paper by Trinidad and Tobago (WT/WGTCP/W/143) had shown that
cooperation in a regional context could take place between countries which were at an advanced stage
of development and which had rather different types of economies.
57. The representative of Hungary said that the main argument against new arrangements on
cooperation at the multilateral level, which was that domestic competition policies varied significantly
across economies both in form and substance, was not convincing.  This was particularly so in the
light of the broad convergence which had taken place in the underlying principles of competitionlegislation, which was the focus of the discussion.  As to the differences in economic conditions and
the objectives of competition policy in individual Members, the mere existence of such differences
did not make it impossible to establish multilaterally  agreed core principles with regard to practices
the assessment of which did not differ overwhelmingly among jurisdictions.  Conversely, the
existence of multilaterally agreed principles would not impinge on the ability of Members to takeadequate account of the specific characteristics of their economies in the architecture of their national
laws.  As a case in point, Hungary's first competit ion law had followed closely the basic approach and
structure of similar legislation adopted in developed countries.  It comprised provisions on horizontal
and vertical restraints, abuses of a dominant position as well as merger control.  At the same time, in
order to reflect the competitive environment that exis ted in the country at that time, it included special
provisions in the form of a narrower scope for prohibitions and less strictly-defined criteria for
exemptions.  For example, while horizontal agreements already fell at that time under a general
prohibition, resale price maintenance was the only prohibited form of vertical restraints.  This
reflected the lack of adequate ties among newly established economic operators which prevailed in
the early years of economic transformation.  After the first competition law had been in operation for
a period of five years, it was felt that domestic market conditions did not warrant the continued
application of most of these special provisions and, th erefore, with the entry into force of the country's
new competition law, most of them were abolished.  Overall, rather than a process of forcedWT/WGTCP/M/11
Page 24
harmonization, what was sought by a large number of Members, including Hungary, was the
development of a multilateral framework focusing on core principles of competition law and policy to
combat anti-competitive practices which had a sign ificant impact on trade and investment and were
thus directly relevant to the WTO.
58. The representative of Canada said that his delegation agreed with the suggestions by the
representative of Pakistan and the United States that further exploration in the Group of the modalities
of cooperation and the concept of flexibility in a multilateral framework was desirable to achieve
greater clarity.  A practical and example-based analysis of these matters would reveal that the
concerns that had been expressed by some delegations about any need for harmonization of
substantive competition laws to facilitate cooperation would quickly evaporate.  The intervention on
this point by the United States had been helpful in that it had pointed out that the potential problems
arising from the current proposals were likely to be of an operational nature rather than beingproblems of policy congruence.  The experience of countries involved in cooperation on competition
law enforcement suggested that the problems might lie more in dealing with the reams of paper
involved and the multiple notifications which might be required rather than in concerns about how
close one's particular law was to that of the othe r countries.  The relationship of Canada and the
United States was a case in point.  Canada had a close working relationship with the antitrustauthorities of the United States (as well as with the European Community) on matters of competition
policy, notwithstanding clear and significant differences in the countries' substantive competition
laws.  It was also interesting that, notwithstanding these differences in substantive laws, in the eyes of
many observers, these jurisdictions had converged in key respects.  This suggested that what was at
issue in the process of convergence was really a matter of identifying common background principlesrather than the harmonization of specific aspects of competition law.  Canada, therefore, encouraged
the Working Group to pursue a concrete analysis of the practical aspects of cooperation, as a means of
coming to grips with the proposals that had been put forward.  Such an analysis would reveal that the
concerns posed by the proposals were of a more mundane nature than was feared by some
delegations.
59. Another representative of the United States noted that the United States shared the objective
of promoting cooperation against hardcore cartels and that it had participated extensively with OECD
members in working toward that objective, notably in the development of the OECD
Recommendation concerning Effective Action against "Hard Core" Cartels which had been adopted in
1998.  Compliance with the Recommendation was voluntary since OECD members did not find it
appropriate to have a binding agreement.  The Recommendation did not attempt to define a hardcore
cartel; this was left to national law.  Nonethel ess, the Recommendation provided a useful framework
and a commitment to cooperate against hardcore cartels.  An interesting aspect of the
Recommendation was that it invited all countries to associate themselves with it, and not merely
OECD members.  Members of the Working Group who were interested in taking a formal step in
evincing a commitment to enforce and cooperate in enforcement against cartels were welcome to do
so under the OECD recommendation.  He noted, as well, that in October 1998, 11 competitionauthorities in the western hemisphere had issued a joint communiqué pledging to cooperate in anti-
trust enforcement and in particular, in enforcement activities directed against hardcore cartels.
60. The representative of Malaysia, commenting on the contribution by the European Community
and its member States (WT/WGTCP/W/140), said that it seemed to suggest that it would be up to
each Member to determine if it wished to have a national competition law, in the light of itsdevelopmental needs.  At least, this was his interpretation of the paper.  There could still be
cooperation, in any case.  He did see some merit in having cooperation in the WTO, though he was
still not convinced that the WTO was necessarily the appropriate venue to promote cooperation in this
field.  Cooperation could of course take place on a bilateral basis, where this was deemed desirable by
the relevant authorities.  In any case, there was no need for any harmonization.  While his delegationand the European Community and its member States seemed to be in agreement on this point, the
latter had also suggested that cooperation would have to be solidly based on the fundamental WTOWT/WGTCP/M/11
Page 25
principle of non-discrimination - something which was difficult for his delegation to accept.  The
principle of transparency might be more acceptable.  The European Community and its member States
had also spoken of the need for progressivity and an evolutionary approach, something which he
found attractive.  In the case of Malaysia, it might or might not wish to incorporate the principle of
non-discrimination into its own domestic competition law, assuming one was eventually adopted, inthe light of its own domestic and political interests and concerns.  It might choose to have a sui
generis  approach to competition law, as other Members might also wish to do.  To be sure, it would
reflect some common basic principles such as taki ng care of price-fixing and cartels, etc., but not
necessarily the core WTO principles.  This was essentially his delegation's position prior to the Seattle
Ministerial Conference.  Nonetheless, he had begun to see that there might be some merits in a WTO
agenda on competition policy on the basis that it would not require harmonization or adherence to
fundamental WTO principles.
61. In response, the representative of the European Community and its member States affirmed
his delegation's view that common principles ba sed on transparency and non-discrimination would be
an essential element to create a credible cooperation mechanism at the multilateral level.  It would be
helpful if Malaysia could clarify the nature of the concerns that it had expressed about the principle of
non-discrimination and national treatment, since his delegation's understanding was that practically nocompetition legislation envisaged discrimination on the grounds of nationality of firms.  This was not
to say that there were no other concerns apart from competition policy which could be relevant in the
domestic process and which in some cases might call for exemptions from the application of
competition law.
62. On the matter of technical cooperation, the representatives of Hong Kong, China; Korea
 and
Switzerland said that the six-point proposal in the contribution of Japan (WT/WGTCP/W/145) in
relation to technical cooperation merited further consideration.  Further, the representative of Hong
Kong, China posed the question of whether technical cooperation as envisaged in this proposal should
be carried out on a voluntary or an obligatory basis?  In response, the representative of Japan stated
that, in general, it should be voluntary.
63. The representatives of Hong Kong, China noted that the paper by Trinidad and Tobago
(WT/WGTCP/W/143) had put forward a number of suggestions relating to the delivery of technical
assistance to CARICOM Members and the continuation of the educational work in the Working
Group.  In reflecting further on these ideas, as had been noted by her colleague, the Group should bear
in mind the role, the nature and the competence of the WTO.  There was also a need for critical
examination, in the light of the WTO's status as a rule-making body, of Japan's suggestion in its paper
(WT/WGTCP/W/145) that the WTO cooperate with other international organisations in order tocontribute to the enhancement of international cooperation in competition policy, while at the same
time making full use of the efforts made at bilateral or regional levels.  As had been pointed out in the
paper by the European Community and its me mber States (WT/WGTCP/W/140), the lack of
coordination between international fora could give rise to duplication of activities, leading to sub-
optimal use of training resources.  This was indeed a potential cause for concern.  To lay a foundationfor further deliberations, her delegation suggested that the Secretariat collect and circulate some
background facts, statistics and feedback from the organisers and participants of past TA programmes.
The development dimension should be at the heart of such programmes.  In other words, the
programmes should address the developmental implications of competition policy in LDCs including
how best to harness competition policy instruments to achieve specific development goals.  On thispremise, the programme organisers should fully involve developing economies in setting the agenda
and objectives of the seminars, workshops, conferences, etc.  Emphasis should be placed on finding
ways and means to address the competition policy issues identified by LDCs as requiring urgent
attention.  Having said this, her delegation remained to be convinced that a coherent approach to TA
and CB should best be pursued in the context of a WTO framework agreement.  Considering thedivergent views held by Members as to the desirability and necessity of multilateral rule-making on
competition, she believed that linking TA initiatives and multilateral competition negotiations wouldWT/WGTCP/M/11
Page 26
risk delaying the delivery of the much-needed training and assistance for LDCs.  A preferred way
forward was to implement TA and CB programmes in isolation from the contentious and divisive
question of whether the WTO should develop a binding competition agreement.
64. The representative of the European Community and its member States, while indicating that
he expected to come back to the whole subject of technical cooperation in a subsequent meeting, said
that the suggestion by the representative of Hong  Kong, China that it would be unwise to discuss
technical assistance in the context of a multilateral framework because this could have the effect of
delaying the provision of such assistance was puzzling.  Substantial technical assistance directed at
institution-building in the field of competition policy field was already being provided by various
organizations and national governments.  The question was how to find ways of giving higher priority
to technical assistance in the competition policy field, and whether a multilateral framework in the
WTO could help in this regard and might also reinforce the goals of such assistance – namely thecreation and growth of vibrant competition institutions.  In this connection, the paper by Trinidad and
Tobago (WT/WGTCP/W/143) had provided a clear illustration of how competition authorities in
developing countries could set a number of priorities at a particular point in time.  On the basis of
priorities such as these, the Group should be aiming at a situation in which the relevant organizations
with competence in the field would work togeth er to develop well-coordinated and integrated
responses.  This was something on which the WTO, while it was not a development agency, could
play a facilitating role.  In fact, this was a concept which was being discussed in many other areas of
the WTO where consideration was being given to the Organization's taking on a role as a facilitator of
cooperation among different international organizations.  His delegation was not suggesting that the
WTO secretariat as such would become the primary provider of technical assistance in thecompetition policy field.  Furthermore, as had been suggested in the paper by Japan
(WT/WGTCP/W/145), there could be great synergies between the provision of technical assistance
and the mechanisms which could be put in place to facilitate cooperation at the multilateral level, for
example with respect to peer review.  The representative of Korea agreed that technical assistance
would be even more effective when operated in tandem with an appropriate multilateral framework, in
a complementary manner.
65. Another representative of Hong Kong, China noted that a number of organizations were
active in providing technical assistance in this area, including UNCTAD and the OECD as well as
various national governments.  This raised three que stions that needed to be answered in the Group:
first, what was the role to be played by the WTO, if any, in the area of competition policy?  It had to
be borne in mind, in this regard, that the WTO wa s a rule-making body, not a development or research
agency.  Secondly, what would be the value-added of the WTO in the area of technical assistance andcapacity building regarding competition policy?  Thirdly, did the WTO have the necessary resources
and expertise to undertake such a role?  The following further questions were posed regarding the role
that the European Community and its member States foresaw for the WTO in the provision of
technical assistance on competition policy.  First, if the WTO itself was not to be the principal direct
provider of such assistance, who would be?  Second, what would be the modalities of the facilitatingrole to be played by the WTO itself?  Third, why would a framework agreement be needed to support
this facilitating role?
66. The representative of the United States said that, without presuming to answer the questions
that had been posed by Hong Kong, China, the fact that the WTO had decided to establish the
Working Group meant that Members had concluded that it could play a useful role, in cooperationwith other international organizations, in promoting understanding in this area.  Furthermore, although
the decision in the Marrakesh Agreement on greater coherence in global economic policy-making
referred more specifically to the interaction between financial and trade policies, the spirit of the
Organization was such that promoting coherence among international institutions in policy
implementation was an important objective.  This suggested that the WTO could, in principle, playsuch a role in the area of competition policy, depending on the direction the Organization chose to
take in this area.WT/WGTCP/M/11
Page 27
67. The representative of the European Community and its member States said that he would
respond more fully at the next meeting to the questions that had been raised by Hong Kong, China on
technical assistance.  However, with regard to the question of which other organizations were
currently active in the provision of technical cooperation on competition policy, the list included
UNCTAD, the World Bank, the OECD and a number of national governments.  The suggestion thatthe WTO could play a useful role in facilitating the provision of such assistance in this field reflected,
inter alia , a general perception that international organizations should attempt to work together more
closely and to take a more coherent and integrated approach to the provision of technical assistance.
The work done in the Working Group had shown that the WTO could indeed play a useful facilitating
role in this particular area - a role which would be greatly enhanced if a multilateral framework were
also adopted.
68. The representative of Hong Kong, China said that, if the forum for facilitating technical
cooperation that the proponents had in mind was the current Working Group, his delegation was
content to continue with the discussion for the purposes of coordination, education and so forth.  What
he was asking was, in addition, perhaps to the Working Group's meeting twice or three times a year,
what additional functions would be contemplated?  The current forum was no more than a forum in
which Ministers at Singapore had agreed that Members should talk about the interaction betweentrade and competition policy.  It was not intended to coordinate the technical assistance programmes
of international organizations in this field.  Coincidentally, through sharing of experience and reports
on the various activities of the respective international organizations it had enhanced understanding.
69. On the matter of creating or promoting a culture of competition,  the representative of Korea
said that the paper by the United States (WT/WGTCP/W/142) provided an excellent step-by-step
approach that would be useful, in particular, to Members that had limited experience in establishing
an effective antitrust agency.  However, it had to be recognized that the adoption of antitrust law was
the product of historical circumstances.  Antitrust laws that had been introduced by developed
countries were aimed at preventing economic concentration created through increasing mergers.
Developing countries now faced different situations from those that existed at the end of thenineteenth century.  Some developing economies were already relatively concentrated as a result of
government intervention.  In Korea, at an early stag e of development, the negative structural effects of
market concentration and distortions had been larg ely overlooked.  Korea's experience was that if
competition policy had been introduced at that stage, the difficult task of industrial restructuring that
had been created by the economic crisis could have been avoided.  From Korea's point of view, it was
important to gain strong public support at the early stage in drafting an antitrust law.  Without
convincing consumers and industries alike, the success of the implementation of competition lawwould not be assured.  He also expressed the view  that it would be desirable if the Working Group
could focus on the interaction of trade and competition policies especially for the developing
countries, and that too much emphasis on competition culture per se might not correspond to the
original purpose of the Working Group.
70. With regard to competition advocacy activities, the representatives of Hong Kong, China said
that, as had been pointed out in the paper by the United States (WT/WGTCP/W/142), a country did
not actually need to have a competition or antitrust law or agency in order to have an effective
competition advocacy program.  The key challenge was to create a culture of competition.  In the case
of Hong Kong, China, competition advocacy had been undertaken through, inter alia , the
promulgation of a Competition Policy Statement as well as the establishment of a high-level inter-departmental body, with membership from th e Consumers' Council, which ensured maximum
compliance with the pro-competition principles set out in the Statement by relevant government
bureaux/departments.  Overall, Hong Kong, China's experience was that an open and free market
policy coupled with a wide range of sector-specific measures was effective in implanting a culture of
competition in all public and private bodies.WT/WGTCP/M/11
Page 28
71. Reflecting further on the pros and cons of a multilateral framework, the representative of
Pakistan said that it seemed that what was being proposed was a multilateral framework that had as its
central element a notion of international cooperation.  Within that, there would be other elementsranging from a building up of national capacities, the promotion of a culture of competition, exchange
of information on anti-competitive practices, an obligation to consult, the possibility of multilateralsurveillance, etc.  Some of these elements did not appear to be objectionable.  For example, there
would be no objection to enhancing national capacities.  But this by itself did not seem to be enough
to engage the WTO.  The WTO was obviously not envisaged as the primary provider of technical
assistance on competition policy, a fact which lent support to the concerns that had been expressed by
Hong Kong, China.  With regard to the more far-reaching proposals concerning exchange of
information, an obligation to consult, multilateral surveillance, etc., these were interesting ideas but
what were their prerequisites?  What would be required in order to take part in cooperation of thisnature, and was the WTO the appropriate forum?
72. The representatives of Hong Kong, China said that five common elements were evident in the
contributions that had been presented by Trinidad and Tobago (WT/WGTCP/W/143), Hong Kong,
China (WT/WGTCP/W/141), Japan (WT/WGTCP/W/145) and the United States
(WT/WGTCP/W/142):  first, a recognition of the extent of diversity in national approaches; second, astrong emphasis on the development dimension of the issues; third, recognition of the need for
flexibility; fourth, the desire for a menu of options for any action to be taken at the multilateral level;
and fifth, a recognition that technical assistance and capacity building in this area was essential.  In
fact, with regard to the matter of diversity, it appeared that there was more or less a consensus that
there was a wide divergence of views among Members with respect to the objectives, scope,substantive content and institutional arrangements for competition policy, based on different stages of
development, needs and concerns, etc.  The question before the Group was how best to take forward
its work in the light of this diversity.  Hong Kong, China was totally committed to the promotion of
competition and also to the principles of transparency and non-discrimination, which were the
cornerstone of the WTO.  However, in the light of the high degree of diversity that was evidentamong Members, it was premature to talk about a multilateral framework agreement.  As had been set
out in the contribution by their delegation (WT/WGTCP/W/141), it was Hong Kong, China's
preference to focus on the results to be achieved rather than the question of the vehicle or instrument.
Members were reminded of the three-point roadmap that had been proposed in this regard.  The
representatives of Singapore and Malaysia
 said that the three-step roadmap that had been proposed by
Hong Kong, China was interesting and worthy of further study.
73. The representative of Japan said that, if Hong Kong China's suggested roadmap meant that the
Group needed to agree on each issue before proceeding to the next step, then Japan could not support
that approach.  Otherwise, Japan agreed that the issues raised in respect of the three steps were
important.  He reminded the Group, however, that aspects of the three questions had already been
addressed in the Group's deliberations to date.  For example, in 1999, Japan had presented a paper in
the Working Group on the impact of hard core cartels on international trade (WT/WGTCP/W/135).Other aspects had been discussed in previous meetings of the Working Group (see, in particular,
Report on the Meeting of 11-13 March 1998, WT/WGTCP/M/4).  In response, the representative of
Hong Kong, China confirmed that it was not the intention of his delegation that step 1 of the proposed
roadmap would have to be completed before work could commence on step 2 or 3, and so forth.
74. The representative of the United States said that, while his delegation considered the issue of
competition policy to be of considerable relevance to the WTO and to trade and trade liberalization
more generally, it had had significant reservations on or at least felt that it was premature to begin
talking about negotiating binding rules on the subject.  But at the same time, there was no doubt that
competition policy was an issue on which the WTO could play a dynamic and progressive role in
terms of furthering international understanding and appreciation of the various elements at issue.Hence, while his delegation could not support the negotiation of binding multilateral rules at this point
in time, he also did not want to convey the contrary impression that the United States was against theWT/WGTCP/M/11
Page 29
WTO being a forum in which progress could be made on competition policy at the multilateral level.
In particular, he wished to point out that, although his delegation's contribution (WT/WGTCP/W/142)
had indeed highlighted the diversity of national approaches to competition policy that was evident on
the ground, this was not intended to rule out the possibility of further progress.  Also, the fact that the
WTO was primarily a rule-making organization did not preclude the possibility that it could serve as aforum for promoting progress in other ways, including in the area of competition policy.  He agreed,
further, that it was important to distinguish between competition or anti-trust law and its enforcement
and the broader concept of competition policy, which touched on a number of other areas many of
which were already dealt with in the WTO, for ex ample in the Agreement on Technical Barriers to
Trade and the various negotiations on services issues.  This contradicted the notion that trade policy or
the WTO was only concerned with government measures.  While it was true that government
measures had been the principal focus of the WTO to date, as the world evolved and governmentmeasures were less and less a factor affecting international trade, the impact of anti-competitive
practices of enterprises would clearly need further study in order to facilitate decisions on the
appropriate directions to take.
75. The representative of India said that the implic ations of the inclusion of a subject in the WTO
were profound, namely the application of the dispute settlement mechanism to that subject.  He
questioned whether dispute settlement procedures were  indeed necessary in this field.  If not, why was
a multilateral framework necessary?  Traditionally, the reasons were twofold.  A multilateral WTO
agreement would be used either to harmonize rules or to achieve minimum standards, as in the case of
the TRIPS Agreement.  A multilateral agreement for reasons other than these would be redundant.
Given that it had been stated that the intention was not to harmonise rules in the area of competition,then the objective must be to achieve minimum standards, although that was also in contradiction with
what had been said by a number of delegations.  The objective of such a regime needed to be clarified
given that some Members had stated that a multilateral regime was not needed and others that had
said that the regime would be extremely flexible which implied that no action might be needed, in the
end.  Further, the anti-competitive effects of trade instruments did need to be considered within the
WTO, given that there was no other Organization that was as well suited to deal with that subject.
76. The representative of the United States informed the Group that an extensive report had been
issued in February 2000 by the International Competition Policy Advisory Committee which had been
established two years previously by the Attorney-General of the United States and the Assistant
Attorney-General for Antitrust.  The report was available on the Department of Justice website at
www.usdoj.gov/atr.  It dealt with three principal issues:  international cartels; multi-jurisdiction
merger review; and trade and competition.  In a ddition to the Commission's own reflections, it was
based on extensive public hearings with participation by current and former senior competition
officials from a dozen or more countries.  On the issue of trade and competition, the Advisory
Committee concluded that the WTO had an important role to play on the issue and that the work of
the Working Group had been useful although the Report also indicated that, at this juncture, the
majority of the Advisory Committee considered that the WTO was not an appropriate forum forreview of private restraints.  The Committee had also called for a new Global Competition Initiative
to carry forward work on competition policy at the international level, in cooperation with other
relevant organizations.  The report had been submitted to the Attorney-General and the Assistant
Attorney-General and a response was pending.
77. The representative of UNCTAD mentioned a number of activities and developments
concerning his organization which were relevant to the issues under consideration.  For example, the
UNCTAD X Conference had noted the importance of competition policy in respect of globalization
and liberalization.  The declaration issued at the UNCTAD X Conference (the "Bangkok
Declaration") stated that the intern ational community as a whole had a responsibility to ensure that an
enabling global environment existed through enhanced cooperation in the fields of trade, investment,competition and finance, for the purpose of making globalization more efficient and equitable.  The
plan of action issued by UNCTAD X along with the Declaration called for UNCTAD to expand itsWT/WGTCP/M/11
Page 30
ongoing assistance to interested countries in developing national regulatory and institutional
frameworks in the area of competition law and policy, in cooperation with UNDP, the World Bank
and other relevant organizations; to help them to educate the public and representatives of the private
sector regarding the benefits of competition policy; to continue to examine issues related to
competition law and policy of particular relevance to development; to prepare periodic reports onrestraints to competition in strategic sectors and their impact on developing countries and economies
in transition; and to study in-depth the developmental impact of possible international agreements on
competition.  The plan of action also called for UNCTAD to further study, clarify and monitor,
including through specific country and case stud ies, the relationship between competition and
competitiveness as well as trade-related aspects of competition.  He noted that, in preparation for the
Fourth UN Conference to review all aspects of the UNCTAD Set, which had been scheduled for 25-
29 September 2000, a number of regional seminars had been planned.  One such seminar for the Asia-Pacific region had already taken place in Jaipur, India on 13-15 April 2000.  These events were aimed
at reviewing the situation in countries in the region, exchanging experiences and reflecting on the
ways in which the Fourth Conference could contribute to ongoing developments regarding
competition policy in diverse national and international fora.  Subsequently, he referred to the role of
UNCTAD and other international organizations, pursuant to the Singapore Ministerial Declaration, inensuring that the development dimension was fully taken into account in work on competition policy
at the WTO.  In this respect, he referred to UNCTAD's role in the area of technical assistance and
noted that UNCTAD had been successfully working in cooperation with other organizations such as
the WTO in addition to the World Bank and the OECD and wanted to continue to do so.  He noted
that the extensive technical cooperation activities engaged in by UNCTAD were not limited toregional seminars of the kind referred to previously but also extended to providing national advisory
services for developing countries interested in adopting competition law to help them understand the
issues.  Further, UNCTAD was involved in facilitating the exchange of experiences with countries
which were more advanced in the area of competition.  UNCTAD's technical assistance experience
confirmed that competition legislation in any country had to be tailor-made and that a harmonizedone-size-fits-all approach was not appropriate, as had been pointed out by a number of Members at
the present meeting.  While UNCTAD believed that competition policy and later, competition law,
was useful for developing countries, including least-developed countries, it also felt that countries
should adopt competition legislation when they felt they needed it and it should not be forced upon
them.  The emphasis that had been placed by the European Community and its member States on the
need for flexibility had much to commend it.  The pr inciple of special and differential treatment was
important in this regard, and should go beyond merely temporary transition periods.  For example,exemptions and exceptions to competition law should be accepted in least-developed or poorer
countries where there were market failures and where there was a need for intervention by the state.
78. The representative of the OECD informed the Group that the mandate of the Organization's
Joint Group on Trade and Competition had been renewed for two years, i.e. until June 2002.  The
Joint Group had adopted a report on the Options for Trade and Competition Policy Coherence thathad been submitted in the documentation for the OE CD Ministerial Meeting to be held on 26 and 27
June 2000.
1  Among other factors, the report acknowle dged the need to take into account the
development dimension in work on the interface between trade and competition issues.  Insofar as
technical assistance was concerned, the OECD had had ten years of experience in providing advice on
the drafting of domestic competition laws and in the organisation of enforcement seminars in variousplaces around the world, a description of which could be found on its Web site.
2  It was ready to
pursue these efforts, in co-operation with other international organisations.   More specifically, with
regard to the subject of international cooperation, she mentioned that  OECD Member countries had
adopted as early as 1969 a Recommendation concerning Co-operation between Member countries on
Anti-competitive Practices affecting Internati onal Trade.  The Recommendation was revised
                                                     
1 Options for Trade and Competition Policy Coheren ce: Report to the 2000 OECD Ministerial meeting,
C/MIN(2000)6.
2 The OECD Web site on Competition can be consulted at: http://www.oecd.org/daf/clp.WT/WGTCP/M/11
Page 31
periodically3 and numerous exchanges of information and consultations had been held pursuant to it.
The experience so far was that co-operation was wo rkable even if laws were not similar and even
when enforcement practices were somewhat different.  With regard to the matter of convergence of
competition laws, it was noted that in 1994, OECD Ministers had adopted an Interim Report on
Convergence of Competition Policies.4  In that report, OECD countries, recognising that convergence
was achievable and desirable, also acknowledged that the goal of the convergence process was not
uniformity in competition policy, law and practice.  It was noted that such convergence could and did
occur in the course of revisions of existing laws as well as when countries adopted new laws.  Perhaps
even more importantly, convergence in the enforcement practices among OECD countries had
occurred notwithstanding diverging legal provisions and could be explained by the fact that there
were a large number of common principles among OECD countries.  While this did not prejudge what
could occur in a wider forum, one particularly strong area of agreement among OECD Membercountries related to the pernicious character of hard core cartels.  In 1998, the OECD Council had
adopted a Recommendation concerning Effective Action against "Hard Core" Cartels.
5  As had been
pointed out, non-Member countries were invited to associate themselves with that Recommendation
and to implement it.  Such an association process was already under way in the case of one non-
Member country.   A progress report on the implementation of the Recommendation and on avenuesfor future work had recently been adopted by the OECD Council.
6  This progress report confirmed the
full commitment of OECD countries to fight vigorously against hard core cartels given the fact that
their pernicious effects had a global impact and that effective measures against them would yield
benefits to consumers in all countries.  The Competition Law and Policy Committee (CLP) had
therefore recently called for a second, three-year phase of the anti-cartel program.
79. The Chairman presented personal reflections on the discussion that had taken place on
Agenda items I and II (complete text circulated  to Members in Job 4442, 13 July 2000).  He drew
attention, inter alia , to the following points.  In offering these reflections, the Chairman emphasized
that they were simply personal impressions which had no official standing:
- There had been a wide-ranging discussion on the development dimension of
competition policy, the relationship between economic development and competition
issues.  This had begun with an acknowledgement that developing countries, like
developed countries but perhaps more so because they might be more trade-
dependent or import-dependent, could be the victims of international anti-competitive
practices by large firms.  In that context, a number of questions had been raisedconcerning matters such as possible trade-offs between competition and other
development-related objectives.
- A further important focus of discussion had been on the special problems faced by
small and developing economies, including island economies.  While it had beenrecognized that such economies were perhaps particularly vulnerable to international
cartels and other anti-competitive practices, in view of their high import and export-
dependency, and therefore that competition policy was, in principle, relevant to their
development prospects, questions had also been raised regarding matters such as the
possibility of excessive entry by foreign competitors leading to sub-optimal firmsizes.  In addition, it had been emphasized that small economies often faced particular
institutional challenges when setting up a competition policy, including a scarcity of
                                                     
3 1995 OECD Council Recommendation Concerning Co-operation between Member countries on
Anticompetitive Practices  affecting International Trade, 27 and 28 July 1995, C(95)130/FINAL.
4 Interim Report on Convergence of Competition policies, June 1994, OECD/GD(94)64.
5 Recommendation of the Council Concerning Effective Action against Hard Core Cartels, 27-28 April
1998, C(98)35/FINAL.
6 Hard Core Cartels, 12 May 2000,  C(2000)63 and Corr. 1.WT/WGTCP/M/11
Page 32
human and financial resources to establish a competition agency and to engage in the
important task of creating a culture of competition.
- In the course of the discussion, reference ha d been made to the past industrial policies
of countries like Japan and Korea.  Differing views had been expressed on the welfareconsequences of these policies and on how far they had been a factor in the financial
crisis of the late 1990s.
- An insight that had been stressed by delegates representing various viewpoints in the
overall debate was that the interests of developing countries were unlikely to be
served by a "one-size-fits-all" approach to competition policy.  In this regard, the
point had been made that, in developed countries, competition laws often haddifferent goals, substantive provisions and enforcement processes.  This diversity in
policy approaches was due not only to different levels of development but also to
differing legal systems, historical factors, and socio-political considerations even
among countries at a similar stage of development.  Many delegations, including both
proponents of and sceptics regarding the desirability of a multilateral framework, hadexpressed the view that such diversity had to be respected.  A view had also been
expressed that the experience of countries with significant experience in cooperation
at the bilateral level suggested that cooperation could be carried on without
harmonization.
- As a further aspect of the debate on diversity, differing views had been expressed on
the question of whether competition law was a necessary or at least a particularly
useful instrument of competition policy.
- The forms and modalities of cooperation had been discussed, with a number of
delegates emphasizing that cooperation could take many different forms and could
have different features at the multilateral as opposed to the bilateral or regional levels.
It had been suggested that, when thinking about the usefulness of cooperation on
competition policy at the multilateral level, one should have in mind three questions:
first, was there a specific role for the WTO; second, what would be the value-added
of the WTO with respect to such an agreement; and third, what would be the cost to
the WTO of such an agreement?  In reflecting on this issue, the Group had been led totry to specify more precisely or concretely what was meant by cooperation and what
benefits could be obtained from a multilateral agreement on competition policy.  In
addition to other possible benefits, it had been stressed that cooperation in a
multilateral context could be a useful tool to assist developing countries to fight
international anti-competitive practices such as international cartels or abuses of adominant position.  In many cases, these were practices which individual countries,
particularly developing countries, might have difficulty fighting by themselves.
- At the same time, some delegates had uttered words of caution regarding the scope
and expected benefits of cooperation at the multilateral level.  Several had indicatedthat they would like to know more about the prerequisites and modalities of
cooperation in the light of the prevailing differences in national regimes, and were
particularly concerned that cooperation should not weaken the flexibility that they
insisted upon in framing their national competition policies.
- There had been a useful exchange on the types of information that would be covered
by a WTO instrument on cooperation on comp etition policy.  A major proponent of a
multilateral framework had indicated that the framework was not intended to provide
for the exchange of confidential information.  One Member that previously had
expressed significant concerns had indicated that this tended to put matters in a moreWT/WGTCP/M/11
Page 33
positive light.  Delegates had also stressed the benefits that would flow even from
improved exchange of non-confidential information, although they had indicated that
they would like further clarification on this.
- Finally, the issue of the proper role, if any, of the WTO in the provision of technical
assistance in the area of competition policy had been broached.  Some delegates had
expressed the view that there was a considerable amount of duplication and possibly
wasteful effort in the area of technical cooperation on competition policy and that
rationalizing the process would make it more effective.  In their view, a WTO
agreement could play a catalytic role in helping to enhance, target and reinforce the
effectiveness of technical cooperation prov ided by diverse donors.  Other delegates
had expressed the view that even if there was a problem of duplication in theprovision of technical cooperation, the WTO did not have a comparative advantage to
address this particular task.
In closing, the Chairman undertook to circulate a brief, synthetic list of key questions which had been
posed in the discussion on items I and II of the agenda.
III. THE CONTRIBUTION OF COMPETITION POLICY TO ACHIEVING THE
OBJECTIVES OF THE WTO, INCLUDING THE PROMOTION OF
INTERNATIONAL TRADE
80. The representatives of Korea, Canada
 and Japan  introduced written contributions on this
agenda item (documents WT/WGTCP/W/144, WT/WGTCP/W/146 and WT/WGTCP/W/147,
respectively).  In addition, the representatives of the United States; Hong Kong, China ; Canada ;
Norway; Japan  and Trinidad and Tobago  made oral remarks or posed questions on this item.
81. The representative of Korea, introducing document WT/WGTCP/W/144, said that it
described, from the perspective of Korea's experience, the role that competition advocacy could play
with respect to the implementation of market re forms, deregulation and privatization.  The Korean
Fair Trade Commission (KFTC) had a mandate to en force market principles in government decision-
making.  This included urging public firms undergoing privatization to undertake re-structuring in a
pro-competitive manner, and eliminating economic regulations that reduced consumer welfare.  The
KFTC was equipped with the legal authority and resources adequate to the above task; for instance, it
had the power to engage in prior consultations with government agencies preparing legislative
proposals.  It had had many major achievements as an advocate of competition policy.  For example,it had taken measures since 1997 to dismantle monopolistic market structures in twenty sectors
including automobiles, steel and tyres.  There were two important lessons to be learned with respect to
the relationship between the advocacy of competition policy and economic development.  First,
economic policies focused on the pursuit of industrial policies were likely to breed government
regulations with anti-competitive effects.  This ha d been the case in Korea where the government had
attempted to steer the sectoral growth of the economy and to this end had established a host of anti-
competitive regulations.  Inevitably, this had distorted market structures and negatively affected
economic development.  Thus, the first lesson was that, beginning at the very early stages of
economic development, every effort should be made to build a market economy through the
introduction of competition policy, with the compe tition authorities taking on an active competition
advocacy role.  The second lesson to be drawn was that it was critical to confer full authority to the
national competition agency to allow it to serve as an effective competition advocate, in view of the
fact that developing countries faced special challenges in the promotion of a free market, and the
contribution of a competition advocate was essential in overcoming those challenges.
82. The representative of Canada, introducing document WT/WGTCP/W/146, said that the paper
was submitted in response to the call in the note by the Chair of 31 March 2000 for concrete examples
which would help to clarify both the costs and benefits of implementing competition policies.  In theWT/WGTCP/M/11
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view of his delegation, Canada's experience with competition advocacy and regulatory reform in the
telecommunications industry provided one such example.  The paper made clear that competition
policy advocacy had played an important role in market reform, deregulation and privatization
processes in this sector and hence in enhancing market access, thus contributing to the WTO's
ultimate goal of increased international trade.  At first glance, competition advocacy might seem
something of a luxury, especially in the case of a nascent competition regime facing numerous
competing priorities.  However, competition advocacy had a broader reach than other instruments of
competition policy given its impact on general economic development.  The contribution of advocacy
activities to deregulation illustrated this wider impact.  Although regulation was a legitimate
instrument of government policy, it could also en tail significant costs, including costs linked to
administering and complying with the regulatory regime  as well as indirect costs attributable to the
distortions caused by the regulatory regime in the market-place.  Competition advocacy served tohighlight and clarify these costs, thereby encouragin g a fuller evaluation of both the costs and benefits
of regulation.  In addition, when deregulating or privatising a sector, competition advocacy could
assist in managing the difficult transition phase from full regulation to open competition.  Finally,
competition advocacy could also be used to inform policy development more generally.  Canada had
found it appropriate to adopt the following principles in applying competition advocacy toderegulating the telecommunications sector:  (i) maximize reliance on competition and market forces
from the outset;  (ii) minimize regulation for incumbents and avoid regulating the new entrants;  (iii)
if necessary, introduce specific targeted mechanisms to address social policy objectives;  (iv) establish
clear rules governing incumbents' obligations to pr ovide access to their networks by competitors and
appropriate pricing principles;  (v) set up timely and effective dispute resolution mechanisms toensure that access to networks is not delayed;  and, finally, (vi) liberalize foreign ownership rules on
networks to help them develop rapidly.  Introduc ing competition into the telecommunications market
had encouraged the entry of new firms, reduced prices and increased the variety of products and/or
services for consumers. Engaging in competition advocacy activities was costly to a competition
authority in the sense that resources were diverted from the direct enforcement of competitiondisciplines to the more indirect goal of encouraging a competition culture generally.  Nonetheless, the
experience of Canada's competition authority was that investment in competition advocacy bore fruit
in the long-term by reducing the challenges to comp etition which it might otherwise face; this in turn
had important implications for the promotion of economic development.
83. The representative of Japan, introducing document WT/WGTCP/W/147, said that it
addressed issues concerning the relationship between intellectual property rights (IPRs) and trade and
competition policy, and discussed recent developments in this area and their implications fordeveloping countries.  The system of protecti ng technology through patents stimulated R&D and
could be a driving force for the creation of new tec hnology.  Statistics from WIPO showed that the
number of applications for patents had rapidly increased from around 1.2 million in 1985 to about 3.5
million in 1996, world-wide.  In parallel with the progress of technology, the coverage of IPR
protection was expanding, and this had multiplied the possibilities for exclusive possession oftechnological information.  All of this had had a strong impact on the incentives for R&D and on the
forms and conditions for transacting technology.  In July 1999, the Japan Fair Trade Commission
(JFTC) had released the "Guidelines for Patents and Licensing Agreements under the Anti-Monopoly
Act", with the purpose of clarifying the interpretation of the sections of the Anti-Monopoly Act
related to these subjects.  This was a revision of guidelines that had been released in 1989.  The newversion reflected the increasing relevance of IPRs in economic activities and the importance of
addressing issues relating to IPRs from the perspective of competition policy.  In particular, the
revised guidelines explained, by way of concrete examples, which licensing agreements posed
problems in terms of competition law.  The JFTC had also released the "Guidelines for Joint Research
and Development under the Anti-Monopoly Act" in April 1993.  The WTO Agreement on TRIPS hadexpanded the international protection of IPRs.  The fact that the Agreement applied to all WTO
Members had significant implications for the world economy.  While the TRIPS Agreement
contemplated transitional arrangements for developing, transition and least developed countries, it
required developing countries to take positive policy measures in this area, including theWT/WGTCP/M/11
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establishment and strengthening of domestic rules and adequate enforcement thereof.  In this context,
it was appropriate also to consider the introduction of policy measures that would help to strike a
proper balance between the protection of IPRs and the use of intellectual property.  Various types of
anti-competitive behaviour relating to the use of IPRs should be considered in this respect.  For
example, a patent cross-licensing agreement that included mutual restrictions on the pricing andoutput of the patented product, and substantially restricted competition in the market for this product,
would constitute an unreasonable restraint of trade (as any other agreement fixing prices and
restricting output) and would therefore be illegal under the Anti-Monopoly Act.  Further, a patent pool
where the patent holders refused to grant licences to newcomers or to specific existing firms without
justifiable reasons, in order to block the entry of newcomers or to make it difficult for existing firms
to conduct business, could be illegal under the Anti-Monopoly Act, on grounds of attempted private
monopolization.  Therefore, to complement the protection of IPRs, developing countries needed toenhance the transparency of their rules, and draw on accumulated experiences regarding the
implementation of competition policy.  Regarding the subject of electronic commerce, he suggested
that, while some believed that the "business method patent" promoted technological innovation and
enhanced the development of electronic commerce, ot hers had concerns that inappropriate protection
could limit competition and restrain economic growth based on the IT revolution.  Consequently, thiswas another important issue to examine from the standpoint of international competition policy.
84. The representative of the United States, commenting on the papers by Korea
(WT/WGTCP/W/144) and Canada (WT/WGTCP/W/146), said that Korea had created an institutional
structure that provided the competition agency w ith real opportunities for being uniquely useful in
terms of influencing government policy through competition advocacy at a high level and at a broadfront.  The paper by Canada provided strong evidence of the value to consumers and to the economy
of a concentrated, long-term, commitment to competition advocacy in the area of telecoms.
85. The representative of Hong Kong, China, comm enting on the paper by Canada, said that his
delegation shared Canada's view that competition advocacy had a significant role to play in promoting
market accessibility and contestability, as well as in reducing unnecessary and burdensomeregulations, and ensuring competition-friendly privatisation.  It was beyond doubt that competition
advocacy was a widely applicable policy driver to enhance economic efficiency and consumer
welfare.  Nevertheless, his delegation was of the op inion that, so far, practical means for promoting
the coherence of trade and competition policies had not been sufficiently discussed.  To this end, his
delegation wished to obtain some clarification on the degree of inter-agency collaboration between
Canada's competition and trade authorities.  His delegation wished to know in particular whether
Canada's competition authorities had launched any joint efforts with Canada's anti-dumping andsafeguard authorities to advance the cause of competition and consumer interests.  More precisely,
Annex A to the Canadian paper indicated that Canada's competition authorities had made 14
submissions on anti-dumping, imports and tariff issues to the relevant Canadian agencies.  What were
the subject-matters of these submissions?  In the view of his delegation, this clarification would shed
some light on the coherence of trade and competition policies.  In response, the representative ofCanada said that Canada's Special Import Measures Act governing the application of trade-remedy
measures had special public interest provisi ons under which the Competition Bureau had made
representations on a number of occasions.  His delega tion would indicate at a later date what products
and sectors had been involved in those submissions.
86. The representative of Norway asked the Japanese delegation whether the "business method
patent" referred to in Japan's remarks with respect to IPRs in electronic commerce was different from
regular patents; what requirements needed to be met in order for such a patent to be granted?  Had
Japan raised this issue already in international organizations like WIPO?
87. The representative of Japan said that the provision of services through electronic commerce
involved lots of computer software.  There was a question as to whether this specialized software
should be protected by patents.  Patent experts from several countries had started to discuss whatWT/WGTCP/M/11
Page 36
kinds of problems could be involved in providing protection for such software applications.  This
issue was very new and Japan had touched upon in its paper simply to highlight its future importance
in the area of IPRs and competition policy.
88. The representative of Trinidad and Tobago, commenting on the paper by Japan
(WT/WGTCP/W/147), said that historically, developing countries had been the target of monopoly
power arising from the abuse of IPRs.  For instance, licensing contracts often incorporated anti-
competitive provisions such as tie-ins or exclusive grantbacks of new innovations following on
patented inventions.  For this reason, Trinidad and Tobago was considering including a provision in
its competition law to ensure that patent holders did not abuse their monopoly rights, as contemplated
under Article 40 of the TRIPS Agreement.
IV. OTHER ISSUES RAISED BY MEMBERS RELATING TO THE GROUP'S
MANDATE TO STUDY THE INTERACTION BETWEEN TRADE ANDCOMPETITION POLICY
89. The Chairman recalled that, based on inputs prepared by Members, the Secretariat had
prepared an overview of Member's national competit ion legislation, which had been circulated in June
1999 as document WT/WGTCP/W/128.  An updated version of this overview had been circulated in
October 1999, as document WT/WGTCP/W/128/Rev.1.  The Secretariat had received a further inputon national legislation from the delegation of Paraguay with the request that it be reflected in the
overview.  The Group agreed that the Secretariat would prepare a new version of the document to
incorporate the input provided by Paraguay and any other inputs that were received by 15 July 2000,for consideration at the next meeting of the Working Group.
V. REQUESTS FOR OBSERVER STATUS FROM INTERNATIONAL
INTERGOVERNMENTAL ORGANISATIONS
90. The Group agreed to revert to requests made by  SELA and by the Organization of the Islamic
Conference at its next meeting, having regard to the ongoing consultations on related matters in the
framework of the General Council.
VI. OTHER BUSINESS
91. The Chairman noted that the next meeting of the Working Group would take place on 2 and 3
October 2000, back-to-back with the Fourth Review Conference of the United Nations Set of
Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices.The substantive agenda of that meeting would be the same as the agenda for the current meeting.
Members agreed to provide written contributions to the Secretariat not later than 15 September, to
permit their translation and circulation to other delegations in advance of the meeting.
92. 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 toconsider how it would report to the General Council on its activities during the year 2000.  One
possibility was to ask the Secretariat to prepare a draft report based on the work undertaken by the
Group in the current year.  The Group could then agree to a third, short meeting in late November or
early December, for the purpose of approving the report.  This would be similar to the procedure
followed by the Group in 1998 and 1999.  The nature of the report could be similar in style andapproach to the Group's reports for 1998 and 1999.
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