RESTRICTED
WORLD TRADE WT/WGTCP/W/18
4July1997
ORGANIZATION(97-2798)
Original: English Working Group ontheInteraction
between Trade andCompetition Policy
COMMUNICATION FROM APEC
APEC 'SACTIVITIES RELEVANT TOTHE INTERACTION BETWEEN
TRADE AND COMPETITION POLICY
Presentation byMark Steel, NewZealand1
Wewelcome thisopportunity tooutline thework thatAPEC isundertaking oncompetition
policy andderegulation. Before identifying thespecific workthatistaking placethispaper firstprovides
background information onAPEC asaninstitution anditsgoals.
What isAPEC, what areitsgoals andhowisitachieving them?
AsiaPacific Economic Cooperation has18members comprising Australia, Brunei Darussalam,
Canada, Chile, China, P.R., Chinese Taipei, Hong Kong, Indonesia, Japan, Korea, Malaysia, Mexico,
NewZealand, Papua NewGuinea, Philippines, Singapore, Thailand andtheUnited States.
APEC, which wasestablished in1989, hasrapidly become thepreeminent forum foreconomic
dialogue andcooperation intheAsia-Pacific region. Theorigins ofAPEC lieprimarily intherealization
thatdynamicbusiness-ledgrowthintheAsia-Pacificregioniscreatinggrowingeconomicinterdependence
andacommon interest insustaining thatdynamism. Inaddition theAsiaPacific business community
isdemanding atrade andinvestment framework thatwillallow them tooperate across borders ina
secure, consistent, predictable andtransparent manner. Governments canhelpachieve theseobjectives
byfurther liberalizing theregulatory environment inwhich trade andinvestment operate, andby
promoting other forms ofeconomic cooperation.
Attheirmeeting inBogor, Indonesia in1994, theLeaders oftheAPEC economies adopted
thegoaloffreeandopentradeandinvestment intheAPEC region by2010forindustrialized economies
and2020 fordeveloping economies. They alsoundertook toaccelerate andlookatbroadening and
deepening theirUruguay Round commitments, andtorefrain fromtightening current levels oftrade
restrictions.
In1995APEC Leaders adopted theOsaka Action Agenda (OAA) which provides aframework
forimplementing theBogor Declaration. TheOAA includes thefollowing general principles applicable
totheentire APEC liberalization andfacilitation process: comprehensiveness, WTO-consistency,
comparability, non-discrimination, transparency, standstill, simultaneous start/continuous
process/differentiated timetables, flexibility andcooperation.
1New Zealand istheCoordinating Economy forCompetition Policy andDeregulation.
Ambassador W.Armstrong isdelivering thispaper onbehalf ofMr.Mark Steel. Mr.Steelhaschaired
thethree APEC Workshops onCompetition Policy andDeregulation todate.WT/WGTCP/W/18
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TheOAA alsolistsactions tobetaken in15specific areas inorder toachieve theobjectives
setoutinaccordance withtheGeneral Principles. Each member economy hasundertaken topursue
these actions through bothan"Individual Action Plan" (IAP) andthrough "Collective Action Plans"
(CAPs). Ineachcase, these plans specify theshort, medium andlong-term actions thatwillbe
undertaken foreachofthe15areas. Twoofthe15areas areCompetition Policy andDeregulation.
TheManila Action PlanforAPEC (MAPA) adopted byLeaders in1996contains thefirstset
ofIAPsandCAPs produced byAPEC members. These plans arenowbeing progressively implemented
andimproved. TheMAPA canbereviewed attheAPEC Secretariat 'sInternet Homepage at:
http://www.apecsec.org.sg.
TheAPEC framework forwork oncompetition policy andderegulation
Theprocess forachieving freetrade andinvestment isdifferent from thetraditional trade
liberalization process forthefollowing reasons:
- APEC isnotanegotiating body. Itisaconsensual process whereby liberalization
isachieved through collective actions andconcerted unilateral initiatives.
- APEC isnotafreetrade bloc. Liberalization implemented byindividual economies
applies totherestoftheworld inaccordance withWTO principles.
TheOAA defines theobjectives forcompetition policy andderegulation asfollows:
Competition policy: APEC economies willenhance thecompetitive environment intheAsia-
Pacific region byintroducing ormaintaining effective andadequate competition policy and/or laws
andassociated enforcement policies, ensuring thetransparency oftheabove, andpromoting competition
among APEC economies, thereby maximizing, among other things, theefficient operation ofmarkets,
competition among producers andtraders, andconsumer benefits.
Deregulation: APEC economies will:
(a) promote thetransparency oftheirrespective regulatory regimes; and
(b) eliminate tradeandinvestment distortion arising fromdomestic regulations which will
notonlyimpede freeandopentradeandinvestment intheAsia-Pacific region butalso
aremore trade and/or investment restricting thannecessary tofulfil alegitimate
objective.
Theinteraction between competition policy andderegulation andtrade policy isincluded in
theAPEC agenda through various collective actions thataredescribed intheOAA. Thefulltextof
theOAA asitapplies tocompetition policy andderegulation isattached.
TheframeworkforworkoncompetitionpolicyandderegulationwasclarifiedbyTradeMinisters
inameeting heldinMontreal inMay1997. Ministers affirmed theirstrong support forarules-based
internationaltradingsystemofuniversalmembership,andconfirmedtheirsupportfortheearlyaccession
ofapplicants totheWTO inaccordance withWTO rulesandbased oneffective market access conditions.
Competition policy wasoneareawhere Ministers specifically called onAPEC todemonstrate leadership
inthemultilateral trade agenda.
Thecombined effect ofthese andother statements fromLeaders andMinisters istoemphasize
thepoint thatremoving barriers totrade attheborder isnotsufficient inorder toachieve freetrade
andinvestment inarealsense. Government policies which havetraditionally beenthought ofas
domestic, aswellasprivate business conduct, canalsoimpede freetrade andinvestment.WT/WGTCP/W/18
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APEC work oncompetition policy andderegulation
Work oncompetition policy andderegulation iscarried outunder theauspices oftheCommittee
onTradeandInvestment(CTI).Inordertobuildasolidfoundationforthisworkasignificantproportion
oftheinitial work hasfocused onpolicy dialogue, sharing ideas andbuilding aconsensus onwork
required intheareasofcompetition policy andderegulation toachieve APEC 'sfreetradeandinvestment
goals. Thedecision taken inFebruary 1996tocombine theareasofcompetition policy andderegulation
reflects thecloserelationship between them, particularly theircommon objective ofpromoting greater
efficiency within economies.
Themain process forwork inthese areas hasbeenthree annual workshops starting in1995.
Theworkshops haveexplored inapreliminary waytheextent towhich anyofthefollowing maypromote
theachievement ofAPEC 'sgoals:
- thewayinwhich effective lawsandeffective enforcement oflawsdesigned toprotect
processes ofcompetition fromanti-competitive business conduct andmarket structures
contribute tofreetrade andinvestment goals;
- approaches togovernment regulation thatwillpromote freetrade andinvestment by
minimizing explicit orimplicit discrimination against foreign andforeign-owned firms;
and
- theinteraction between theobjectives offreeandopencompetition andtrade policy.
More specifically thetopics thathavebeenaddressed are:
- theobjectives andoperation ofcompetition policy andlaw;
- themechanisms forimplementing competition policy;
- whatisnecessary toensure aneffective andadequate competition law;
- theroleforcompetition lawsandenforcement agencies inachieving theobjectives of
competition law;
- openmarkets asanapproach tocompetition policy;
- general approaches toderegulation;
- concepts ofderegulation andtheirinterrelationships withcompetition policy;
- occupational regulation;
- theregulation ofnatural monopolies; and
- theinterrelationship between competition policy and/or lawsandtrade policy.
Theworkshopshavehighlightedthatmembereconomiesareatdifferentstagesinthedevelopment
ofcompetition policy and/or laws. They havemade clearalsothatitisimportant formembers toshare
theirexperiencesandlearnfromeachotherinordertoimplementdeliberateandwelltargetedcompetition
policies thatwillsupport APEC 'sBogor Declaration goals.WT/WGTCP/W/18
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Inaddition totheworkshops, various projects areinprogress orhavebeen completed in
competition policy andderegulation areas. Theimportance oftechnical assistance, andofgathering
anddisseminating information about APEC members 'policies and/or laws, havebothbeenrecognized.
Asfarastechnical assistance isconcerned, afive-year training programme oncompetition
policy wasstarted in1997ontheinitiative ofJapan andThailand under APEC 'S"Partners forProgress"
technical cooperation scheme. Korea hasalsobeenactive withtechnical assistance initiatives aimed
atAPEC economies.
New Zealand carried outasurvey ofAPEC competition policies andlaws in1994.
ChineseTaipeihasestablishedanInternetdatabasewhichwillprovideinformationaboutAPECmembers'
competition policies andlaws. Thelocation is:http://www.apeccp.org.tw.
Themajor work initiatives toariseoutofthelatest workshop heldinQuebec CityinMay1997
are:
- toexplore theeffect ofcompetition lawsondeveloping internationally competitive
industries andpromoting foreign direct investment; and
- todeepen thedialogue ontheinterrelationship between competition policy andother
policies related totrade andinvestment.
Finally, oneofthetasks identified intheCAP forderegulation istoexamine thepossibility
ofestablishing non-binding APEC guidelines ondomestic regulation.
Therelationship between APEC andtheWTO ontheinteraction between Trade and
Competition Policy
Oneofthespecific collective actions identified intheOsaka Action Agenda isto"deepen
competition policy dialogue between APEC economies andrelevant international organizations". The
WTO is,without doubt, oneofthose organizations. APEC andtheWTO havealotincommon in
theareaoftradeandcompetition policy. Bothhaveawidediversity ofmembership, acommon interest
intradeliberalization andbothareatanearlystageofexploring waysthatcompetition policy andliberal
trade policy canbemutually reinforcing.
Furthermore, tradeandcompetition policy isarecurring theme across anumber ofother areas
ofAPEC andtheWTO 'swork. InAPEC competition principles underlie some ofthework aimed
atpromoting freeandopentrade andinvestment intheservices sector. Itisalsosignificant forwork
aimed atenhancing themobility ofbusiness people. IntheWTO thereareanumber ofexamples where
competition principles areasignificant issue. Furthermore, competition-related provisions existin
WTO agreements suchastheGATS (including theresults ofnegotiations onBasic Telecommunications
services), TRIPS, TRIMS andthevarious WTO agreements ontrade ingoods, including certain
provisions ofGATT 1994.
Conclusions
TheOAA envisages adeepening ofthedialogue oncompetition policy between APEC and
otherinternational forums considering issues ofcommon interest. AtthisstagetheCommittee onTrade
andInvestment andAPEC Senior Officials havenotdiscussed thespecific relationship withtheWTO
Group ontheInteraction between Trade andCompetition Policy. Wepropose tosubmit apaper at
APEC meetings tobeheldinAugust 1997seeking agreement toapolicy onalonger-term relationship
withtheWTO oncompetition policy.WT/WGTCP/W/18
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ATTACHMENT
EXTRACTS FROM THE OSAKA ACTION AGENDA
8. COMPETITION POLICY OBJECTIVE
APEC economies willenhance thecompetitive environment intheAsia-Pacific region by
introducing ormaintaining effective andadequate competition policy and/or laws andassociated
enforcement policies, ensuring thetransparency oftheabove, andpromoting cooperation among APEC
economies, thereby maximizing, inter alia,theefficient operation ofmarkets, competition among
producers andtraders, andconsumer benefits.
Guidelines
Each APEC economy will:
(a) review itsrespective competition policy and/or lawsandtheenforcement thereof in
terms oftransparency;
(b) implementasappropriatetechnicalassistanceinregardtopolicydevelopment,legislative
drafting,andtheconstitution,powersandfunctionsofappropriateenforcementagencies;
and
(c) establish appropriate cooperation arrangements among APEC economies.
Collective actions
APEC economies will:
(a) gather information andpromote dialogue onandstudy, starting from 1996;
(i) theobjectives, necessity, roleandoperation ofeach APEC economy 's
competition policy and/or laws andadministrative procedures, thereby
establishing adatabase oncompetition policy;
(ii) competition policy issues thatimpact ontradeandinvestment flows intheAsia-
Pacific region;
(iii) areas fortechnical assistance andthemodalities thereof, including exchange
andtraining programmes forofficials incharge ofcompetition policy, taking
intoaccount theavailability ofresources; and
(iv) theinter-relationship between competition policy and/or lawsandotherpolicies
related totrade andinvestment;
(b) deepencompetitionpolicydialoguebetweenAPECeconomiesandrelevantinternational
organizations;
(c) continue todevelop understanding intheAPEC business community ofcompetition
policy and/or lawsandadministrative procedures;WT/WGTCP/W/18
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(d) encourage cooperation among thecompetition authorities ofAPEC economies with
regard toinformation exchange, notification andconsultation;
(e) contribute totheuseoftradeandcompetition laws, policies andmeasures thatpromote
freeandopentrade, investment andcompetition; and
(f) considerdevelopingnon-bindingprinciplesoncompetitionpolicyand/orlawsinAPEC.
10. DEREGULATION OBJECTIVE
APEC economies will:
(a) promote thetransparency oftheirrespective regulatory regimes; and
(b) eliminate tradeandinvestment distortion arising fromdomestic regulations which not
onlyimpede freeandopen trade andinvestment intheAsia-Pacific region butalso
aremore trade and/or investment restricting thannecessary tofulfil alegitimate
objective.
Collective actions
APEC economies, taking intoaccount work doneinother areas ofAPEC activity will:
(a) publish annual reports detailing actions taken byAPEC economies toderegulate their
domestic regulatory regimes; and
(b) develop further actions taking intoaccount theabove reports, including:
(i) policy dialogue onAPEC economies 'experiences inregard tobestpractices
inderegulation, including theuseofindividual casestudies toassist inthe
design andimplementation ofderegulatory measures, andconsideration of
further options forawork programme which mayinclude:
- identification ofcommon priority areas andsectors forderegulation;
- provision oftechnical assistance indesigning andimplementing
deregulation measures; and
- examination ofthepossibility ofestablishing APEC guidelines on
domestic deregulation; and
(ii) regulardialoguewiththebusinesscommunity,includingapossiblesymposium.