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WTO Secretariat

1. Existing WTO provisions

2. The Singapore mandate

3. The work programme of the Working Group (Checklist of Issues Suggested for Study)

4. The 1998 report of the Working Group

5. The 1998 Decision on further work

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Main features of the 1998 report

1. With the exception of the recommendation on further work, the 1998 report does not seek to be a report establishing consensus views. However, some important points emerge:

• The mutual consistency between competition law and policy properly applied and trade liberalization.

• The scope for inconsistencies between the two areas arising from trade restrictive measures that impede competition and the inadequate or improper application of competition law.

2. The impact of anti-competitive practices of enterprises on international trade

• Identification of a range of anti-competitive practices that can limit market access for imports and reduce or eliminate the effects of trade liberalization (e.g. import cartels, exclusionary abuses of a dominant position and vertical market restraints, certain private standard-setting activities).

• Identification of practices distorting international markets, where different countries are affected in largely the same way (e.g. international cartels).

• Identification of practices having a differential impact on the national markets of countries (e.g. export cartels).

• Identification of situations where national competition law may not provide appropriate remedies.

3. The impact of trade policy on competition

• While recognizing that trade measures can reduce competition, different views on the role of the Working Group in examining them and criteria for determining which to focus on.

• Wide-ranging discussion of this topic in the Group (well beyond the anti-dumping question).

• Contrasting perspectives on anti-dumping and competition policy.

4. The impact of state monopolies, exclusive rights and regulatory policies on competition and trade

• Recognition of adverse impact that state monopolies and exclusive rights can have on trade and competition, especially where control of essential facilities is involved.

• Discussion of how competition law and policy can more effectively address such situations.

• Appreciation of the significance of regulatory reform for competition and trade and the risks of privatization/deregulation without an adequate framework to maintain competition.

• Wide recognition of the importance and potential benefits of competition advocacy activities by relevant agencies vis-à-vis government measures.

5. The relationship between competition policy and intellectual property rights

• - Interest in, and wide acceptance of, current economic perspectives on the relationship of competition policy and IP.

• - Debate about whether the level of IP protection is an issue for the Working Group and for competition policy.

6. The development dimension and investment

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Where has the work reached?

1. Most recent meeting held 19-20 April 1999. The discussion is now much more focused, implicitly or explicitly, on what action should be taken in the WTO framework:

• role of the Working Group in this discussion;

• role of the intersessional process of the General Council preparing for the Seattle Ministerial Conference.

2. A range of possibilities are under discussion concerning the future role of the WTO:

• continuation of the educational process;

• promotion of forms of cooperation on a voluntary basis;

• conclusion of a legally binding agreement; and

• treatment of trade measures from a competition perspective.

3. Some important considerations influencing views on these matters:

(i) A perception that the WTO, by promoting competition and the role of competition authorities, can not only contribute towards furthering the objectives of competition policy but also those of the multilateral trading system:

• concern about "under-investment" in competition policy, both nationally and internationally;

• what the WTO may be able to do to reinforce the role of national competition policy and authorities (raising the political profile, moral, material, even legal, support);

• what competition policy and authorities can do to support the objectives of the WTO (tackling anti-competitive practices that impede or distort trade, advocacy role in relation to domestic regulatory policy and trade measures �� the systemic difficulty of the WTO in addressing regulatory measures that impact on international trade).

(ii) The development dimension:

• intense interest. Has permeated the discussion so far;

• widespread appreciation of the benefits of an effective competition policy for development (importance of competitive markets for efficiency, including by lowering input costs, for engendering competitive enterprises and for enhancing the adaptability of economies to both domestic and external shocks);

• however, concern that the WTO should not stand in the way of the flexibility felt necessary to take account of differing national stages of development, cultures, resource endowments, etc. (e.g. to discriminate in favour of national enterprises in certain circumstances, to maintain exceptions, to take into account social objectives other than efficiency and to recognize the transition difficulties associated with moving from relatively non-competitive to competitive markets).

(iii) The investment link:

• built into the GATS, TRIPS and TRIMs Agreements;

• the role of competition law and policy in enhancing the benefits from FDI, including through international cooperation to facilitate action against abuses of market power by investors;

• the role of competition law and policy in removing impediments to FDI and providing an attractive legal environment for FDI.

4. The educational role of the WTO:

• intense interest (116 national submissions to the eight meetings held so far, of which 58 from developing countries);

• the view that this should be the focus of further work.

5. Suggestions for ways in which the WTO might enhance cooperation on a voluntary basis:

• technical assistance and capacity building;

• exchange of experience;

• development of a WTO guideline for regular review of national regulatory policies in the light of competition policy principles;

• country reviews/benchmarking;

• promotion of case-specific cooperation (notification, consultation, cooperation, positive/negative comity);

• guidelines/models (e.g. for cooperation agreements).

6. Suggestions for a legally binding agreement. Possible elements:

• adoption of a competition law, subject to transitional provisions;

• basic principles (non-discrimination and transparency);

• core substantive requirements (e.g. hard-core cartels);

• merger control?

• application to both public and private enterprises;

• treatment of exclusions;

• relationship to regulatory policies and other forms of government intervention;

• convergence/harmonization of merger notification requirements and procedures;

• the advocacy role of competition authorities;

• competition authority with sufficient powers of investigation;

• due process;

• remedies;

• rights of private parties (e.g. direct access to the courts);

• the role of the judiciary;

• provisions on international cooperation;

• WTO dispute settlement;

• special and differential treatment.

7. Treatment of trade measures from a competition perspective:

• suggestions for making WTO rules more consistent with competition principles, notably in the fields of trade remedies and state-trading monopolies (e.g. in regard to anti-dumping, use of marginal or average variable cost in determining dumping and taking into account impact on the economy as a whole in determining injury), and for further elaborating TRIPS provisions on anti-competitive practices;

• proposal for "Free Trade and Competition Commitments".

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Some Seattle Issues

1. Some options regarding a competition mandate:

• not part of a single undertaking; continuation of the Working Group;

• a "soft" negotiating mandate (e.g. to study the issue further on the basis of some agreed parameters and to negotiate, if found appropriate, multilateral disciplines or a multilateral framework);

• a mandate to negotiate a framework for at least "soft law" international cooperation and, if appropriate, hard law as well;

• a mandate to negotiate a hard law agreement containing certain specific elements;

2. Some issues regarding a competition approach to trade remedies and other trade measures:

• horizontal language in the considerations that are to be taken into account in all areas of the negotiations;

• some specific language in particular areas;

• a special institutional link between negotiations on these matters and any negotiations on international cooperation in area of competition law and policy.

3. The role of a competition component in demonstrating balance in the multilateral trading system, especially in the eyes of civil society.

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