Competition Law/Policy and the Multilateral Trading System: A Possible Agenda for the Future

Brief
Date period
7 September 2015

Implemented jointly by ICTSD and the World Economic Forum, the E15Initiative convenes world-class experts and institutions to generate strategic analysis and recommendations for government, business and civil society geared towards strengthening the global trade and investment system for sustainable development. The E15 Expert Group on Competition Policy is co-convened with Bruegel.

Important synergies or complementarities exist between trade liberalization initiatives and the application of measures to suppress anti-competitive practices or arrangements. In fact, both anti-competitive practices of firms and state-orchestrated arrangements that restrict competition can undermine the gains from trade in myriad ways. Perhaps, the clearest examples of such effects involve international cartels that allocate national markets among individual producers, abuses of a dominant position that limit access to facilities that are necessary for the importation of goods or services, and import cartels or anti-competitive vertical market restraints that exclude foreign suppliers from a market. As another manifestation of complementarity, trade liberalization can itself be a powerful tool for addressing competition policy concerns, for example, where the liberalization of government procurement markets through participation in the WTO Agreement on Government Procurement (GPA) helps to make bid rigging more difficult, by increasing the number and diversity of competing suppliers. More generally, trade liberalization is an effective vehicle for enhancing competition in many contexts. As well, the WTO’s cornerstone principles of non-discrimination and transparency have important application to competition law enforcement processes and institutions.

The purpose of this think-piece is not to make a general pitch for resumption of work on competition policy in the WTO, or to advocate a specific approach to renewed work. Rather, its purpose is to identify and set out a menu of issues that could be addressed in such work in the event that WTO Members choose to go forward in this area, taking account of both past work and current developments in the policy environment. As a basis for delineating relevant issues, the think-piece reviews and seeks to derive insight from (i) the work done by the WTO Working Group on the Interaction between Trade and Competition Policy (WGTCP) from 1997 to 2003, and the problems that related negotiating proposals encountered; (ii) the ways in which competition policy considerations already figure in existing WTO Agreements; (iii) the treatment of competition policy in recent regional trade agreements and ongoing negotiations; and (iv) other relevant developments in the global policy environment, including with respect to business community perspectives and the emergence of new concerns/analytical issues for consideration at the interface of trade and competition policy. On the basis of these considerations, the paper sets out a menu of issues for possible related work.

The ease of restarting even analytical work on trade and competition policy should not be overstated. There is, in any case, no suggestion here that related work be brought forward in any way that would detract attention from the conclusion of the current negotiating round. With these caveats, the think-piece draws attention to two contextual points of potential interest. First, the original WTO WGTCP, while currently designated as “inactive,” still exists. Moreover, the decision taken by the WTO General Council in 2004 regarding the status of the Group leaves the door open to a resumption of work on relevant issues following the conclusion of the Doha Round. Arguably, it also does not rule out, even before that time, a resumption of exploratory work on these issues provided that such work is not directed “towards negotiations.” Certainly, the WTO Working Group which, in its early years earned solid credit for just such an exploratory work programme, would be a logical body to undertake resumed work in this area.

Second, any resumed work programme on trade and competition policy in the WTO could and should invite and encourage input from other organizations active in the competition policy field. These could include, for example, the International Competition Network (which is the organization that competition agencies see as being most directly “theirs”) but also the United Nations Conference on Trade and Development (UNCTAD), the Organisation for Economic Co-operation and Development (OECD) and the Consumer Unity and Trust Society (CUTS). There is no reason why such organizations could not eventually be given specific, dedicated roles in the development of relevant standards. This would be broadly comparable to the roles that other organizations and policy development exercises have had in relation to the negotiation of other important WTO Agreements. Such a consultative approach, with specific vectors for incorporating input from organizations with more specialized expertise in competition policy per se, could enhance both the usefulness and the political acceptability of resumed WTO work in this subject-area.