Bridges Weekly Trade News Digest • Volume 6 • Number 33 • 2nd October 2002
WTO Competition Meeting Addresses ‘Core Principles’
At a meeting of the WTO’s Working Group on the Interaction between Trade and Competition Policy held on 26-27 September, Members continued discussions as mandated by para. 25 of the Doha Declaration and focused in particular on the clarification of "…core principles, including transparency, non-discrimination and procedural fairness." While the meeting, according to a trade source, failed to break new ground in terms of agreement on the relevance of a multilateral framework on competition, it did see "interesting" submissions tabled by Members on substantive aspects of core principles for such a potential framework.
Background
According to the Doha Declaration, Members agreed last November that "negotiations will take place after the Fifth Ministerial Conference [in Cancun, September 2003] on the basis of a decision to be taken, by explicit consensus, at that session on modalities of negotiations". Under para. 25, the Competition WG is mandated to clarify core principles, such as transparency and provisions on hardcore cartels; modalities for voluntary cooperation; and support for reinforcement of competition institutions in developing countries. Its last meeting focused on ways to combat so-called ‘hardcore cartels’ (see BRIDGES Weekly, 10 July, http://www.ictsd.org/weekly/02-07- 10/wtoinbrief.htm).
Calls for "comprehensiveness" and "special and differential treatment" to be added to core principles
A submission by New Zealand (WT/WGTCP/W/210, available at http://docsonline.wto.org) called for the principle of "comprehensiveness" to be added to the open-ended list of core principles specified in para. 25 of the Doha mandate. The submission recognised exceptions and exemptions to competition laws and policies permitted by countries for valid reasons, but stressed the need to implement these in a manner that would minimise economic distortions. Interestingly, the submission stressed ‘flexibility of approach’ that "would recognise the diversity of circumstances in WTO Member countries" and "does not put pressure on developing countries to drive towards particular competition policy outcomes, which may be inappropriate and/or premature." The New Zealand paper also emphasised that agreement on core competition principles needed to be underpinned by the provision of relevant technical assistance to developing countries.
Thailand (WT/WGTCP/W/215) wanted "special and differential treatment" to be the fourth proposed core principle for competition negotiations, calling firstly for exemption of developing countries from national and international export cartels (citing the small scale of developing country exporters and importers and the need to counter the bargaining power of larger buyers or sellers from industrialised countries). The Thai proposal secondly called for a gradual introduction of greater transparency and due process in the administration and enforcement of competition law.
Reconciling industrial policy and the ‘development dimension’ with ‘national treatment’
Both India (WT/WGTCP/W/216) and Switzerland (WT/WGTCP/W/214) in their submissions did not support the concept of ‘national treatment’ in its pure and literal meaning. India cited instances where differential application of competition laws (a violation of the doctrine of national treatment), such as between large domestic firms and multinationals, could level the competitive playing field, ensure dynamic efficiencies and build research capabilities and be beneficial to both economic development and competition. India considered it appropriate to adopt the concept of non-discrimination in terms of differential treatment of different countries with different capacities. It further stated that these countries also have the need and responsibility to provide assistance, positive measures and affirmative action to local firms and institutions in developing countries to ensure their viability, development, efficiency and competitiveness. India also highlighted the need for firms to be bound by transparency and procedural fairness in another submission (WT/WGTCP/W/215).
Subject to transparency and the rule of law, Switzerland was in favour of a modified interpretation of the National Treatment principle, which, while not discriminating on grounds of nationality, allows in specific instances the use of industrial policy based on a public benefits test as well as for other policy choices, for example, in public services.
Australia (WT/WGTCP/W/211), Korea (WT/WGTCP/W/212) and Japan (W/WGTCP/W/217) also made submissions on "core principles". The US presented two papers (W/ WGTCP/W/218 and W/ WGTCP/W/219) focusing on transparency and procedural fairness and South Africa (W/ WGTCP/W/220) presented a paper on its domestic legislation and experience.
Global Competition Body Launched
A new organisation, the International Competition Network (ICN), has been launched to assist developing and developed countries with practical competition enforcement and policy issues. The organisation also aims at being a forum for global competition rules. In the words of the chairperson of the South African Competition Tribunal, "it is the only international body exclusively devoted to competition law enforcement," citing that the Network would improve international co- operation and result in more efficient enforcement, benefiting not only local competition authorities, but also consumers and businesses.
The founding conference of the ICN was held in Naples, Italy 28-29 September, and the organisation has already announced a series of best practice proposals aimed at improving merger review and competition advocacy. For further information, visit http://www.internationalcompetitionnetwork.org/index.html.
ICTSD reporting; "Competition Network To Help With Globalisation," BUSINESS DAY, 1 October 2002.