Competition Policy, Trade and the Global Economy: Existing WTO Elements, Commitments in Regional Trade Agreements, Current Challenges and Issues for Reflection

Abstract

Competition policy, today, is an essential element of the legal and institutional framework for the global economy. Whereas decades ago, anti-competitive practices tended to be viewed mainly as a domestic phenomenon, most facets of competition law enforcement now have an important international dimension. Examples include: the investigation and prosecution of price fixing and market sharing arrangements that often spill across national borders and, in important instances, encircle the globe; multiple recent, prominent cases of abuses of a dominant position in high-tech network industries; important current cases involving transnational energy markets; and major corporate mergers that often need to be simultaneously reviewed by multiple jurisdictions. Beyond competition law enforcement per se, increasingly, major issues of competition policy (e.g., the impact on competition of the structure and scope of intellectual property rights or the role of state-owned enterprises) implicate the interests of multiple jurisdictions.

To date, efforts to establish a general agreement on competition policy in the framework of the international trading system have been unsuccessful. Nonetheless, provisions relating to competition policy are incorporated in the WTO General Agreement on Tariffs and Trade (GATT); the General Agreement on Trade in Services (GATS); the Agreement on Trade-Related Intellectual Property Rights (TRIPS Agreement); the Agreement on Trade-Related Investment Measures (TRIMs Agreement); and other WTO instruments. Effective national competition policies are also essential to realizing the benefits derivable from participation in the (plurilateral) WTO Agreement on Government Procurement (GPA). The importance of competition policy for world trade is also manifested by the increasing incorporation of undertakings on competition policy in the Protocols of Accessions that apply to new WTO Members, and in the work of the WTO Trade Policy Review Body, which systematically references developments regarding national competition policies in developed and developing jurisdictions.

Beyond this, as set out in this paper and further manifesting the significance of competition policy for international trade, detailed chapters on competition policy have been incorporated in numerous bilateral and regional trade agreements (RTAs) linking developed and developing economies around the globe.

The WTO Working Group on the Interaction between Trade and Competition Policy, which was active from 1997 through 2003 and which considered the case for a more general agreement on competition policy in the WTO, has been inactive since 2004. It is, nonetheless, available as a potential vehicle for stocktaking of developments and reflection on relevant issues if ever WTO Members find this useful and timely. A salient related consideration is that, whereas in 1997, when discussion commenced in the WTO Working Group, only around 50 economies in the world had national competition legislation, currently, about 135 WTO Members have such laws. These include all of the BRICS economies (Brazil, Russia, India, China and South Africa) and a large number of other developing WTO Members.

Concurrent with the foregoing developments, increasing attention is being given, in international policy circles, to particular issues of competition law enforcement and competition policy with significance for the global economy. These include:

• The international dimension of competition law cases: the resulting positive spillovers for economic welfare and potential for conflicts of jurisdiction;

• The broadening application of competition policy vis-à-vis intellectual property rights in the global economy;

• Important issues concerning the potential for monopolization and the maintenance of competition in digital markets;

• Issues concerning state-owned enterprises, the role of industrial policy and the maintenance of competitive neutrality in emerging economies; and

• A mounting concern, on the part of global businesses, to ensure non-discrimination, transparency and procedural fairness in competition law enforcement worldwide.

This paper reviews and reflects upon these and related developments. It proceeds from the premises that important synergies exist between trade and competition policy and that it is reasonable to acknowledge this and inquire whether additional steps are desirable to ensure the full realization of the relevant synergies. The paper is intended to serve as a resource for reflection on related issues, if and/or when WTO Members decide to undertake such an exercise. Even so, it is recognized that the issues are complex, and that simplistic or overly ambitious or prescriptive solutions will not be helpful. In this light, the closing portions of the paper reflect upon the importance of relevant international learning processes; the actual and potential contributions of the WTO in this regard; and prospects for the future.

Keywords: Competition Policy, Anti-Competitive Practices, International Trade Policy, WTO Agreements, Regional Trade Agreements, State-Owned Enterprises, Competitive Neutrality, Digital Economy

JEL Classification: F02, F13, F23, F53, L40, L44, L49, N40