Interaction between Trade and Competition: Why a Multilateral Approach for the United States?

By Chang, Seung Wha | Duke Journal of Comparative & International Law, Spring 2004 | Go to article overview

Interaction between Trade and Competition: Why a Multilateral Approach for the United States?


Chang, Seung Wha, Duke Journal of Comparative & International Law


I. INTRODUCTION

Competition law is no longer a strictly domestic law that deals with monopolies in internal markets only. For instance, megamergers between two foreign companies often tend to be subject to a third country's antitrust investigation. In the case where an antitrust authority assesses whether transborder activities are anticompetitive, the relevant geographic markets normally extend beyond national geographical borders. (1) This international conception of "relevant markets" indicates that competition law is very often closely related to international trade. As a result, international economic institutions such as the Organization for Economic Cooperation and Development (OECD) have discussed competition law and policy and its interaction with international trade law and policy. (2)

The General Agreement on Tariffs and Trade (GATT) (3) was born in 1947 with the purpose of liberalizing international trade and reducing or eliminating tariffs and non-tariff barriers. The GATT successfully performed its mission, eventually consigning that mission to the World Trade Organization (WTO), (4) which has significantly contributed to reducing or eliminating "public" trade barriers. (5) The WTO continues to liberalize trade through a series of multilateral trade negotiations in various sectors. (6) Nonetheless, anticompetitive activities committed by private companies have recently emerged as a new type of serious trade barrier. (7) These barriers are called "private" trade barriers due to the fact that they are not set by governments, but rather by private actors. This phenomenon has triggered a discussion of whether the WTO should have an agreement on competition policy and thereby contribute to the removal of trade distortion created by private trade barriers in international markets.

At its Singapore Ministerial Conference held in December 1996, the WTO decided for the first time to discuss the interaction between trade and competition policy. (8) The Ministerial Conference established the WTO Working Group on the Interaction between Trade and Competition (WTO Competition Working Group), which has discussed issues of interaction at a theoretical level, without producing any definite agreement. The Fourth Session of the Ministerial Conference held in November and December 2001 in Doha, Qatar, set the legal basis for launching negotiations on the interaction between trade and competition policy, which is considerable progress from the merely theoretical discussion existing under the WTO Competition Working Group. (9) Paragraph 23 of the Doha Ministerial Declaration authorized the WTO Members to negotiate on the interaction between trade and competition policy for a multilateral framework to enhance the contribution of competition policy to international trade and development after the Fifth Session of the Ministerial Conference, held in summer of 2003. Paragraph 23 required the launching of negotiations on the interaction between trade and competition policy based upon a decision to be taken, by explicit consensus, at the Cancun Ministerial Conference on the modalities of negotiations. In addition, during the period leading up to the Fifth Session, the WTO Competition Working Group was authorized to work on the clarification of "core principles, including transparency, nondiscrimination and procedural fairness, and provisions on hard-core cartels; modalities for voluntary cooperation; and support for progressive reinforcement of competition institutions in developing countries through capacity building." (10) The WTO Competition Working Group made substantial progress on these issues. (11) Unfortunately, however, the Cancun Ministerial Conference held in September 2003 failed to reach an explicit consensus on the modalities of such negotiations, as is required under Paragraph 23 of the Doha Ministerial Declaration. Such failure to agree on the modalities of negotiations on the interaction between trade and competition policy, as well as for other Singapore issues, (12) led to the collapse of the whole package of the Cancun Ministerial Conference. …

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