It is a pleasure to participate in this important discussion of the World Trade Organization and the evolution of the world trading system. The survey paper by James Southwick on market access barriers in Japan was very good.(1) The economic landscape that he describes is a mixture of governmental and private restraints, most of which have limited effective coverage under the rules of the WTO. These are also matters that are difficult to effectively address through bilateral negotiations. Many of the problems that he describes are allegedly anticompetitive private restraints of trade that operate against a background business environment of public restraints and may even be encouraged or unleashed by government approval.
The Southwick paper challenges us to ask: what are or should be the policy tools available to address such distortions, and what are the appropriate expectations for those policy tools be they grounded in antitrust or trade? Let me offer a few observations on these broader questions.
First, the problems that Southwick identifies are not uniquely Japanese, although practices in Japan have produced many economic tensions with its trading partners. If these problems were unique to Japan, then it might not be sensible to think about constructing or designing a global multilateral response. I have had the privilege of serving as the Executive Director of an International Competition Policy Advisory Committee to the Attorney General and Assistant Attorney General for Antitrust. In the course of the last two years, the Advisory Committee held a number of public hearings, with the participation of business executives, competition authorities from around the world, lawyers, academics, economists, and other interested parties. These hearings produced a number of submissions and comments regarding anticompetitive practices around the world that inhibited access to markets and trade. The committee heard, for example, about standard setting practices in Europe in the telecommunications sector that were seen as tipping those standards in favor of EU producers. This practice was not facially discriminatory, nor an example of formal governmental measures, but nonetheless had adverse consequences on foreign (in this case U.S.) would-be market-entrants. The EU example is quite analogous to the problems associated with the Large Scale Retail Store Law in Japan. The government had delegated the authority to regulate to the regulated-in the EU example, the trade association and in the Japan example, the local shops-with the resulting exclusion.
In some respects, this is the kind of problem covered by the Technical Barriers to Trade Agreement (TBT), because regulatory protection is within its ambit and the agreement provides that protection is not saved by the facial neutrality of the measure. However, the TBT has a limited history of application. And, of course, it raises the even larger question about how far we might want the WTO to go down the road of interpreting national regulatory practices.
Further, as difficult as these mixed governmental and private problems have been in the Japanese context, I am inclined to think that the international community will face a world where they continue to arise. The accession to the WTO of important transition economies, such as China and Russia, are likely to produce more tensions between nations about practices that reflect a mixture of governmental and private restraints.
What, then, might be the potential or available policy tools to get at these types of problems? My own personal view is that, though no tool offers complete solutions, each can get us part way down the road.
With respect to antitrust tools, U.S. antitrust law does reach anticompetitive restraints in foreign markets that harm U.S. export trade if certain conditions are met. Jurisdiction aside, the availability of this tool will always hinge on meeting the evidentiary requirements of U. …