THE INTERNATIONAL WORKING GROUP ON THE DOHA AGENDA (IWOGDA) PROGRAMME  

Introduction

It is well recognised that varying economic social and cultural needs and interests influence and separate national systems of competition law (Ulrich, 1998)[1].  That competition policy cannot be identical in different countries and each market needs to be assessed in its own context (Britain and Van Merit, 1996).[2]  Differences in competition policies are therefore significant and often reflect themselves in the gaols of competition laws.  There is perceived to be a broad consensus amongst WTO members that the basic goal of competition policy is to enhance inter-firm rivalry in private markets, to deal with anticompetitive government measures so as to promote economic efficiency, consumer welfare and economic development.  Governments differ however, on weather and to what extent non-efficiency goals (such as fairness, opportunities of small business, market integration, pluralism, technological development) should be taken into account in the conduct of competition policy.  The WTO principles of non-discrimination (national treatment, most favoured nation) transparency and procedural fairness reinforces the competition law objective of protecting the competitive process without regard to the nationality of the competitors, however, it is argued that there is a need to clarify and adapt the non-discrimination principles with regard to competition laws and policies for developing and lesser developed countries.

Multilateral negotiation on competition policy by developing countries has been a slow and deliberate process. These countries appear to be uncertain if not insecure about the costs benefits of new disciplines in this area, although many support the general concept of the application of binding international rules to curb restrictive trade practices.   The differences in the approach, goals and implementation of competition policies in developed countries however, suggest that national needs and objectives rather than international considerations are decisive issues.

WTO and Competition Policy

Given the different conceptions and objectives with which developed and developing countries have approached exploratory  negotiations on competition policy, the outcome of the exercise has been unpredictable.  In the present context, developing countries have a lot of freedom to design and implement their competition policies, unrestricted by international rules and to some extent so far free from demands or coercion by developed countries.  There is no obvious urgency on their part to move forward the agenda for a multilateral competition regime.

The EU appears as the leading force behind the proposal to develop disciplines on competition in the framework of the WTO; although there is considerable disagreement amongst some developed countries on the desirability and possible outcome of such proposal. The EU initiative appears to be driven by the belief that an effective application of competition policy can keep markets open and accessible for foreign competitors.  The reaction of developing countries has been one of cautious observation, adopting a collective position to proceed with care in the context of the limited domestic reach of competition laws vis-à-vis the growth of anticompetitive practices by TNCs globally.  Cognisant of the fact that domestic competition policy cannot ensure that competition will prevail because competition in any territory will be affected by external actions and decisions (e.g. market strategies of firms located outside the territory especially in the service industries) over which the national territorial laws have no jurisdiction. 

It is argued that a multi-lateral framework of competition rules and cooperation for international trade should be consistent with the general WTO principles of transparency, non-discrimination, procedural fairness, cooperation and commitment, supported by enforcement procedures, cooperation and dispute resolution.  These principles are endorsed in the WTO agreements; GATT, GATS and TRIPS Agreement[3], whilst further recognising and specifically addressing the issue of national circumstances. Proposal for the application of these principles to competition law and policy has been met with mixed reaction from some of the developed and many developing Member states of the WTO.

Implications for Developing Countries

The uniform application of these principles in the context of the general thrust and objective of WTO agreements (to provide for market access) would not only create serious inequities between the developed and developing WTO Members but would also have the effect of opening up domestic markets of all Members to other Member states on a non-discriminatory basis and expose their businesses (importantly, services of the LDC and developing countries) to competition from the developed countries. .  The ability of home companies to sell products and provide services in their own home markets is only possible in the long run if their products and services are competitive with goods from the U.S., EU and Japan (which is highly unlikely). Application of these principles in relation to competition in an international context would without specific adjustments, give the firms of the developed countries an unfair advantage to unlimited and uncontrolled access to the LDCs’ national market which would harm their firms development prospects especially the service sectors which currently makes up 60% of most economies and underscore the concerns of developing countries and their reaction to the proposals for a multilateral framework for competition law and policy negotiation.

Competition authorities in developing countries complain that developing countries interests are not adequately taken into consideration in the competition policies of developed industrialised countries and can be substantiated by numerous examples to date.  The Director General of the WTO, Michael Moore, (a New Zealander) recently wrote, “It is ironic that it is those sectors that benefit most from the international trading system continue to work so hard to stay outside the system and its rules. The aviation and agriculture sectors in particular and yet they remain largely outside the scope of the WTO rules.  The most global of all industries remain protected contrary to the WTO agreements principles of non-discrimination and transparency and thus advance the case for a multilateral framework”. [4]

Private international anticompetitive practices or monopolisation by global firms of domestic markets can therefore prevent economic development, or limit its scope.  Failure by developing countries to have adequate means to fight such practices exposes them to significant costs and retardation in their processes of economic development. Developed countries have generally ignored or encouraged export cartels whose activities deleteriously affect other countries (LDCs and developing countries in the main). Experience has shown that cooperation of developed countries in the investigation and discovery of such practices has been lacking. 

Many developing countries do not have the necessary endowments, national competition laws or competition policy in place to meet the transparency and non-discriminatory market access principles and obligations of the WTO agreements; they lack the ability to engage in market orientated reforms or to adopt a competition law, being without the instruments to build a competition culture or develop appropriate institutions.   Real concerns are also expressed that a multilateral framework on competition policy would impair or limit their development policy options and ability to implement pro-development industrial policies at their fledgling stages.  

It is essential therefore, that the effect of WTO principles on the autonomy of national competition authorities and the interpretation and enforcement of their laws, should not weaken existing competition safeguards.  As stated by Ernst-Ulrich Petersmann,[5] “There is a need for pragmatic synthesis between narrow “…competition law approaches” and over ambitious “integration law approaches” so as to enable WTO Members to move towards progressive competition-orientated reforms of the world trading system in order to better protect consumer welfare and the equal rights of   citizens”

There are real issues to be addressed as global economies are not homogenous and poses serious difficulty to integrate competition rules[6] . Any serious deliberation must include and address the issues of non-discrimination requirements that could limit parochial exemption that unreasonably favour domestic economic activities and impose significant costs on other countries. A literal and untempered application of MFN and non-discriminatory treatments would be inequitable and difficult given the vast differences in development amongst WTO Member countries. The WTO principles, could fulfil the competition law objective of protecting the competitive process without regard for nationality of the competitor in an integrated approach as proffered by Ernst-Ulrich Petersmann,[7] whilst providing for pragmatic synthesis between narrow competition law approaches and over ambitious integrated law approach as stated by Frederic Jenny[8].  .   In the final analysis and in the context of a statement issued in the 1997 WTO Annual Report “The issue is not weather competition policy issues will be dealt with in the WTO context, but how and in particular, how coherent will the framework be within which this is to be done”. [9]

Core Requirements of New Agreement  

Adoption of a multilateral competition framework reflecting the core principles of WTO would need to deal with the following issues in order to address the concerns of developing countries:

• General consensus and acceptance of core principles of competition at the international level integrated into a cooperation agreements with different commitments and conditionality for its implementation, corresponding to the development and cultural regimes of each country; allowing for the different levels of resources and institutional endowments; as members are characterised by extensive diversity of economic development, socio-economic circumstances, laws, cultural norms and history.

• Commitment to the process with suitable modulation of treatment through negotiated transitional periods and requirements for each subgroup, depending upon the Member’s state of development and legal and institutional endowment. . These should not be abused for protectionist reasons.

• Establish sub-groupings into Developed - with functional law and institutions, Developing - with operative competition regime, policy, legislation and agencies and Lesser Developed Countries with limited or no competition institutional endowment.

• Clarify and adapt the non-discrimination principles of WTO law with regards to competition law and policies as a safeguard for LDC and developing countries and I so doing   provide for special and differential treatment through flexibility, appropriate exemptions, exceptions, and waivers so as to reflect the specificity of national competition policy and law; to provide temporary relief from competition to domestic manufacturers and service providers to address the concerns of LDCs and developing country Members; to enable them to achieve their development objectives, with binding realistic timeframes.

• Permit realistic exclusions and exemptions and waivers, with timely provisions for elimination or phasing out and measure to ensure transparency of such exclusions, exemptions or waiver.

• Promote bilateral and multilateral cooperation on competition matters, exchange of information, assistance in the formulation and introduction of competition policy, laws and institution and capacity building for LDCs and developing countries.

·    The MFN treatment can be problematic but Governments can chose to negotiate commitments in a various ways as provided in the GATS and TRIPS Agreements. 

Conclusion

Negotiated temporary respite should be permitted, suitable to address the cases of those countries without national regimes or those that need to make the necessary national adjustments to be in a position to access and apply the negotiated competition commitments in an agreed time framework, to facilitate market access by a gradual process. Allowance should be made for differences in national legislation provided they are not contradictory or conflict with the underlying consensus expressed in the WTO principles whilst accepting the reality that the community of trading nations is very diverse with different cultural norms.

It should be accepted that there are differences in the levels of economic development amongst the Members and that not all Members are immediately and equally able to provide or access the benefits of a multilateral international competition regime applied in the context of the WTO agreements principles. There should be uniform application of core principles of competition on a level-playing basis only if national circumstances are comparable. Limits should be placed upon unfair protectionists’ exceptions and sectorial exclusions in national competition laws and policies, and strengthen and extend bilateral cooperation among competition authorities.

Suggested Wording of Provision

Temporary relief and negotiated competition commitments in an agreed time framework.

“Each Member State subscribing to the WTO set of protocols on the Multilateral Agreement in respect of Competition Law and Policy shall have the right to apply for temporary relief from international competition to domestic manufacturers and service providers firms, to address the specific constraints of that Member State in an attempt to minimise the burden on Members carrying out any obligations or commitments given.  Temporary relief shall be by way of grant of waiver, exemption or exclusion to comply with or the application of any commitment required or given or any provision of the Agreement.  Member shall be granted the opportunity to obtain, such relief with appropriate flexibility upon mutually agreed terms in respect of the applicant Member and with respect to the time limit within which such obligations and commitments given are to be complied with.   All such commitments and or temporary relief granted shall be binding upon the parties thereto and shall be otherwise subject to the general provisions of the Agreement.”

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