RESTRICTED
WORLD TRADE WT/WGTCP/W/4
19June1997
ORGANIZATION(97-2510)
Original: English Working Group ontheInteraction
between Trade andCompetition Policy
COMMUNICATION FROM JAPAN
Thefollowing communication hasbeenreceived from thePermanent Mission ofJapan with
therequest thatitbecirculated toMembers.
_______________
Given thecomplicated nature oftheinteraction between tradeandcompetition policy, theinitial
work oftheWTO onthisissue should havecomprehensive coverage ofalltherelevant issues raised
bytheMembers, forthefollowing reasons:
(a) Themarket structure within theborder isbecoming more andmore relevant totrade
flows, astheborder barriers havedramatically reduced astheresult ofaseries oftrade
negotiations, including theUruguay Round.
(b) Thelackofcommon international rulesorofconvergence ofcompetition policies could
motivate some countries totakeunilateral measures.
(c) Thetrademeasures designed toprotect domestic industries could affect faircompetitive
conditions. Thismaybeanissue which maynotbeeffectively addressed within the
limited framework oftrade measures, butcould bemore appropriately addressed in
awider framework ofinteraction oftrade andcompetition.
(d) Asliberalization ofinvestment progresses andinvestment rulesarebeing made clear,
agreater number ofissues areemerging withregard tothemarket structure within
theboundaries.
Members mayclarify, when necessary, whattheymean by:
(a) competition/competition policy;
(b) competition policies which affect trade;
(c) anti-competitive practices which affect trade;
(d) restrictive trade measures/practices which affect competitive conditions.WT/WGTCP/W/4
Page2
Suggested work programme andissues tobeconsidered
1. Stocktaking ofexisting rules related totrade andcompetition policy:
(a) WTO rules, including:
(i) Articles VIIIandIXoftheGATS, aswellastheReference Paper (concerning
basic telecommunications), oftheFourth Protocol totheGeneral Agreement
onTradeinServices(whichstatesthatappropriatemeasuresshallbemaintained
forthepurpose ofpreventing major suppliers fromengaging inorcontinuing
anti-competitive practices);
(ii) competition policy-related provisions intheWTO agreements including the
GATT 1994(particularly theAgreement ontheimplementation ofArticle VI
ofGATT 1994, theAgreement onSubsidies andCountervailing Measures,
theAgreement onSafeguards).
(b) Competition policy-related provisions inregional and bilateral agreements
(e.g.consultations agreements between competition authorities).
(c) Domestic rules:
(i) competition policies andtheirenforcement byWTO Members;
(ii) domestic regulations forcompetition-related trade measures including the
conditions forpublic interest anddefinition ofinjury.
2. Analysis ontheinteraction between trade andcompetition policy:
(a) Toanalyse theeconomic effects ontrade caused byanti-competitive practices aswell
ascompetition policy:
(i) howanti-competitive practices suchascartels, boycott, vertical restrictions
andabuse ofadominant position restrict market access opportunities offoreign
goods andservices, andundermine thebenefits oftrade liberalization/tariff
concessions;
(ii) howtodealwithpredatory pricing asaresponse tocounter foreign firms
entering thedomestic market;
(iii) how(intra-nation/international) merger would affect trade flows. What are
theeffects ofmerger policies?
(iv) whether therules including exemptions currently inplace governing anti-
competitive practices areadequate todealwiththem;
(v) whether theenforcement ofcompetition policies, including extraterritorial
application ofcompetition law,could distort flows oftrade;
(vi) what aretheeffects oftheharmonization ofcompetition policy overtrade
measures/practices;WT/WGTCP/W/4
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(vii) howtherestricted business practices would affect trade flows.
(b) Toanalyse theeconomic effects oncompetition caused bytrade measures/practices:
(i) what willbetheeffect oftrade remedies suchasanti-dumping measures,
safeguardmeasures,subsidiesandcountervailingmeasuresoverthecompetitive
conditions offoreign anddomestic goods andservices;
Itmaybeworthwhile tolookintodifferent circumstances andconditions indifferent
markets suchas:
- markets indifferent competitive conditions (e.g.monopoly, oligopoly,
competitive markets);
- markets ofdifferent products (e.g.rawmaterials, components, finished
products); and
- markets ofdifferent industry type (e.g. mature industries, new
industries, high-tech industries, industries withsignificant economies
ofscale).
(ii) whatarethecases inwhich trademeasures which areoriginally ofprovisional
nature could excessively restrict ordistort competition?
3. Case studies oninteraction between trade measures andcompetition policies:
(a) Toconduct casestudies onthetreatment oftrade measures andcompetition policies
inregional agreements, andbilateral agreements such astheEU, ANZCER
(Australia-New Zealand), andCanada-Chile FreeTrade Agreement.
(b) Toconduct casestudies onhowcompetition policy perspective iscurrently taken into
account when invoking trade measures, including theinvolvement ofcompetition
authorities andimplementation ofapublic interest clause.