WORLD TRADE
ORGANIZATIONWT/WGTCP/W/241
25 July 2003
(03-3981)
Working Group on the Interaction
between Trade and Competition PolicyOriginal:  English
COMMUNICATION FROM CHINA
The following communication received from the Permanent Mission of China, is based on the
text of a statement made by the delegation of China at the Working Group's meeting of 26-27 May2003.
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Hardcore Cartels and Voluntary Co-operation
I. HARDCORE CARTELS
1. China believes that an effective multilateral solution could be designed only when the anti-
competitive practices covered by so-called hardcore cartels are clearly defined.  Some developing
countries, like China, have not had an anti-monopoly law yet.  Although some anti-competitive
practices are governed by various existing legislations, still there is no one uniform definition on
hardcore cartel.  So China believes that it still will take more time for Members to further study and
clarify the definition of hardcore cartel in the Working Group before Members could decide whetherfor example the definition in the OECD Recommendation on Hardcore Cartels could be incorporated
in the future multilateral competition framework.
2. On the other hand, for developing countries, within a certain development period, excessive
competition in certain sectors may have negative effects.  So adequate flexibilities for developing
Members should be incorporated into any regulati on on cartels in the future multilateral competition
framework.  For example, exemptions could be applied to small and medium-sized enterprises for
industrial development purposes.
3. Effective cooperation at the multilateral level is only possible when all Members have fully
realized the harmfulness of hardcore cartels, established adequate domestic regulative systems and
accumulated enough administrative experience.  The large gap between developed Members anddeveloping Members in these aspects forms the biggest barrier for effective multilateral cooperation.
The representative of Hong Kong, China explained in its submission
1 last February the challenges of
these gaps to the multilateral framework.  China has similar feelings.
4. So China believes that the future multila teral competition framework should take into
consideration the current situations in developing countries.  One of its main tasks is to help promoteinformation exchange and experience sharing among Members through capacity building, facilitate
                                                     
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the formation of consensus and set a good basis for further cooperation.  Capacity building is not only
an important method, but also an integral part of the future framework.
5. China would also like to touch upon several related issues.
A. EXPORT CARTEL
6. Developing countries have been suffering from their weak positions in market access and
international technology transfer which hamper their effective participation in economic globalization.
If developed countries continue to maintain their export cartels, it will put developing Members at  an
even worse position in international trade.  So Chin a supports the idea proposed by Thailand that the
future competition framework should have restrictions on developed Members in maintaining export
cartels.
B. INTERNATIONAL CARTEL
7. China agrees that international cartels ha ve negative impacts on both developing and
developed Members.  At the same time, China also agrees with other developing Members' view that
international cartels are largely a developed country phenomenon, in that low-income countries and
LDCs are home to none of the notorious internationa l cartels that have been discussed in the Working
Group.  So China believes that since developing Members do not have both adequate domestic
legislation and enforcement experience, developed Members should make more efforts in combatinginternational cartels.  The sharing of successful experience and provision of technical assistance in
this area will contribute to capacity building for developing Members in fighting against international
cartels.
C. T
HE ABUSE OF INTELLECTUAL PROPERTY RIGHTS THROUGH INTERNATIONAL CARTEL
8. China also believes that the Working Group could give special attention to the issue of the
abuse of intellectual property rights (IPRs) through international cartel arrangements for the purpose
of limitation on competition.  The TRIPS Agreement has in principle required control over the rights
holders' abuse of intellectual property rights.  The future multilateral competition framework could
have necessary regulation on this kind of abuse.  It will contribute to the better protection of IPRs,
realization of social public interests and balancing rights and obligations concerning IPRs.
II. VOLUNTARY COOPERATION
9. With the development of economic globalization, the negative effects of cross-border anti-
competition behaviour on the economic and trade development of WTO Members has become more
and more obvious, especially to the developing Members.  WTO Members should consider
strengthening their cooperation to deal with this situation and this need has been recognized by most
of the Members.
10. International cooperation on trade and competition policy has two major aspects.  One is the
cooperation on the enforcement of competition law; the other is cooperation on capacity building in
relation to competition policy and the construction of a competition culture.
11. Only if Members participating in international cooperation have established their own
competition law and enforcement system, can cooperation on enforcement of competition law be
implemented effectively.  In practice, some Members have already had this kind of cooperation at abilateral or regional level.  Undoubtedly, the experiences and lessons from such cooperation will be
useful to cooperation under a multilateral framework.WT/WGTCP/W/241
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12. But we cannot ignore the big differences on legislation and enforcement of laws that exist
between different Members, especially developed and developing Members; this must be taken into
consideration during the cooperation in the WTO.  For example, there is serious difficulty in
implementing the principle of "positive comity" in  the cooperation on the enforcement of competition
law.  On the one hand, "positive comity" has not always been implemented well, and has not alwayshad satisfactory results in the international practices.  This phenomenon should be given sufficient
attention by the Working Group.  On the other hand, a very important systemic basis of positive
comity is that both sides should have full-fledged competition laws.  However, the systems of
legislation and enforcement of competition law of  most of the developing Members are not well
developed yet, which makes it hard for them to meet preconditions of the implementation of positive
comity by developed Members.
13. Therefore, Members should take developing Members' capacity building as the basis when
Members discuss international cooperation on trade and competition policy under a WTO framework.
And Members should promote the construction of co mpetition culture and the law in the developing
Members by way of information exchange and technical assistance.
14. China is working hard on the establishment of anti-monopoly law, and needs international
cooperation on competition policy.  In practice, China has already had bilateral cooperation with someWTO Members.  Of course, the major part of our cooperation is capacity building and information
exchange, for example, joint studies and expert consultations on the drafting of the Anti-monopoly
Law and other legislation on competition policy.
15. China suggests that voluntary cooperation be incorporated into the future WTO multilateral
framework of competition policy.  The major aspect of voluntary cooperation is the cooperation oncapacity building and the construction of competition culture.  Members should pay attention to the
following points while implementing voluntary coop eration.  Firstly, international cooperation should
be taken progressively, with the precondition of not over burdening developing Members.  The fields
of international cooperation can be expanded gradually, as developing Members improve their
capacity.  Secondly, Members need not wait for the establishment of a single competition authority inorder to fulfill international cooperation, although to set up a single competition authority is the
direction.  Different Members have different cultures of law, so future arrangements on cooperation
should be flexible enough to reflect this variety.  We should allow developing Members to have
flexibility on the establishment of their competition authorities, considering the differences among
Members in levels of economic development and the conditions of market competition.  Thirdly, as
part of the cooperation, Members could exchange laws, regulations and documentation related to anti-
monopoly policy at the multilateral level on a voluntary basis and through mutual trust.  Fourthly, it isworthwhile to discuss closer international cooperation, for instance, cooperation on specific cases.
But we must take developing Members' conditions into full consideration, and it should not be
mandatory, i.e. if one Member is not yet prepared for the cooperation with other Members, others
should not be able to force it for whatever reason.
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