WORLD TRADE
ORGANIZATIONWT/WGTCP/W/236
24 July 2003
(03-3972)
Working Group on the Interaction
between Trade and Competition PolicyOriginal:  English
COMMUNICATION FROM JAPAN
The following is the final text of a communication received from the Permanent Mission of
Japan, which was circulated as an advance copy for the Working Group's meeting of 26-27 May 2003.
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Introducing a Model of Peer Review
I. INTRODUCTION
Since the Fifth Ministerial is drawing near, Japan would like to provide some material that
could encourage some active discussions in this Working Group meeting. As mentioned in the
communication from Australia, the important topic on the nature and scope of the compliance
mechanism has not yet received much consideration; thus Japan welcomes this occasion as an
opportunity to discuss matters further in detail.  Furthermore, Japan welcomes both the European
Community’s submission on Dispute Settlement and Peer Review Options for a WTO Agreement on
Competition and the US submission on the Benefits of Peer Review in the WTO CompetitionContext.
Japan’s view on the issue, i.e. the nature a nd scope of the compliance mechanism that could
be applicable under a multilateral framework on competition, is that the compliance mechanism
should be determined through the negotiation.  During the several discussions that have already taken
place on the issue, we have established the three approaches shown in Australia’s paper:  1) a formalbinding mechanism based on the WTO’s Dispute Settle ment Understanding (DSU);  2) a peer review
process;  and 3) or a combination of the DSU and peer review.
Japan has no real preference among the above three opinions at this stage.  Japan’s view,
however, is that the compliance mechanism should be  determined in accordance with the outcome of
the future negotiations on the rules and principles that will feature in the new multilateral frameworkon competition.
On the other hand, at the February meeting, many Members raised the point that peer review
has a variety of purposes and benefits within the multilateral framework on competition, aside from
considering it solely as a compliance mechanism.  Japan thus believes that a multilateral framework
on competition should also incorporate multi-purpose peer review, as we shall discuss later.
Japan considers that peer review in a possible WTO framework on competition should be
designed to meet the needs and demands of Members in the context of competition alone, and thusWT/WGTCP/W/236
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should differ from the existing trade policy review mechanism (TPRM), while noting the importance
of drawing from its experience.
As Japan finds it important to begin studying the various aspects of a possible peer review in a
WTO competition context, this paper will serve to:
1. discuss the role of peer review in existing multilateral frameworks, focusing on its
advantages and disadvantages;
2. illustrate a model for peer review in a WTO competition context;  and
3. suggest and examine those issues that need further discussion.
From our experience in other multilateral fora, a peer review must be developed by taking
fully into account the efficiency and effectiveness of the review system and process.  Japan strongly
hopes that this paper will help facilitate discussions in this Working Group.
II. A MODEL FOR PEER REVIEW IN A POSSIBLE WTO FRAMEWORK ON
COMPETITION
A. THE ROLE OF PEER REVIEW
Having been developed and experienced in existing multilateral frameworks, such as the
WTO, the OECD and the APEC, a peer review cont ributes to a wide-range of purposes, such as:
- Agreement adherence (mainly on core principles);
- Policy consultation;
- Technical assistance;
- Transparency;
- Information and experience sharing;- International cooperation.
On the other hand, some countries, in particular developing countries, have pointed out some
disadvantages related to peer review i.e.:
- the burden on Member countries, as it will evidently take time to prepare;
- the uncertainty of its effectiveness.
When taking the advantages and disadvantages into account, full consideration should be
given to incorporating a Competition Policy Review Mechanism (CPRM) into a WTO framework on
competition.  In order to adopt an efficient mech anism with an effective approach, the following
section could provide the basic design for a future CPRM.
B. B
ASIC DESIGN OF A CPRM
1. Participation
Regarding participation, a voluntary peer re view "on-demand" would probably be the most
efficient approach.
In such a CPRM, it would be appropriate to implement a review in accordance with the
applying country’s needs and requests in such cases as, for example:
- a Member seeking advice on its domestic competition law and policy,WT/WGTCP/W/236
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- a Member intending to trigger international cooperation (technical assistance for
capacity building or case-specific cooperation).
2. Countries and issues to be reviewed
As mentioned above, requests from Members wishing to be reviewed should be "on demand"
in accordance with their needs.  The issues subject to review should also be relevant to the needs of a
Member.
3. Peer Members/Forum
The proposal to establish a WTO Competition Policy Committee that would facilitate the
sharing of information and experiences among Members should receive full support from Members
and should also play a key role in promoting technical assistance.
A CPRM would thus be more efficiently im plemented through using such a Competition
Policy Committee.  For reviews necessitating minute examination, it would be appropriate to
designate a peer group which consists of both specific peer Members and outside experts, invited as
judged necessary, having enough expertise in the field of competition.
4. Preparation of recommendations and follow-ups
To strengthen the advantages of peer review, it is important that the WTO Secretariat and peer
Members alike are able to propose various policy recommendations or prescriptive guidelines.  These
recommendations and guidelines would be conducive to the Members being peer reviewed.  Having
said that, these recommendations and guidelines should not be set out in a time-consuming, detailed
comprehensive report, but rather in a more streamlined report focused on specific issues to be
reviewed in an efficient and effective manner.
Of course, implementing the conclusion of the review would be indispensable in order to
make up for the weaknesses often pointed out as regards the effectiveness of peer review.  A follow-
up review is thus proposed every two or three years after implementation.
5. Peer review flow
It is desirable that the system of a CPRM be made more efficient and less complicated than
that of the existing TPRM.  The following sequence steps are possible recommendations:
a) Request of a review;
b) Submission of reports by the country to be reviewed;
c) Pre-review examination by a review group (if necessary);
d) Review meeting (at one of the competition policy committee meeting sessions);
e) Discussion and conclusion of the review report and policy recommendation;
f) Follow-up review (two or three years after the review implementation).
C. ISSUES TO BE CONSIDERED
Several issues need be further discussed when designing a CPRM, by considering the issues
discussed in existing multilateral frameworks through peer review.  Typical examples are the burden
on participating countries and the possible overlap with current review systems.  Japan’s questionsand views on these issues are set out below:WT/WGTCP/W/236
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1. Would the establishment of a new peer review system be burdensome?
A CPRM should be efficient and it is indispensable to take into account the concerns raised
by some Members with regards to a potentially increased burden.
However, since the review is proposed as a voluntary system, the burden borne by the
Members, particularly developing countries, would not be greater than that of the existing TPRM,currently conducted on an obligatory process.
Furthermore, the review mechanism should be made as efficient as possible since, to some
extent, additional human resources and even a secretariat will be needed.
2. What is the relationship between a new CPRM and the existing TPRM?
When establishing a CPRM, we need to consider its relationship with the existing
WTO/TPRM, since for some Members; competition policy itself is included in the report on recent
policy development in the process of WTO/TPRM.
In order to pursue a more efficient approach, it is important that the subjects of these two
review mechanisms do not overlap.
One option would be that the existing TPRM no longer covers competition policy, which
would be found in the new CPRM.  However, if we are to establish a CPRM as an independent "on
demand" mechanism, another option would be more appropriate.  That is to say, we should continuedealing with the general issues related to the co mpetition policy of each Member in the TPRM, while
a CPRM should mainly focus on the specific issues that have been requested by a Member.  In this
way, we can easily differentiate the two mechanisms.
3. How should we consider countries without any competition law?
Since the CPRM proposed here is a voluntary system, i.e., on a request basis, a Member
should not be burdened with excessive obligations simply because there is no domestic competition
law.
It is thus important that sufficient flexibility be secured in the multilateral framework on
competition for those Members not having established a competition law.  On the other hand, a
country in the process of studying and developing domestic competition law could benefit from policyadvice and technical assistance through a CPRM.
4. How can international cooperation be encouraged?
Some developing countries have pointed out that a 'voluntary' mechanism for cooperation
would be insufficient for a multilateral framework on competition.  This is due to the fact that, even if
one Member country asks another for cross-border case-specific cooperation, it can be assumed that
the former will not necessarily receive adequate cooperation from the latter, since there is no real
"obligation".
However, through such a mechanism, Members can share information on the needs of
developing countries, in particular, as well as knowledge of the cooperation that can be received from
other countries of a CPRM.  This would greatly enhance the common recognition among Members
and would thus contribute to encouraging international cooperation.WT/WGTCP/W/236
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A developing country that may consider that it has not received enough cooperation from
developed countries could, of course, use the new CPRM to share its needs and demands for
cooperation, including technical assistance, among other Members.
5. Can peer review be considered effective as a compliance mechanism?
If we are to regard a CPRM as a system which is wholly based on voluntary request, the
question then arises on how the system itself can effectively function as a compliance mechanism
within a WTO framework on competition.
When discussing the development of an effective compliance mechanism, we have
recognized the opinion that combining of DS and peer review would be best.
Japan’s view on the matter is simply that it should be resolved in the negotiation stages.
III. CONCLUSION
While peer review itself has many objectives, there still remain some issues for clarification
in the future discussions in order to make it as efficient and as effective as ever.
As already mentioned, Japan believes that the debate regarding which approach should be
adopted as a compliance mechanism for a WTO framework on competition is an issue to be
determined through negotiation.  Thus, as discussions proceed and the shape of a multilateral
framework becomes clear, the type of compliance mechanism to be adopted would also take form.This paper, therefore, does not preclude the possibility of adopting WTO dispute settlement
procedures for a future multilateral framework on competition.
Our aim is that the multilateral framework on competition should be beneficial to all
Members, particularly the developing Member countries.
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