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Trade and Competition Policy

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The World Trade Organization: Legal, Economic and Political Analysis

Abstract

Competition policy1 and trade policy can be mutually reinforcing policy tools, working in tandem to foster markets that are contestable and competitive to the benefit of foreign and domestic interests alike. In some ways, these two policy instruments are flip sides of a coin—competition policy addresses private restraints of trade, whereas trade policy focuses on governmental restraints of trade. In the absence of effective competition policy, private restraints of trade can nullify the benefits of negotiated trade liberalization measures, reducing the benefits of the negotiated trade bargains such as tariff reductions and perhaps even public support for liberalization of trade.

From 1997–2000, Professor Janow served as Executive Director of the International Competition Policy Advisory Committee to the Attorney General and Assistant Attorney General for Antitrust, US Department of Justice.

This discussion uses the term competition policy to encompass those national laws (such as U.S. antitrust laws) and policies designed to promote competition in the marketplace and to deter and punish restrictive or abusive business practices. The main concern of competition law and policy is therefore private firm actions.

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References

  1. The antidumping laws require a showing that the dumping contributed to material injury, which is defined as harm that is not “inconsequential, immaterial or unimportant.” Section 771(7)(A) of the Tariff Act as amended, 19 U.S.C. §1677 (7)(A) (2001). US antitrust laws, however, have a higher standard of injury and causation and tend to require a showing of a substantial lessening of competition or unreasonable restraint of trade. Moreover, price discrimination in the context of the Robinson Patman Act provides certain defenses which are unavailable in the antidumping context, such as meeting competition. For an excellent comparison of antitrust and trade remedies and standards, see Harvey M. Applebaum, The Interface of the Trade Laws and the Antitrust laws, 6 Geo. Mason L. Rev 479 (1998).

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  17. Specifically the recommendation states that “... the party addressed should accord sympathetic consideration to and should afford adequate opportunity for consultations with the requesting party, with a view to reaching mutually satisfactory consultations, and if it agrees that such harmful effects are present it should take such measures as it deems appropriate”. See, GATT BISD 9th Supp. 28 (1961). This resolution existed in relative obscurity until it was invoked in 1996 by the United States in the context of a film dispute with Japan. See discussion later in this section.

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  18. The GATT provided legal remedies for government actions that had the effect of nullifying and impairing the benefits that another GATT member received as part of the market access it was promised in its quid pro quo for the market access that it provided. The GATT also recognized there could be measures or developments that were not a direct violation of agreed-upon commitments but which nevertheless had the effect of nullifying or impairing the intended benefits of the liberalization measures. For additional discussion of this subject see Bernard M. Hoeckman and Petros C. Mavroidis, Competition Policy and the GATT, 17 The World Economy 141 (1994).

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  24. The US argued that certain distribution-related measures, restrictions on large stores and promotional measures resulted in a GATT Article XXIII:1(b) non-violation nullification or impairment of benefits accruing to the United States based on tariff concessions made by Japan in the Kennedy, Tokyo and Uruguay Rounds. The Panel rejected these claims, relying in part on the fact that many of the challenged measures were relatively old, and that the causality between the measure and the distribution system was not well established. The Panel also rejected the U.S. violation claims, which included an argument that the JFTC and certain fair trade council’s failure to publish certain enforcement actions were a violation of GATT Article X: 1. See Japan—Film, supra note 12, ¶¶ 10.390–393.

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  28. This voluntary code contained several provisions calling for special concern to the problems facing developing nations. The code’s substantive provisions condemn collusive anticompetitive actions such as price-fixing, collusive tendering, market or customer allocations, sales, or production quotas and various kinds of concerted refusals to deal. The Code also condemns abuses of dominant position such as predatory behavior, discriminatory commercial terms and anticompetitive mergers. Wood, supra Diane P. Wood, The Impossible Dream: Real International Antitrust, U. Chi. Legal F. (1992) note 18, at 286.

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  31. This agreement contained six comity principles that would be considered by the parties in seeking an appropriate accommodation of the competing interests. These include factors such as the relative importance of the activities involved within the enforcing party’s territory; the presence or absence of a purpose to affect consumers, suppliers or competitors within the enforcing Party’s territory; the relative significant of the effects of the anticompetitive activities on the enforcing jurisdiction; the existence or absence of expectations that would be furthered or defeated; the degree of conflict or consistency between the enforcement activities and the other party’s laws; and the extent to which the enforcement activities of one party would impact the other jurisdiction. For additional detail see, Agreement, supra note 36, Article VI.

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  32. Agreement between the Government of the United States of America and the Government of Australia, A Mutual Legal Antitrust Enforcement Assistance Agreement, available at: http://www.usdoj.gov/atr/public/international

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Authors and Affiliations

  1. Masters Program in International Affairs, Columbia University, Columbia

    Merit E. Janow (Professor in the Practice of International Economic Law & International Affairs and Director)

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  1. Merit E. Janow
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Editors and Affiliations

  1. International Trade Law Center, International Law Institute, Washington, D.C.

    Patrick F. J. Macrory (Director) (Director)

  2. White & Case, Geneva

    Arthur E. Appleton (Counsel) (Counsel)

  3. SAIS-Bologna, Johns Hopkins University, Bologna

    Michael G. Plummer (Professor of International Economics) (Professor of International Economics)

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Janow, M.E. (2005). Trade and Competition Policy. In: Macrory, P.F.J., Appleton, A.E., Plummer, M.G. (eds) The World Trade Organization: Legal, Economic and Political Analysis. Springer, Boston, MA. https://doi.org/10.1007/0-387-22688-5_57

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