RESTRICTED
WORLD TRADE WT/WGTCP/W/20
4July1997
ORGANIZATION(97-2799)
Original: English Working Group ontheInteraction
between Trade andCompetition Policy
COMMUNICATION FROM NEW ZEALAND
Ministers atSingapore decided toestablish aworking group ontheinteraction between trade
andcompetition policies. Themandate forthegroup isverywide. Ministers agreed to"establish
aworking group tostudy issues raised byMembers relating totheinteraction between trade and
competition policy, including anti-competitive practices, inorder toidentify anyareas thatmaymerit
further consideration intheWTO framework".
Theinteraction between trade andcompetition policy iscomplex butsome important themes
canbeidentified andwebelieve thatitwould beuseful tostructure ourdiscussions around these, so
thatwecanfulfiltheMinisters 'mandate ofidentifying anyareas thatmaymerit further consideration
intheWTO framework. These themes centre ontheimpact ofglobalization onthemultilateral trading
system andtheresulting relationship between trade anddomestic regulations.
Atthecentre oftheinteraction between tradeandcompetition policy isthefactoftheincreasing
globalization ofbusiness. Globalization means thatfirms areincreasingly looking tooperate across
national borders toservice theirbusinesses, thereby sourcing inputs attracting investment anddeveloping
markets inmany different countries. Therange ofgoods andservices thatcanbeandaretraded
internationally continues togrow. Globalization isbotharesult ofandacontributor toincreasingly
open markets. Thedefinition ofan"open market" isitself evolving inresponse tothose changes.
While intheearly years ofthetrading system theprocess ofopening markets focused ontheremoval
ofbarriers totrade attheborder intheUruguay Round andsince ithasbeenrecognized thatmarket
structures andthenature ofdomestic regulation alsohaveimportant impacts ontheability ofcompanies
toparticipate intheinternational market place.
Abroad range ofgovernment policies andpractices cancause barriers totrade. These include
suchmattersasrestrictionsonentrytoutilityandothermarkets,marketregulationthatlimitscompetition
more thannecessary toachieve other policy objectives, regulations thatdonotmeettherequirements
ofsound quality ofregulation principles, theabsence oflawstoprotect competitive processes, theuse
oftraderemedies lawsinaprotectionist fashion, andindustry policies thatfavour domestic producers.
NewZealand proposes thattheworking group should focus itsattention initially onthebroad
conceptualrelationshipsbetweentradeandcompetitionpolicy,includingtherangeofgovernmentpolicies
which impact onthecompetitive business environment.
Thiswork could startwithanalysis ofexisting WTO provisions witharelationship tothe
interaction between trade andcompetition policy, inthebroad sense described above. Thiswillgive
usallasense oftheextent towhich thetrading system already addresses aspects oftheinteraction
between policy areas.
./.WT/WGTCP/W/20
Page2
Thisanalysis willalsohelpustounderstand theways inwhich thetrading system hasevolved
totakeaccount oftherelationship between market access, thenature ofdomestic regulation andthe
development ofaninternational competitive business environment. Inparticular, itwillhelpusidentify
howthebroad application oftheprinciples ofthetrading system, including suchimportant principles
asnational treatment, mostfavoured nation treatment, transparency, leasttraderestrictive andnecessity,
aremoving ustowards thatsortofenvironment and,inaccordance withMinisters 'mandate, identify
areas which merit further consideration. Inthiswork, wewillwanttolookattherelationship between
these principles andnewprinciples founded inthediscipline ofindustrial organization economics.
Thiscanhelpusidentify howexisting multilateral rules canbeimproved andhowbarriers totrade
imposed bygovernment regulation andanti-competitive business conduct canbediminished orremoved.