WORLD TRADE
ORGANIZATIONWT/WGTCP/W/217
26 September 2002
(02-5154)
Working Group on the Interaction
between Trade and Competition PolicyOriginal:  English
COMMUNICATION FROM JAPAN
The following communication, dated 25 September 2002, has been received from the
Permanent Mission of Japan with the request that it be circulated to Members.
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Core Principles
I. INTRODUCTION
In Paragraph 25 of the Doha Development Agenda, the Core Principles are mentioned as the
items to be clarified by the 5th Ministerial Conference, together with such other focal points as
hardcore cartels and voluntary cooperation, as well as the progressive reinforcement of competitioninstitutions in developing countries.  The concrete elements of the core principles, for example
transparency, non-discrimination and procedural fairness, have been exemplified, all of which are
fundamental principles of the WTO.  Transparency, as far as the WTO is concerned, refers to the
publication of relevant ordinances, rulings and decisions, not forgetting the reporting of government
executive activities to the WTO.  The rules and regulations for securing transparency are numerous in
the WTO Agreement, including Article 10 of the GATT.  Another example is non-discrimination,
which imposes the national treatment and most-favoured-nation treatment, both of which are amongthe most basic principles of the WTO.  When referring to national treatment, this implies using no less
disadvantageous treatment for other countries than for one's own nationals, while the most-favoured-
nation status provides no less favorable treatment than that of a certain country's most favoured
nation.  National treatment and most-favoured-nation treatment are set out in concrete terms in
Articles III and I of the GATT, respectively.  Procedural fairness in the WTO is, as provided for inArticle X:3 of the GATT, to execute ordinances, judicial judgements and executive decisions in a
uniform and impartial manner, and to promptly examine administrative measures.
Each element of the core principles should also be secured as a rule in the multilateral
framework on competition policy.  However, when it comes to actually applying these principles, it isnecessary to examine certain exceptions and the application range, as it would not be right to correct
them mechanically across the board.
The following issues are those to be examined at a time when the core principles are being
applied to competition policy, especially with regard to the ideal way to apply the core principleswithin the multilateral framework on competition policy.  Japan would also like to indicate the
exceptions and the application range, as well as other points that should be noted for each issue.  The
paper has been compiled for the purpose of clarifying the points to be discussed.  It should, therefore,
to be noted that the Government of Japan is in no way bound by the contents of this paper.WT/WGTCP/W/217
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II. THE MAIN POINTS UNDER DISCUSSION CONCERNING THE CORE
PRINCIPLES REGARDING COMPETITION POLICY
• Issue 1:  How should the core principles be positioned within the multilateral
framework on competition policy?
Competition regulations provide for general requisites only, and whether or not they meet
such requisites, they will be judged case-by-case.  By making public the guidelines, the application
standard can be clarified.  Therefore, in order to secure their appropriate execution, it is necessary to
carry out competition regulations with clarity and transparency, by making just procedures for
business entities and consumers in general through not only ordinances, but also through regulations,
administrative decisions and procedures available to the general public.  Furthermore when applying
competition law, it is evident that the law be applied equally and impartially to all enterprises,
irrespective of their nationalities.  As there is no objection to non-discrimination being secured, suchcore principles as transparency, non-discrimination and procedural fairness should be designated in
the multilateral framework on competition policy, as the foundation stone.
If one is to consider the diversity of the competition laws and policies in each country, the
application of the principles should be neither mechanical nor uniform.  We will state this point inconcrete terms at the following part.
• Issue 2:  In the WTO Agreement, transparency, non-discrimination and procedural
fairness are provided for only in general terms.  In this respect, should not a moredetailed minimum standard be provided for within the multilateral framework on
competition policy in addition to the general provisions?
For example, in view of securing transparency for business entities and general consumers,
the more detailed the standards of the core principles are, the more desirable it is.  We already note
that, in the OECD countries, the general practic e is for competition agencies to announce to the
general public the relevant regulations, administrative decisions, execution policies, inquiries andprocedures, etc.  Thus, in the multilateral fram ework on competition policy, there can also exist
choices for setting a minimum standard for the core principles, which aim at securing transparency at
a certain level, fixed in common with each country.
On the other hand, a limit should be imposed when setting out the detailed standards because
competition laws and policies differ and execution procedures vary from country to country. For
example, in the multilateral framework on competitio n policy, a general rule is worked out, leaving
the possibility to give a more detailed explanation or examples, as necessary, in the form of non-
binding guidelines or a menu of options.
It is thus necessary to discuss which choices to adopt in the future, considering the various
elements, such as the interests of business entities and consumers, as well as the differences in the
competition policies of each country.
• Issue 3:  In the multilateral framework on competition policy, to what extent do we
aim at securing the core principles?  In doing so, to what extent should we impose an
obligation on each country? Should we allow special and differential (hereinafter
referred to as "S&D") treatment for developing countries?
If the core principles are characterized as the foundation stone of the multilateral
framework on competition policy, the obligation for participating countries to equip themselves
with a system for freedom of information may arise in order to secure transparency, or in order toWT/WGTCP/W/217
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revise domestic laws for the purpose of securing non-discrimination and procedural fairness.  In
addition, after completion of such domestic measures, the obligation for participating countries to
inform the WTO of ordinances, and court judgements and decisions may also arise.  The extent of
this latter obligation will depend upon how far the core principles should be secured.  For instance,
if participating countries are obliged to establish more detailed procedures in order to secure a high-level of procedural fairness, they will, in turn, have a greater burden the participating countries will
have to bear. The burden will be even greater for countries having no competition laws.
It is expected that the countries already equipped with competition laws and systems may
secure more than a certain level of the core principles.  However, the secured level and the working
procedures may differ from country to country.  In view of the divergences in each participating
country, it may not be practical to uniformly impose the obligation to secure a high-level of  thecore principles, nor to immediately revise competition laws or change the existing modus operandi
of the competition ordinances.  A certain flexibilit y must, therefore, be allowed.  It would then be
possible to show the contents of the high-level standards as the menu of options mentioned in
Issue 2.
There may also be room for argument as to whether a certain flexibility should be allowed
in developing countries in the form of "S&D" treatment.  However, there are certain developing
countries which have had competition laws for some time and thus have a great deal of experience
with the competition policy system.  Such countries have already secured a certain amount of
transparency, non-discrimination and procedural fairness.  Thus, the flexibility of the obligations ofvarious kinds to secure the core principles should be characterized as "S&D" treatment for those
countries without competition laws, irrespective of whether the country is developing or not.
Having said that, it goes without saying that proper technical assistance and capacity
building must be carried out in order to allow each country participating in the multilateralframework on competition policy to secure more than a certain level of the core principles.
• Issue 4:  When applying the core principles to competition policy, should the
restrictions on hardcore cartels be the only subject of discussion, or should anti-competitive practices, such as the abuse of a dominant position and the concentration
of businesses besides hardcore cartels, be included in discussions?
It was generally agreed at the previous Working Group session that hardcore cartels are the
most harmful anti-competitive practices, and, bearing in mind the harm caused, all hardcore cartels
should be globally banned.  To be more specific, restrictive measures should be provided for in a
multilateral framework on competition policy, obligating each country to fulfill its duty to restrict
hardcore cartels.  Restrictions on hardcore cartels should be prescribed in the framework of voluntary
cooperation, whereby the core principles should be secured as a means of controlling hardcore cartels.
On the other hand, there is room for argument as to whether anti-competitive practices, such
as the abuse of a dominant position and the concentration of businesses besides hardcore cartels,
should be discussed in the multilateral framework on competition policy and whether restrictions be
imposed on for each country.  However, in order to tackle efficiently and effectively the various anti-competitive practices that influence trade, it would be desirable to include both the abuse of a
dominant position and the concentration of business es in the framework of voluntary cooperation.
Core principles do not impose the obligation to control these anti-competitive practices on each
country.  However, if each country has some regulations to control the anti-competitive practice, each
country is required to ensure the principle, such as transparency and non-discrimination.  It would bedesirable, in such a framework, that the core principles should be secured to deal with restrictions on
anti-competitive practices other than hardcore cartels.WT/WGTCP/W/217
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• Issue 5:  What do we think about the relationship between the cooperation under a
bilateral agreement on the execution of laws between competition agencies and theprinciple of non-discrimination?
The bilateral agreement on cooperation regarding the enforcement of competition policy
between competition agencies provides a mechanis m for obtaining further cooperation with a country
having a close economic relationship with either one agency.  If a multilateral framework on
competition policy is to be established in the future, neither country seeking a closer cooperation with
each other should interfere with the concluding of the agreement on such competition policy.  The
bilateral agreement on the execution of competition policy promotes cooperation between competition
agencies: it contributes to a deepening of cooperation in the multilateral framework.  Thus, if the same
definition of non-discrimination as that stipulated in the existing WTO Agreement is also used in the
multilateral framework on competition policy, there could arise some misunderstanding whereby suchbilateral agreement is contrary to the principle of non-discrimination.  To avoid any misinterpretation,
the bilateral agreement should thus be indicated as an exception to the non-discrimination.  When
concluding a bilateral agreement, if such an agreement is to be treated as an exception, it should be
notified to the WTO in order to ensure transparency under the multilateral framework on competition
policy.
III. CONCLUSION
With respect to the status of the core principles of competition policy, especially regarding
the application of the core principles within the multilateral framework on competition policy,  Japan
has already presented some specific points to be considered and discussed in the Working Group.  Wehave voiced our opinions on the respective points at issue, as well as on points that we should pay
special attention to in the future.  We hope that the clarification of these points will lead to a
negotiation on a multilateral framework on competition policy, which should be initiated by the WTO
in the due course.
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