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Journal Article

IDS Bulletin Vol. 34 Nos. 2

The World Trade Organization and Competition Policy: Implications for Developing Countries

Published on 1 April 2003

Concerns about competition and trade have a long pedigree, back to Adam Smith.

The 1947 Havana Charter of the abortive International Trade Organisation (ITO) included a requirement of members to police international restrictive business practices:

Each Member shall take appropriate measures and shall cooperate with the Organisation to prevent, on the part of private or public commercial enterprises, business practices affecting international trade which restrain competition, limit access to markets, or foster monopolistic control, whenever such practices have harmful effects on the expansion of production or trade and interfere with the achievement of any of the other objectives set forth in Article 1 (UN 1947: Article 46, para. 1).

The Havana Charter would have left the “appropriate means” up to the member. The ITO as an organisation would have been called upon to investigate any complaints not resolved by consultation and make recommendations for action, but had no provision for a judicial system. It allowed for intergovernmental cooperation, and also provided a means for dealing with disputes in the service sector. The aim of today’s World Trade Organization (WTO) discussions remains that of preventing private business practices from nullifying the benefits of the removal of governmental barriers to trade, even if the proposed means of achieving this aim are very different.

The topic “trade and competition policy” was put on the WTO agenda by the Singapore Ministerial meeting in 1996. A decision was taken to set up a working group to consider this interface. The working group is strictly for discussions only but its work has influenced the attitudes of WTO members towards the possibility of such negotiations and its reports give a valuable account of the evolution of the debate.

A fundamental requirement to justify a multilateral agreement on competition must be that, in some senses, anti-competitive practices in one jurisdiction may have spillover effects in the global economy, as may national policies towards them. These are admirably reviewed in WTO (1997). But it does not follow that the existence of spillovers automatically means that a WTO agreement could actually solve the problems created.

We must ask first: is there evidence that cross-border anti-competitive behaviour is a problem? This seems to be agreed. However, three further questions arise:

  1. Why cannot national governments take the necessary action?
  2. What advantages does a multilateral agreement have over other forms of cross-border cooperation?
  3. What forms should appropriate action take?

Related Content

This article comes from the IDS Bulletin 34.2 (2003) The World Trade Organization and Competition Policy: Implications for Developing Countries

Cite this publication

Holmes, P. (2003) The World Trade Organization and Competition Policy: Implications for Developing Countries. IDS Bulletin 34(2): 52-64

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Authors

Peter Holmes

Publication details

published by
IDS
authors
Holmes, Peter
doi
10.1111/j.1759-5436.2003.tb00070.x

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