Competition Policy within the Context of Free Trade Agreements

This think-piece reports the findings of a mapping exercise of the competition-related provisions of 216 free trade agreements (FTAs) included in the World Trade Organization’s (WTO) Regional Trade Agreements (RTA) database. This represents by far the largest sample of FTAs analyzed to date in this type of mapping exercise. Where available, it also reviews official proposals for and accounts of the negotiations of a competition policy chapter in the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP). But it does not review provisions that are not competition-specific but arguably also impact competition policy and enforcement (for example, non-discrimination and transparency). With a view to identifying both common ground and significant discrepancies between different approaches to addressing competition-related issues in FTAs, it pays close attention to differences in language, terminology, and scope. To begin with, it establishes a typology of competition-related provisions in FTAs, and provides the basis for devising a comprehensive database summarising these provisions. It then identifies distinct model approaches to addressing competition-related issues in FTAs, and provides a summary of the economic and political economy rationales for including competition-related provisions in FTAs. Drawing lessons from this mapping exercise, it formulates tentative policy recommendations, exploring the appropriate fora and methodologies for harmonising competition provisions within the international trade system. The paper proposes to draft a model competition chapter that could serve as a basis for tackling competition-related issues in future FTAs.

Setting up a comprehensive, user-friendly database summarising competition provisions in the FTAs will provide stakeholders with easily accessible guidance for negotiating competition-related FTA provisions. Such a database could ideally be maintained by the WTO Secretariat and/or the International Competition Network (ICN). In light of the repeated failures to include a set of comprehensive competition policy principles in “hard law” multilateral trade instruments and continued opposition from a number of developing countries, a “soft law” approach appears to be the only realistic perspective in the near future at the multilateral level. The ICN stands out as the only international platform that has both the needed flexibility and ability to influence policymakers. Given the medium- and long-term shortcomings of a soft law approach, the paper proposes devising a step-by-step approach, with a gradual movement from voluntary participation in a soft law convergence process to the adoption of more binding instruments at the bi- and plurilateral levels, including by emphasising the multiplication of competition-related provisions in FTAs. To garner sufficient support for such an initiative, it will be crucial to devise ways to either decrease the cost or increase the benefits of including competition-related provisions in FTAs. The first step for soft convergence would be to identify areas of competition policy that a model chapter should include and the parties could rather easily agree upon. To facilitate adoption by countries with less experience in competition law enforcement and/or ensure special and differential treatment for developing countries or least-developed countries, it envisages following a multi-tiered approach inspired by the WTO Trade Facilitation Agreement.

Tag: Competition Policy, Compliance and Transparency, Diversification & Competitiveness, Mega-regionals, Monitoring, Multilateral, Negotiations, Regional Trade Agreements, Regional/Bilateral/Plurilateral, Regulation, Soft Law