Policy Options Paper

Competition Policy and Trade in the Global Economy: Towards an Integrated Approach

January 2016

Competition law and policy are essential elements of the global framework for addressing anticompetitive arrangements that thwart development and reduce the welfare of citizens. The importance of such law and policy is now recognised across developed and developing countries alike. Competition law, in particular, deters arrangements such as cartels, abuses of dominant position, and mergers that, left unrestrained, block competition on the merits. Despite the very significant progress towards promoting international cooperation and convergence in competition policy that has been made mainly by the International Competition Network (ICN), an informal network of competition authorities, major future challenges remain as globalisation goes further and deeper. This leads the present paper to reflect on the need for additional coordination mechanisms to address the challenges of an increasingly globalised and networked economy. In recognition of the fundamental complementarity of competition and trade policy, multiple initiatives have been taken at the international level to attempt to formalise their interrelationships and better harness related synergies. To date, none of these initiatives has resulted in a binding framework that ensures a better application of competition policy in relation to trade and investment. In the context of this incomplete institutional and policy infrastructure, the paper puts forward a set of policy options with the objective of intensifying international convergence and injecting competition into international trade. Many of these recommendations can be implemented through existing mechanisms and institutions. They include: (i) multidimensional awareness raising concerning the role of competition policy; (ii) practical steps aimed at enhancing cooperation in the implementation of competition policy at the international level; (iii) the progressive introduction of international dispute resolution and appeal mechanisms; (iv) the promotion of convergence and best practices in competition regimes through peer reviews; (v) the enhanced engagement of national competition authorities in assessing and advising on the implementation of trade measures; (vi) the review of rules on competitive neutrality as a tool to address the role of state-owned enterprises; and (vii) efforts to broaden the application of innovative approaches to the trade and competition interface in free trade agreements. The paper advocates an incremental path to reform and emphasises that the efforts to be undertaken in the international competition policy arena should build on the important work already being conducted on related issues by organisations such as the ICN, the OECD, and UNCTAD.

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