James H. Mathis Amsterdam Law School University of Amsterdam, NL

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Relevance of WTO core trade principles and S&D for developing countries / Principios bsicos del comercio de la OMC y el Trato Especial y Diferenciado: aspectos relevantes para los pases en desarrollo. James H. Mathis Amsterdam Law School University of Amsterdam, NL. Overview. - PowerPoint PPT Presentation


  • Relevance of WTO core trade principles and S&D for developing countries / Principios bsicos del comercio de la OMC y el Trato Especial y Diferenciado: aspectos relevantes para los pases en desarrollo.

    James H. MathisAmsterdam Law SchoolUniversity of Amsterdam, NL

    UNCTAD Competition

  • Overview

    I. Relevance of core principles to developing countriesII. Elements of a developmental- friendly multilateral framework.

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  • WTO & private conduct

    WTO is between States - not firmsWTO compels NO domestic regimes (TRIPS excepted)No requirement to have competitive market for either domestic or foreign firms. WTO Members not required to address cartels or monopolies, except state owned

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  • Part I: WTO rules- law or no law ?a) importation / exportation rules apply whether or not a country has a competition law:

    b) if a country has a competition law, then rules on imported apply:Importation / exportation rules PLUS rules on imported (goods or services)

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  • GATT treatment of importation as compared to imported goods

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    Import Country (imported) Border (importation / exportation)

    Art. III National Treatment

    No less favourable treatment:

    - like imported/domestic goods

    - for laws, regs, requirements

    - affecting sale / distribution

    - de jure and de facto

    Article XI no (restrictions)

    other than duties

    upon importation and exportation

    Art. II. tariff bindings (para. 4) undermining

    MFN applies to

    internal laws

    Art. I (MFN) duties and

    formalities upon importation

    and exportation

  • Importation rules - GATT XINo prohibitions or restrictions other than duties maintainedon the importation or exportation or sale for exporton any product destined for the territory of any other contracting party.??: When is a restriction private and when is it public?

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  • Article XI - State responsibility tests1. but / for test - otherwise firms would not form an import / export restriction.

    2. inducements test (Japan - Semi)

    3. co-operation test (administrative guidance) Kodak / Fuji

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  • Article XI - cartel interaction - attribution Argentina - Bovine Hidesgovernment can implement a measure by interaction with a private cartel.Need to prove the existence of the cartel ? whether government needed to know of actual cartel practices or at least, established that the actions attributed to the government by rules of state responsibility

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  • Importation rules for services in the GATS.

    Quotas are lawful under GATS until market access commitment. No GATS comparable to GATT article XI. (no preference for duties)On GATS market access all importation measures eliminated except scheduled.? GATS provision on export restraints?

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  • Related GATS ProvisionsGATS Article VIII (compare GATT Article XVII for state monopolies. Titled Monopolies and Exclusive Service Suppliers. Member shall ensure that a monopoly supplier of a service does not act contrary to MFN or commitments GATS Article IX. Business Practices - Members obliged to consult to eliminate certain business practices that, may restrain competition and restrict trade in services. GATT has no comparable Article.

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  • WTO Rules regarding imported Goods/Services When a country HAS a competition law

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  • GATT National TreatmentArticle IIIimposes equality of competitive conditions for all imported goods as compared to like domestic products. Applies to any domestic law, regulation or requirement; that affects the sale, offer for sale, distribution of imported goodsno less favourable treatment standard (no protection for like domestic production)

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  • GATS (services) National Treatment. Article XVIIimposes equality of competitive conditions for foreign services and providers.

    ONLY after a market access commitment as been made (positive list) subject to reservations (Negative list).

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  • WTO national treatment rules de jure / de facto

    National Treatment applies to competition law and policies, both de jure and de facto De jure: origin difference in the textDe Facto: facially neutral law has (less favourable) effect upon like imported goods, services / providers in application.

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  • GATS de facto national treatment

    Formally identical treatment violates national treatment if it modifies the conditions of competition in favour of domestic goods, services or providers.

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  • De facto NT as to exemptions/ exclusionsExemption/exclusion stated in national law is a part of the law - Does the exclusion treat DCS products or services? (ex: coffee / tea) Is the exclusion addressed to a cartel or monopoly that controls imports or exports ?Can foreign provider form similar restrictive arrangements?

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  • Compare EC proposal and national treatment- 1First, a broadening of national treatment to apply to firms on the basis of nationality - (horizontal MFC) not conditioned upon trade-related aspects as to goods, services or providerssimilar to GATS Art. XVII as to foreign providers, but GATS NT after market access commitment is made

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  • EC proposal and national treatment -2Second, a narrowing to apply only to de jure cases -disparate effects by individual decisions would not be actionablewould eliminate complaints on de facto discrimination as to exemptions/ exclusions scope of de jure to question as to secondary legislation and notices.

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  • Relation of MCF national treatment to existing provisions

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    WTO Investment


    treatment /

    post admit.


    -de facto



    services /



    - de facto




    - general

    -de facto

    MCF national treatment. - nationality of firms in respect of de jure (facial) competition law. Treatment not as to imported goods or services.

    TRIPS national treatment Art. 3, Each member shall accord to nationals

    of other Members. Treatment not as to imported goods or services.

  • Treatment of exemptions/exclusions in the EC Proposal

    All exclusions are permitted at the outset with notice and transparency

    this includes developed as well as developing country exclusions

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  • EC proposal, prohibition and co-operation aspects.

    Stated prohibition against certain international hard core cartels.See OECD recommendations

    Appears as a trade related prohibition as a Member obligation

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  • Prohibition / co-operation implicationsprohibition not on monopolies (exports) to treat by domestic enforcement of competition laws. Effects upon local markets (inbound)export restrictions (outbound) treated by voluntary co-operation. There is no MFN for positive comity co-operation

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  • II. Elements of a developmental friendly multilateral framework

    What is special and differential (S&D) treatment in the competition policy context?

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  • Traditional S&D elementslonger timelines for implementationbest efforts provisions (consultation) better access by preference (GSP) , i.e., non-reciprocity in obligationslesser market opening by tariffs for infant industry purposes (GATT XVIII)

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  • S&D as to national treatment There is no general S&D principleand no S&D principle applies to national treatment, or to exceptions. National treatment in competition law context viewed as restricting industrial/ employment policies, infant industry development, S&M, affirmative action

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  • Balance of domestic enforcement v. co-operation issues

    There is an import and an export side to the competition issue Co-operation to view as implementing a prohibition on hard core cartels. Quid pro quo for domestic enforcement is binding action on export restrictions. S&D could require more than quid pro quo. (ding ctry export cartels)

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  • Question as to participation...

    Some argue for no participation at all, - pending offers agriculture / textiles, Some suggest dangers of laying out. Result in a take it or leave it framework without better co-operation, S&D. Many new laws or no law. Experience at national and regional levels first

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  • Some suggested alternatives

    Code of voluntary conduct and variations binding / nonbinding (scheduling?) (HKC)Stronger (quid pro quo) on export treatment, effect for the UN Set (India)Trade related approach, import and export restrictions unlawful trade practices. (Thailand)

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  • Trade-related international competition provisionsSherman Act (US) - Affecting trade and commerce among the states - M and CHavana Charter ITO - Business practices affecting international trade - M and CEC Treaty - which may affect trade M and CUNCTAD Set - Undermining benefits of trade liberalisation. M and C

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  • Unfair trade practices approachNO requirement for a law - principles apply to laws in any case. Trade commitments affected by RBPs (GATT II.4 example). state to state, imports and exports. States may apply unfair trade lawsNon-bound trade related - consultation no DSU (see GATS Art. IX) non-trade related (anti-competitive) non binding

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  • Where national treatment applies: What is S&D for national treatment? The non-efficiency objectives are not all development oriented. Does a Framework recognises other objectives ? regional integrationsmall and medium domestic market participation cultural/ethnic affirmative action distressed area developmentinfant industry context/ industrial policyresponsive consolidation

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  • National Treatment S&Dthree approachesAll exclusions permitted, developed and developing. Scheduling voluntary national treatment (as in the GATS), developed and developing negotiated exemption approach. The framework states the exemption criteria as to non-efficiency objectives.

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  • Negotiated Exemption ApproachFramework pramble- states non-efficiency objectivesNegotiated exemption paragraph provides negotiated criteria to apply non-efficiency objectivesPre-violation. Burden remains on complainant to show abuse / misapplicationArticle 81(3) example for exemptions

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  • Conclusion - Doha to CancunFor Cancon - meaning of explicit consensus

    Institutional provisions for the modality discussion - When are modalities negotiated

    Substantive modalities. How broad is the Doha text? Is a horizontal framework on general anti-competitive practices already committed?

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