A Bad Problem Getting Worse

Regional Trade Agreements and the Future of the Multilateral Framework on Competition Policy and Law

Kim Them Do

ZWeR Online

Contents

I. Introduction

II. A Brief History of the Development of International Competition Policy and Law

III. Brief Overview of the Current Development of the Regional Trade Agreements

1. Some Basic Characteristics                                                     

2. Current Development

IV. Global Picture of Some Selected Typical Regional Trade Agreements   

1. EU                                                                                    

2. ANCERTA                                                             

3. Other Selected Regional Groupings               

4. Other Selected Regional Groupings for Further Discussion

4.1 NAFTA                                                                          

4.2 MERCOSUR                                                                       

4.3 ADEAN Community (AC)                                   

4.4 APEC                                                                        

4.5 ASEAN

V. Implications for the Future of a Multilateral Framework on Competition Policy and Law

1.  NAFTA

2.  MERCOSUR

3.  ADEAN

4.  APEC/ASEAN                                                                        

5.  Remarks

VI. Conclusions

***

I. Introduction

Since the Doha Trade Talks, negotiations on international competition policy and law in the framework of the World Trade Organization (WTO) has reached deadlock because developing countries have blocked these initiatives[1]. They argue that the detrimental effects of hardcore -cartels are not their chief concern and that they would not be able to overcome the regulatory burden and compliance costs if the agreement on these issues were to be implemented. As a result, many international competition law scholars are suggesting various approaches to moving forward[2].

However, rather surprisingly something of a paradox has simultaneously emerged with these ongoing efforts: Regional Trade Agreements (RTAs) have proliferated extraordinarily in the world trade landscape; presently over 457 such agreements have been notified to the WTO and 266 agreements are in force[3]. Most importantly, some trade diplomats are coming to recognize the greater significance of competition policy and law in dealing with regional trade issues and are arguing that RTAs are likely to prevent to create anti-competitive cross border merger and acquisition business practices by firms. In the expectation that this will enhance trade welfare effects, they advocate that competition-related provisions should be included in the framework of RTAs. Consequently, the adoption of these provisions in RTAs is expanding and becoming a trend in the regional trade landscape[4].

The relationship between regionalism and multilateralism is certainly not new in trade policy discourse. International trade scholars have long debated how regionalism may be able to contribute to the multilateral trading system and whether it is likely to function as a building block or a stumbling block in this system[5]. Due to the priority of market opening objectives in the trade liberalization process, they believe that lowering tariff barriers and removing a variety of non-tariff barriers are the principal issues to be addressed and that the implications of competition policy and law in enhancing trade welfare effects is not directly relevant to the objective pursued.

Based on the regionalism versus multilateralism debate, this article discusses the prospects for the multilateral framework on competition policy and law and asks whether there is a relationship between these and at least the beginnings of a regulatory process at global level. In exploring these issues this article focuses solely on the question of the inclusion of competition-related provisions in RTAs and suggests using the North American Free Trade Agreement (NAFTA), the Comunidad Andina de Naciones (Andean Community, AC), the Mercado Comun del Sur (MERCOSUR), the Asian Pacific Economic Cooperation (APEC) and the Association of South East Asian Nations (ASEAN) as case studies. This article examines the functions of RTAs and proposes to redefine the relationship between regionalism and multilateralism in order to better assess the regulatory initiative on international competition policy and law in the future.

For this analytical purpose, this article proceeds as follows: Section 2 provides a brief history of early attempts at international initiatives on competition policy and law. Section 3 summarizes the current development of RTAs. Section 4 discusses the inclusion of competition-related provisions in selected typical RTAs. Section 5 explains how good or bad regionalism may be for multilateralism, assessing the implications of the RTAs for the development of a multilateral framework on competition issues. The conclusion summarizes the key findings and outlines some possible implications that follow from the discussion.  

II. A Brief History of the Development of International Competition  Policy and Law

International competition policy and law is not a new concept; political debate about the creation of a world competition law code and authority has a long tradition and various international bodies have strongly influenced the emergence of international antitrust regulations. The most important contributions are those from the International Trade Organization (ITO) and the WTO.

The ITO’s 1948 Havana Charter[6] provided a regulatory framework for increased world trade liberalization. It examined restrictive business practices, especially in the fields of public and private restraints, cartels, manipulation and market access. Practices such as price-fixing, the allocation of markets, boycotts and the suppression of technology and unauthorized extension of patent monopolies which harm international trade could be referred to the ITO. It foresaw the dispute resolution mechanism, rules and recommendations. However, the charter was not politically supported by the US and developing countries, and was not brought into force[7]. 

The objectives of the WTO are to facilitate world trade by arranging the reduction of trade barriers and eliminating discrimination against unfair trade through multilateral negotiation. It seems clear that there is much to recommend the WTO’s assumption of the role of international coordinator of competition policy[8]. The adoption of intellectual property laws within the framework of the WTO system has been relatively successful; there is no reason to expect that its incorporation of competition law would be problematic[9].

Most relevantly, the WTO is considerably experienced in competition policy. After the Ministerial Conference in Singapore in 1996 it established the Working Group on the Interface between Trade and Competition Policy, the purpose of which is to study the interaction between trade and competition policy and to examine the possibility of integrating these areas into the WTO framework[10]. The 2004 Geneva Ministerial Conference decided that competition policy, among other issues at Singapore, would not be included in the Work Programme of the Doha Trade Talks[11].

Consequently no negotiations concerning competition policy in the context of the WTO are planned for the near future.

In contrast to the unsuccessful efforts of the ITO and WTO regarding formal negotiations, other international bodies are playing a contributory role in facilitating the addressing of these   challenges. Some of these are the Economic and Social Council of United Nations (ECOSOC)[12]; the General Agreement on Tariffs and Trade (GATT)[13]; the United Nations Conference on Trade and Development (UNCTAD)[14]; the Organization for Economic Cooperation and Development (OECD)[15] and the International Competition Network (ICN)[16]. The main features of these actors are similar: they have no legal status to promulgate hard law and serve primarily as forums at which their members meet and exchange information on a voluntary basis; their objectives are to establish legally nonbinding international standards and codes of conduct to reduce anticompetitive effects. These organizations have not brought about greater cooperation in international competition law and policy and cannot be the best platform for further progress[17].

The various international bodies discussed above have considerably influenced the development of international cooperation in competition law and policy. In spite of all these invaluable initiatives toward global cooperation, three limitations are particularly striking. Existing initiatives have proved unsuccessful in solving the problem of global cooperation: due to sovereignty costs and the weak effects of soft law, their efficiency is limited; the regulatory framework is provided by a set of institutions, rather than by standards; and the desirable WTO approach is currently politically unachievable[18]. 

III. A Brief Overview of the Current Development of the Regional Trade Agreements

1.  Some Basic Characteristics[19]

Many terms are used in the trade literature to describe this arrangement: it is variously called a free trade agreement (FTA), a regional trade agreement (RTA), a trade and investment agreement (TIA) and a preferential trade agreement (PTA). These terms are often used indistinguishably and interchangeably. Faced with such semantic ambiguity this article suggests using RTA as an umbrella term to refer to trade arrangements at the regional level in the broadest sense. The term “regional” may be used in contrast to “multilateral” and “national” in the current trade policy discourse.

RTAs are not a new phenomenon in world trade history. The first RTA was Deutsche Zollverein, a customs union formed in 1834 by eighteen small states[20].  RTAs aim to remove trade barriers and to achieve economic integration between the contracting partners at regional level. Theoretically, this integrative arrangement comprises five stages: a free trade area, a customs union, a common foreign trade policy, a common market and political harmonization through supranational institutions.

Practically, there are two main categories of RTAs: non-reciprocal agreement and partial scope agreement. The former is often used by developed countries; it helps the economy of developing countries by opening the domestic market unconditionally through an economic development assis-tance program. The latter is only used among and between developing countries themselves. They prefer exchanging in a limited range of pro-ducts as a preference of trade policy. Arguably, they cannot implement a comprehensive RTA effectively due to political reasons or limited capacity[21].

It is hard to generalize about how countries proceed with their RTA policy as this varies from country to country. There are diverse factors worth exploring: political and economic power, preferences in trade policy, institutional maturity, human resources, the objectives pursued and so on. Understandably, developed countries have much political power and larger domestic markets whereas developing countries have no strong bar-gaining position in negotiations.

At first, a trading partner may propose an RTA project by suggesting a limited scope of trade exchange and conducting a feasibility study. For this reason it is impossible to design a comprehensive model of a RTA exactly and in detail here[22]. Rather than reaching a comprehensive arrangement in a common trade policy, trade negotiators prefer limiting to negotiate some scope of trade liberalization objective, for instance export of agricultural products. Developing countries often suggest that some sectors may be completely or partially outside the scope of negotiation; trade in services is often the case.

Most importantly, they focus on the significance of the Rules of Origin regime; this issue should be always a major item in the negotiation of RTAs because it determines the location of production and value adding to products, particularly as a means of protecting domestic industry. Schedules and modalities of implementation are important issues to be discussed in the negotiation. After successful negotiation and signing, ratification can be difficult for the trade officials even though it is a home affair. In certain cases domestic lobbying pressure has caused difficulties with the ratification or implementation processes.

The economic effects of RTAs are highly controversial in trade literature. Two familiar aspects of this debate are the static and dynamic effects. Key issues relating to static effects are trade diversion and trade creation. The trade diversion effect has arguably been the most significant problem with regard to the development of RTAs: producers locating outside the RTA area are not in position to enjoy the tariff reductions incurred by the RTA’s internal liberalization and so an outsider may offer a more competitive product than an insider. On the other hand, trade creation is a positive effect of RTA because the most effective producers within the RTA area can expand their market power easily in the internal market. In practice, the net welfare effect between trade diversion and creation is very difficult to assess. It is a question of empirical evidence because there are so many factors involved: the levels of trade protection, intra-industry trade and specialization, and so on[23].

Not only the static but also the dynamic effects of RTAs matter to the trade negotiators. A key argument in this rationale is economy of scale. Arguably, RTA would create an internal specialization of production among member countries. Due to competitive pressure within the FTA area, the market would be more integrated than before while the most competitive producers would expand their production, sharing the internal market. Increased competition would lead to improved efficiency and investment in new technologies, not only for the firms engaged but also for the countries concerned. Member countries generally benefit immensely from market integration effects because the structural change leads to the formation of an attractive environment for further economic development.

However these dynamic factors are variable and difficult to determine. Some of these difficulties are familiar: pre-RTA economic data are often insufficient; the political and socio-economic situation or objectives pursued may be changed over time; some further particularities need to be deeply examined. Viewed from this perspective it is difficult to verify a pure gain from trade effects because it depends more on others’ public policies than on a calculation of trade policy. Most significantly, a multi-disciplinary approach is needed to provide a comprehensive understanding of this issue[24]. 

As discussed above, the number of RTAs has dramatically increased and this trend is becoming global: not only developed but also developing countries are beginning to pay closer attention to the significance of RTAs and have intensified their RTA activities. There are many practical reasons for why they presently choose regionalism: multilateralism is not longer attractive approach to follow and the WTO may not be able to advance multilateral trade liberalization objectives or promote deeper economic integration regionally as generally presumed. Instead, it is easier for some countries to negotiate special issues (e.g. environment, competition and trade in services) with the other partner in the background of the RTA than to take the WTO approach[25].

The most ambitious objective of developing countries in trade policy is to access large and/or regional markets; e.g. the US and the EU markets seem to be the best destination of export products; entry into a global market seems to them to be unfeasible. Arguably, if the integrated regional market became more attractive, foreign direct investment of global firms might expand rapidly.

Viewed from a legal perspective, the most important benefit of RTAs is that few countries may create commitments beyond the scope of existing WTO obligations. The basic principle of the WTO is the Most Favored Nation (MFN) clause: any concession granted to one member has to be granted to any other member.

The WTO law on RTAs aims to maximize trade creation and minimize the trade diversion effect in constituting three provisions for exceptions to WTO law (Art. XXIV, Art. V and the 1979 Enabling Clause). The basic requirements for these exceptions are that such an RTA shall comprise “substantially all the trade” and that “the duties and other regulations” in force after the creation of the RTA shall not be higher than those in force before. If the signatories fulfill these conditions, it may be assumed that trade barriers do not arise among them[26]. 

2. Current Development

It is impossible both to provide a list of all existing RTAs and to discuss their characteristics in detail here[27]. Some of the most cited examples of RTAs in the trade literature are: EG, EFTA, MERCOSUR and NAFTA. Some of the latest developments in RTAs are implemented in East Asia, Oceania and Pacific America. Some of the latest RTA projects in the EU are: the EU-Palestine Authority, EU-Morocco, EU-Chile and EU-Mexico. The US is engaged not only in the NAFTA but also in other RTA projects, including US-Chile and US-Singapore. The emerging China, now recognizing the importance of RTAs, has signed FTAs with ASEAN, Chile, New Zealand and Australia.

In sum, most states have come to know the greater significance of the RTAs in removing trade barriers in the regional market integration process and improving the investment environment of member countries. Not only the signatories but also the consumers and firms in the region can benefit from the welfare effects of these RTAs.

Some regional powers have begun paying attention to the contributory role of competition law and policy in facilitating trade promotion and are including their provisions in their RTAs. The link between regional competition law and regional trade law is the core hypothesis of the following discussion. Before examining the main question of whether or not trade regionalism makes a positive contribution to the regulatory framework on competition law and policy, it is helpful to outline some typical RTAs that can serve as a basis for this discussion.

IV. A Global Picture of Some Selected Typical Regional Trade Agreements

The following neither creates a complete taxonomy of competition-related provisions in all of the existing RTAs nor classifies them accordingly;[28] rather it provides an overview of some typical RTA[29]s in order to analyze their contributory role in advancing the regulatory process of the multilateral framework on competition issues.

The literature in international trade politics tells us that two of the first and best models of RTA today are the European Union (EU) and the Australia New Zealand Closer Economic Relation Trade Agreement (ANCERTA). As a result, most trade scholars and policymakers try to develop their own regional integration project looking to Europe and Oceania as models.

1. The EU[30]

The EU model is the most comprehensive and sophisticated form of political, economic, social, cultural and monetary integration. This project is a treaty-driven process of interstate cooperation and regional integration. EU competition law and policy encompass a broad range of targets including the fight against monopolies, oligopolies, cartels, subsidies and state protection. These laws aim at achieving a better allocation of resources and promoting innovation and consumer and societal welfare. It is surely one of the most efficient regulatory instruments to contribute to market integration success; and most importantly, the cooperation of enforcement activities within the frame-work of EU competition law provides evidence of this.

The coordination of these laws is ensured by the principle of primacy of EC competition law over national competition law; although its member states have separate competition laws and these differ from each other. An important current development in this process is the modernization of European competition law. This has made EC competition law much stronger at all levels, enabling it to play a bigger role than ever before. Regulation 1/2003 extends the implementation of EU competition law in light of decen-tralization. Its objective is to increase the effectiveness of EU competition law and enhance its role in economic and political integration[31]. One of the most notable aspects of this reform is the promotion of active participation by member states’ competition authorities and civil courts in the appli-cation of competition law.

Consequently, the allocation of jurisdiction, enforcement procedures and institutional arrangements within the EU context do not significantly alter the competition policies of member states. They demonstrate successful effort towards legal harmonization at European level[32].

2.  ANCERTA[33]

The ANCERTA is another success story of the regional integration process and the harmonization of national competition law Due to geographical proximity and similarities in the countries’ legal, economic and social backgrounds, this agreement between Australia and New Zealand is one of the most remarkable achievements in the process of regionalization. It provides a legal background for investigative assistance, the exchange of information and coordinated enforcement activities; each competition authority may control the misuse of the market power of firms located outside the domestic market.

The deep nature of integration between these countries allows a rather advanced cooperative mechanism that goes beyond competition issues: the elimination of antidumping measure is one of the special purposes of the ANCERTA. Although the ANCERTA is not provided with a supranational institution for resolving conflict like the EU, relations between the two competition authorities can go so smoothly in a mutually supportive way that anticompetitive business practices by firms should be controlled by the competition laws of each country effectively[34].

Due to the particularities dealing with the deep integration and supra-national power of the EU and the specific purpose of the ANCERTA, the two regional powers have been embedded in a specific set of determinant factors which do not lend themselves to uniformity of experience.

3. Other Regional Groupings

As discussed above, this trend is global and some other regional groupings have adopted or are going to include a regional approach to competition law and policy. Some other principal regional groupings are presented below[35].

The Caribbean Community and Common Market (CARICOM) is a regional integration project that favors and promotes competition in the Caribbean Community.[36] Protocol VIII prohibits two practices by law: business practices affecting the healthy competition of the market (prevention, restriction and distortion) and abuse of the dominant position in the market[37]. The Merger Control Regulation is not yet available.

The Common Market for Eastern and Southern Africa (COMESA) is a regional agreement between 19 African country members.[38] Based on the provision of Article 55 of the COMESA Treaty, the Members adopted its competition rules in 2004. The main objectives of this regulation are the promotion of regional integration through trade and maximization of consumer welfare through competition[39].  

The Southern African Development Community (SADC) is a Treaty established by 14 countries.[40]  This Agreement aims to promote economic development and reduce poverty through regional integration. The members recognize the significance of the competition rule in the FTA in stating that “Member States shall implement measures within the commu-nity that prohibit unfair business practices and promote competition”[41].

The East African Community (EAC)[42] is a regional treaty that also pays closer attention to competition issues. Article 75 of the Treaty recognizes that competition is the principal objective to be developed in the EAC area. Member states are negotiating the draft competition law[43]. 

The West African Economic and Monetary Union (WAEMU)[44] have eight member countries. This grouping agreed a Treaty in 1999 with market integration, custom union and common trade policy its objectives. In 2002 Community Competition Law was adopted with some basic principles: control of anticompetitive business practices of firms; control of abuse of the dominant position in the market; control of state aid and cooperation among competition authorities’ enforcement activities[45].

This is not a complete list of regional groupings, but they have some broadly similar features[46]: these economies are small; their governments have limited resources and experience with competition issues; national competition law has not yet been introduced; the creation of a supranational competition authority is politically either undesirable or not feasible; the operational procedures are ineffective; institutional design is still needed, and so on.

These are the most important reasons behind the ineffectiveness and unenforceability of these RTAs. These political and socio-economic situations are remarkably uncertain and the driving forces are not sufficient to meet the prerequisites for deeper integration in competition issues.

It is worth asking how competition policy can be used as the most prominent instrument to promote regional integration, but it is not meaningful to discuss it in detail in this section, attempting to learn from these diverse groupings, because technical assistance, institutional design and deliberative practice are very much needed. As a result, these RTAs should not be under our discussion.

4. Other Selected Regional Groupings for Further Discussion

This section highlights some features in the latest development of the NAFTA, MERCOSUR, Andean, APEC and ASEAN.

4.1 NAFTA[47]

The NAFTA took effect in 1994 and was one of the first RTAs in America. This agreement was signed by the US, Canada and Mexico to create a trade bloc in North America[48]. Its market is over 445 million people with an estimated GDP of US$171 trillion. The three most prominent features of the NAFTA are that most forms of trade barriers have come down; goods are required to be subject to free trade and a new system of dispute resolution mechanism has been established.

Generally, it deals with trade in services as well as goods, intellectual property, sanitary and phytosanitary measures and technical barriers to trade. Specifically, the NAFTA has a chapter on competition policy that reinforces its member countries’ national competition laws. Chapter 15 specifies three requi-rements for dealing with anticompetitive business conduct (Art. 1501), governmental conduct affecting competition (Art. 1502) and cooperation among the competition authorities in the NAFTA area.

Article 1501 of NAFTA requires that each party shall adopt or maintain measures to proscribe anticompetitive business conduct and take appropriate action with respect thereto. Measures need to be understood as “any law, regulation, procedure requirement or practice”, as Article 201 of NAFTA indicates. In practice, the Sherman, Clayton and Federal Trade Commission in the US, the Competition Act in Canada and the Federal Law on Economic Competition in Mexico are a legal basis for the examination of what might constitute appropriate action with respect to anti-competitive business practice[49].

The NAFTA states that notification, consultation and exchange of information are the basic tools of cooperation on competition law enforcement. This cooperative mechanism is applied at the national level of the contracting partner only. As a result, agency-to-agency cooperation is out of the scope of the NAFTA framework and would be addressed in the background of a trio of bilateral antitrust cooperation agreements.

In case of conflict arising out Article 1501, no contracting party may use any NAFTA dispute resolution mechanism as a legal means to resolve the problem; instead, Article 1501 foresees a consultation process for the parties concerned, aimed at discussing the effectiveness of a measure suggested by the partner involved[50].

Articles 1502 and 1503 of the NAFTA foresee two types of government conduct in dealing with competition issues: the state authorizes a state monopoly, and the state conducts a business operation by itself. It aims to limit the potential of the state to distort competition, not to outlaw state monopolies.

Article 1502 (2) provides that if a party designates a new monopoly, he must inform the other party affected of his decision. In the case of disagreement related to this designation, he has to introduce appropriate measures to offset the impairment of benefits.

Article 1502 (3) (a) restricts the ability of governments to use monopoly to circumvent other NAFTA obligations. In doing business, state monopolies have no power in granting import or export licenses or imposing quotas, fees or other charges because state is responsible for these matters. With regard to the purchase or sale of a good or service, the state monopoly has to act in accord with commercial considerations. “In accord with commercial considerations” needs to be understood as the usual business practice of private firms. The monopolist must provide non-discriminatory treatment to the investments of investors in the relevant market. Monopolies and states enterprises are subject to a dispute settlement mechanism. Disagreement arising out of antitrust cooperation is not subject to this solution mechanism[51].

Due rich experience of resolving the various disagreements in the framework of the existing bilateral relations, the member countries prefer referring to bilateral cooperation agreements on competition enforcement to fulfilling obligations imposed by the competition provisions of the NAFTA. The objective of the trio of bilateral antitrust cooperation agreements is to foster day-to-day enforcement of bilateral cooperation and avoid conflicts arising from the application of competition law. Principally, the contracting party has to inform the other with respect to enforcement activities affecting the other’s interests.

Specifically, his partner needs to be informed in a timely manner about investigative procedures against anticompetitive conduct and merger control cases (e.g. seeking of information, consensus of investigative measures and remedies proposed). In practice, the confidential information does not always have to be provided on request; it is decided on the case-by-case basis. The use of publicly-available information is occasionally helpful, and the protection of confidentiality laws is always a controversial issue among practitioners.

Experience shows that cooperation works well in a limited number of cases. The commonly-cited example is the Blue Circle merger project by Lafarge, which particularly affects the Great Lakes region along the US and Canada border. The American and Canadian Antitrust Authority are ready to exchange the confidential information needed and to take necessary and separate action in order to ensure that the remedies complement each other[52]. 

Most trade scholars argue that NAFTA has been beneficial to business in all three countries and has not caused trade diversion as generally presumed. The volume of trade has increased, but NAFTA did not work fast enough to produce an economic convergence as expected.  The impact of the competition issues contained in Chapter 15 of the NAFTA agreement is a contentious issue. The competition experts call for further review because of its ineffectiveness due to the fact that Chapter 15 provides no uniform competition rules, no supranational institution and no dispute resolution procedures. The absence of robust competition-related provisions cannot help in achieving the purpose of their founders and developing regional competition law within the NAFTA area is unlikely to be fully achievable[53].

There is much pressure to reform regional practices, particularly the regulatory asymmetries among member countries. The US and Canadian cooperative mechanism has been a most effective tool for resolving the disagreement about dealing with the practical question of enforcement activities; this dynamic of the cooperation is becoming increasingly clearer and it is likely that it will continue to function. In contrast, Mexico needs to strengthen its domestic competition law and general legal framework to enhance its effectiveness[54]. 

4.2 MERCOSUR[55]

MERCOSUR is an RTA among Argentina, Brazil, Paraguay and Uruguay, founded in 1991 by the Treaty of Asuncion[56]. The common market has 267 million people and is worth about US$2,895 trillion. Bolivia, Chile, Columbia, Ecuador and Peru (joined in 1996) and Venezuela (joined in 2006) are associated members of the bloc. Among others, its objectives are that: all internal trade should be duty free; the national tariffs applied to third countries’ imports should converge without exception; protection of internal trade should be eliminated; technical barriers should be harmonized and finally, all members should follow a common external trade policy and competition policy.

To set guidelines on a common competition policy, the MERCOSUR countries adopted the Protocol of the Defence of Competition (Protocolo de Defensa de la Competencia) in Brazil in December 1996[57]. This Protocol is also known as the Fortaleza Protocol because it was agreed at a meeting in this Brazilian city.

The Fortaleza Protocol provides a legal mechanism to restrain anti-competitive practice by firms, ensuring similar conditions of competition and controlling public policies that distort competition conditions in market development among member countries (Article 1). One of the most ambitious purposes of the Protocol is to abolish antidumping measures in the regional market[58].

Article 2 states the scope of application of this Protocol. Any undertaking of private or public entities aiming to influence the competition environ-ment within MERCOSUR is subject to this Protocol, including the business of state monopoly[59].

Article 3 specifies that the principle of competition policy seeks to avoid abuse of the dominant position rather than market power per se. The principle of economic efficiency in market operation must be considered with care; not every entry of an economically powerful firm into the market automatically qualifies as market dominance and a violation of competition; there is no reason why an efficient firm should be penalized[60].

Article 6 outlines 17 typical types of anticompetitive conduct by firms that are subject to being strictly examined on entering in the market. Some of these are: fixing prices and conditions in collaboration with another competitors; sharing research and technological development; dividing the market for products or services; limiting or impeding new entrants’ access to the market; agreeing on prices or conditions that distort the competitive market; selling below cost without good reason, rejecting´ suppliers without justification, etc[61].

Article 30 specifies that member countries adopt the mechanism of cooperation and technical consultation between the national competition authorities for the application of domestic competition law. Three typical joint actions in this practice are exchange of information and experience, training of experts, and case law study. 

Apart from the competition provisions of the Protocol, the most basic norms in this field can be found in “the Understanding on Cooperation between Competition Defence Authorities of the Member States of MERCOSUR for the Enforcement of National Competition Laws”[62]. The member countries adopted this Understanding in 2004 as a background for further cooperation, notably in the enforcement activities of national competition authorities and the positive comity approach[63].

Article 8 foresees that the MERCOSUR Trade Commission (TC) is in charge of adjudicative functions and the Committee for the Defense of Competition (CDC) is responsible for its investigative function. Both bodies are composed of representatives from each member country[64]. The representative of each country on the Committee must come from his or her respective competition agency. As stipulated in Articles 10–20, the dispute settlement procedure should proceed in three stages: First, an interested party may request to initiate the first investigative proceeding before the competition agency of each country and the agency involved considers whether the anticompetitive practices of the firm would affect the markets of the member countries. Second, after examination the agency submits the report to the CDC for a second review.

Based on the principle of the rule of reason, the definition of a relevant market and the economic effects are the criteria on which the CDC will decide the case. Third, if the decision is affirmative, the CDC submits the case to the TC for its final decision; this does not represent a move towards supranational authority in a legal sense. In fact, the Fortaleza Protocol does not create a supranational institution.

Consequently the TC has no supranational power of review as the EU does. The effectiveness of its remedy relies primarily on the enforcement power of national agency[65].

The development of MERCOSUR competition law was arguably weakened by many factors including internal conflict over trade and competition policy between Argentina and Brazil, between Argentina and Uruguay and between Paraguay and Brazil and so on. In contrast to the legal effects of Chapter 15 in the NAFTA as discussed above, the Fortaleza Protocol, the tool of MERCOSUR competition law has a first and insurmountable challenge: to date, this document has been not yet ratified by all the member countries[66].

There are many reasons for this failure. First, Brazil, the most politically and economically powerful member country in MERCOSUR, is trying to introduce this Protocol for the region because it is heavily influenced by Brazilian competition law. Brazil contends that the elimination of anti-dumping duties should be a main objective of the Protocol. However, other member countries see other issues as being of greater importance.

Second, cooperation of competition policy of member countries is certainly troublesome because of its institutional asymmetries. Third, Argentina and Brazil have national competition laws and resources that enable them to enforce the bloc’s discipline, while Paraguay and Uruguay do not yet have competition law and are only beginning to debate how best to introduce it.

As to date, they have neither the appropriate experience nor institutional maturity. This imbalance of resources and experiences amongst the members is likely to make cooperation more difficult than expected. As long as the compulsory mechanism of cooperation is not available and the supranational enforcement authority does not come into being, effective cooperation between members remains desirable[67].

4.3 ADEAN Community (AC)[68]

The Andean Community is a trade bloc comprising Bolivia, Columbia, Ecuador and Peru. It came into existence with the signing of the Cartagena Agreement in 1969. This integrated market has 98 million inhabitants whose GDP amounts to US$745.3 billion.

The Cartagena Agreement does not deal directly with competition issues but rather with tariff reduction, anti-dumping and countervailing measures, rules of origin and investment[69]. In 1991 the AC adopted Decision 285 as a regulatory instrument to deal with competition. It aims to prevent or correct distortion effects resulting from anticompetitive business practices by firms. Price fixing, restraints on output and distribution, market allocation, discrimination and tying arrangements and abuse of the dominant position in the regional market are prohibited by this Decision.

The Board of the Commission has a supranational power to investigate the infringement of competition law at the request of members or affected firms. The General Secretariat, an administrative body of the AC, is responsible for coordination with the national competition authority concerned. If the Board confirms that the business practice of a firm should be prohibited in the AC market, it may issue an order for it to cease, or request the member to do so. Decision 285 has some main weaknesses: the Board has power neither to initiate investigation on its own nor to enforce its decision. Currently, there is no Regional Merger Regulations in the AC area; to fill this gap, member countries may apply national regulations on cross border merger review appropriately[70].   

In order to improve its effectiveness the AC adopted Decision 608 “Norms for the Protection and Promotion of Free Competition in the AC” in 2005. Two of the most prominent features of this legal reform are that the General Secretariat has the power to impose sanctions in the case of anticompetitive business practices by firms and may conduct an investigation on its own initiative, and it may create an Advisory Committee. The main duties of this Committee are to facilitate the hand-ling of cases and especially to improve the mechanism for the exchange of information and experience, technical training and case law study[71].

Even though the AC has created a supranational institution, some remaining limitations explain why it is still ineffective in promoting regional market integration as expected. First, the application of law is inconsistent among the AC competition authorities. None of the member countries have developed sound criteria for guidelines to be strictly applied. Second, due to the diversity of priority objectives each country treats the merger review differently. The list of tasks to be completed is long, but the most pressing work to modify regional practices in the near future are improving AC Competition Law, helping Bolivia and Ecuador to introduce its laws and supporting Columbia and Peru’s adaptation to regional competition law[72].

4.4 APEC[73]

APEC is not an RTA in the legal sense because there is neither a treaty nor a protocol to give it legal status. Established in 1989, it serves as a forum for 21 Pacific Rim countries to cooperate on regional trade and investment, liberalization and facilitation. Its founders have no intention of following the supranational EU model of regional integration: rather they foster economic interdependence, policy dialogue and consultation with the philosophy of open regionalism.

The three main objectives pursued are promoting regional economic growth, development and cooperation; upholding an open multilateral trading system; and engendering a sense of regional economic community. Its members account for approximately 40% of the world’s population, approximately 54% of world GDP and about 44% of world trade.An annual APEC Economic Leaders’ Meeting is attended by the heads of government of all APEC members. The APEC Business Advisory Council (ABAC) was created in November 1995 with the aim of providing advice to its leaders[74].

APEC is criticized for being too large and diverse and for producing more rhetoric than action; most importantly, it fails to clearly define itself. APEC works at the level of the lowest common denominator in order to bring all members to a consensus. Its achievement is much less than desirable because of its lack of institutional maturity[75]. Whether it can accomplish anything constructive in dealing with the development of APEC competition law and policy remains debatable.

In 1999 APEC Ministers endorsed the APEC Principles to Enhance Competition and Regulatory Reform and approved a guideline for future work. One of the most crucial principles is to develop effective means of cooperation between APEC economy regulatory agencies, including competition authorities, and ensure that these are adequately resourced. In doing this APEC will make efforts to “address anticompetitive behavior”, consider “timing and sequencing” when introducing competition, and focus on fostering confidence and building capacity[76].

In 2007, APEC leaders endorsed a Forward Work Program in five policy areas including competition policy. This work program reaffirms that “competition policy is an important means to achieving a more productive and dynamic economy”. The aims of the Forward Work Program are (i) to increase awareness of the importance of competition policy to economic growth, (ii) to instill knowledge of the practical elements of introducing a sound competition regime, and (iii) to explore practical guidance on how governments can facilitate competitive markets in key infrastructure sectors[77].

APEC’s Competition Policy and Law Group (CPLG) is in charge of this responsibility. Some of the remarkable achievements of this Group have been organizing various workshops and seminars on competition policy for government officials. The most notable events are as seminars on The Role of Competition Policy in Structural Reform; The Creation of Competition Culture; Utilizing the APEC-OECD Integrated Checklist on Re-gulatory Reform; Training Course on Competition Policy; and its Competition Policy and Law Database[78].

Current developments in national competition law in the APEC economies are notably diverse; some basic features are as follows: among the 21 APEC member economies, 17 have introduced comprehensive competition laws and established competition authorities; Canada, USA and Japan are the leading competition law systems among these; Chile, Australia, Republic of Korea, New Zealand, Peru, Russia, Chinese Taipei and Mexico have introduced comprehensive competition laws; from 1999 to 2008 Indonesia, Thailand, Papua New Guinea, Singapore, Viet Nam and the People’s Republic of China introduced national competition laws; Malaysia, the Philippines and Hong Kong China are currently debating these issues[79].

The most prominent features of the substantive provisions of competition laws in the APEC economies are: prohibition of cartel/ collsion/conspiracy/ bid-rigging; prohibition of abuse of dominant position/monopolization; review of mergers and acquisitions and prior notifications of decision.

Some of the procedural provisions and guidelines focus on the following issues: processes of notification and investigation of mergers; enforcement activities; investigation procedure; the relationship between the competition authority and other governmental, regulatory or judicial bodies[80].

4.5 ASEAN

ASEAN was established in Bangkok in 1967 by Indonesia, Malaysia, the Philippines and Singapore. Brunei Darussalam joined in 1984, Vietnam in 1995, Laos and Myanmar in 1997 and Cambodia in 1999. This bloc contains 580 million people with GDP of more than US$1.5 trillion. Its main objectives are economic growth, social progress, protection of the peace and stability in the region.

The organization holds summit meetings at which the heads of each member government meet to discuss and resolve regional issues[81]. One of its most remarkable areas of progress in regional economic integration has been an agreement on the ASEAN Free Trade Area (AFTA). ASEAN has launched several economic cooperation schemes for implementing open regionalism, especially with the ASEAN plus Three (China, Japan and South Korea), ASEAN plus Six (China, Japan, South Korea, India, Australia and New Zealand) and ASEAN – EU (ASEM), in order to find a balance between regional integration and global liberalization. ASEAN is criticized for being too soft in its approach to human rights violations and in promoting democratization process.

Since ASEAN is committing to developing its integrated regional market, it requires a regional competition regime to enhance fair competition among firms and review its anticompetitive business practice. Faced with the spillover effects of cross-border merger activity, ASEAN countries also need to modernize their competition law to better control these[82]. 

To date national competition law has been enacted in most of the member countries, some a long time ago (Thailand in 1979, Indonesia in 1999) and others much more recently (Singapore in 2004, Vietnam in 2005). Malaysia has no comprehensive competition law but introduced a Code on Takeovers and Mergers in 1998; the Philippines deals with some competition issues in some laws, e.g. monopolies has been prohibited by constitutional law and some unfair competition conducts have been restricted by penal law. Laos has just begun with a Decree on Trade Competition; Brunei Darussalam, Myanmar and Cambodia do not yet have fully-fledged competition law[83].

In practice, the competition laws of these countries are designed to cure negative effects rather than to prevent the cause in that they apply more administrative than judicial regulations. Due to lack of public awareness, these regulations were mostly ex officio administrative authorities rather than filed complaints. Even Thailand and Indonesia have a systematic set of competition laws and some experience in dealing with enforcement activities and international cooperation; they need to strengthen the effectiveness of their laws. Some countries have adopted competition laws that are incompatible with international standards[84].

Although the ASEAN leaders are coming to recognize the significance of regional competition law, they have not had sufficient experience in the field of implementation and regional cooperation. Most importantly, a comprehensive regional system of merger control does not exist in the ASEAN area.

Because of the diversity of development stages within the bloc it is difficult to design a uniform competition regime within the ASEAN area. In these circumstances, a flexible mechanism should be gradually strengthened and technical assistance for procedural mechanisms, institution-building, human resources and discursive practice are strongly required[85].

To achieve this objective the ASEAN Experts Group on Competition (AEGC) was established in March 2008 to facilitate the development of regional competition policy. This body is responsible for finding a strategy that meets the various needs of member countries. It also fosters cooperation and networking among the agencies concerned. Specifically, the AEGC focuses on providing best practice for member countries. Most notably, the “ASEAN Regional Guidelines on Competition Policy” and the “Handbook on Competition Policies and Laws in ASEAN for Businesses” will be published in 2010[86]. The AEGC has received significant technical and financial donor support, particularly from Germany through InWEnt (Capacity Building International)[87], and German Technical Cooperation (GTZ).  Other sources of technical assistance include the Asian Develop-ment Bank Institute, Australia, the EU, Japan, the OECD and the US.

V. Implications for the Future of a Multilateral Framework on Competition Policy and Law

This section discusses the implications of rule-making in RTAs for future multilateral initiatives on competition policy and law, drawing lessons to be learnt from the regional practices[88]. 

The diffuse pictures of the various legal contexts of RTAs discussed above cannot provide an appropriate answer to the question indicated above, but at least we can identify some common features of these endeavors.  Including these competition provisions in RTAs all member countries will that RTAs can facilitate regional trade liberalization and provide an opportunity to open the market, to eliminate anti-dumping measures and to follow other trade-related purposes.

In addition, they focus on strengthening cooperation on enforcement activities and particularly on fostering the harmonization of rules. With regard to the institutional aspect, where participants set up a domestic competition authority responsible for the enforcement of competition law this institution should be subject to be independent of domestic judicial review.

Besides setting some very general procedural and substantive requirements, RTAs specify some provisions regarding voluntary cooperation among members (exchange of information, notification, consultation, negative and positive comity and so on) and technical assistance (workshops, seminars and best practice). Institutional design is the most important matter to be addressed in these documents. Provisions for a dispute settlement mechanism are not introduced in all RTAs[89].

There are many difficulties to assessing the practical impact of these provisions: information about performance is not available; the applicable criteria needed for evaluation are not firmly established; the number of filed complaints or conflicts recorded is extremely low,[90] the surge in popularity of these provisions is certainly not quantifiable; and most notably, there is no causal relationship between the application of these provisions and records of their implementation[91].

Instead, some trade scholars suggest using net trade effects as a basic concept for further discussion. In theory, net effects in trade welfare are calculated on the relationship between trade creation and trade diversion. The evidence is highly contested on the fact that these methodologies are not standardized. The main issues to be addressed in this context are: would these provisions enhance or reduce the net welfare effect? Would these desirable effects be reserved for members only? Would non-members accordingly be discriminated against? These questions can be answered empirically only after these trade policies have been fully implemented and these dynamic effects have been reported. This paper cannot put forward an empirical answer to these questions[92].

Viewed from the legal perspective, even if the inclusion of the competition provisions in RTAs is normatively desirable, their effectiveness is unlikely to be fully achievable. Obviously, these norms are unenforceable; and more speculatively, there is considerable uncertainty about the future of the regional political economy. Our discussion of the implications of regional competition law for the global initiative becomes a story with no clear outcome; some notable examples are discussed below.

1. NAFTA

As discussed above, the provisions of Chapter 15 are practically unenforceable. Instead, the rising usefulness of existing bilateral cooperation makes implementation of the NAFTA more difficult than expected. Mexico has often claimed that these provisions are too vague and that the US and Canada prefer to initiate cooperation with Mexico separately. In fact, the US and Canadian competition authorities work together effectively, simply because the competition officials find that the backgrounds of the Agency to Agency agreements (ATAs)[93] and Mutual Legal Assistance in Criminal Matters (MLTAs) have more relevance than Chapter 15. Importantly, informal cooperation through a networking mechanism may be more helpful than formal agreement; it is certainly not enough, but at least it would gradually build the mutual trust of the participants in achieving the desired result. 

Surprisingly, the legal impact of the NAFTA on the telecommunications market has been remarkable; two important competition-related NAFTA provisions on telecommunications have spread within and outside the Americas. Article 1305.1 of the NAFTA proscribes telecommunications monopolies engaging in anticompetitive conduct.  Mexico and Chile have included this provision in a number of the RTAs that these countries have signed. Article 1305.2 of NAFTA specifies that each party shall prevent anti-competitive conduct by telecommunications firms. This article has spread widely; to date 16 nations have signed up to RTA provisions identical or similar to Article 1305.2. This is just one noticeable trend among others in this positive development of the regional trade landscape[94].

The non-enforceability of Chapter 15 indicated above is just one component of the weakness among others. The effectiveness of regional competition policy and law depends mostly on the political and socio-economic factors affecting development in the region. In broader terms, these desirable effects are coupled with other public policy, especially the convergence between overall governance and market development. At present NAFTA’s levels of market integration are declining; its short-comings are becoming evident with both the dysfunctional political economy of the region and its structural deficiency; the call for NAFTA reform is becoming louder and this effort needs political support[95].

Generally, Mexico is undoubtedly in trouble and hopes that NAFTA would make Mexicans richer. On the contrary, American hat more fear from Mexicans: illegal immigration and drugs violence. Conflict and recession should be reason enough to make relations worse.

Arguably most importantly, NAFTA has some internal pressures: its regulatory asymmetries and structural inconsistency should be urgently improved, particularly in reviewing current and pending trade agreements with others. The unsatisfactory situation in the NAFTA is creating negative effects for the future of the region. At the very worst, neither government wants to reopen negotiations on NAFTA while Mexico wants to expand economic integration[96]. As long as institutional change and better regulatory structure within the NAFTA area are not fully realizable and competition-related provisions are not effective, it may be said that its implications for a global initiative are uncertain.

2.  MERCOSUR

MERCOSUR suggests that an intergovernmental body should decide on a firm’s infringement of the regional competition law with its decisions non-binding to the national competition authority. Due to the variety of their priority objectives, member countries often have difficulty in agreeing unanimously on cases of anticompetitive business practice by firms in practice. More negatively, as being pressed by lobbying from the domestic industry, member country may modify this decision and command the national competition authority to enforce it as appropriate as needed.

The ineffectiveness of these provisions provides evidence of the negative implication for the future of the regional market development as well as for multilateral initiatives. Most importantly, the driving forces behind these ongoing efforts are complex, and the change for the worse is obvious: MERCOSUR is expected to entail nearly insurmountable political economy problems[97]. The most difficult issue is resolving institutional asymmetries and underlying differences among members pursuing a common policy. 

Critics suggest that radical reform is needed. Argentina and Brazil are the regional hegemons and gain more benefit from the integrated market than Paraguay and Uruguay[98]. Since joining MERCOSUR, Venezuela has been trying to align with these two small members to balance this historical asymmetry. In addition to its active role, Venezuela’s anti-neoliberalist position cannot particularly contribute to developing MERCOSUR as a well-balanced platform for member countries. Second, a structural inconsistency is likely to obstruct the prospect of MERCOSUR development.

In legal terms, MERCOSUR is a closed regional market regime. No member country may negotiate individually with a third party without prior consultation with MERCOSUR members, and Resolution 32 of MERCOSUR empowers members with the right to veto a member for wrongdoing. Paraguay and Uruguay find this right to veto unacceptable as they seek to negotiate with the US independently. Entry into the US market is more attractive for them than the Latin American market. These bilateral initiatives of member countries could challenge the future of regional market integration because each already has a bilateral agreement or is planning to negotiate with various third countries. Under these circumstances it is extremely difficult for MERCOSUR member countries to find a common foreign trade and competition policy as long as reform of the trade agreement is still being developed.

As a result, the implications of MERCOSUR’s competition-related provisions are minimal and as uncertain as the political future of the region[99].

3. Andean Community (AC)

The AC has established supranational competition rules; this progress can be seen as a signal of good governance and market integration and may considerably improve the investment environment in member countries. It is true that the AC has created good effects of deeper integration in regional market development, namely in 1992 members of the AC agreed to adopt a new investment policy that creates favorable climate for foreign investors, and in 1994 it adopted a common external tariff (CET) applicable to third party countries. This measure can be seen as a first step towards forming a customs union.

Most notably, in 2005 the AC signed an agreement with MERCOSUR in which the two partners granted each other reciprocal status. Both intend to remove trade barriers within 15 years without engaging in a special political commitment[100].

Although these positive effects are remarkable, they are not enough to relieve the ongoing political turmoil in the AC area. It is impossible to isolate the above positive effects without examining the general driving forces for regional market development, especially the structural inconsistency and underlying differences between the common trade policy objectives among member countries taking a lot of trouble to find the right way forward.

Recent political events affecting the contemporary setting include Venezuela’s withdrawal from the AC to join MERCOSUR in protest against Peru and Columbia’s foreign trade policies. Most importantly, the CET may not be as essential to trade integration in region as initially expected because it may not be possible to apply it to all member countries: Peru and Bolivia do not apply this policy, preferring to keep their own tariffs. Columbia, Ecuador and Venezuela have full membership of the CET[101].

The bilaterall trade agreement with the other trading partners is most popular among member countries; each has at least already signed one or is going to negotiate individually with other members. This trend has a legal exemption: Decision 598 empowers members to negotiate trade agreements independently. Based on this, Peru and Colombia negotiated a bilateral trade agreement with the US in 2006. 

In contrast to these bilateral efforts, the anti-American position of Bolivia and Venezuela make trade integration efforts in Latin America more difficult than expected. The political environment is not conducive to creating incentives for members to follow the common foreign trade policy. Each member is afraid that the free trade of American capitalism could create a new imperialism in the region; rising expectations of better social and economic living conditions through the integration project should be ideologically reconsidered. At present, it seems that each country prefers initiating its trade and competition policy in its own way.

The discussion above illustrates that the future of the political economy of AC is uncertain, and there is no reason to believe that the impact of rule-making by the AC regarding regional competition policy and law would be helpful to the development of regional market integration and global initiatives on competition policy and law.

4. APEC and ASEAN[102]

Some APEC and ASEAN member countries lack both effective domestic competition law and experience of cooperation; introducing and strengthening their competition law system is currently ongoing. Open regionalism is highly contested issue among policymakers and scholars because no country would need to carry out liberalization or deregulation under the pressure of agreement since the commitments could not be legally binding.

In addition, every country may freely initiate or introduce a new policy in a rather testing way under the auspices of APEC.  This desirable approach in dealing with ‘informality, soft institutionalization and non-binding characters’ may be particularly appreciated by all Asian trade negotiators, but apparently it is not advocated by Western legal practitioners simply because they prefer to see the “zone of law” than the “zone of politics” in emerging Asia. They contend that gradual and flexible cooperation on a voluntary basis by member countries in the region would generate more controversy and rhetoric than expected while what these countries need is a clear, effective and authoritative competition law system, mutual trust in cooperation and institutional maturity.

Currently Asian policymakers strongly advocate that the market opening objective in the trade liberalization process is more important than other public policies. Strategically, they intend to keep the US remains engaged in the APEC area economically and militarily. Therefore, harmonization of APEC and ASEAN competition policy and law is not a top priority in their regional market integration project.

Whereas the other regions are beginning to reform their agreements and are coping with the structural inconsistency and harmonization of their common objective, APEC and ASEAN have to find how the basic needs of norm penetration can be satisfied[103]. The question of its impacts on the region may be returned to for further discussion in the future research paper. 

In sum, the various models of competition provision in RTAs all have the same weaknesses: their ineffectiveness and unenforceability. Presently, all RTAs face the same challenge: the political and economic development of the region is very uncertain and a driving force is not available because of its structural inconsistency and underlying differences in common policies pursued. Faced with this ongoing turmoil, scholars and policymakers agree that regulatory reform is urgently needed and that political support for this effort is necessary.

Viewed from this perspective, a consensus on trade and competition issues at the regional level is becoming imperative. As a result, no model discussed above can serve as an emerging driving force for global initiatives, although some specific experience may be of interest for academic discussion and may deserve further investigation. 

5. Remarks

These findings lead us to another question: what are the lessons to be learnt for the possible future of multilateral competition rule? Are these chilling effects of the operation of multilateral provisions unavoidable? Are the existing RTAs relevant to future initiatives?

In fact, there is a difference between RTAs and multilateral agreements in terms of the scope, objective, member characteristics and specific competition-related provisions[104]. Many international competition law scholars are suggesting various approaches to achieving these objectives differently. The debate highlights some of the basic particularities of a multilateral agreement such as agreement on minimum standards, procedural convergence and harmonization of substantial provisions and centralization of enforcement practice. In dealing with the institutional aspect, some argue that the WTO cannot escape regulating international com-petition law and policy because it serves to promote trade liberalization[105].

From the perspective of practicability, some advocate that the convergence of procedural laws is politically feasible; plurilateral agreements would be more practicable than multilateral treaties; soft law effects would be useful in forming hard law norms. More specifically, cooperation between the WTO and the ICN would be the first and best step towards preparing this strategic option[106].

In this respect the proposed multilateral framework should go further than the competition-related provisions of RTAs. Consequently, dealing with the procedural mechanism, institutional design, discursive practices, cooperation issues and participation of developing countries at global level is not relevant to the particularities of the RTAs’ nature.

The principal matter to be addressed in the regionalism v. multilateralism debate is that the rule-making of multilateral initiatives is somewhat different to that of RTAs with their current failure. Some other factors need to be deeply examined and compared[107]. 

Two typical diversities are briefly recapitulated as follows: first, the rationale of most RTAs is opening the market in the liberalizing process of regional integration, whereas multilateral initiatives focus on eliminating the spillover effects of anticompetitive business practice by merging firms. Second, the impact of RTAs’ competition-related provisions for non-signatories would not be a main concern of the participants negotiating and signing multilateral agreements. It is obvious that the detrimental effects could harm the trade interests of RTA non-members; it is a question of empirical evidence.

On the other hand, commitment to non-discrimination in competition rules in a global framework do not create the discriminatory effects for a non signatories as a RTA may cause; if this project were fully implemented, all signatories would benefit equally. There are just two main factors that illustrate that the design and implementation of future multilateral initiatives are not closely related to the current deficiency of the RTAs. After all, the question of how and to what extent RTAs may substitute or strengthen multilateral agreements is irrelevant[108].

VI. Conclusion

The purpose of this analysis has been to provide an explanation of the relationship between regionalism and multilateralism by addressing the most relevant issues in the function of RTAs and the design and implementation of future framework for multilateral competition policy and law. After presenting the current setbacks in international negotiations on competition issues, discussing the proliferation of RTAs in the world trade landscape and particularly examining the experiences of MERCOSUR, AC, NAFTA, APEC and ASEAN as case studies, this article concludes that the effects of the inclusion of competition provisions in RTAs are twofold. 

One, these provisions cannot be seen as a building block because of their ineffectiveness and unenforceability, nor can they be seen as a stumbling block because their practical relevance is minimal.

Two, more negatively, these RTAs have to face the same uncertain situation; the structural inconsistency and underlying differences in common policy objectives lead to a substantial degree of political uncertainty; the regional market integration project is a developing story with no clear outcome; and ongoing debate on the reform is creating mounting tension between member countries.

It remains to be seen whether the current political discourse will help to achieve these objectives. After all, the present comprehensive backgrounds of RTAs are not conducive to designing and implementing a multilateral competition agreement for the future.

For analytical purposes the decreasing role of the WTO in competition matters had been excluded from the discussion, but one important related aspect has to be addressed in this context. Trade diplomats have to deal with the effects of the global financial market crisis and rising protectionism[109]; it is hard for them to see whether the WTO may be now in a stronger position than in the past and whether the benefits of future cooperation within the organization will suffice, or radical thinking on the need for renegotiation of competition matters is necessary[110].

Where is this trend taking us? Without being pessimistic, this article argues that the contributory role of RTAs in this regard is extremely limited and that scholarly innovation is needed before a clearer picture of the desirable global initiative emerges. This normatively desirable framework will be economically beneficial for consumers and firms and academically interesting for scholars and policymakers. There are avenues that are still worth exploring; we have so many invaluable resources and so many policy spaces that we continue to experiment with this undertaking. Three key features to be addressed in this reorientation are:

• Strengthening the role of international regulatory[111] and consumer protection networks[112], according them an active role as norm entrepreneurs;
• Introducing a new approach that not only focuses on harmonizing the rules but also promotes the soft pressure[113] of shared values: consumer welfare protection as an international public good[114].
• Accepting the role of developing countries as the emerging driving force in the world competition community[115].

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This paper has been previously published in Zeitschrift für Wettbewerbsrecht (ZWeR), Journal of Competition Law, H.4 December 2010, S. 353-377

[1] “With respect to the three Singapore issues, i.e. investment, competition policy and transparency in government procurement, the General Council decided on General Council 1 August 2004 that these issues, mentioned in the Doha Ministerial Declaration in paragraphs 20, 22, 23, 25 and 26 respectively, will not form part of the Work Programme set out in the Declaration and therefore no work towards negotiations on any of these issues will take place within the WTO during the Doha Round”, see www.wto.org/english/tratop_e/draft_text_ge_dg_31july04_e.htm

[2] Böge (2005) Die Herausforderungen einer internationalen Wettbewerbspolitik in Zeiten globalisierter Märkte, WuW p.590; Bradford (2007) ‘International Antitrust Negotiations and the False Hope of the WTO’ 48 Harvard International Law Journal, p.383; Budzinski (2008) The Governance of Competition, Competence Allocation in International Competition Policy; Calvani, (2005) ‘Conflict, Cooperation, and Convergence in International Competition’, 72 Antitrust Law Journal p.1127; Conrad (2005) ‚Die Notwendigkeit, die Möglichkeiten und die Grenzen einer internationalen Wettbewerbsordnung‘; Do (2009) ‚The Perspectives of International Cooperation in Competition Law and Policy‘ in: Zeitschrift für Wettbewebsrecht Band 3, p. 289; Drexl (2004a)‚‘WTO und Kartellrecht – Zum Warum und Wie dieser Verbindung in Zeiten der Globalisierung‘ in:  Zeitschrift für Wettbewerbsrecht, Band  2, p. 191; Drexl (2004b) ‘International Competition Policy after Cancun: Placing a Singapore Issue on the WTO Development Agenda’, in: World Competition, 27(3): p.419;  Epstein and Greve (eds.) (2004) ‘Competition Laws in Conflict: Antitrust Jurisdiction in the Global Economy’; Oberender (Hrsg.) (2006) ‘Internationale Wettbewerbspolitik’; Gerber (2007) ‘Competition Law and the WTO: Rethinking the Relationship’ Journal of International Economic Law, 10 (3) p.724; Hwang and Chen (eds.) (2004) ‘The Future Development of Competition Framework’; Noonan (2008) ‘The Emerging Principles of International Competition Law’; Sokol (2007) ‘Monopolists Without Borders: The Institutional Challenge of International Antitrust in a Global Gilded Age’ Research Paper Nr. 1034 Law School, University of Wisconsin, available at http://ssrn.com/abstract=988381; Taylor (2006) ‘International Competition Law: A New Dimension for the WTO’; Utton (2006) ‘International Competition Policy- Maintaining Open Markets in the Global Economy’.

[3] For more on the current development of RTAs, see Report 2009 of the Committee of Regional Trade Agreements to the General Council WT/RG/20 16 October 2009, 09-5105 available at http://www.wto.org/english/tratop_e/region_e/region_e.htm

[4] For more detailed examination see Alvarez/Wilse-Samson (2007) ‘Implementing Competition-Related Provisions in the Regional Trade Agreements: Is it possible to obtain development gains?’ UNCTAD/ DITC/CLP/2006/4, available at: http://www.unctad.org/en/docs/ditcclp20064_en.pdf; Anderson/Everett (2006)‘Incorporating Competition Elements into Regional Trade Agreements: Characterization and Analysis’, available at www.evenett.com/working/CompPrincinRTA.pdf; Brusick/Alverez/Cerat (2005) ‘Competition Provision in Regional Trade Agreement How to Assure Development Gains’ UNCTAD/DITC/CLP-2005 available at http://www.unctad.org/en/docs/ditcclp20051_en.pdf; Gal (2009) ‘Regional Competition Law Agreements: An Important Step for Antitrust Enforcement’, Working Paper; New York University School of Law; available at http://ssrn.com/abstract=1505543; Solano/Sennekamp (2006) ‘Competition Provision in Regional Trade Agreement’, OECD Trade Policy Working Paper No. 31 COM/DAF/TD/20053FINAL, available at http://www.oecdilibrary.org/docserver/download/fulltext/5l9t0v5qk4r0.pdf?expires=1267229813&id=0000&accname=freeContent&checksum=F099AAC7BC9C787CED827D07D7BD46D0 ; Sokol, (2007) ‘Order without (Enforceable) Law: Why Countries Enter into Non-Enforceable Competition Policy Chapters in Free Trade Agreements’, 83 Chicago Kent Law Review, available at http://ssrn.com/abstract=1005338.

[5] See generally, for example, Bhagwati, (1992) ‘Regionalism versus Multilateralism’, 15 World Econ 535 expressing skepticism about whether regionalism serves the objective of multilateral free trade for all; Cho, (2001) ‘Breaking the Barrier between Regionalism and Multilateralism: A New Perspective on Trade Regionalism’, 42 Harvard International Law Journal p. 419 outlining political and economic perspectives of trade regionalism; Kaiser (2002) ‘Regionale versus weltwirtschaftliche Integration’ p. 106-123;Langhammer/

Wößmann (2002) ’Erscheinungsformen regionaler Integrationsabkommen im weltwirtschaftlichen Ordnungsrahmen: Defizit und Dynamik’ p. 374-396 in: Schüller/Thieme (Hrsg.) ‘Ordnungsrahmen der Weltwirtschaft’.

[6] The Final Act of the United Nations Conference on Trade and Employment which took place in Havana in March 1948; for full text of draft charter see http://www.worldtradelaw.net/misc/havana.pdf.

[7] Noonan, (2008) footnote 2, p.405-407; Budzinski (2008) footnote 2 p. 115-148; Utton (2006) footnote 2 p.106 offering a historical review of early attempts to harmonize a system of international controls on anticompetitive behavior.

[8] The Working Group of Experts at the Max Planck Institute proposed a Draft International Antitrust Code for possible adoption by the WTO. It suggested five principles, namely application of substantive national law for the solution of international cases, national treatment, minimum standards for national laws, international procedural initiatives (establishing an international antitrust agency), and cross border situations, see Fikentscher/Heinemann, WuW 1994, 97; for a good overview of the various proposals for including competition law in the WTO see Marsden (2003) ‘A Competition Policy for the WTO’; Wins (2000) ‘Eine Internationale Wettbewerbsordnung als Ergänzung zum GATT’.

[9] Nguyen/ Lidgard (2009) ‘WTO Competition Law Revisited: From TRIPS Competition Flexibilities and Singapore Issues to the WTO Agenda of a Post-Doha Round’, Legal Research Paper 09:51, Lund University, available at: http://ssrn.com/abstract=1455366; Guzman (2003) ‘International Antitrust and the WTO – The Lesson from Intellectual Property’, 43 Virginia Journal of International Law p. 933 (951-956), argues that the WTO could be served as the forum for negotiating the questions of an agreement on competition law and policy and the Agreement on TRIPS could be used as a model; see an opposing and convincing view Bradford, footnote 2, p. 423- 425. He explained why the dynamics of antitrust negotiations would be unlikely to resemble the negotiations of the TRIPS Agreement. There are at least five basic differences between the Antitrust and TRIPS. These arguments are extremely insightful.

[10] The Working Group issued a number of reports in 1997, 1998, 1999, 2000 and 2001. The most important issues under examination are the relationship between trade and competition policy; analysis of instruments and standards; the impact of state monopolies on competition policy; and the contribution of competition policy to achieving the objectives of the WTO, for the full text available at www.wto.org/english/tratop_e/com_e/wgtcp_docs_e.htm.

[11] See footnote 1.

 [12]See Taylor (2006) footnote 2 p.15.

[13] See Taylor footnote 2.p. 15.

[14] In 1980, the Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices creating voluntary guidelines was adopted by the United Nations by a consensus resolution; see UNCTAD (2000) ‘The United Nations Set of Principles and Rules on Competition’ TD/RBP/CONF/10/Rev.2 Geneva; for the full text UNCTAD-Doc.TD/RBP-CONF6/15 18. 11. 2005 see www.unctad.org/ensubsites/cpolicy/index.html.

[15] The OECD adopted a number of non-binding Recommendations on competition law and policy and Best Practices on information exchange in cartel investigations, for the full text see  http://www.oecd.org/document/59/0,3343,en_2649_34715_4599739_1_1_1_37463,00.html.

[16] It is widely accepted that the diversities at procedural laws could be reduced at a very basic level; much of the activity of the ICN involves efforts to seek convergence in procedural laws, for further information, see

www.internationalcompetitionnetwork.org/media/archive0611/icnnpguidingprint.htm.

[17] See Do footnote 2 p. 297.

[18] See Do footnote 2 p. 297.

[19] Cho (2001) footnote 5 p. 429; Langhammer/ Wößmann (2002) footnote 5 p. 376; Dent (2006) New Free Trade Agreement in the Asia-Pacific; Hilpold (2005) International Competition Law and Regional Trade Agreements in: Manchester Journal International Economic Law Vol. 2 Issue 3 82-93.

[20] Cho (2001) footnote 5 p. 429.

[21] Other trade scholars identified this process differently; for instance, five forms of economic integration may be 1. Preferential Trade Areas (PTAs): member countries agree to levy reduced, or preferential, tariffs on partner countries; 2. Free Trade Area (FTAs): trade barriers between partner countries are abolished, but each member country determines its own external barriers; 3. Custom Union (CUs):  intra-union free trade prevails and a common external trade policy is adopted by member countries; 4. Common Markets: the free movement of goods, services and factors of production; and 5. Political Unions: the ultimate form of economic integration. While PTAs and FTAs do not require inter-governmental institutions, since each member country remains in charge of its own policy, CUs do involve a delegation of sovereignty, and thus an element of supranationality, as at least external trade policy is the result of a common decision by member countries. For a detailed discussion see Dent (2006) footnote 19 p 15-17; Hilpold (2005) footnote 19 p. 88-89; Langhammer/Wößmann (2002) footnote 5 p. 376.

[22] Dent (2006) footnote 19 p 18-19; Kaiser (2002) footnote 5 p.215.

[23] Dent (2006) footnote 19 p 21-23; Langhammer/ Wößmann (2002) footnote 5 p. 383.

[24] Dent (2006) footnote 19 p 23.

  [25] Dent (2006) footnote 19 p. 26.

  [26] Hilpold (2005) footnote 19 p 88-89; Langhammer/ Wößmann (2002) footnote 5 p. 376.

  [27] See footnote 3.

[28] Solano and Sennekamp (2006) footnote 4 review the competition chapters of 86 RTAs. The overwhelming majority of these are of the North-South type. Evenett arguing that Solano and Sennekamp do not include the EC, the US and Canada as a signatory and these RTAs examined do not fall into the two categories North- South as generally presumed, see Evenett in: ‘What can we really learn from the competition provisions of RTAs?’ p. 37-63 (41) in: Brusick/Alverez/Cerat (2005) footnote 4 p. 37-63; for more information see also Anderson/Everett (2006) footnote 4.

[29] For more detailed examination see Home/Müller/Papadopolos (2006) ‘A Taxonomy of International Cooperation Provision – Competition Policy Foundation for Trade Reform, Regulatory Reform and Sustainable Development’ available at http://cpftr.org/cpftr/deliverables/Deliverable13.pdf; see also an Overview of Latin American Competition Law and Policy in Sokol (2007) footnote 4.

[30] Anderson/Heimler (2007) ‘What has Competition Done for Europe? An Inter-Disciplinary Answer’ in: Aussenwirtschaft 62, p. 419-454; see also Dent (2006) footnote 19 p.27 and 213.

[31] For a recent development see Gippini-Fournier Eric (2008) ‘The Modernization of European Competition Law: First Experience with Regulation 1/2003, Community Report to the FIDE Congress 2008’, available at http://ssrn.com/abstract=1139770.; for a pointed review see Jenny/Horna ‘Modernization of the European System of Competition Law Enforcement: Lessons for other Regional Groupings’ in Brusick/Alverez/Cerat (2005) footnote 4 p. 281-327.

[32] Anderson/Heimler (2007) footnote 30.

[33] See Round/Tustin/Round (2006) ‘Australasian Competition Law: History, Harmonization, Issues and Lesson – Competition Policy Foundation for Trade Reform, Regulatory Reform and Sustainable Development’ available at http://cpftr.org/cpftr/deliverables/Deliverable24.pdf; Holmes/Papadopolos/Kayaki/ Sydorak ‘Trade and Competition in RTAs: A missed opportunity?’ in Brusick/Alverez/Cerat (2005) footnote 4 p. 65-121; for the full text of ANCERTA see http://www.dfat.gov.au/geo/newzealand/anz_cer/cer.pdf

[34] Holmes Papadopolos/Kayaki/Sydorak(2005) footnote 33 p. 79-82.

[35] For a pointed review see Jenny/Horna ‘Modernization of the European System of Competition Law Enforcement: Lessons for other Regional Groupings’ in: Brusick/Alverez/Cerat (2005) footnote 4 p. 281-327; Stewart (2005): ‘Special cooperation provisions on competition law and policy: The case of small economies’ in: Brusick/Alverez/Cerat (2005) footnote 4 p. 331-362.

[36] CARICOM comprises Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, Grenada,  Guyana, Haiti, Jamaica, Montserrat, St Kitts and Nevis, St Lucia, St Vincent and Grenadine, Suriname, Trinidad and Tobago; see Jenny/Horna (2005)footnote 35 p. 305-308.

[37] For the full text of the Revised Treaty von Chaguaramas (2001) see http://caricom.org/jsp/community/revised_treaty-text.pdf

[38] COMESA consists of Angola, Burundi, Comoros, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe.

[39] For a detailed examination see Lipimile/Gachuri (2005) ‘Allocation of Competences between National and Regional Competition Authorities: the Case of COMESA’ in: Brusick/Alverez/Cerat (2005) footnote 4 p. 361-410.

   [40]Angola, Botswana, Democratic Republic of Congo, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe.

[41] See Lipimile/Gachuri (2005) footnote 39 p.367.

  [42] Kenya, Uganda and Tanzania; Rwanda and Burundi are applying to join the EAC.

[43] See Lipimile/Gachuri (2005) footnote 39 p.368.

  [44] Benin, Burkina, Faso, Côte d´Ivoire, Guinea- Bissau, Mali, Niger, Senegal and Togo.

[45] See Jenny/Horna footnote 35 p.310-312.

[46] Jenny/Horna footnote 35 p.319-322; Steward footnote 35 p.358.

[47] Damtoft (2008) ‚NAFTA‘ in: Terhechte (Hrsg) Internationales Kartell- und Fusionskontrollverfahrensrecht; International Cartel and Merger Enforcement Law, p. 1193-2005; OECD (2008) ‘Latin American Competition Forum- Competition Provisions in RTAs’, 19 August 2008 DAF/COMP/LACF/WD(2008)1available at http://www.oecd.org/dataoecd/44/56/41165175.pdf; Clifford (2006) Competition Dimensions of NAFTA and the European Union: Semi-Common Competition Policy, Uncommon Rules, and No Common Institutions, Jean Monnet/Robert Schuman Paper Series Vol. 6 No. 18 University of Miami Florida.

[48] For the full text of Agreement see

http://www.nafta-sec-alena.org/DefaultSite/index_e.aspx?DetailID=78

[49] OECD(2008) footnote 47 p. 1.

            [50] OECD (2008) footnote 47 p. 3; Clifford (2006) footnote 47 p. 9-10.

[51] OECD (2008) footnote 47 p. 3-4.

[52] For the case study see http://www.ftc.gov./opa/2001/06lafarge.htm

[53]  Clifford (2006) footnote 47 p.10.

[54]  Gallagher/ Wise (2009) ‘Reforming North American Trade Policy: Lesson from NAFTA’, available at www.americaspolicy.org;  Zamora (2008) ‘A Proposed North American Regional Development Fund: The Next Phase of North American Integration under NAFTA’ 40 Loyola University Chicago Law  Journal 93 p. 92-141, available http://ssrn.com/abstract=1360947

[55]Bischoff-Evrding (2008) ‘MERCOSUR’ in: Terhechte (Hrsg.) footnote 47 p. 1966-1979; Azevedo (2005) ‘Mercosur Agreement on Competition Policy- How effective has it been and how to promote further Cooperation – Competition Policy Foundation For Trade Reform, Regulatory Reform and Sustainable Development’ available at http://cpftr.org/cpftr/deliverables/Deliverable23.pdf; Ladman(2002) ‘MERCOSUR’ in: Basedow (ed.) Limits and Controls of Competition in View of Harmonization.

[56] For full text see http://www.worldtradelaw.net/fta/agreements/mercosurfta.pdf

[57] For full text see www.sice.oas.org/Trade/MRCSRS/Decisionss/ANI1896p; for further discussion see Jenny/Horna footnote 35 p. 308-310.

[58] Azevedo (2005) footnote 55 p.4; Jenny/Horna footnote 35 p.308-310.

   [59] Azevedo (2005) footnote 55 p. 5.

[60] Azevedo (2005) footnote 55 p. 5.

[61] Azevedo (2005) footnote 55 p. 6.

[62] For full text see http://www.sice.oas.org/trade/mrcsrs/decisions/de0404s.asp.

[63] Jenny/Horna (2005) footnote 35 p. 310.

[64] Jenny/Horna (2005) footnote 35 p.308.

[65] Azevedo (2005) footnote 55 p. 8.

[66] Azevedo (2005) footnote 55 p. 9.

[67] Azevedo (2005) footnote 55 p. 9; Jenny/Horna (2005) footnote 35 p.309.

[68] Bischoff-Everding/Schreiber (2008) ‚Andengemeinschaft‘ in: Terhechte (Hrsg.) footnote 47 p. 1981-1987; Jenny/Hornes (2005) footnote 35 p. 301.

[69] See http://www.sice.oas.org

[70] Jenny/Hornes (2005)footnote 35 p. 302.

[71] For the full text available a http://www.comunidadandina.org/normativa/res/R420.htm; see also  Jenny/Hornes(2005)footnote 35 p. 303-304.

[72] Marcos (2007) ‘Downloading Competition Law from RTA: a New Strategy to Introduce Competition Law in Bolivia and Ecuador’ IW Working Paper Derecho WPED 07/02, available at http://ssrn.com/abstract=940467; Jenny/Hornes(2005)footnote 35 p. 303-304.

[73] APEC (2008) Economic Policy Report, APEC Economic Committee, available at   http://www.apec.org/apec/member_economies/economy_reports.html; Brooks/Evenett (2005) ‘Competition Policy and Development in Asia’; Medalla (2005) ‘Competition Policy in East Asia’; Terhechte (2008) ‘ASEAN/APEC’ in: Terhechte (Hrsg.) footnote 47 p. 1956-1964.

[74] http://www.apec.org

[75] http://www.apec.org/apec/about_apec.html

[76] APEC (2008) Economic Policy Report footnote 73 p. 4.

[77] APEC (2008) Economic Policy Report footnote 73 p. 12.

[78] APEC (2008) Economic Policy Report footnote 73 p. 12.

[79] An overview of historical background and different level of introduction and implementation of competition law in APEC economies see APEC (2008) Economic Policy Report footnote 73 p. 22-43.

[80] See APEC (2008) Economic Policy Report footnote 73 p. 47-51.

[81] Terhechte (2008) in: Terhechte (Hrsg.) footnote 73 p. 1957.

[82] Lin (2005) ‘The Evolution of Competition Law in East Asia’ in: Medalla (ed.) footnote 73 p. 15-40; Thanadsillapakul (2004) ‘The Harmonization of ASEAN Competition Law and Policy and Economic Integration’ in Inif Law Rev.3, 1; Wattanapruttipaisien (2010) ’Competition, State Aids and Subsidies in ASEAN’, OECD-DAF/COMP/GF/WD 2010 02 available at http://www.oecd.org/dataoecd/20/6/44558467.pdf

[83] For further reference see Terhechte (2008) footnote 73 p.1960.

[84] Terhechte (2008) footnote 73 p. 1963.

[85] Wattanapruttipaisien (2010) footnote 82 p. 3-5.

[86] Wattanapruttipaisien (2010) footnote 82 p. 3-5.

[87] For the current development see

http://gc21.inwent.org/ibt/en/modules/gc21/ws-FLEXasec/info/ibt/index.sxhtml

[88] Cernat (2005) ’Eager to Ink but Ready to Act? RTA Proliferation and International Cooperation on Competition Policy’ in: Brusick/Alverez/Cerat (2005) footnote 4 p. 3-36.

[89] Solano/Sennekamp(2006) footne 4; Sokol (2007) footnote 4.

[90] To date just one case in dealing with the NAFTA competition law has been reported, see UPS in Canada (NAFTA) United Parcel Service of America, Inc. v. Government of Canada, Award on Jurisdiction, NAFTA Arbitration Tribunal, November 22, 2002 available at http://www.dfait-maeci.gc.ca/tnanac/parcel-en.asp. An independent investigative commission of the Canadian government reported in late 1996 that Canada Post was a monopoly practicing in seriously unfair competition with the private sector. In 1997, Canada decided to take no action against Canada Post. United Parcel Services (UPS), a worldwide express delivery service, claimed damages against Canada under the provisions of Article 1105 of the NAFTA, resulting in the convocation of a multinational arbitration panel under Chapter 11. Canada challenged the jurisdiction of the panel to hear a claim based on Chapter 15 of the NAFTA. The Arbitration Tribunal ruled that claims were outside the jurisdiction of the Tribunal. As a result, NAFTA provides no protection or remedy for private firms who might be victims of antitrust violations; for a case study see Clifford (2006) footnote 47 p.12-16. Another case deals with the dispute resolution mechanism in the NAFTA is Mexico—Measures Affecting Telecommunications Services. The U.S. complained that Mexico allows discriminatory and anticompetitive conduct in certain telecommunications markets. Arguably, the U.S. telecom companies could not provide international call services from the U.S. into Mexico and Mexico had failed to prevent the anticompetitive business practices of Telmex, a national monopoly. The U.S. could not resolve this dispute under NAFTA, since NAFTA dispute resolution procedures are not applicable to regional competition rules see Panel Report, WT/DS204/R (2 April 2004), available online at http://docsonline.wto.org. For an extensive discussion see Clifford (2006) footnote 47 p. 17; Lee, ‘The WTO Dispute Settlement and Anti Competitive Practices: Lessons Learned From Trade Disputes’, Working Paper (L) 10/05 Centre for Competition Law and Policy, The University of Oxford, 2005.

[91] Cernat footnote 88 p. 31-35.

[92] Cernat footnote 88 p. 32.

[93] The reason for this preference is understandable: ATAs are negotiated by the competition officials, not by the trade negotiators. They speak the same language and are aware of the practicalities of enforcement activities. 

[94] Baldwin/ Evenett/ Low (2007) ‚Beyond Tariffs: Multilateralising Deeper RTA Commitments’, Paper presented at WTO-HEI Conference 10-12 September 2007 p. 23.

[95] Gallagher/ Wise (2009); Zamora (2009) footnote 54.

[96] The Economist `Mexico and America Gently does it`; for the full background see http://www.economist.com/world/united-states/displaystory.cfm?story_id=15019872

[97]Brummer (2007) ‘the Ties that Bind: Regionalism, Commercial Treaties, and the Future of Global Economic Integration’ in: Vanderbilt Law Review, Vol. 60, No. 5, October 2007, available at http://ssrn.com/abstract=962898

[98] Azevedo (2005) footnote 55 p. 12-13.

[99] Brummer (2007) footnote 97 p. 33-35; Azevedo (2005) footnote 55 p. 14.

[100] The AC and MERCOSUR have intention for future negotiations towards integrating all of South America in a Union of South American Nation (USAN); it was established in 2008.

[101] For a detailed discussion see Brummer(2007)footnote 97 p.28-31

[102] Hufbauer /Schott(2007)‚ Multilateralizing Regionalism Fitting Asia Pacific Agreements in the WTO System‘ Paper presented at WTO-HEI Conference 10-12 September 2007.

[103] Hilpold (2005) footnote 19 p. 93

[104] Cernat footnote 88 p.32; Evenett footnote 4 p. 46-51.

[105] Wood, DePaul Law Review 1995, p. 1289, argues that extraterritoriality and cooperation remain an effective solution. She proposes that the OECD and the bilateral agreements could play a crucial role in developing soft harmonization.

[106] See Do (2009) footnote 2 p. 313.

[107] Sokol (2007) footnote 4 argues that RTA may encourage domestic compliance through norm creation; it may serve as a checklist of issues that countries have identified as needing increased capacity-building in related domestic institution. In addition, it may serve as mini-laboratories of experimentation. On the contrary, Gal(2009) footnote 3 p. 23-26 argues that RTA creates the positive effects on efforts of international cooperation in examining the coast-benefits factors of the small economies joined in RTAs; the arguments of Gal are not convincing because the benefits gained are not sufficient and she does not consider the political economy constraints and the other driving forces.

[108] Evenett in Brusick/Alverez/Cerat (2005) footnote 4 p. 46-51.

[109] Lamy argued that the re-negotiations on the Doha Development Agenda would be one of the most appropriate collective stimulus packages. It would be the surest way to safeguard the multilateral trading system against the threat of the outbreak of protectionism. Speech at the Trade Policy Trade Review WTO on 14 April 2009, available at: www.wto.org/englishnews_e/news09_e/trdiv_14.apr.e.htm.

[110] See Nguyen/ Lidgard (2009) footnote 4 discussing a competition law prospect after the Doha Round and advocating that competition law should be developed in tandem with intellectual property protection; this principle should be respected in negotiations in a post-Doha Round p. 25.

[111] See Do(2009) footnote 4 arguing the increasing role of ICN in dealing with the procedural convergence.

[112] Consumers International (2007) ‘Consumers and Competition: A Consumer Welfare Analysis of Three Retail Markets in 14 EU Member States’, available at http://www.consumersinternational.org/shared_asp_files/GSFR.asp?NodeID=96969; Mehta/Nanda (2005) ‘The Role of Civil Society in Promoting Competition Culture at the Regional Level’ in: Brusick/Alverez/Cerat (2005) footnote 4 p. 253-279.

[113] Do (2009) footnote 2 p. 313.

[114] Drexl (2004b) footnote 4 arguing the WTO law as instrument for providing private goods p. 441.

 [115] Bhattacharjea, (2006) ‘The Case for a Multilateral Agreement on Competition Policy: A Developing Country Perspective’, Journal of International Economic Law 9 (2): 293-323.