The Interaction between Trade and Competition Policy: Constructing A Framework for International Competition Rules in the World Trading System

Abstract

Thanks to the successive rounds of trade negotiations within the GATT framework, member countries have succeeded in mitigating conventional trade barriers, namely a dramatic reduction of tariffs and the lessening of non-tariff barriers. Although the GATT, the acknowledged constitution of the international trade, includes some disciplines that address problems relating to the competition within international markets, there has been little progress in creating a competition-consistent global trade environment compared to that achieved in trade liberalisation. However, new pressures arising from the increased integration of international markets has revealed one reality: the world economic system is saturated by policies that until recently have placed their primary focus on trade liberalisation. In an increasingly globalised world economy, relatively new approaches need to be incorporated into the existing ones in order to tackle new challenges which are coming into play. Consequently, it is now widely recognised that a competition policy-oriented approach must be incorporated into future efforts of trade libe ralisation. In this context, the basic argument to be made in this dissertation is that creating an international framework of competition rules and introducing anti-trust law on the WTO agenda may well contribute to global welfare by fostering efficiency and strengthening the world trading system. Departing from the need for understanding the links between trade and competition policy and for exploring the gaps and problems arising from the application of these policies, this paper will attempt to clarif y such questions: Are trade liberalisation policies and competition policies theoretically consistent? What are the similarities and divergences between the objectives and instruments of these two policy domains? Are they mutually enforcing as such? Where a re the existing problems coming from? Are existing instruments enough to solve those problems? What efforts are being exerted to overcome these problems? What are the proposals to create a competition-consistent trade environment? Are they feasible and desirable?