Competition Policy within the Context of Free Trade Agreements

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This paper reports the findings of a mapping exercise of the competition-related provisions of 267 free trade agreements (FTAs) included in the World Trade Organization’s (WTO) Regional Trade Agreements (RTA) database. This represents by far the largest sample of FTAs analysed to date in this type of mapping exercise. For the purposes of this paper, we did not review provisions that are not competition-specific but arguably also impact competition policy and enforcement (for example, non-discrimination and transparency). To begin with, we propose a typology of competition-related provisions in FTAs. Based on this typology, and for the purpose of this paper, we have set up a tentative, hopefully user-friendly database summarising competition provisions in the FTAs - we hope that this database can be maintained and improved in order to provide stakeholders with easily accessible guidance for negotiating competition-related FTA provisions. We then identify distinct model approaches to addressing competition-related issues in FTAs and provide a summary of the economic and political economy rationales for including competition-related provisions in FTAs. Drawing lessons from this mapping exercise, we formulate tentative suggested ways forward, exploring the appropriate fora and methodologies for harmonising competition provisions within the international trade system. In light of the repeated failures to include a set of comprehensive competition policy principles in “hard law” multilateral trade instruments and continued opposition from a number of developing countries, a “soft law” approach appears to be the only realistic perspective in the near future at the multilateral level. The ICN stands out as the only international platform that has both the needed flexibility and ability to influence policymakers. Given the medium- and long-term shortcomings of a soft law approach, the paper proposes devising a step-by-step approach, with a gradual movement from voluntary participation in a soft law convergence process to the adoption of more binding instruments at the bi- and plurilateral levels, including by emphasising the multiplication of competition-related provisions in FTAs. The recent approval by the ICN’s Steering Group members of an international framework on Competition Agency Procedures (CAP), which is largely inspired by a number of provisions set out in bilateral and regional agreements, is a good example of what could be a first possible step in “multilateralising” certain FTA provisions on competition policy. To garner sufficient support for such an initiative, it will be crucial to devise ways to either decrease the cost or increase the benefits of including competition-related provisions in FTAs. The first step for soft convergence would be to identify areas of competition policy that a model chapter should include and the parties could rather easily agree upon. To facilitate adoption by countries with less experience in competition law enforcement and/or ensure special and differential treatment for developing countries or least-developed countries, the paper envisages following a multi- tiered approach inspired by the WTO Trade Facilitation Agreement.