Basic Principles of the WTO and the Role of Competition Policy

Both competition policy and the World Trade Organization (“WTO”) aim to promote and maintain a free and open trading system. The WTO’s task is to establish an international trading system based on a free and open market, and competition policy that covers both domestic and international markets. However, the similarity of their purposes and objectives is unmistakable. The WTO tries to reduce and eliminate governmental trade barriers, such as tariffs and quantitative restrictions. Under the auspices of the General Agreement on Tariffs and Trade (“GATT”) of 1947, eight trade negotiations were conducted, the last of which was the Uruguay Round (1986-1993). The WTO was created as a result of the Uruguay Round, which was about fifty years after the proposals for the Havana Charter and International Trade Organization failed. As will be discussed later, the WTO is based on the principles of mostfavored- nation treatment (“MFN”), national treatment, and transparency. These three principles are the most fundamental principles of the WTO, and all are designed to establish and maintain non-discrimination and openness in the international market. The principles of MFN and national treatment establish “a level playing field” among participants in international trade in different nations by eliminating discriminatory measures adopted by Member governments. The principle of transparency as incorporated in Article X of the GATT, Article III of the GATS and Article 63 of the TRIPs Agreement ensures the openness of governmental regulations and thereby helps maintain predictability for players in international trade. The coverage of competition policy extends not only to international trade but also to the purely domestic market. The objectives of competition policy vary from country to country. Competition policy aims at controlling not only the activities of private enterprise but also governmental restrictions. In this latter respect, competition policy shares a common goal with the GATT/WTO. The goal of Competition Policy is to establish and maintain the freedom of enterprises, the equality of the competitive conditions under which they compete, and the openness of markets. A striking similarity exists between the objectives of the WTO and those of competition policy. The key concepts common to both are, inter alia, promotion of an open market, provision of fair and equal business opportunities to every participant in the market, transparency and fairness in the regulatory process, the promotion of efficiency, and the maximization of consumer welfare.