After the Tokyo Round of Multilateral Trade Negotiations, the European Commission (EC) created an interdepartmental group to work on the topics that should be on the next round of multilateral trade negotiations. At that time, it was suggested that international competition rules should be on the agenda. However, the then-chairman of that group did not think it likely to be accepted as part of the work program and the EC did not propose that it be included in the work program of the Uruguay Round. Few at the European Commission seriously defended the idea of having international competition rules in the work program, mainly because at that time it was felt that such proposal would not be accepted. However, after the Uruguay Round, the idea came up again that there should be negotiations about the relationship between trade and competition.

Quite a few years ago, I presented a report to the International Law Association, together with Professor Matsushita about the need for international competition rules.

When I recently reflected on the subject of international competition rules in connection with the World Trade Organization (WTO), I thought that a good title for a paper would be: "International Competition Rules: Cancún or the Legacy of a Misconception."

The first question that arises in this context is what is the rationale for having negotiations in the WTO about competition? There may be very different views about that, but it is generally agreed that international competition rules are needed. However, some have argued that there should not be an overarching international agreement in the WTO, while others have argued that there should be international competition rules negotiated at the WTO level.

The pressure for having negotiations on international competition in the WTO was coming from the European Union (EU), because within the EU itself, there was at the inception a link established between liberalizing trade within the EU and competition rules. The underlying idea was that in the absence of competition rules, the efforts undertaken to remove the barriers that are maintained by governments to intra-EC trade would be circumvented by private agreements between companies. It is thus not surprising that the EU would, on the basis of its own experience, propose to have negotiations on competition rules at the WTO level. This is also borne out by the existence of a number of cartel-like agreements that are jeopardizing the efforts made by governments in the WTO to eliminate obstacles to international trade. That was one rationale, and it was generally accepted in the group that was established within the WTO on trade and competition.

Then something strange happened during the course of the discussions. Some delegates in that group were arguing that from a competition theory point of view, international competition rules whose sole purpose would be to ensure market access would not be enough: competition rules at the WTO level should go further than simply ensuring market access. Ultimately, at the Doha Ministerial Conference launching the Doha Round, competition rules and the other Singapore Issues were put on the work program conditionally. So they had a lower degree of priority than the other items of the program, such as agriculture. At the subsequent Cancún Ministerial Meeting, however, it was decided that the Singapore Issues, except for the issue of trade facilitation, would no longer be on the work program.

Why this should have turned out to be the case? What was then on the table was certainly not the type of international agreement that had been worked out and that carried the name of the Munich Code, which is an international code of antitrust rules that a certain number of academics had drafted. What was then on the table was firstly, a commitment to a set of core principles, which were transparency, non-discrimination, and procedural fairness; secondly, a commitment to act against hardcore cartels; third, the development of modalities for cooperation; fourth, technical assistance and capacity-building; and finally, that there should be a standing WTO committee on competition. These limited issues were on the table prior to Cancún.

There are a number of reasons why agreeing that such issues should be on the Doha work program encountered difficulties at Cancún. One of them is that many delegations considered that these were new issues; a number of WTO members were not yet satisfied that the older issues had been satisfactorily resolved; they were unhappy about the way earlier commitments about these issues had been implemented; as a result, they were opposed to the introduction of new issues. A certain number of developing countries came out of the meeting at Cancún and said, "We have won," because they had avoided having international competition rules on the agenda. I was surprised that they considered that as winning, bearing in mind that a study by the World Bank showed that in 1997 U.S. $81 billion of developing countries' imports were affected by international cartels.

Apart from improving market access, there is another rationale for international competition rules. If there is not a rapprochement between the competition rules of countries, there should be at least a system of cooperation between cartel authorities. To that effect, the International Competition Network (ICN), among competition authorities, was set up. I attended the first meeting of the ICN in Naples with representatives of many of the 90 countries that had competition laws in place. Cooperation is needed to avoid not only jurisdictional conflicts about extraterritoriality, but also conflicts of substance. Such conflicts have, for example, arisen between the United States and the EU regarding clearance of the same merger. There are other examples of this where one authority is taking a decision in its own market, but that decision is going against the decision of another authority: the result is that an international transaction cleared by one country and prohibited by another has to be abandoned. Therefore, as a first step at least, there is a need to have cooperation amongst authorities in antitrust matters.

My reply to the question of whether the Singapore Issues should be brought to life again, is that they certainly should. There is still opposition from WTO Members, but some of this opposition may be due to the fact that some WTO Members are badly informed or perhaps it is done in bad faith. E.g., in American literature, the view has been defended that WTO rules on competition would result in the WTO becoming a super antitrust agency. That has never been the case. Another reason for international competition rules not being wanted is because they will take away one of the main arguments for maintaining anti-dumping rules: one of the main policy arguments for having anti-dumping rules is the absence of international competition rules. That is my first point.

My second point is trade and investment, which is another of the Singapore Issues that was dropped after Cancún. This is not a new subject for the WTO, because there are provisions on investment in the General Agreement on Trade and Tariffs (GATT) itself and in other instruments that show that the WTO system is already dealing with investment, albeit in a haphazard, mosaic-like way.

The subject is a fascinating one from an international law perspective. There are no international multilateral rules on investment. There is customary international law. There is, however, not much agreement on what customary international law on investment really says. For example, there is the Hull Doctrine and the Calvo Doctrine that are difficult to reconcile.

The 1974 Charter of Economic Rights and Duties of States proclaims that each State has the right to regulate and exercise authority over foreign investment within its national jurisdiction. The Charter also states that each State has the right to regulate and supervise the activities of transnational corporations within its national jurisdiction, and that no State can be forced to grant preferential treatment to transnational corporations. This sounds nice on paper, but a country that needs foreign investment may not be in a position to insist on the Charter.

So again, at Cancún, developing countries considered it as a victory that there would not be rules on investment within the WTO. In theory, they won but in practice, I think they lost. My view is that it would have been much better for developing countries to negotiate an agreement on a certain number of rules of investment within the WTO framework where they represent the majority, rather than negotiating individually on a case-by-case basis bilateral investment treaties where they are in a weak position. It would therefore be worth having a revival of that Singapore Issue as well in the WTO.

The interesting question is why the EU insisted on having that item on the agenda in Doha. One possible explanation is the so-called bicycle theory. Like a bicycle an international organization needs to be on the move, otherwise it falls down. Members may be proposing to put new items on the WTO agenda, not so much because they have a clear trade interest, but to keep the 'bicycle' running.