While many have suggested that competition policy should be included on the agenda of future rounds of multilateral trade negotiations, other policies may have greater effects in restricting the contestability of markets. In Discussion Paper No. 876, Research Fellow Bernard Hoekman and Petros Mavroidis argue that efforts to ensure that the GATT's contracting parties actually invoke its current rules to enhance competition and eliminate the remaining `loopholes' may prove more productive than the explicit pursuit of multilateral competition policy. Experience at the regional level suggests that this is difficult and may depend on achieving far-reaching liberalization of market access first. The GATT rules allow substantial scope for redress against business practices that restrict market contestability and entail de facto discrimination that enjoy government support. The GATT's rules on the implementation of antitrust legislation have not been properly tested, and their greater use by contracting parties would help to determine whether calls to introduce competition policy into the multilateral negotiations are justified. The virtual absence of such cases suggests, however, that this is not a primary concern of governments.

Hoekman and Mavroidis note that the GATT currently offers no scope for redress against private business practices that restrict market access. It does not promote competition policy per se and provides no means of regulating firms in export markets (or inducing their `home' governments to regulate them). More work is required to document and quantify the impact of these `holes' in the GATT, but their empirical relevance may be quite small. Most anti-competitive business practices are supported by governments in ways that allow recourse to the GATT; arguments for multilateral discipline on competition policies are not compelling; and any agreement to impose multilateral disciplines on export cartels must be complemented by analogous tightening of the rules that allow countries to restrict exports, which may be much more important in practice.

Competition, Competition Policy and the GATT
Bernard M Hoekman and Petros C Mavroidis

Discussion Paper No. 876, January 1994 (IT)