Canada and developing nations should resist competition policy rules at Cancun WTO Ministerial

August 29, 2003

OTTAWA--A new study warns that a WTO agreement on competition policy could have a number of negative consequences. It recommends that WTO Ministers reject a proposal to negotiate competition policy rules when they meet in Cancun in two weeks.

Titled Competition Policy in the WTO and FTAA: A Trojan Horse for International Trade Negotiations?, by Marc Lee and Charles Morand, the study notes that competition policy has traditionally been concerned with curbing excessive market power in the private sector.

But the rich countries pushing competition policy at the WTO see it as a means of facilitating the market access of their corporations and streamlining the process of international mergers and acquisitions--measures that would further the interests of large global corporations.

"Competition policy can be viewed as a Trojan Horse," said the study's co-author, Marc Lee. "It may look appealing, but once inside could be a means of letting the invaders in."

Discussions on competition policy are also ongoing as part of the Free Trade Area of the Americas initiative. Lee and Morand caution that incorporating competition policy rules into international trade agreements would have several negative effects:

  • They could be used to attack and undermine public monopolies such as Canada Post and the Canadian Wheat Board, and even public health insurance.
  • They would limit the scope of national industrial policies, particularly in the developing nations, that have been used in the past to create "national champions".
  • They would be costly to implement and administer for developing countries that have more pressing priorities for public spending.
  • They would threaten regulations aimed at promoting national culture or restricting foreign ownership.

Lee and Morand note that discussions to date do not address legitimate concerns of many developing countries, and civil society actors in rich countries, about the growing market dominance of large global companies. The negotiations would not replicate at the international level the type of competition policies that have served to keep the private sector in check at the national level.

"Competition policy negotiations to date have been shaped by the corporate interests of rich countries," said Lee. "They should be resisted by countries that want the flexibility to guide the development process of their economies."