The BCTT Competition Working Group is focused on the elements of a traditional competition chapter of a trade negotiation (antitrust enforcement, designated monopolies, state-owned enterprises). In particular the priority areas are transparency and due process in competition enforcement proceedings and concerns with regard to governments circumventing trade and investment commitments through state-owned/state-favored enterprises.
Transparency & Due Process in Antitrust Enforcement
The U.S. and the EU have had in place for more than 20 years a memorandum of understanding to guide both policy and enforcement cooperation. Despite the depth of experience and high degree of cooperation which has been achieved, substantive policy and legal frameworks differences remain. These differences are well known, but we do not believe that a Transatlantic Trade and Investment Partnership (TTIP) should attempt to bridge all of these differences, but instead should largely focus on key messages a TTIP agreement can send to the rest of the world regarding antitrust enforcement.
Objectives for the TTIP Negotiations
- TTIP should identify what transparency and due process obligations are expected with regard to antitrust proceedings. It is critical that antitrust enforcement agencies not be seen as “black boxes” and that those under investigation can frequently engage with enforcers to understand the evidence, legal and economic theories that should underpin investigations so that an adequate defense can be mounted. The U.S. has an established practice in its trade agreements of incorporating such obligations in this regard, most recently in the Transpacific Partnership negotiations. This should be the basis for discussion in the TTIP.
- Further, the TTIP should seek to codify OECD and ICN merger review best practices as part of a complete and comprehensive approach to transparency and procedural fairness. To date the U.S. approach in trade agreements has focused largely on cartel and conduct proceedings. However, today many global transactions require merger review across multiple jurisdictions. Merger clearance and the coordination across jurisdictions as well as the development of merger remedies are becoming increasingly complex. Recommitting to merger best practices in this agreement along with a cooperation pledge to work closer together and with third-countries in regard to merger review should be paramount to any competition provisions of a TTIP agreement.
- Finally, the TTIP should address the challenges that arise with regard to the extent to which legal privilege is recognized in the EU in comparison to what protections are afforded within the United States and within various EU member states. This is no doubt a difficult subject. However the ambitious nature of the TTIP can only be achieved if difficult subjects like this are in fact raised and addressed.
Disciplines for State Favored Commercial Actors
A new dynamic in the world economy threatens the competitiveness of American and European companies and workers in world markets: Market distortions caused by government’s favoring government supported and government owned enterprises through either government financing, the offering of non-financial advantages, or from directing/influencing the “commercial operations” of these enterprises in the market.
As a result, where the government takes on the role of a commercial actor it creates an opportunity for the government to circumvent many of its multilateral and bilateral trade and investment obligations. The result is a distortion to competition which creates an un-level playing field, and actively undermines confidence in international trade and investment rules.
This is a key issue confronting trade and investment in the 21st century, and must be dealt with in future trade and investment agreements. It is critical that the TTIP agreement include comprehensive rules to address market distorting behavior by government to favor or direct the actions of its state-owned or state-favored enterprises on which each party can model future agreements with other countries and take a common approach to the issue in multilateral fora.
Objectives for the TTIP Negotiations
- Address these concerns as they arise in an investment, cross-border, and third country context.
- Discipline government financial advantages provided on a preferential access and non-commercial basis to these entities.
- Discipline government non-financial/regulatory treatment, including prohibiting selective enforcement of laws and regulations that is often done in a manner that is partial to these entities.
- Ensure that a government is accountable for these entities’ decisions in the market that are proven to be discriminatory or made as a result of government influence and not conducted in accordance with commercial consideration.
- The obligations to address all of these distortions are subject to dispute settlement.
For more information about this working group. please contact:
Shaun Donnelly, United States Council for International Business (USCIB)
Sean Heather, U.S. Chamber of Commerce
Alan Wolff, for National Foreign Trade Council (NFTC)