OECD Competition Committee

Secretary-General Cormann, 

Mr. Fred Jenny, Chairman (of OECD Competition Committee),

Excellencies, Ladies and Gentlemen,

Thank you very much for inviting me to join you for this event, a major feature in the international competition policy landscape. It is a pleasure to provide some remarks for this opening session after IMF Managing Director Kristalina Georgieva.

This year’s forum includes two sessions of direct relevance to the work of the WTO: on the interaction between trade, competition, and development and on competitive neutrality.

Both sessions concern a question that was at the origin of the past work on competition policy at the WTO, and which has again come to the forefront: How can competition and trade policy work together to maintain a level playing field in an increasingly interconnected global economy?

Undeniably, over the recent decades, competition law and policy has become an essential element of the legal and institutional framework for the global economy.

Today some 135 WTO Members, including all emerging economies, have in place national competition laws, up from 50 economies in 1997. This welcome state of affairs is due in significant part to the excellent work of institutions like the OECD, the ICN (International Competition Network), UNCTAD and individuals like our chair today, Professor Frédéric Jenny.

There are, of course, many links between the global trading system, international competitiveness – and state interventions such as subsidies – and competition policy. One of the basic principles in competition law and policy is “fair play” in the market. In that regard, the OECD has developed the concept of “competitive neutrality” to be discussed today.

And the question as to whether or not our policies and rules create a level playing field is more relevant than ever. For instance, the current debate about the structure of global digital markets, including the economies of scale, industry concentration and network effects observed in these markets, have raised questions about whether these markets, if left to themselves, promote competition, inclusiveness and work to the benefit of consumers. 

Related to subsidies as well, there are also debates as to whether WTO rules adequately regulate schemes in which government support goes to a recipient manufacturing products in a different country. By the same token, it has been noted that recent COVID-19 state support measures need to be monitored carefully and designed so as not to distort competition and lead to unwelcome longer-term distortions in the long-run.

At the WTO, fair trade is at the core of our work. Arguably, and similar to competition law and policy, this entails transparency, non-discrimination and fair play amongst all players as fundamental principles incorporated in several of the WTO agreements.

Today, the WTO examines domestic competition policy regimes, in its trade policy reviews of existing WTO Members, as well as in working party reports on countries seeking WTO accession, and provides technical assistance to a large and geographically diverse group of developing countries.

In other areas, like trade and public health, consideration of the role of competition policy features prominently, whether it is in discussions in the WTO committees or in the joint work with WHO and WIPO.

Even then, some would say that the existing competition rules in trade agreements do not adequately discipline trade and are not reflective of the current economic and competitive conditions in the international sphere today.

For example, existing subsidy rules do not sufficiently discipline subsidies to state-owned enterprises; transnational subsidies; fuel subsidies; fisheries subsidies, among others.

Subsidy rules in trade agreements exist to avoid, inter alia, distortive effects on the global market and negative cross border effects. In today’s world, integrated global value chains represent an increasing challenge to existing subsidy rules. This is because the effects of a subsidy are more difficult to track down in GVCs.

At the same time, if we want to build back better, we need to provide enough flexibility to support our economies and make sure that our regulations do not increase red tape for investment flows that negatively affect competition and ultimately slow down growth.

A balanced, sufficient trade and competition law and policy framework levels the playing field by ensuring, among other things, non-discrimination and fair-play. It incorporates the competitive neutrality principle in a manner that ensures that all players in the market adhere to non-discrimination and fair-play principles. It provides flexibility for positive measures to the extent needed and legitimate (e.g., positive measures taken in the context of the COVID-19 pandemic to boost resilience).

Several WTO Members have argued for commitments on competitive neutrality to discipline trade distortions, industrial and agricultural subsidies, activities of state owned and transnational enterprises among other areas.

Discussions such as these, with Heads of Competition Agencies, and working together with our trusted partners, such as the OECD and the IMF represented on this panel, help shape policies and outcomes that aim for tangible results.

The WTO has recently increasingly been seen as part of the solution to tackling the current pandemic and that it is capable of addressing modern challenges and realities in international trade.

The OECD work on competition and competitive neutrality can be useful in our efforts to understand how to eliminate competitive distortions, and enhance levering the playing field, hence guaranteeing open, market-oriented trade to the benefits of millions.

In that regard, I commend the OECD for the adoption, this year, of the Recommendations of the Council on Transparency and Procedural Fairness in Competition Law Enforcement as well as on Competitive Neutrality – complemented, of course, by the OECD Voluntary transparency and disclosure standards for internationally active state-owned enterprises.

I think I can confidently say that competitive neutrality can become an essential analytical tool to improve the multilateral trade system.

Mr. Chairman, this concludes my remarks. Thank you again for the opportunity to join you today.