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Conciliation of Conflicts of Opinion Between the North and the South on International Law Regulating Cartel

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Strategies to Achieve a Binding International Agreement on Regulating Cartels

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Abstract

International competition law cannot avoid considering the development-perspective of competition law since the majority of the constituents of international organizations which tried to adopt competition law experience or experienced developing market economies or least-developed economies. As the 2003 Cancun Ministerial Conference for Doha Development Agenda demonstrated, the unilateral market-oriented competition policy from the advanced countries was not welcomed in the developing countries’ context even though competition law produces legal guidelines to business activities among competing companies along with providing much benefit in increasing consumers’ welfare and efficiency. In light of the development-approach, there need to be flexible rules acknowledging exceptions to cartel regulations and assistance in operating cartel regulations in developing economies. Major aspects of international development law , e.g., differential treatment, non-reciprocity, and convention of commodity-producing and consuming countries in markets, need to be adopted by international competition law since the international competition law is currently in the initial stage and the wide gap of experiences in practice between advanced countries and developing countries cannot be regulated under a single standard. As binding international cartel law can help foster competition policy in less-competitive markets, it will support MNEs or companies from advanced countries which want to expand their market. On the other hand, it can also proffer benefits to developing countries where the level of economic development outgrows its low level and international trade occupies a growing portion of Gross Domestic Product.

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Notes

  1. 1.

    The ACP grouping consists of over seventy countries that are beneficiaries of the European Union’s preferential market access programs, originally provided by the Lome Convention and later renewed by the Contonou agreement. White and Case LLP (2003), at 3.

  2. 2.

    EC’s concession to drop two issues including competition policy was criticized for being too late. See id.

  3. 3.

    The procedure is criticized from two conflicting perspectives. The one from advanced countries argues that although the consensus-based system is democratic, it is exposed to abuse from anti-trade or anti-liberalization groups and inefficient to produce any substantial result with further negotiation. See White and Case LLP, supra note 1, at 9; Baldwin (2008), at 3 and 10. The other one from developing countries insists that WTO’s untransparent and nonparticipatory decision-making process which invoked developing countries’ rage led to the collapse of the negotiation, whereby criticizing WTO’s bias in favor of minority of developed countries rather than majority of developing countries. The informal drafting custom by chairmen, since 1996 Singapore Ministerial Conference, urged every member to adopt the last draft on the last day of schedule, which accumulated anger from members with limited access to decision. Khor (2003), at 3–6.

  4. 4.

    The chairman’s closing announcement was considered as surprise since quite a few WTO members were absent at the meeting where the EC concession was presented. Arguably, the motives of the chairman might have been driven by other factors, not related to Singapore issues, such as developed countries efforts to thwart agricultural reform. See Khor, supra note 3, at 1–5; White and Case LLP, supra note 1, 2–4.

  5. 5.

    Khor, supra note 3, at 2 and 9. However, Khor states, the Chairman proposed that the two issues, investment and competition policy, would be dropped out from the agenda but that for the other two issues, trade facilitation and procurement, negotiations could begin. In response to the proposal, the EC Commissioner agreed to it, giving impression that these would be removed from the WTO altogether, not just from Doha mandate. Khor, id. at 2.

  6. 6.

    See White and Case LLP, supra note 1, at 2–3. The article states that the second draft Ministerial Declaration reflected the U.S. proposal regarding the cotton initiative in conflict with the initial pleading of four West African cotton producers, Burkina Faso, Benin, Chad and Mali, for the consideration of a sectoral initiative to reduce and eliminate cotton subsidies. Id. 5–6. Especially the text language inflames the African countries, saying that international bodies direct existing programmes and resources toward diversification of the economies where cotton accounts for the major share of their GDP, because the African countries recognized the wording as suggestion of stopping growing cotton. JOB(03)/150/Rev.2, at para. 27. They asked the ACP group of support for the initiative, and the group requested to end all export subsidies in 3 years, production subsidies in 4 years starting in 2005, and to remit payments of maximum $300 million annually to African countries affected by subsidies. The situation appeared to have spiraled out of control. See id. at 6.

  7. 7.

    Khor, supra note 3, at 2–3.

  8. 8.

    The G-21+, led by Brazil, China, and India, also includes Argentina, Bolivia, Chile, Colombia, Costa Rica, Ecuador, El Salvador (later withdrew), Guatemala, Mexico, Pakistan, Paraguay, Peru, Philippines, South Africa, Thailand, and Venezuela. At the start of the Cancun Ministerial, Egypt, Senegal and Turkey joined, Indonesia and Nigeria joined toward the close of Ministerial. See id. at 3 fn 3.

  9. 9.

    The G-21+ group had taken a hard line on agriculture negotiation.

  10. 10.

    See id. at 3.

  11. 11.

    See id. at 4.

  12. 12.

    Baldwin, supra note 3, 9–10.

  13. 13.

    U.S. General Accounting Office [GAO] (2004), at 2–3.

  14. 14.

    See id.

  15. 15.

    Less than a month before the meetings, the U.S. and the EU jointly presented a broad framework for improving market access for agricultural products and joined with Canada in presenting a proposal aimed at reaching an agreement on negotiating modalities for nonagricutlural products. Baldwin, supra note 3, at 10.

  16. 16.

    White and Case LLP, supra note 1, at 2; Khor, supra note 3, at 5.

  17. 17.

    Canada’s trade minister Pierre Pettigrew facilitated the discussions on the Singapore issues at Cancun and proposed a compromise that would have allowed the two less controversial issues to proceed, public procurement and trade facilitation, along with eventual negotiations on investment, but not competition. On the other hand, the EU and Japan had been the main supporters for negotiation on investment and competition since at the Singapore Conference in 1996. However, the EU made concession to remove the investment and competition at Cancun.

  18. 18.

    Malaysia, an opponent of all the issues, however, suggested to agree to trade facilitation and competition, not in public procurement. On the other hand, South Korea, traditional supporter of all the issues, kept on its position in spite of the EU’s concession. See id. at 2–3.

  19. 19.

    JOB(03)/150/Rev.2, at para. 15.

  20. 20.

    Para. 24 of Doha Ministerial Declaration states that the ministers shall work in cooperation with other relevant intergovernmental organizations, including UNCTAD, and, through appropriate regional and bilateral channels, to provide strengthened and adequately resourced assistance to respond to the needs of DCs and LDCs for competition policy.

  21. 21.

    Baldwin, supra note 3, at 12.

  22. 22.

    Dumping means that the price of a product which is introduced into the commerce of an importing country is less than (a) the comparable domestic price, in the ordinary course of trade, for the like product in the exporting country, or (b) in the absence of such price, either (i) the highest comparable price for the like product for export to any third country, or (ii) the cost of production plus a reasonable addition for selling cost and profit. GATT (1947), Art. VI para. 1.

  23. 23.

    Baldwin, supra note 3, at 12.

  24. 24.

    Although UN does not have any established convention for the designation of ‘developed’ and ‘developing’ countries or areas, UNCTAD considers ‘developed’ such countries as Israel and Japan in Asia, Canada and the U.S. in northern America, Australia and New Zealand in Oceania and most countries in Europe. Meanwhile, it treats as a separate group South-East Europe including countries of former Yugoslavia as well as Commonwealth of Independent States (CIS), former U.S.S.R. All the other countries fall on ‘developing countries’. Countries are categorized under such classification. Definition of Developed, Developing countries [code 491], at http://unstats.un.org (last visited on 14 Sept. 2007); UNCTAD (2005), at 10.

  25. 25.

    Baldwin, supra note 3, 12–13. The LDCs are defined by low-income, human resource weakness, and economic vulnerability. The low-income criterion is under $ 750 for inclusion and above $ 900 for graduation based on three-year average estimate of the gross domestic product per capita. The human resource weakness criterion is indicated by nutrition, health, education, and adult literacy. The last criterion is based on the instability of agricultural production, instability of exports of goods and services, the economic importance of nontraditional activities, merchandise export concentration, and the handicap of economic smallness (excluding large economies with more than 75 million people), and the percentage of population displaced by natural disasters. 50 countries are categorized as LDCs by the UN. The list of LDCs is reviewed every 3 years by the Economic and Social Council, available at http://www.un.org/geninfo/faq/factsheets/FS20.HTM (last visited on 14 Sept. 2007).

  26. 26.

    Refer to III of this chapter.

  27. 27.

    Baldwin, supra note 3, at 22 and 24.

  28. 28.

    Baldwin has the same opinion. See id., at 16. He requests immediately to set up Working Groups to investigate on the matter and the adjustment problems among various competition rules besides enforcement costs and possible means of funding.

  29. 29.

    Levenstein and Suslow (2003–2004), at 801–818.

  30. 30.

    Estimated price effects in 14 cartel cases under the survey range from 3 to 65 %. See OECD (2002), at 9.

  31. 31.

    The reasons are following. First, most competition authorities , first, do not require calculation of the damage as an element of prosecution, but focus on the unlawful gain accruing to cartel operators for sanctions because it is easy to figure out. Due to lack of formal record or data, the work of quantifying the total damage is interesting academic researchers. Second, the result of quantifying the total damage may not be correct because it comes under assumption for a competitive price, a predicted price in the affected market, so as to determine the unlawful margin. OECD, id, at 6–7.

  32. 32.

    Id. at 5 and at 9.

  33. 33.

    Id. See also UNCTAD (2003), at 16. The UNCTAD report introduced a bid-rigging case on the United States Agency for International Development (USAID) in Egypt, filed on Aug. 11, 2000, in the U.S. District Court in Birmingham, Alabama. The defendant, American International Contractors Inc. (AICI) pleaded guilty to participating in a conspiracy involving bid-rigging from Jun. 1988 until at least Jan. 1995, and was required to pay US$ 4.2 million fine for the bid-rigging for wastewater treatment facilities construction contracts funded by the USAID in Egypt. Philipp Holzmann AG, a construction company based in Frankfurt, Germany, pleaded guilty to its participation in the cartel and was ordered to pay $ 30 million fine. As a result of such bid-rigging, the procurement market in Egypt became less-competitive and the competitive lowest price was unavailable.

  34. 34.

    Levenstein and Suslow, supra note 29, 804.

  35. 35.

    See id., at 816. It cites World Development Indicators for 2001 of World Bank. The series used was ‘official development assistance and official aid’.

  36. 36.

    Evenett et al. (2001), at pp. 1237–1240.

  37. 37.

    Levenstein and Suslow, supra note 29, at 813–818. Their calculation is based on the conservative approach. First, it included only products with available narrow Standard International Trade Classification (SITC) rather than those with broader SITC which might contain goods with the cartelized product. The latter standard was used only when the narrow level standard was not available. Second, it excluded service trade. Third, it considers only international cartel s, not domestic cartels which might affect negatively developing countries. Fourth, it used only known cartel conspiracies.

  38. 38.

    See id. at 816–818. Even a narrower approach of the two researchers demonstrates that the average annual amount of trade in the cartel-affected industries from 1990 to 1997 was $ 18.5 billion, and that wealth-transfer due to international cartel s equals 9.4 % (minimum price-increase) or 21 % (maximum price-increase) of development assistance.

  39. 39.

    Id., at 816. According to an average calculation, international cartel s have kept taking the amount from 9.4 to 21 % of development assistance during the 8 years when the average 10 % price increase in overall countries is applied for the conservative approach.

  40. 40.

    In Asian Pacific region where many LDCs as well as a few developed countries are located, 800 million live out of the 1.2 billion poor people of the world who live on less than a dollar a day. Mehta (2003), at 79.

  41. 41.

    Consumer Unity and Trust Society (CUTS) (2003).

  42. 42.

    Conclusion from the 1998 Recommendation of the OECD Council Concerning Effective Action against Hard Core Cartels. OECD GFC (2003), at 4.

  43. 43.

    OECD GFC, id, at 6. It states, the harm to productive and dynamic efficiency is no less real than that to allocative efficiency if even more difficult to measure.

  44. 44.

    UNCTAD, supra note 33, 16.

  45. 45.

    See id. at 11.

  46. 46.

    The reason for the first drop is analyzed by Mathew Lerner who pointed the fact out that the Chinese government has stopped giving export tax credits to Chinese citric acid producers. Levenstein and Suslow, supra note 29, 822–824.

  47. 47.

    UNCTAD, supra note 33, at 13–14.

  48. 48.

    For example, a report from Ukraine states that revisions of prices for electricity and water supply, formerly set by another regulator, in 2 years have reduced consumers’ costs with a total amount more than US$ 200 million. OECD GFC (2004), Sess.IV., at 3.

  49. 49.

    Although monopolist or a competitor restrained entry into a market, enforcement of competition law opened the market, thereby generating much wider choices for consumers. For Russian money transfer system case and Jamaica’s communication interface of bank case, see id. at 4.

  50. 50.

    Lithuania’s privatization of telecommunication could succeed with active enforcement of competition law to prevent existent operator’s anticompetitive behaviors. Currently, network digitalization reaches 88 % while ADSL services are available 85 % of the telecom operator’s customers. Pakistan’s two merger cases were approved on the condition to introduce improved technology. Id. at 3–4. The similar principle can apply to a cartel case.

  51. 51.

    Bid rigging is widely prevalent in Nepal, especially in the construction and supply sector. A conspiracy among manufacturers and suppliers of polythene pipes to the Napal Drinking Water Corporation, and one among suppliers of rations to the Royal Napalese Army and Nepal Police are reported. Due to prevalent bid rigging, even municipalities in Nepal have refused to follow the guideline which requires the awarding of a contract to the lowest bidder at the time of execution of the development project. UNCTAD (2004), at 64–65.

  52. 52.

    OECD GFC (2003), at 6.

  53. 53.

    In those industries in Ukraine where there is competition in at least half of activities such as the food, forestry, and light industry sectors, growth is between 1.2 and 2 times higher than in the industry at large. In the road transportation for passengers, opened for competition in the last 3 years, growth of the transportation volume has been 6 times higher than in the railway transport sector, still under monopoly. See id. at 5.

  54. 54.

    Levenstein and Suslow, supra note 29, at 839–840; KFTC Decision [공정거래위원회심결] 2002국협0250, Table 2 and 10–11 (2002), at http://ftc.go.kr/data/hwp/case/20020401_6330.hwp.

  55. 55.

    Levenstein and Suslow, supra note 29, at 839–841.

  56. 56.

    Id., at 833–834; KFTC Decision, supra note 54, 7.

  57. 57.

    Laffont (1994), at 237–257. The position is followed by economists supporting structuralist theory solution regarding the Asian financial crisis.

  58. 58.

    Singh (2002), at 4. He provided another supplementary statistics indicating that there is greater turnover as well as entry and exit of firms in the small number of emerging markets for which such studies have been carried out than for advanced countries. See id. at 4–6 and Table 5. The position is followed by Tibout who argues that the existing empirical literature does not support the notion that LDC manufacturers are relatively stagnant and inefficient.

  59. 59.

    See id. at 3–4 and Tables 1 and 2.

  60. 60.

    OECD CFC (2003), at 5.

  61. 61.

    Id. at 6.

  62. 62.

    Kovacic (2001), at 306. Kovacic cites statement of Michael Trebilcock and Laffont who examined reform efforts of transition economies.

  63. 63.

    Cha, Omnipotence of KFTC: one of three retired senior officers moved to big law firms [무소불위 공정위: 퇴직간부 3명중 1명 대형로펌으로 옮겨], Hankyung (8 Aug. 2007), available at http://www.hankyung.com/news.

  64. 64.

    Kovacic (1997) at 403–420.

  65. 65.

    Singh, supra note 58, at 6.

  66. 66.

    See id.

  67. 67.

    Lee (2008), at 55.

  68. 68.

    Ratio for the level of enforcement in DCs compared to that in advanced countries does not reach the ratio of damages. See 2.3 of Chap. 2.

  69. 69.

    IMD (2001); The WB Group (2002).

  70. 70.

    See Sect. 4.2.A of this chapter.

  71. 71.

    Kovacic, supra note 64, at 421.

  72. 72.

    KFTC was criticized with its overarching investigation, arguably impeding in affairs of other departments. Ki-Hyun Cha, Is an administrative guide a collusion? [행정지도가 담합이라니], Hankyung (7 Aug. 2007), available at http://www.hankyung.com/news.

  73. 73.

    OECD GFC, supra note 42, at 6.

  74. 74.

    Kovacic, supra note 64, 426–427. He introduced an interview with the manager of a state-owned firm and the incorrect information that he submitted.

  75. 75.

    Id., at 426. Capelik, Vladimir, & Slay, Ben, Antimonopoly Policy and Monopoly Regulation in Russia, in Slay (1996), at 65–66.

  76. 76.

    Kovacic, supra note 64, at 426; Whalley (1998), at 571.

  77. 77.

    Fourteen emails with public officer, Hang-Rok Oh, at KFTC (from 18 Dec. 2006 to 19 Jan. 2007) (on file with author). According to him, companies under investigation have never rejected the administrative investigation which are not compulsory with warrant but powered with sanction of maximum US $ 200,000 in case the companies reject.

  78. 78.

    S.Ct.[대법원] 2002.3.15. Decision[선고] 99 두 6514, 6521. Art. 19 Sec. 5 of MRFTA states, where two or more enterprisers are committing such acts as price fixing, market allocation, or price restriction, that practically restrict competition in a particular business area, they shall be presumed to have committed an unfair collaborative act despite the absence of an explicit agreement to engage in such act.

  79. 79.

    See Kovacic (1997), pp. 420–421; Dean and Mohieldin (2001) at 13. Kovacic points out exceptions at footnote 50 by describing aspects of Zimbabwe’s judicial and commercial law jurisprudence that would facilitate implementation of a competition policy system. See also Kovacic (2001), at 306.

  80. 80.

    The District Court of Seoul, in Daum Inc. v. Microsoft, in South Korea, suspended the civil action by the time Korean Fair Trade Commission issued its final decision. Other developing countries have such judicial branch problems as considerable delays and a lack of independence. See Garcia-Rodriguez (1995), at 1177; see also Rowat et al. (1995); Bentley (1994).

  81. 81.

    Decisions related to competition law can be issued from the administrative body in charge of competition policy, e.g. FTC, as well as the judicial body. Semi-judicial decisions are the decisions from the administrative body.

  82. 82.

    A research by Transparency International demonstrates that, in more than twenty-five countries, at least one in ten households reported paying a bribe to get access to the court system, and that widespread corruption in judicial bodies impedes development of legal system. Herald Tribune Europe, Judicial corruption undermining legal systems worldwide, (24 May 2007), available at http://www.iht.com/articles/ap/2007/05/24/europe/EU-GEN-Britain-Transparency-Judicial-Corruption.php (visited on 3 Apr. 2008). Particularly, in South Korea, seven officers received cars from Hyundai Automobile company which was under investigation of KFTC. People Power 21[참여연대], Unfair Business Practices of public officers[공무원들의 불공정거래], 24 Nov 2006, available at http://www.peoplepower21.org/?s01:i:b18223-12-1-1164340490 (visited on 3 Apr 2008).

  83. 83.

    The WB (1995), at 1.

  84. 84.

    Kovacic, supra note 62, at 304.

  85. 85.

    Such sanctions with respect to competition law are predatory pricing or anti-dumping suits. Kovacic, supra note 64, at 423.

  86. 86.

    Kovacic, supra note 62, 302–304.

  87. 87.

    It is especially true of public officers in charge of tax code violations under the guise of settling tax claims. See id., at 304.

  88. 88.

    KFTC, although it has its twenty-seven-year-old history, are criticized for its large amount of fines and overarching investigations in South Korea. Ki-Hyun Cha, Series of Omnipotence of KFTC: indiscrete investigatory pressure to industry [‘무소불위’ 공정위] (상) 산업계 무차별 조사 압박], Hankyung (7 Aug. 2007), available at http://www.hankyung.com/news. A Korea’s major newspaper of Hankyung wrote a series of nine articles criticizing KFTC’ overarching investigation, disharmony due to leniency policy, large amount of fine, and a hybrid function of administration and judiciary without participation of entrepreneurs.

  89. 89.

    According to UN’s definition of developing countries, in international trade statistics, countries from the former Yugoslavia are treated as developing countries while countries of eastern Europe and the former USSR countries in Europe are not included in under either developed or developing regions. However, from the perspective of cartel regulation, this thesis includes these countries in developing countries. UN Statistics Division, Definitions, available at http://unstats.un.org/unsd/cdb/cdb_dict_xrxx.asp?def_code=491 (visited on 2 Apr. 2008).

  90. 90.

    UNCTAD(2005), at 10–16.

  91. 91.

    See id. at 12. Algeria, Angola, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, Venezuela and United Arab Emirates are OPEC members. Bahrain, Congo, Gabon, Yemen, and Oman, among other countries, belong to non-OPEC countries within this group.

  92. 92.

    Isabel Gorst, Wealth is being deployed to cut dependence on oil, FT Special Report of Azerbaijan, at 2 (25 Jan ’08).

  93. 93.

    Besides Brazil, India, China which belong to emerging markets called BRICs, Malaysia, Mexico, Philippines, Thailand, and Turkey, along with NICs, belong to the group. UNCTAD (2005), 12.

  94. 94.

    Singapore, Hong Kong, Taiwan, and South Korea are called NICs.

  95. 95.

    Argentina, Chile, Uruguay, and Puerto Rico belonged to the group in 2000.

  96. 96.

    Bolivia, Dominica, Fiji, Peru, and Morocco belong to it. See id. at 12.

  97. 97.

    Total 50 countries belonged to LDCs in 2005. Three-year average estimate of GDP per capita under $ 750 is qualified for inclusion in the list but above $ 900 means graduation. Economic vulnerability criterion consists of (i) instability of agricultural production, (ii) instability of exports of goods and services, (iii) the economic importance of nontraditional activities, (iv) merchandise export concentration, and (v) the handicap of economic smallness, and the percentage of population displaced by natural disasters. UN, What are the Least Developed Countries, available at http://esa.un.org/unpp/definition.html#LDC (visited on 23 Dec ’07).

  98. 98.

    The effort of extraterritorial application of competition law by developing countries, even MEMs, does not demonstrates effective investigation or strict punishment against international cartel s. See Chap. 2.2.5.

  99. 99.

    GA Res. 3201 (S-VI), 6 (Special), UN GAOR, 6th Spec. Sess. Supp. No. 1, at 3, UN Doc. A/9559 (1974), para. 2 and 3.

  100. 100.

    Sell (1998), at 72.

  101. 101.

    See UN G.A. Res. 3201, para. 4(a)–(i).

  102. 102.

    See id., para. 4(j)–(s).

  103. 103.

    See id., para. 4(t).

  104. 104.

    Sell (1998), at 147–149.

  105. 105.

    Id., 143–149.

  106. 106.

    Id. at 158–159. Only business practices that reduce output and increase price are anticompetitive; business practices that expand output are pro-competitive.

  107. 107.

    See Commission Regulation (EEC) No.418/85 of 19 Dec. 1984.

  108. 108.

    Sell (1998), 162–163.

  109. 109.

    Id., at 142.

  110. 110.

    Id., at 34.

  111. 111.

    Id., at 32–33. Even OPEC ’s solidarity was undermined by member countries’ cheating e.g. overproducing.

  112. 112.

    Id., at 170–171.

  113. 113.

    See id. at 80–81.

  114. 114.

    UN, Proceedings of the U.N. Conf. on Trade and Development(UNCTAD), Final Act and Report, at 10–11, Second Part, A.I., U.N.Doc., E/CONF.46/141,Vol.1, U.N.Sales No.64.II.B.11 (1964).

  115. 115.

    UN, Proceedings of the united nations conference on trade and development, 3rd Sess. Report and Annexes (Vol. 1), Res. 46(III), para.1.III. at 60 and Res. 82(III), at 61-2, U.N.Doc. TD/180, Vol. I, U.N. Sales No.E.73.II.D.4 (1972). See also id., 4th Sess. Res. 91 (IV), para. I.10. & II.15(d)at 15-6, U.N. Doc. TD/218 (Vol.I), U.N. Sales No.E.76.II.D.10 (1976).

  116. 116.

    Developing countries claim that Part IV has been without practical value as it does not contain any obligations for developed countries. WTO, Work on special and differential provisions, 4, available at http://www.wto.org.

  117. 117.

    Art. XXXVI para. 8 states, the developed contracting parties do not expect reciprocity for commitments made by them in trade negotiations to reduce or remove tariffs and other barriers to the trade of the less-developed contracting parties. Para. 5 of the 1979 GATT Decision use the same languages except using ‘developing countries’ instead of ‘less-developed contracting parties’.

  118. 118.

    GATT, Decision on Differential and More Favorable Treatment, Reciprocity and Fuller Participation of Developing Countries (1979).

  119. 119.

    UN G.A., GA Res. 55 Sess. 55/2, para. 15 (A/Res/55/2) (2000).

  120. 120.

    Berthoud (1984), at 71 and 80. Art. 23 among proposed articles on the MFN principle from the UN’s International Law Commission (ILC) states that a beneficiary State of a MFN clause (a developed country) is not entitled to treatment extended by a developed granting State to a developing third State on a non-reciprocal basis within a scheme of generalized preferences established by the granting State.

  121. 121.

    See id., at 78–80. In-detailed arguments of developing countries and weakness of the GSP were explained.

  122. 122.

    UN G.A. Res.82(III) A.1(b)(c) and B2; Res.91(IV) I.6, 9, 13 and 14.

  123. 123.

    Berthoud, supra note 120, at 83–85.

  124. 124.

    Part IV. Sec. C (iii) of the UN Set .

  125. 125.

    Berthoud, supra note 120, at 85. Report of the International Law Commission (ILC) on the Work of its Thirtieth Session, 1978, UN Doc. A/33/10, 173 ff; ILC, Summary record of the 1494th meeting: Most-Favoured-Nation clause, vol. 1, 100, UN Doc. A/CN.4/SR.1494 (1978), available at http://www.un.org/law/ilc/index.htm (last visited on 23 Sept. 2007).

  126. 126.

    ILC, supra note 123.

  127. 127.

    Para. 3, 4(a), Sec. A, B, and C of Art. XVIII.

  128. 128.

    Para. 4(b), Sec. C and D. Para. 20 and 23 of art XVIII, Art. I (MFN), and Art. XIII (nondiscriminatory administration of QR).

  129. 129.

    GATT, Decision of 28 November 1979 (L/4903).

  130. 130.

    See Docalavich (2007), at 75: WTO, Annex II: Summary of Provisions Contained in the UR Agreements for the Differential and More Favourable Treatment of Developing and Least Developed Countries, available at http://www.wto.org.

  131. 131.

    GATT, Agreement Establishing the World Trade Organization, 2nd para. of chapeau.

  132. 132.

    GATT/WTO, Decision on Measures in Favor of Least-Developing Countries, 2(i) and (ii).

  133. 133.

    See id. (iii).

  134. 134.

    The Art. 66 provides LDCs with a longer time-frame to implementation Delay for up to 10 years from most TRIPS obligations and the possibility of extension following duly motivated the request.

  135. 135.

    The Art. 66.2 requests developed members to provide incentive to companies to encourage technology transfers to LDCs.

  136. 136.

    The Art. 67 requires technical assistance for the LDCs’ to be provided. Art. 12.3 and 12.7 in Agreement on Technical Barriers of Trade of the UR require very similar technical assistance for the LDCs.

  137. 137.

    G.A.Res.55/2, U.N. GAOR, 55th Sess., para. 15–18, U.N.Doc.A/Res/55/2 (2000). The Barbados Programme of Action is a plan for developing small island DCs under the formal name of ‘Programme of Action for the Sustainable Development of Small Island Developing States.’ Refer to UN (1994), Chap. I, resolution 1, annex II.

  138. 138.

    UNCTAE (1948), at 39. The International Natural Rubber Agreement held, as its objectives, the stability of the export earnings from natural rubber of exporting members and the increase of their earnings at fair and remunerative prices. See Art. 1, para. (c), 1979.

  139. 139.

    Section III. H of the DD III Strategy. See Adebanjo (1984), at 175.

  140. 140.

    The CERDS is adopted by UN GA, 12 Dec. 1974. GA Res. 3281, UNGAOR, 29th Sess., Supp. No. 31, at 50, UN Doc.A/9631 (1975). It is appraised as modern expression of basic principles of international public law because it is impossible that the traditional fundamental rights deriving from the existence of states have their realistic and effective projection, able to ensure an international order on the basis of justice, equity and cooperation, without recognition of these economic rights enumerated under the Charter. Berthoud, supra note 120, 91–94.

  141. 141.

    Section II.

  142. 142.

    Hoekman (2006), at 95–96. See ILC, supra note 123.

  143. 143.

    See id. at 99.

  144. 144.

    Dean and Mohieldin, supra note 79, at 26; Levenstein and Suslow, supra note 127, at 807. They cite a speech by the Former Assistant Attorney General for the Antitrust Division of the US Department of Justice.

  145. 145.

    Singh analyzed the reasons as the follows: (i) inadequate development of the legal and institutional framework, and (ii) lack of information and difficulties of proving that prices were manipulated by international cartel s. See Singh, supra note 58, at 12–14.

  146. 146.

    Draft Code of Conduct on Transnational Corporations is adopted by the UN Economic and Social Council, 1 Feb. 1988. UN Doc. E/1988/39/Add.1 (1988).

  147. 147.

    See Standard Oil Co. of New Jersey v. U.S., 221 U.S. 1, 47–49, 31 S.Ct. 502, 510–511 (1911).

  148. 148.

    See Rail Road Trust Inc. case of the U.S. S.Ct.

  149. 149.

    Dean and Mohieldin, supra note 79, at 4, Dean and Mohieldin explains the ‘economic efficiency’ as the maximization of the sum of the discounted present value of the surpluses of consumers and producers which assumes static and dynamic efficiency in the way that the current welfare losses may be tolerated if the same factors generating the losses also cause efficiency gains in the long run.

  150. 150.

    For more information, refer to Chap. 4.

  151. 151.

    The OECD Guidelines for Multinational Enterprises were adopted by the OECD Council on 21 Jun. 1976.

  152. 152.

    Para. 3. See also para. 1 prohibiting the MNCs from abusing a dominant position of market power through anti-competitive acquisitions, predatory behaviors, unreasonable refusal to deal, abuse of industrial property rights and discriminatory pricing.

  153. 153.

    Para. 4.

  154. 154.

    Refer to Chap. 2 for the in-detailed research.

  155. 155.

    The four issues are investment, competition policy, governmental procurement, and trade facilitation, which were dropped out at 2003 Cancun Ministerial Conference.

  156. 156.

    Rossen (1984), at 287.

  157. 157.

    See id., at 285 and 287. Rossen states, the conclusions of a report to UNCTAD V in 1979 included recommendation concerted measures at the intergovernmental level that would promote structural changes in the world economy and a favorable environment for sustained development at the global level. Id. at 285.

  158. 158.

    See para. 37 of Draft Code and para. 3 of Part IV, Sec. D of the UN Set .

  159. 159.

    See Rossen, supra note 156, at 286–287. The protection-oriented government policies were tackled by the efforts of UNCTAD in the similar way to the market approach. It cites a report to UNCTAD V (1979), UNCTAD document TD/225, Policy Issues in the Field of Trade, Finance and Money and their Relationship to Structural Change at the Global Level.

  160. 160.

    The U.S. v. Socony-Vacuum Oil Co., 310 U.S. 150, 213 (1941). However, recently, the U.S. Supreme Court held that a vertical agreement setting minimum resale price should be decided based on its impact on competition in a market. Leegin Creative Leather Products, Inc. v. PSKS, Inc., 127 S.Ct. 2705, 2714–2718 (2007). As a result, per se illegal rule is limited to a horizontal price-fixing agreement.

  161. 161.

    Singh, supra note 58, 7. Singh cites Amsden and Singh, The Optimal Degree of Competition and Dynamic Efficiency in Japan and Korea, 28 Eur. Econ. Rev, at 941–951, and Laffont, supra note 57, at 237–257. Singh added, at fn 11, that the concept of competition which he discussed is as regards an incentive to elicit maximum individual or organization effort while the one formulating general equilibrium leads to a Pareto-optimal allocation of resources under specific conditions.

  162. 162.

    The proponents are Dasgupta, Stiglitz, and Bain. See Dean and Mohieldin, supra note 79, 6–7.

  163. 163.

    See Rowthorn (2005).

  164. 164.

    Baumol (2001), at 736.

  165. 165.

    Chang and Bad (2008), at 15 and 21. While Chang illustrates the examples of South Korea and Japan, economic policy of China recently adopted free trade regime pervasive under remaining control of the state after its accession to WTO.

  166. 166.

    Martin Wolf, The Growth of Nations, 6 Fin. Times (21 Jul. 2007). For instance, industrial districts in Italy and other European countries through the Marshall Plan in post-war period.

  167. 167.

    Chang, supra note 165, 74–78 and 158–159. See also Reinert (2007), at 165–181. Reinert illustrates the retrogress of Mongolia’s economy after its sudden market open in 1991 and names it as primitivization which contrasts to globalization which economic policy aimed at originally.

  168. 168.

    Chang, supra note 165, 73.

  169. 169.

    Singh, supra note 58, 8.

  170. 170.

    Laffont , supra note 57, 237. The conditions are large number of participants in all markets, no public goods, no externalities, not information asymmetries, no natural monopolies, complete markets, fully rational economic agents, and a benevolent government which provide lump sum transfers to achieve any desirable redistribution.

  171. 171.

    Competition goes too much when it leads to price-reducing wars with sharp falls in profits and when it diminishes the desire to investment of companies. See Singh, supra note 58, at 16.

  172. 172.

    See Cook et al. (2004).

  173. 173.

    See Appalachian Coals v. U.S. 288 U.S. 344, 360–363, 53 S.Ct. 471, 474–476 (1933).

  174. 174.

    Immenga (1999) at 350–351.

  175. 175.

    Doc. C(86)44 of 21 May 1986.

  176. 176.

    It requires the requested country to take a measure only when the involved activity violates its competition law.

  177. 177.

    1.B.4. of Revised Recommendation of the Council of the OECD concerning Co-operation between Member Countries on Restrictive Business Practices affecting International Trade (Doc. C(86)44 of 21 May 1986).

  178. 178.

    Fasulo (2004), at 169–170.

  179. 179.

    Singh, supra note 58, 6–7 and 13–15. Singh cites Scherer, Competition policies for an integrated world economy (Brookings Inst. 1994) and argues that it takes about 10 years for countries to acquire the necessary expertise and experience to implement such laws effectively.

  180. 180.

    For argument for an appropriate framework for international cooperation , see Singh, supra note 58, 14–15.

  181. 181.

    See Hoekman et al., supra note 142, pp.100–101.

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  1. Global Law Department, College of Law, Soongsil University, Seoul, Korea (Republic of)

    John Sanghyun Lee

  2. Golden Gate University School of Law, San Francisco, CA, USA

    John Sanghyun Lee

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Lee, J.S. (2016). Conciliation of Conflicts of Opinion Between the North and the South on International Law Regulating Cartel. In: Strategies to Achieve a Binding International Agreement on Regulating Cartels. Springer, Singapore. https://doi.org/10.1007/978-981-10-2756-7_4

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