Order without (Enforceable) Law: Why Countries Enter into Non-Enforceable Competition Policy Chapters in Free Trade Agreements

Competition Policy and Antitrust

Article Snapshot

Author(s)

Daniel Sokol

Source

Chicago-Kent Law Review, Vol. 83, 2008

Summary

The author argues that chapters on competition policy are not as effective in antitrust as is conventionally believed.

Policy Relevance

Chapters on antitrust in PTAs are commonly believed to be effective. However, they lack binding effect and may in fact not be as effective as traditionally thought. However, the chapters may still have symbolic value.

Main Points

  • Antitrust law can play a role in the greater economic development of Latin America by creating a competitive market. Trade and regulatory liberalization as whole will further this development.
     
  • Traditionally competition policy chapters in preferential free trade agreements (PTAs) have been thought to strengthen domestic antitrust law by creating a lever through international law to influence domestic interest groups.
     
  • PTAs are binding commitments on an international level. They provide for third-party adjudications of potential disputes. However, these dispute settlement provisions are missing from antitrust chapters.
     
  • Possible reasons for the lack of binding commitments in antitrust may be that antitrust law is substantively different from other areas of law, that creating norms is enough for enforcement, or that “soft law” is enough.
     
  • Even though chapters on antitrust tend not to have binding effect regarding dispute settlement, they are still often included in PTAs. Reasons include:

     

    • The chapters may have power through symbolic meaning.
       
    • Chapters may facilitate relationships across antitrust agencies.
       
    • The agreements may send powerful signals to domestic interest groups.
       
    • The notion that antitrust agencies may need less international intervention.
       
  • Additional scholarship is needed to determine the reasons for these arguments about why antitrust chapters are still included in PTAs.
     
  • Even though these chapters lack binding effect, if creating them is low-cost and they in fact have significant symbolic value in creating pro-competition environments, then their inclusion in PTAs may still be beneficial.
     

 

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