Public Sector Restraints: Behind-the-Border Trade Barriers

Abstract

In the United States and in many other countries, private sector restraints, monopolization, and collusive behavior are addressed by statute. Thus, by law, this path of private anticompetitive behavior is blocked. It is not always the case that public sector restraints are addressed. Although competition law and trade law have been separately analyzed in economic literature to a large extent, the interaction of competition law and trade law remains underdeveloped. The foundation of dealing with public sector restraints at a global level already exists in various WTO agreements. To that extent, the aim of discussing competition is not to introduce the issue, but rather to make the efforts already in place more effective. The way to do this is to address the issue of public sector restraints. We examine case studies of public sector restraints in: A. Price Controls: Pharmaceutical Price Ceilings; B. Entry and Exit Restrictions: Dealer Protection Laws; C. Government Procurement: Microsoft and Open Source; D. Technical Standards Restrictions; and E. Government Created Monopolies and Cross-Subsidization: Telecom. As we seek to reduce trade barriers, it is also important to address these issues of competitive environments. It is not sufficient to lower trade barriers if it is still exceedingly difficult to compete in such markets because of regulatory barriers. To this end, the creation of multilateral competition policy and competition agencies as well as competition policy disciplines at the bilateral and WTO level is crucial to true trade liberalization.

Keywords: antitrust, international, public sector restraints, international trade, trade and competition

JEL Classification: K21, F13, F14