The International Governance of Competition and Trade –Theoretical and Institutional Differences.

Abstract

Economic globalization brings forms of global governance. Multilateral economic institutions, such as the IMF and the WTO, emerged as mechanisms of regulation of international markets. Countries decide to abide by the rules emanated from transnational institutions in order to tackle externalities derived from otherwise unregulated market transactions in international trade and finance. For developing countries, the adoption of rules from the abovementioned institutions may enhance institutional learning, hence, contributing to economic development. Contrary to what occurred with trade and finance, there was no headway on a global institutional framework to regulate international competition. Yet, global firm strategies in the area of production and services may have effects on international and domestic competition, for example: cartels with transboundary effects, agreements to exclude foreign competitors, abuse of dominant positions, mergers between companies in different countries, vertical markets integration in regional trade blocks, among others. There is a trend toward “globalization anticompetitive practices”. This paper discusses this apparent contradiction, that is: the rise of antitrust aspects in the global economy not matched by an international institutional response. First, it discusses some stylized facts regarding the relation between economic globalization and competition, focusing on trade issues. Second, it identifies theoretical foundations of trade and competition policies, emphasizing the political economy of antidumping, a policy in which trade and competition intersect. Antidumping policy and international cartels are examples. The third section suggests that, despite the lack of formal international regimes, there has been institutional convergence in competition policies among countries; based on “order without formal law” and “competition advocacy”.