Competition Policy and the WTO: Is there a need for a multilateral agreement?

This paper discusses the arguments in favour of an International Competition Policy Agreement (ICPA) within the WTO framework. We argue that the only clear justification for an ICPA is in the presence of cross-border policy spillovers in competition policy. However, it is shown that such an agreement may lead both to a less competitive world trading system and, more importantly, to a lower level of world welfare. While recognizing the potential benefits that may arise from an ICPA, we recommend a cautious approach that acknowledges these drawbacks and other potential holes in such an agreement.