Paper prepared for workshop on Trade-And? The World Trade Organization’s Fuzzy Borders

While the European Union (EU) has been the leading advocate of incorporating competition rules into the World Trade Organization (WTO), its efforts failed in 2003 with the collapse of negotiations at the Cancun Ministerial. This paper tests the relative influence of two prominent issue linkage tactics—trade-competition and competition-Singapore Issues—employed by the EU in its failed efforts to add competition policy to the WTO negotiating agenda. Although the US did not actively oppose either linkage, it also did not offer active support. This lack of support was further diminished by forum-shopping opportunities and the fact that it had invested less resources and reputation in either linkage tactic. The analysis suggests that the failure to add competition policy to the WTO negotiating agenda is best explained by developing country opposition to the trade-competition linkage. Developing countries opposed this linkage because it was distant and indirectly linked to trade (ie, fuzzy), they suffered from a related information asymmetry, and they viewed competition policy as a threat to their interests. Developing countries also opposed the competition-Singapore Issues linkage because it multiplied the resource costs associated with the trade-competition linkage and was not seen as complementary to their interests. While both linkages were ‘destructive’, a counterfactual analysis suggests that developing country opposition to the trade-competition linkage was the deciding factor in the failure. Based on the findings, the paper concludes with preliminary comments on the dangers of negotiating at the fuzzy border. The study introduces original research based on a qualitative analysis of secondary and primary sources, including official government and WTO documents and speeches.