China's Anti-Monopoly Law, effective August 1, complements the existing law governing foreign trade and the combination of the two leads to a legal framework creating a fair competition environment in the internal and world markets.
Prof. Huang Yong, from Beijing-based University of International Business and Economics, who has been involved in the legislation of both the AML and the Foreign Trade Law as an expert, explained the implication of the AML on foreign trade in a recent interview with People's Daily Online.
Globalization means the impact of a country's competition policy goes beyond the border. And like laws in any other country in the world, there is an article on the extraterritorial application of the law in China's AML.
Consumers --- wherever they are --- and economies benefit from well-regulated competition in the internal market and the international market. That can only be possible when both well-regulated competition and free trade are secured. The competition policy prevents the abuse of market dominance by foreign trade operators while the trade policy guarantees an open market.
In fact, the principle of competition was reflected in China's trade law even before the Anti-Monopoly Law was promulgated. According to China's Foreign Trade Law revised in 2004, monopolistic conduct in foreign trade operations are illegal; and will be subject to the anti-monopoly laws and regulations.
However, the balance between the two has always been a dilemma for authorities in any economy. Huang suggests that the competition policy be made a priority. "For any market economy, the core advantage is competitiveness."
Meanwhile, he said, there are special cases in which actions to protect trade interests are justified. First, a country's stage of development should be taken into consideration. There is still a big gap between China's industries and those in developed economies.
Second, developed countries do not always make the principle of competition a priority; although they have initiated and advocated the idea of free trade. For example, currently there is mounting pressure of protectionism in Europe and US.
Given that, China is entitled to use trade remedy measures rationally and legally to protect its interest in world trade when its rights are injured.
The article that exempts monopolistic agreements from legal consequences due to "righteous interests" in foreign trade and economic cooperation is very "normal;" and a common legal practice in many countries.
At the same time, Huang retiterated the importance of defining"righteous interests" carefully; and using the article with caution. Otherwise, the feasibility of the article will be at risk and the possibility of triggering extraterritorial jurisdiction against business behaviors in China by other countries will be on the horizon.
"Anyhow, the purpose of the competition policy converges with the trade policy on protecting a fair competition environment for the sake of consumers," Huang concluded.
By People's Daily Online
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