On The International Regulation Of Export Cartels

There are two significant consequences of the fact that the export cartel conduct takes place in the exporting state but the adverse effects are felt exclusively or mainly in the importing country. First, the exporting state, which has clear territorial jurisdiction over the association, has few incentives to discipline the conduct. Secondly, the importing state, which has the incentives to discipline the conduct, dose not have the territorial jurisdiction. Therefore, the importing state must apply its law (if any) extraterritorially if it wishes to sanction the cartel. Because the exporting incentives to ensure that the cartel is not disciplined, the exporting state may try to block the importing state's attempts to apply its law extraterritorially. This is done ex ante facto through the use of exemptions, explicit or implicit, and ex post facto by failing to cooperate with the importing state. For example, the exporting state may refuse to provide access to important evidence located within the exporting state. This conflict in incentives means that export cartels are not optimally regulated. For this reason, it has been argued that some global rule is required.This article examines both the need for, and the possible shape of, a multilateral export cartel rule. The article is divided into four parts. First, it examines the nature of export cartels, investigates the extent to which export cartels represent a significant global problem. The analysis reveals that there is insufficient evidence to justify condemning export cartels out of hand; while some export cartels reduce consumer welfare in importing state, others probably benefit the importing state's consumers.Secondly, the article examines the treatment of export cartels under the laws of various countries. Although there has been a noticeable trend towards removing explicit exemption for export cartels, this has not greatly altered the landscape. The reason for this is that most states now judge the legality of a cartel on its domestic effects. Therefore, the vast majority of export cartels are lawful.Thirdly, this article examines the international regulation of export cartels. The conclusion is that export cartels are not optimally regulated in the international lever. Part four of the article provides a possible structure of an export cartel rule. It may take the following general form. The exporting state agrees to assess the legality of cartel arrangements, which predominantly affect foreign consumers and buyers according to a competitive effects test. When determining whether an export cartel is lawful, the export state will consider all foreign effects to extent that such effects are relevant to the assessment of legality. The export state should grant non-discriminatory access to its competition law processes (administrative and judicial) in cases involving an export cartel, and provide adequate procedural rules. The export state should publish reasons for its decisions. Where the state has failed to comply with these obligations, another nation affected by such non-compliance is entitled to activate the dispute resolution of the WTO, provided that the non-compliance complies to export cartels which are hardcore cartels. This rule shall not apply to export cartels located in developing states except to the extent that the complaining nation is another developing nation.