The impact of WTO law on foreign investment: the Walmart/Massmart mergerPosted on Wednesday, February 22nd, 2012 in Working Papers
Author: Paul Kruger
The main focus of this paper is the effect that international obligations and commitments can have on the local establishment of foreign companies. The relevance of international commitments made by South Africa at the multilateral level became prevalent during the recent merger between Walmart and Massmart. What is the role, in a merger review process, of international law in domestic proceedings and to what extent should South African Competition Authorities consider the country’s obligations made at the multilateral level? The paper aims to answer this question against the backdrop of the Walmart/Massmart merger approval process and the facts applicable in the case. The emphasis is on three pieces of multilateral legislation: the General Agreement on Tariffs and Trade (GATT), the Agreement on Trade-Related Investment Measures (TRIMs) and the General Agreement on Trade in Services (GATS). It was argued during the hearing before the Competition Tribunal that the non-discrimination provisions in GATT Article III and TRIMs Article 2 can have a bearing on the legality of conditions imposed on the merging parties. These provisions deal with trade with goods while GATS Articles II and XVII refer to non-discrimination in the area of trade in services. How do these provisions influence the ability of the South African government to impose performance requirements such as local content on multinationals and foreign companies?
The paper examines the purpose and objectives of the multilateral WTO negotiations and highlights the role of the South African government in the merger review process. It specifically considers investment related obligations and how they relate to the access and treatment of foreign investors and companies. As the merging parties of Walmart and Massmart operate in the wholesale and retail sectors, the relationship between the distribution sector and multilateral agreements is also analysed. The paper considers the extent to which international agreements are part of the domestic regulatory framework in South Africa and how international legislation is domestically incorporated. Specific emphasis is placed on non-discrimination in the context of the multilateral agreements and the behaviour of the host state towards the foreign supplier.
- Download: S12WP032012 Kruger Impact WTO law foreign investment WalmartMassmart merger FIN.pdf
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