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Competition policy in the WTO: an introduction to the issues Robert D. Anderson Counsellor, WTO Secretariat WTO Public Symposium on Multilateralism at a Crossroads CUTS panel on a Multilateral Competition Framework: Where and How? Geneva 26 May 2004
Issues to be addressed Will not take a position on the pros and cons of a multilateral framework on competition policy (will leave this for others to debate) Rather, will focus on some key underlying issues: What is competition policy? Why is it important for developing countries? What might be contained in a possible multilateral framework on competition policy? What are the main concerns of developing countries with respect to a possible multilateral framework in this area and how might they be addressed?
What is competition policy? Policy/law dealing with anti-competitive practices of firms (e.g., cartels, abuse of a dominant position, anti-competitive mergers) Also known as "antitrust, "anti-monopoly or fair trade policy or law Attempts to ensure that markets function efficiently, competitively and in the interests of consumers/user industries Not the same as laissez-faire (rather, is based on a recognition that markets do not function well without appropriate rules and institutions)
Why competition policy is important for development (1): domestic aspects Tackling domestic cartels/monopolies that raise business input costs (e.g. energy and distribution sectors), also prevention of bid rigging Ensuring that privatization/deregulation genuinely contribute to increased efficiency/consumer welfare Promotion of necessary restructuring/opportunities for new entrepreneurs
Competition policy and development (2): international aspects Impact of international cartels on developing countries Apparent relationship between cartels and predatory conduct against developing country suppliers Ensuring that FDI actually works to the benefit of host economies
Some hard data: the impact of international cartels on developing countries Many examples of international cartels have been disclosed recently: in vitamins, lysine, citric acid, graphite electrodes, bromine, cement, numerous other industries World Bank study (Levenstein and Suslow): U.S. $ 81 billion in developing countries imports affected by international cartels in 1997; average price impact of 20-30%).* * study available on the Internet at: http://www-unix.oit.umass.edu/~maggiel/WDR2001.pdf
What might be the main elements of a possible WTO agreement on competition policy? (based on recent proposals by the EU/other proponents) Requirement to adopt a competition law embodying provisions against hard-core cartels Core principles (transparency, non- discrimination and procedural fairness) for the field of competition law Modalities for voluntary co-operation, e.g. with respect to the exchange of national experience by competition authorities and aspects of enforcement Commitment to enhanced technical assistance
What are the main concerns of developing countries and how might they be addressed (1)? Curtailment of development options/erosion of policy space But note: the current proposals are directed at private anti-competitive practices, not government measures that limit competition or serve other industrial policy objectives To the extent that the concern remains, could it be satisfactorily addressed through an unfettered right to exclude strategic sectors or other over-ride mechanisms?
What are the main concerns of developing countries and how might they be addressed (2)? Resource costs of implementing a competition regime But CUTS/other analysis suggests these may be small in relation to the potential benefits Perceived lack of negotiating capacity (but note the role of technical assistance/capacity building here)
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