RESTRICTIVE PRACTICES STILL USED, EXPERTS SAY.

Nov 21, 1984

RESTRICTIVE PRACTICES STILL USED, EXPERTS SAY.

GENEVA, NOVEMBER 19 (IFDA/CHAKRAVARTHI RAGHAVAN) -- Government experts on restrictive business practices from 80 countries, at their meeting here under the auspices of UNCTAD, have expressed concern over the resort to such practices affecting international trades particularly the trade and development of the Third World.-

The inter-governmental expert group is the institutional mechanism for overseeing the implementation of the set of multilaterally agreed equitable principles and rules for the control of Restrictive Business Practices (RBP).-

An UNCTAD secretariat study for the group had said the set has had "very limited impact" both with regard to policy formulation and legislation towards elimination of RBPs.-

The Deputy Secretary-General of UNCTAD, Mr. Jan Pronk, in his address to the group, had stressed the need for "transparency" in this area.-

"Why should governments insist upon improved transparency regarding governmental measures affecting trade, and yet condone and foster a situation of virtually no transparency regarding restrictive agreements and arrangements entered into by their enterprises regarding exports?", he asked.-

The expert group in a resolution adopted Friday night, took note of the views expressed at its meeting that implementation of the set had been "inadequate" during the 4-1/2 years since it was agreed to unanimously at the UN Conference in 1980 and adopted subsequently by the UN General Assembly.-

During the discussions in the Committee one of the causes advanced for tardy implementation had been inadequate response by international organisations and financing programmes like the UNDP in providing technical assistance.-

The UNDP itself has said that in view of its own resource position, no resources could be made available in the 1984/86 biennium.-

The expert group called upon member states to take up this issue at the current session of the UN General Assembly.-

The set is due for a comprehensive review at a UN Review Conference in November 1985.-

Detailed proposals for the Review Conference are to be taken up and considered by the expert group at its next meeting in April 1985.-

At the current meeting, the Group of 77 had tabled a draft resolution, which among other things had called upon the Review Conference to make the set a legally binding instrument rather than a mere recommendation and moral commitment.-

The G77 proposal is to be discussed at the April meeting of the Group.-

The expert group also called upon the secretariat of the UNCTAD to arrange for publication, along with comments made at the meeting by spokesmen of regional groups, of the secretariat study on collusive tendering.-

On the basis of information provided by governments, the study had said that collusive tendering was a common practice in international trade.-

While most countries prohibited such collusive tendering, and practices involved in it such as price fixing or market allocation, on their domestic markets, numerous cases of such collusive tendering continue to be discovered in the domestic markets.-

In international trade, while such practices are prohibited by RBP laws of various countries in so far as imports into their markets are concerned, relatively few countries have prohibited collusive tendering on exports when the harmful effects of such practices are felt only in other countries.-

Underlining the deleterious impact on the Third World of such collusive tendering, the study brought out that for capital goods imports the Third World countries were particularly dependant on imports from the Industrial countries.-

In capital goods as a whole, the Third World took in 30 percent of Industrial country exports, while for certain specific products, more than 70 percent of Industrial country exports went to the Third World.-

Replies provided by governments to the UNCTAD secretariat brought out the difficulties faced by them, within their national jurisdictions, in the detection and control of collusive tendering practices.-

And when international trade transactions are involved, the problems increase greatly in magnitude and complexity, the UNCTAD study brought out.-

Governments of Third World countries have limited scope for effective remedial action when the practice in question originates with enterprises outside their national territory.-

Such collusive tendering not only results often in higher prices, but by eliminating competition, it "delays completion of the project, results in poorer quality of goods and services, and is a less efficient means of providing these goods and services", UNCTAD has said.-

To the extent higher prices result from collusion, the purchaser and the country will have fewer resources available to devote to other needs.-

Such practices also have an impact on a country's economic development, in as much as the goods procured are frequently for developmental purposes, and collusion may be aimed at eliminating domestic competitors within the purchasing country as well as potential new participants in international trade.-

At the final plenary Friday nights Mervyn Keehn of Australia, speaking for the OECD countries, underlined his group's view that the secretariat studies were drafted for the expert group and could only be disseminated on its authority after being subject to its revision.-

This view was however contested by both the Group of 77 and the Socialist Group.-

Mahmoud Assran of Egypt, speaking for the Group of 77, said that while the expert group had a role to play in considering secretariat studies, it was not realistic for the group "to try to negotiate them as agreed texts paragraph by paragraph".-

Gennadi Kuzman of the Soviet Union, speaking for the Socialist Group of countries, said the expert group was an "institutional mechanism and not a forum", and its task was to promote efficient implementation of the set.-

The studies were the responsibility the secretariat, Kuzman said.-

Ye Shangchun of China said the monopolies and transnational corporations of the Industrial countries were the main sources of the RBPs, and the responsibility for control of these abuses devolved on these countries.-

On the issue of technical assistance, Keehn said a number of countries of his group had provided assistance on a bilateral basis.-

Assran said that while bilateral assistance was welcome, but it was never seen as corresponding to the concept of technical assistance as developed in the set.-

Kuzman underlined that technical assistance in the sense of the set should be multilateral.-

Ye Shangchun stressed the importance of technical assistance for countries that lacked sound RBP legislation. He acknowledged the expressions of interest from Norway and Sweden in meeting this need.-