6:57 AM Nov 16, 1995

UNCTAD ROLE IN COMPETITION POLICIES PRAISED

Geneva 15 Nov (Chakravarthi Raghavan) -- The role of UNCTAD in promoting national laws and regulations to ensure competition by controlling Restrictive Business Practices (RBPs) has received warm praise at the UN review conference which began Monday with Eduardo Garmendia, head of Venezuela's competition authority as President.

Praise for the role of the UN Conference on Trade and Development came at the Third UN Review Conference on The Set (the Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices) from such not-so-friendly quarters as the United States, the European Union's executive commission as well as the normal UNCTAD constituency of developing countries.

But some developing country sources, while welcoming this, privately noted however that the focus of the US, EC Commission and of many industrialized countries was more on technical assistance to developing countries to formulate and enact model competition laws and their enforcement, and there was little hint that they would move some way in putting teeth into the UN voluntary code and/or international actions to enable developing countries to hit at the RBPs affecting their trade and development, but originating in the developed countries and their enterprises, including their authorized export cartels.

Given the differing market conditions in countries, needing different approaches to hit anti-competitive policies and national judgements on the kind of enterprise mergers that could create monopoly situations in particular markets, even stated willingness of competition authorities to cooperate bilaterally in providing information has many limitations, it was explained.

In an opening statement for the UNCTAD Secretariat, Carlos Fortin, Deputy to the Secretary-General of UNCTAD and Director-in-Charge of the International Trade Division, noted that trade and competition policy was among the issues to be discussed at UNCTAD-IX.

The Conference, he suggested, could be an occasion to begin to build an international consensus on the main features of multilateral "rules of the game" in this area. In an increasingly globalizing world economy, national competition policies need to be complemented by actions at the international level to ensure competition in the global market. This would be a logical next step in the progressive liberalization of international trade and would enhance global economic efficiency while reducing trade or competition policy tensions.

In the general plenary debate, many speakers outlined the progress made in their own countries in enacting legislation to implement the Set as also changes and improvements in their competition regulations. There was also emphasis on importance and need for continued UNCTAD technical assistance for training competition authorities in developing countries, particularly in the context of their ongoing programmes of privatization and the current globalization phenomenon.

That sixty countries had adopted competition laws and established competition agencies since the adoption of The Set in 1980, Edward T. Hand, assistant chief of the US Justice Department's Anti-Trust division said, showed the enormous progress made in furthering trade competition. Technical cooperation to assist new competition agencies and mutual cooperation in competition law enforcement were two important aspects to be reviewed at the Conference, Hand said, in praising UNCTAD's useful role to undertake work that individual countries could not manage.

Hartwig Wangemann of the German Federal Cartel office, who also stressed the large number of countries who had either enacted competition laws or revised them since the last review conference in 1990, said adoption of competition laws and their enforcement was the most appropriate way of showing commitment. German, he said, would continue to support UNCTAD activities of technical support and advice.

The UNCTAD Intergovernmental Group of Experts on RBPs should continue to be the "main international forum for cooperation and exchange of experience on competition matters," the German delegate added.

Canada's Robert Anderson, who also voiced his country's support for the IGE, spoke of the role of international cooperation and information sharing among competition authorities.

Tunisia's Director of Price Competition in the Trade Ministry, Mohamed Ben Fraj, said the competition issue had become the centre of concern since the successful conclusion of the Uruguay Round because of the need to ensure that the reduction of tariffs and opening of borders are not negated by RBPs. There was hence need for competition laws and implementation authorities at the national level and cooperation among such authorities at international level. UNCTAD should be consolidated as the privileged forum to deal with RBP problems.

China's Tang Yufeng, while thanking UNCTAD for its useful work in this area, pointed out that notwithstanding the progress made over the last 15 years, RBPs were proliferating in recent years. As tariff and non-tariff barriers were gradually reduced, big firms might consolidate their dominant market position through RBPs. Such monopolization would seriously affect foreign trade of developing countries through unfair competition in the international market that offset the benefits of trade liberalization. There was need for the international community to adopt appropriate legislation to control RBPs.

South Korea's Nam Kee Lee stressed that it was more urgent than ever before that developing countries showing dynamic growth and developed countries with experience in RBP regulations should cooperate. So far, he noted, consensus on necessity of international principles on competition policy were not viewed as mature enough.

Korea advocated greater research on anti-dumping, inter-firm transactions of transnational corporations, technical assistance and information exchange, anti-competitive provisions in international agreements and the interactions between competition and trade. It would be useful to maximize a consensus on international competition policy under the supervision of UNCTAD.

Sri Lanka's Dharshana Jayaniha Pathirana said UNCTAD's experience of the Set should be drawn upon to formulate a core of universal competition principles to form the basis for work on the international trading system. Fifteen years after its adoption, and the considerable market-oriented reforms in the world economy, the Set remained the only fully multilateral instrument on competition policy.

Egypt, while viewing the Set as providing very useful guide and principles that had encouraged many developing countries to apply competition laws and policies, nevertheless believed that a more effective, legally binding, mechanism should be formulated with the assistance of UNCTAD to enforce control on RBPs internationally.

Amb. Angelina Bonetti Herrera of the Dominican Republic, while viewing the Set becoming the starting point for negotiations on this issue to be launched in the near future in the context of the WTO, said that a number of elements however need to be taken into account.

There was need to consolidate competition policy at the national level. Attention should be given in this to the tight linkages between regulations on free competition and protection of consumers, unfair competition, deregulation and privatization of public services, intellectual property, distribution channels, anti-competitive practices in basic services sectors, anti-dumping rules as well as use of rules of origin for consolidation of dominant positions within integration groupings or preferential trade schemes.