6:32 AM Oct 31, 1994
COMPETITION IMPLICATIONS OF URUGUAY ROUND TO BE STUDIEDGeneva 28 Oct (Chakravarthi Raghavan) -- A study of the implications of the Uruguay Round agreements relevant to competition policy and implications for the developing and other countries is to be undertaken by the UNCTAD secretariat, as part of the preparations for the Third UN Conference to Review all aspects of the Set of Principles for the control of Restrictive Business Practices. This was one of the agreed conclusions of the week-long meeting of the Intergovernmental Group of Experts (IGE) on Restrictive Business Practices (RBPs) which ended here Friday. The question of competition figures in a number of Uruguay Round agreements, and the entire question of competition policy is one of the subjects raised by several Ministers at the Marrakesh Ministerial meeting that concluded the Uruguay Round in April. All the subjects raised were listed by the Chairman of that meeting in his concluding meeting as issues that could be raised in the Preparatory Committee in relation to the future work programme of the World Trade Organization. The decisions on the WTO work programme has to be made by the Ministerial Conference of the WTO, when it comes into being. The Set on RBPs was negotiated under UNCTAD auspices and adopted by the UN General Assembly as a Set of principles and guidelines applying to all enterprises, including TNCs. But the Set is only voluntary, without any international enforcement. Efforts of developing countries to put teeth into the Set, and get commitments from the developed countries on control of RBPs of their corporations affecting the trade and development of developing countries has so far been resisted by the major industrial nations. This, and the moves for a global competition policy, will be one of the issues for the Third Review Conference. At global level, the majors are pushing for a global level competition policy and norms -- to bring about a 'level playing field' for the TNCs -- though there are some significant differences on these amongst the US, EU and Japan. Neo-classical economists have been constantly revising the theories of competition and the operations of the 'invisible hand' to the point where competition amongst oligopolies is now claimed to have the same effects of the same 'invisible hand' of the market that Adam Smith talked about, namely, consumers expressing their choice and benefiting from the competition, and resulting in 'efficiency' of resource allocation and ultimate public welfare. However, in the absence of a global government to provide the countervailing force, under oligopolistic or olipsonic competition in a global market, the benefits of competition and profits being converted through efficient resource allocation into capital investments for future production will accrue to the home countries where the corporations are headquartered and take their decisions on a global basis. This does not necessarily mean 'welfare' to the public and consumers in all parts of the world. The IGE asked UNCTAD secretariat to examine the scope, coverage and enforcement of competition laws and policies in member States and to analyze the provisions of the Uruguay Round Agreements relevant to competition, including their implications for developing and other countries. A second study, in the context of assessing the impact of the finalization of the Uruguay Round on competition policy, asks for a review of selected cases of RBPs that have an effect in more than one country, in particular developing countries and countries in transition. In opening the IGE on Monday, the Officer-in-charge of UNCTAD, Carlos Fortin had noted that several of the Uruguay Round agreements -- like the Agreements on safeguards, services, intellectual property rights and investment measures -- dealt with competition policy questions and the time had come to start examining such issues at multilateral level. But, Fortin said, since the Agreements did not address all relevant issues, it was necessary to update and build upon the principles in the Set and in particular examine how to control RBPs affecting global trade and competition and ease tensions in this area arising from the enforcement efforts of governments and possible conflicts between competition and trade policies. Hitherto, the US has been reluctant to such studies as now called for from the UNCTAD secretariat.