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MULTILATERAL FRAMEWORK FOR COMPETITION POLICY:
By James Hurungo
November 2002
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===================== The inclusion of competition policy in the new WTO round of trade negotiations has been met with varied responses. Whereas developed countries view inclusion of competition policy as a means of opening up markets in developing countries, achieving economic efficiency, developing countries have viewed it as a means to stimulate development; that is focus is on striking a balance between efficient markets and sustainable development. Of concern to developing countries is that the WTO process is driven by (market access) export interest, not national welfare considerations, and there is no assurance that the agreed rules will be welfare enhancing and pro-economic development. In addition, African countries have not been at the centre of the debate on trade and competition in the WTO. Worse still they do not have competition laws, regimes or authorities, and the few that do, often have limited implementation ability. They cannot control the restrictive business practices of TNCs. This has called for the need to develop national and regional competition policies to safeguard consumer interests as regional competition policy can effectively deal with restrictions on competition that have cross boarder-effects. It is in view of this background. that Trade and Development Studies Centre in conjunction with Consumer International Regional Office for Africa, through this study, undertook to explore the link between competition policy and consumer welfare at national, regional and particularly multilateral level. To achieve this broad objective, the study analyses key issues for Africa relating to inclusion of competition policy in the WTO agenda. It also provides a situational analysis for selected African regional groupings and countries on the relationship between competition policy and consumer welfare. Finally; the study explores the action areas, proposes strategies and necessary preparations for African countries in the area of competition policy within WTO. It is worthwhile noting that the study is not intended to be comprehensive but to provide guidelines and highlight controversies around the issues.
====================== 1. BACKGROUND TO COMPETITON POLICY AND CONSUMERS 1.1 Introduction Paragraph 23 reads “Recognizing the case .for a multilateral framework to enhance the contribution of competition policy to international trade and development, and the need for enhanced technical assistance and capacity-building in this area as referred to in paragraph 24, we agree that negotiations will take place after the Fifth Session of the Ministerial Conference on the basis of a decision to be taken, by explicit consensus, at that session on modalities of negotiations In paragraph 24, the emphasis is on developing countries needs. “We recognize the needs of developing -and least-developed countries for enhanced support for technical assistance and capacity building in this area, including policy analysis and development so that they may better evaluate the implications of closer multilateral cooperation for their development policies and objectives, and human and institutional development. To this end, we shall work in cooperation with other relevant intergovernmental organisations, including UNCTAD, and through, appropriate regional and bilateral channels, to provide strengthened and adequately resourced assistance to respond to these needs” While paragraph 25 focuses on substantive issues, principles, guidelines and process, “In the period until the Fifth Session, further work in the Working Group on the Interaction between Trade and Competition Policy will focus on the clarification of core principles, including transparency, non-discrimination and procedural fairness, and provisions on hardcore cartels; modalities for voluntary cooperation; and support for progressive reinforcement of competition institutions in developing countries through capacity building. Full account shall be taken of the needs of developing and least-developed country participants and appropriate flexibility provided to address them” 1.2 Emerging Controversies It is recognised that competition policy has a crucial role to play in developing countries, both in promoting a competitive environment and in building and sustaining public support for a pro-competitive policy stance by the government. Competition brings about efficiency through enhanced inter-firm rivalry, limiting anti-competitive behaviour in the private sector as well as prohibiting government led market distortions. However, because of structural and economic handicaps of developing countries, which distance them from the ideal world of perfect competition, it is a misnomer to surmise that competition will yield the expected results in these countries. Competition policy should aim at allocating resources as accurately as possible to the satisfaction of consumer and Multilateral Framework For Competition Policy; Where Do African Consumers and ......... ================== 4.3 Conclusions The Multilateral Framework on Competition policy should not be too narrow in its focus, that is, it should not be taken as a means to increase market access only but rather it should complement and supplement the broader development objectives of African Countries. It should be noted that whilst competition policy can ensure that the benefits of globalisation reach the masses as it is not an end to the enhancement of consumer welfare. For most developing countries it is sometimes, too costly to put up a competition policy in place and implement it at the same time, that is setting up proper and adequate institutional capacities, human resources and expertise required to implement the policy could prove to be too costly for them. Sadly Competition laws in most developing countries are more or less replicas of the developed countries laws, which happen to be inappropriate for them given their level of development. Consumer rights are likely to be eroded further by the inclusion of competition policy on the WTO agenda. African consumers are likely to become perpetual losers in face of the current multilateral trading system and developed countries and TNCs are perpetually winning the race as they have the resources and power to tilt all negotiations to their favour. However, consumers in Africa need to act now and ensure maximum representation in national, regional and global fora to ensure that their interests are articulated and heard and there by ensure the enshrinement of consumer rights in all circles. International policy on competition policy should respond to four problems, namely, reducing transnational anti-competitive activity outside control of any single nation, enforcement of conflicts resolutions, enhancing market access for weak countries and avoiding unnecessary costs of compliance. 4.4 Recommendations |
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