1 Seminar on Competition Provisions in Regional Trade Agreements: How to assure development gains organized by UNCTAD and Yeditepe University, Turkey with the support of IDRC, Canada 31 July – 01 August 2006 The role of Competition Law and Policy and Consumer Protection in Bilateral and Regional Trade Agreements: a positive social impact Presentation by Ana María Alvarez Competition and Consumer Policies Branch UNCTAD

2 Index of the Presentation Competition-Related Provisions (CRPs) in Regional Trade Agreements (RTAs): major issues The role of UNCTAD in promoting Competition Law and Policy (CLP) at the regional level Implementing bilateral and RTAs with CRPs: bottlenecks and ways out Development issues concerning CRPs in bilateral and RTAs

3 Competition- Related Provisions (CRPs) in RTAs: Major issues covered in the publication New issues that merit further discussion Competition- Related Provisions (CRPs) in RTAs: Major issues covered in the publication New issues that merit further discussion

4 Competition Provisions in RTAs: Reasons prompting the signature of agreements: not sufficiently explored What are burdens involved in implementing those agreements? What are the development implications of those agreements? ⇒ Low degree of implementation Need to review these agreements bearing in mind their effective economic and development impact Economic welfare: what are the gains for consumers? Can bilateral and RTAs contribute to enhance productive capacities and contribute to poverty alleviation? Dissemination phase: propose new modalities of support to developing countries in negotiating agreements Publication prepared with the support of IDRC, Canada and launched at the Fifth Conference to Review all Aspects of the UN Set on Competition (Antalya, Turkey, November 2005) Switzerland, Turkey, Korea, South Africa and Brazil

5 Some facts From 1990: proliferation of Bilateral and Regional Trade Agreements (RTAs); various agreements contain provisions on Competition law and policy (CLP) Approx. 100 agreements out of more than 300 RTAs contain provisions on CLP. 56 include developing countries (DCs) Broad RTAs are more likely to include CLP (second generation type of agreements): ensure greater coherence between trade and competition. ‘Deep Integration’ Slow implementation of RTAs, rapid growth of bilateral and informal agreements (less burdensome) Overlapping obligations: increased burden for developing countries? Do the agreements require implementation of the same or different provisions?

6 Africa Asia Latin America and the Caribbean European countries; negotiating accession; Countries in transition - CEMAC - COMESA - UEMOA/WAEMU - SACU - EAC - SADC - ASEAN - SAARC - APEC - MERCOSUR - Andean Community - CARICOM - NAFTA (+ US & Canada) - Latin American FTAs Regional Trade Agreement containing CRPs Proliferation of agreements including CRPs: potential benefits? EFTA, Euromed, Accession to EU

7 Proliferation of cooperation agreements other than formal integration agreements Agency-to-agency - ATAs or agreements of mutual legal assistance – MLATs – Informal co-operation e.g. through the ICN –Seemingly more efficient and less burdensome than RTAs Proliferation of CLP in RTAs: network effects Technical cooperation without commitments –Provisions on Special and Differential Treatment

8 Why do countries need Competition Related Provisions within a Regional Trade Agreement? Diversification of products Lower prices Better use of scarce resources To respond rapidly to market signals To improve the quality of goods and services To better respond to consumer needs Incentive for enterprises, particularly SMEs Consumer welfare To ensure that market access is not impeded by restrictive arrangements To promote harmonization of laws to reduce transactions costs, increase investor certainty, raise investment Gain co-operation in enforcement against cross border anti-competitive practices, or technical assistance from another agency

9 Reasons for including CRPs in bilateral and RTAs EU Initiative – harmonization of competition laws Ensure benefits from trade & investment liberalisation; avoid impact of anticompetitive practices (ACP) Support to countries, particularly developing countries in the fight against cross-border anti- competitive practices (international cartels, possible negative effects of foreign mergers) Sensitize developing countries and transition economies, particularly policymakers on the implications of CLP issues in RTAs and development, particularly for economic welfare

10 Issues that merit further discussion Bilateral and RTAs have proliferated and sometimes, commitments overlap Balance of burden and benefits If there is a lack of implementation of CRPs in RTAs, benefits are insufficiently clear and costs are high – –Need to examine cross-cutting and specific experiences, national and international implementation problems If stronger markets and inclusive growth are the key for economic development, need to examine: –Economic and development impact of CLP and regional competition law and policies –What formulations of CLP are most friendly to poverty alleviation and efficient development?

11 CRPs in RTAs Cross-cutting issues Implementation problems National Technical Capacity Policy space for CLP International Problems with Co-operation National Interest Specific experiences Implementing Competition Provisions in bilateral and RTAs

12 Issues for discussion: National vs. Regional law The absence of a law hinders cooperation: without law there is no competition authority; exchange of information will not therefore be possible Which law has priority, the national or the regional law? Regional law: enforcement not easily feasible CARICOM: the surpranational law should be technically applied to crossborder practices with anticompetitive impact at regional level SACU: Member States are free to choose which treaty needs to be applied in case of conflict between jurisdictions Andean Community: “normativa andina” applies to crossborder cases; regional law temporarily used at national level in Bolivia and Ecuador

13 Modernisation of the European Competition Law Enforcement: extrapolating to other regional groupings Clear definition and roles between the Commission and national courts Cooperation agreements involve support to case investigations Explicit mandate to exchange information (include confidential information ) amongst competition authorities Monitoring of the community law implementation at national level to be done by the European Commission Case allocation : Community law provides more competence to national authorities What are the implications of the modernisation scheme for the national authority? Can this experience be extrapolated to other regional groupings?

14 The role of UNCTAD in promoting CLP at regional level

15 Competition and Consumer Protection work in UNCTAD: Ensuring consistency among the three pillars UNCTAD’s interactive and mutually reinforcing pillars of work consist of international consensus-building, research and policy analysis, and technical cooperation. The dissemination phase aims at ensuring the interconnexion between these three pillars Consensus building Research Technical cooperation

16 UNCTAD mandates on Competition Law and Policies - Promoting regional competition law and policies - Fifth UN Conference to Review all Aspects of the UN Set on Competition (Antalya, Turkey, november 2006) launching of the publication Intergovernmental Group on Experts on Competition Law and Policies – 2006 Isssues to be discussed: International cooperation in investigating and prosecuting hard-core cartels affecting developing countries; Cooperation and dispute settlement mechanisms relating to competition policy in regional free trade agreements, taking into account issues of particular concern to small and developing countries

17 Implementating bilateral and RTAs with CRPs: bottlenecks and remedies Implementating bilateral and RTAs with CRPs: bottlenecks and remedies

18 Issues that merit further discussion National problems related to the implementation of agreements: Is implementation inhibited by the lack of a national law or its relative ineffectiveness? Is implementation inhibited by the relative ineffectiveness of a national authority? How can bilateral and RTAs contribute to strengthen the powers, budget and resources of competition agencies? What are the implications of provisions on trade remedies for the size and composition of caseloads of competition agencies?

19 International problems related to the implementation of agreements: In what ways, have competition provisions fostered cooperation between agencies on actual enforcement cases? What are the Pros and Cons of binding competition enforcement issues? What disputes have arisen on CLP between signatories of agreements? How were they solved? What is the relationship between cross-border mergers and adquisitions and implementation of CRPs in bilateral and RTAs? Issues that merit further discussion

20 Development Issues concerning bilateral and RTAs with CRPs

21 Issues for further discussion Impact of CRPs in bilateral and RTAs on economic development: Is there a possible positive social impact? Contribution to economic welfare, increase of productive capacities and poverty alleviation What formulations of CLP are most friendly to poverty alleviation and efficient development? Role of a regional or national competition body in directly targeting issues of social concern: a quest for a long-lasting competition culture. The link between competition provisions and other aspects of bilateral and RTAs: implications for trade diversion and trade creation

22 Requisites for implementing CLP with a development dimension Not only a CLP is important: implementation is crucial Recommendations for policy changes and institutional reforms aiming at promoting domestic competition, competitiveness and development Publication prepared with IDRC (Canada) support, launched at UNCTAD IX (Sao Paulo, June 2004)

23 Many thanks For further information UNCTAD outreach and dissemination team