1. 1 UNCTAD/Yeditepe Üniversitesi/IDRC Competition Provisions in Regional Trade Agreements (Istanbul, 31 July - 01 August 2006) by Philippe Brusick Head, Competition & Consumer Policies Branch UNCTAD Competition Law and Policy in Promoting Development at Regional Level: The Role of UNCTAD

2. 2 OUTLINE I.Anti-Competitive practices as barriers to trade II.Anti-Competitive practices affecting Development III.RTAs aim at increasing efficiencies and Development IV.Types of RTAs V.Competition Provisions in RTAs VI.Common Regional Competition Rules VII.The role of UNCTAD

3. 3 II. Anti-Competitive Practices as Barriers affecting Trade A.Government Barriers: Tariffs Non-Tariff barriers: quotas customs valuation customs formalities standards subsidies anti-dumping actions etc etc

4. 4 Barriers (cont’d) B.Enterprise Barriers Cartels: allocating markets fixing prices fixing production/output quotas Other anti-competitive restraints dumping boycotts (refusal to deal) differential pricing tied-selling etc

5. 5 Realization that if a FTA is to be created, it must also get rid of enterprise-level distortions: Articles 85 and 86 of the Treaty of Rome (1957) Competition provisions in RTAs Common Competition Rules in RTAs (eg. COMESA) UN Set of Principles and Rules on Competition

6. 6 « Anti-competitive practices should not impede or negate the realization of benefits that should arise from the liberalization of tariff and non-tariff barriers affecting world trade … » UN Set of Principles and Rules

7. 7 II. Anti-competitive Practices Affecting Development Trade is an engine of Growth and Development ─Practices affecting trade affect development Anti-competitive practices affect ─Efficient allocation of resources ─Level of prices ─Quality & choice for consumers ─Innovation & R&D effort  Not only Final Consumers are adversely affected, but also ENTERPRISES using anti-competitive output as intermediate inputs  Hence, losing COMPETITIVITY

8. 8 III. RTAs aim at increasing efficiencies and Development by: ─Increasing economies of scale ─Creating a larger market free of trade barriers ─Creating a more competitive setting

9. 9 IV. Types of RTAs: They can be: –Bilateral FTAs –Regional FTAs –Plurilateral FTAs

10. 10 From single to more elaborate RTAs, we have: FTAs Custom Unions Common industrial policy in specific areas Common Competition rules Monetary Union Political Union: Common Constitution Foreign Affairs Defense etc.

11. 11 V. Competition Provisions in RTAs: Are only part of the agreement Follow the logic that trade needs to be freed from enterprise-level distortions Contain a commitment for both parties to adopt (and enforce) competition legislation Provide for technical assistance Exchange of information subject to confidentiality rules

12. 12 VI. Common Regional Competition Rules usually involve: A prohibition of cartels involving more than one member-country Control of abuse of dominance Region-wide merger control Creation of a Common Supranational Competition Authority Rule of subsidiarity usually applies with respect to national competition authority in member countries (if they exist).

13. 13 VII. The Role of UNCTAD Sao Paulo UNCTAD XI Conference « UNCTAD/IDRC book on Competition Provisions in RTAs: How to Assure Development Gains?» launched on the ocassion of the Fifth UN Conference to Review all Aspects of the Set of Principle and Rules on Competition, in Antalya (Turkey) in November 2005.

14. 14 Some findings: Since mid-1990s, significant increase in RTAs worldwide (over 300). Most recent RTAs contain competition related provisions. (141 out of 300). Competition Policy rules needed particularly in developing country partners to an RTA. Effects? Increased adoption of national competition laws in developing countries.

15. 15 THANK YOU TESEKKÜR EDERIM