1

UNCTAD/Yeditepe Üniversitesi/IDRCCompetition Provisions in Regional Trade Agreements

(Istanbul, 31 July - 01 August 2006)

by Philippe BrusickHead, Competition & Consumer Policies Branch

UNCTAD

Competition Law and Policy in Promoting Development at Regional Level:

The Role of UNCTAD

2

OUTLINE

I. Anti-Competitive practices as barriers to tradeII. Anti-Competitive practices affecting

DevelopmentIII. RTAs aim at increasing efficiencies and

DevelopmentIV. Types of RTAsV. Competition Provisions in RTAsVI. Common Regional Competition RulesVII. The role of UNCTAD

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

Barriers (cont’d)

B. Enterprise BarriersCartels: allocating markets fixing prices fixing production/output quotas Other anti-competitive restraints

dumping boycotts (refusal to deal)

differential pricing tied-selling etc

5

Realization that if a FTA is to be created, itmust 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

« 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

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

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

IV. Types of RTAs:

They can be:

– Bilateral FTAs

– Regional FTAs

– Plurilateral FTAs

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

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

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

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

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

THANK YOUTESEKKÜR EDERIM