International Issues Related to UTPs

1. International Issues Related to UTPs Research Project on Unfair Trade Practices in Select ASEAN Economies First Policy Dialogue Ho Chi Minh City, 12th September 2012 Douglas H. Brooks Asian Development Bank

2. Outline • UTPs from an international perspective • Multilateral Competition Law? • Competition Policy and the ASEAN Economic Community

3. UTPs from an international perspective

4. Why an international approach to competition is needed… • Increased international trade • Not only in goods, but also in services • FDI and MNCs • Global production networks • Further development of competition policies in most countries Note: Figures are average of exports and imports Source: World Development Indicators Online, accessed 23 August 2012

5. These trends are likely to continue and will lead to conflicts • Extraterritoriality and Jurisdiction • Consistency of rules • Monitoring

6. Multilateral Competition Law?

7. Currently, only certain UTPs affecting international trade in goods are governed by multilateral agreements • Agreement on Anti Dumping Measures Basically dumping occurs when: Pe<Pn • Agreement on Subsidies and Countervailing Measures • Directly affecting competing industries in the importing country • Other suppliers are effectively crowded out of the country providing subsidies to particular industries • When subsidized goods prevent the entry of other suppliers from accessing markets where subsidized goods are exported

8. A multilateral competition agreement was attempted (under the Singapore issues in 1996) • A commitment to adhere to a set of core principles (transparency, non-discrimination, procedural fairness) in the application of competition law • A commitment to enact and enforce a law against hard-core cartels • The development of modalities for voluntary coopertation on competition law and policy matters • A commitment to support the introduction and strengthening of competition laws and related institutions in developing countries

9. But this did not succeed… Evenett (2007) • Policy space • Wrong proponents • Single undertaking

10. Nontheless, efforts towards convergence continue EU and US convergence … Source: Kovacic (2008)

11. Convergence is also facilitated through other avenues • International Competition Network (ICN) • Competition committee of the OECD • Regional collaborations – ASEAN, Andean Pact, CARICOM, COMESA • Non-government networks, professional associations, academic organizations • CUTS

12. Competition Policy and the ASEAN Economic Community

13. Competition policy is an important aspect towards the realization of the AEC 2nd part of the ASEAN economic blueprint aims for a competitive economic region “characterized by sound competition policy, consumer protection…” • Members introduce competition policy by 2015 • Establish network of authorities for coordination and discussions • Capacity building for members • Regional guideline on competition

14. But coverage, scope and implementation of ASEAN countries of national competition policy & law vary Source: Pupphavesa et al, in Plummer and Chia (2009)

15. Prohibited Horizontal Agreements in National Competition Policy and Law Source: Pupphavesa et al, in Plummer and Chia (2009)

16. Prohibited Misuse of Market Power in National Competition Policy and Laws Source: Pupphavesa et al, in Plummer and Chia (2009)

17. Competition policies are relatively recent developments for most ASEAN countries … and governments have had rudimentary and limited experience in handling competition issues, especially of cross boundary nature …as an organization, ASEAN has yet to have an institutionalized arrangement for cooperative work on competition policies and laws (Pupphavesa et al. 2009)

18. Established practice and policies are still at initial stages • Jurisprudence • Consolidation • American vs European model • Challenging, but late comer advantage

19. ASEAN countries, individually and collectively must strive to answer some key questions… • Which types of anti-competitive practices should be included in national /regional competition law? • Is there a case for a phased introduction over time of measures against different types of potentially anti-competitive practice ? • The pros and cons of giving the agency in charge of enforcing measures against potentially anti-competitive practices responsibilities for: (i) undertaking competition advocacy, (ii) enforcing consumer protection law, (iii) enforcing laws against economic concentrations, and (iv) other economic laws. • What are the criteria in determining which corporate or state practices should be overseen by competition law. Possible suggestion: potential for anti-competitive impact, prevalence, and pre-requisites for effective enforcement

20. The gains from an effective and harmonized ASEAN competition policy are considerable • Efficiency gains • Boost international trade and investments • Consumer protection • Institutional reform • Growth (Pupphavesa et al 2009; Dutz & Hayri 2000)

21. Summary • Competition policies must be developed and implemented with international developments in mind • Convergence of national competition policies are needed if the growth benefits of trade are to be sustained • ASEAN countries are beginning to consolidate their competition policies • The region has less experience with implemention but has a late comer advantage • Considerable gains are to be had from improved competition environment in the region

22. Thank you dbrooks@adb.org