UNCTAD and SELA Secretariats have formed the Working Group on Trade and Competition last October 2010 after having organised two regional meetings in Caracas (April 2009) and Brazilia (May 2010).
The Working Group reflects the growing trend towards corporate concentration as a result of the internationalization of world economy, which highlights the need for appropriate and effective mechanisms to preserve the conditions of free competition in markets, whether local or expanded, so that individuals can not unduly restrict or distort competition without risk of punishment.
Furthermore, it has been stressed that technological advances increasingly encourage innovative ways of distortion of competition, for which authorities should often assess and update the rules, working methods and tools for implementation at the global, sectoral and regional levels, if it is the case.
2. BACKGROUND AND JUSTIFICATION
Economic integration in Latin America has not stopped despite the international crises and trade and political differences among countries and trade zones. Therefore, Central American, Caribbean, Andean and MERCOSUR countries continuously strengthen and improve mechanisms, agreements and their institutions for trade, political, social and cultural integration at their own pace and with their own possibilities of application.
With the internationalization of the economy, the differences in the procedures to conduct international trade affect the performance of markets, production processes and the ways investments are made. Thus, we are witnessing the emergence of new transnational production processes, the creation of new business networks and vertical integration mechanisms, with profound implications on issues related to national economic development and international trade policy – particularly concerning the promotion and preservation of free competition. However, several studies point to the coexistence, in our region, of very dissimilar experiences and approaches as regards regulatory policies, institutions, international commitments on competition, and foreign trade.
However, it is also true that this scenario does not reflect the current existence of a growing intra-regional Latin American and Caribbean market for goods and services, which tends to diversify the current focus on subregional blocs, to promote productive development in the region, to foster greater and more diversified mutual investment flows and to encourage greater participation of extra-regional investments in our countries. In addition, progress has been made in infrastructure development and transport, and with respect to political rapprochement in the region.
For this reason, as part of the process to build a regional Latin American and Caribbean market – whose most recent momentum was the proposal made on 23 February 2010 to create the Community of Latin American and Caribbean States (CELAC) –, deepening the integration of Latin America and the Caribbean as a major economic area in the world is considered of crucial importance. In this context, we intend to conduct consultations and to promote regional cooperation and coordination, as basic tools for the gradual process of convergence to shape up a Latin American and Caribbean regional agenda. To this end, the treatment of trade and competition policies requires new coordinated actions and working methods, so as to support the creation of the regional market in Latin America and the Caribbean.
In April 2009, the Secretariats of UNCTAD and SELA organized in SELA's headquarters in Caracas, Venezuela, the First Regional Seminar on Trade and Competition, which raised the possibility of studying the creation of a regional Working Group on Trade and Competition. On the occasion of the Second Regional Forum in Brasilia – to be held from 26 to 28 May 2010 – which will also deal with the participation of Latin America and the Caribbean in the VI United Nations Conference to Review All Aspects of the Set of Principles and Rules on Competition, a proposal is being made once again to study trade relations and competition, and to encourage coordination efforts in Latin America in line with the policy foreseen to achieve the regional objectives of CELAC.
3. PURPOSE AND SCOPE
A Working Group could promote institutional strengthening, facilitate knowledge sharing, foster regional consultation, and contribute with the identification and provision of economic and technical cooperation from the region itself, from international organizations and other sources. More specifically, it could conduct the following activities:
- Provide a regional framework for interaction between national and regional authorities in charge of trade with their counterparts in the area of competition.
- Strengthen political, institutional and regulatory capacities, as well as the capacities of the system to protect free competition in the context of regional integration.
- Create a mechanism to analyze trends in the treatment of issues related to competition within the framework of agreements and of trade forums at the international, regional and national levels.
- Promote consultation and coordination mechanisms for developing regional convergence processes in Latin America and the Caribbean in the area of competition policy.
- Facilitate the exchange of national and regional experiences as regards actions in the area of competition and trade policies.
- Identify mutual cooperation mechanisms for institutional strengthening and activities related to extraterritorial competition practices. The Voluntary Consultation System foreseen in Section F of the Set of Principles and Rules on Competition of the United Nations is of special relevance in this connection.
- Identify programmes and channel international technical cooperation resources for training, capacity-building and institutional modernization.
- Provide an institutional means for consultation and coordination in Latin America and the Caribbean concerning competition-related issues, with a view to strengthening the participation of the region’s countries in international forums.
4. INTERNATIONAL FORUMS ON COMPETITION AND THE WORKING GROUP
Regional events on competition policies are organized on a regular basis with the main purpose of increasing knowledge of the issue among the authorities responsible for enforcing national and subregional regulations and standards. UNCTAD organizes annual forums on competition. In addition, there is the International Competition Network.
However, the Working Group proposed for Latin America and the Caribbean would also cover matters concerning the region’s trade relations, and would be much more formal. In addition to implementing international cooperation mechanisms for the region, the Group would be able to promote consultation, cooperation and coordination among LAC countries, in order to support the creation of a Latin American and Caribbean economic space. It would also promote joint international participation, in accordance with the objectives outlined by the Presidents and Heads of State and Government during the meeting of the Rio Group and the Summit of Latin America and the Caribbean on Integration and Development (CALC), on 23 February 2010, who agreed to establish the Community of Latin American and Caribbean States (CELAC).
The Working Group would be of an inter-governmental nature. It would be open to the participation of the following officials from Latin America and the Caribbean:
- Heads of national institutions in charge of enforcing competition regulations.
- Officials responsible for competition issues in national foreign trade institutions.
- National officials responsible for international trade negotiations.
- Experts from regional and subregional integration organizations in Latin America and the Caribbean.
UNCTAD would provide technical support, as required by the Working Group.
6. TECHNNICAL AND FINANCIAL SUPPORT MECHANISMS
For the technical activities of the Working Group, SELA requests technical support from UNCTAD in view of its vast expertise in strengthening competition policies in developing countries and its experiences with Latin American and Caribbean countries, as well as other regions, and in multilateral forums.
International organizations and donor agencies could participate by providing technical and financial support. In addition, the Working Group could identify and channel cooperation from international sources, as well as bilateral, regional and multilateral agencies.
7. RULES AND PROCEDURES
The Working Group would operate under the institutional system of SELA, with technical support from UNCTAD Secretariat. Initially, it would operate in an informal way until an agreement is reached on its by-laws and regulations and its first work programme, which shall be submitted to the Latin American Council for approval. Once in operation, the Group shall present an annual report of activities and its next work programme to the Council.
8. TECHNICAL SUPPORT ACTIVITIES BY THE SECRETARIAT OF UNCTAD
Pursuant to the mandate of UNCTAD (2008 Accra Agreement) and the UN Set of Principles and Rules on Competition, and under the COMPAL Programme, UNCTAD will contribute to the Working Group, mainly, in conducting the following investigation and research activities:
- Cooperative evaluation of case investigation and research techniques: expansion of the pilot project initiated by Colombia and Peru to other countries.
- Study of cross-border practices: Identification of investigation and research methodologies for those practices, such as splitting-up markets among countries.
- Study of relevant markets: Identification of methodologies to define relevant markets in Latin American economies. (Review of the particular features of Latin American economies – such as the fact that they are highly concentrated markets – barriers to entry that are different from those imposed by developed countries in the wake of the opening-up of markets, which has characterized Central American countries since the signing of FTAs). Methodologies should be defined on the basis of this study.
- Study on Competition Laws in the Latin American and Caribbean region, including comparative legal analyses.
9. TECHNICAL SUPPORT ACTIVITIES BY THE SECRETARIAT OF SELA
In addition to acting as the Technical Secretariat of the Working Group, the Permanent Secretariat of SELA could organize some support activities, such as:
- Reports on international standards and agreements of Latin American and Caribbean countries, relating to trade and competition issues.
- Directory of participants in the Working Group.
- Creation of a database and a digital library on competition laws and their amendments, as appropriate, as well as related legislations (e.g., consumer protection, among others), most relevant competition cases in each country, institutional issues, and agreements signed by Latin American and Caribbean countries.
- Follow-up on developments concerning regulations, as well as regional and international debates.