Stakeholders demand an International Competition Fund for
capacity building
Doha, Qatar, April 25, 2012
Developing countries often lack the
resources and capacity to deal with anticompetitive practices in
their countries. They need technical assistance from WTO, UNCTAD and
CSOs like CUTS International to build the required capacity. One way
forward is to create an International Competition Fund out of cartel
fines imposed by rich countries which have a global dimension. This
emerged in the discussion at an event on issues related to trade and
competition in primary commodity markets organized by CUTS
International at UNCTAD XIII.
A joint publication by CUTS International and Centre for Economic
Policy Research (CEPR) titled “Trade, competition and pricing of
commodities” was also launched on the occasion by Hassan Qaqaya,
Head, Competition and Consumer Policies Branch, UNCTAD.
In his introductory remarks, CUTS Secretary General, Pradeep S Mehta
made a comprehensive presentation on cartelisation in global markets
for primary commodities. He talked about the nature of problems,
their reasons, governance challenges, and way forward.
Many developing countries are heavily dependent on primary
commodities but receive only a small part of the total value chain.
On the other hand, a small number of international traders and
retailers control the large segments of the value chain in coffee,
fertilisers, potash etc. The situation is exacerbated as many
countries including the USA do not prohibit export cartels.
“Countries adopt a beggar-thy-neighbour policy and thus allow export
cartels to operate freely”, said Mehta. “This is one area where
capacity building is required urgently for developing countries to
be able to deal with such cartels through extra territorial
jurisdiction. They also need resources and effective cooperation
from the rich countries, because just the law will not help them to
deal with them”.
Mr. Mehta presented five multilateral solutions to address the
current lack of adequate governance of export cartels. These are:
strict WTO disciplines on export restrictions; other possible WTO
remedies against injury caused by export cartels, e.g. reverse
antidumping; formation of countervailing buyer alliances; a
multilateral agreement on trade and competition; and creation of an
international competition authority.
Mr. Qaqaya stated that cartels are both exclusionary and
exploitative. Their actions wipe out the benefits of trade
liberalisation through collusive behavior. Ironically, it was the US
which allowed export cartels through their Webb Pomerene Act, whose
goal was to promote trade at any cost. However, several European
countries and Korea have now prohibited export cartels in
realisation of their adverse impact on their own domestic economies.
According to him, countries need laws to deal with export cartels.
There is also need to improve cross-border cooperation and
intelligence-sharing among national competition agencies. In this
regard, lessons can be drawn from the experience of consumer
protection regimes in the world where cross border cooperation is
quite advanced and effective.
Participants discussed the need for further case studies to better
understand the economic consequences of export cartels at the
national and international levels. It was also recognized that
individual countries have less incentive to prohibit export cartels
within their respective jurisdictions for fear of losing out to
other countries which do not do so. This clearly indicates the need
for coordinated international action.
Some ideas for the way forward presented and discussed in the
meeting include: an agreement on information sharing on cartels;
capacity building and technical assistance to developing countries;
diversification of exports away from primary commodities; and
establishment of an International Competition Fund.
For more information, please contact:
Kshitiz Sharma, Assistant Director CUTS International, +974-55004828 (Doha,
Qatar),
ks@cuts.org |