Consumer groups have welcomed the new Competition Bill but have suggested further fine-tuning, in submissions made before the Parliamentary Committee to which the Bill has been referred.

The existing MRTP Act cannot deliver justice to the country's consumers, is the message conveyed to the Committee, which is headed by Pranab Mukherjee.

A coalition of consumer groups in association with Consumer Unity & Trust Society (CUTS) maintain that inadequate coverage has been given in the Bill to Intellectual Property Rights (IPRs). A good competition law today cannot afford to be silent on IPRs, which are used as market strategy in modern knowledge-based economies. Licensing arrangements that restrict 'parallel imports' for instance, can be extremely injurious to competition. Similarly, the provision in TRIPS (Trade Related Intellectual Property Rights of the World Trade Organisation) for 'compulsory licensing', can be quite useful in correcting anti-competitive practices. CUTS has proposed a whole separate chapter on Intellectual Property Rights in the new Competition Bill.

The consumer groups' coalition comprises Consumers' Forum (CF) New Delhi, Federation of Consumer Organisations (FEDCOT) Tamil Nadu, Consumer Education & research Centre (CERC) Ahmedabad, Consumer Unity & Trust Society (CUTS) Jaipur among others.

Glaring escape hatches have been left open for the perpetuators of hard-core cartels, in that the prosecution must prove that the offending trade practice (such as price-fixing) has actually injured market competition. In such serious misdemeanor, proving purpose and intent ought to be enough to take cognizance.

Moreover, some cartels may in fact be in the better interest of the consumer, while hard-core cartels are really damaging to consumer interest. In other countries there is clear recognition of the various kinds of cartels that may exist in the market place, and the differential treatment meted out to the perpetuators. The Indian Bill under consideration, however, largely paints all conducts with the same brush. Hence, the prescribed fines may be too harsh a punishment for certain cases of abuse of dominance and vertical agreements, while may be less than required deterrent for hard-core cartels.

Another surprising omission in the Bill pointed out by consumer groups is the lack of protection for the whistleblower, or a leniency programme for the colluding firm turned approver. A stick and carrot policy of heavy fines and punishments coupled with the promise of amnesty for the whistleblower has proven effective in uncovering and prosecuting cartels in many countries including the US and in the European Union.

In a rare matching of views between consumer groups and business lobbies, both feel that the given criteria of eligibility and age-limit for membership of the Competition Commission could easily make it into another sinecure for retiring and retired judges and bureaucrats. This must not be allowed.

For further information please contact:

Tapas Das

Consumers would welcome competition law and policy at the international level, but not sure if the WTO is the best place

Doha, 12 November 2001

The proposed multilateral competition policy is about enabling cooperation at the international level, and not imposing an international competition law.

Frederic Jenny, chairman of the WTO working group on trade and competition law, made this point at a panel discussion on “Trade and Competition Policy” organised by Consumers International and CUTS Centre for International Trade, Economics & Environment here on the sidelines of the 4th WTO Ministerial Conference.

“The purpose of this meeting is to explore how we can move forward in ensuring that consumers are adequately protected from anti-competitive practices by business in a globalising economy,” said Pradeep S. Mehta, Secretary General of CUTS. “In 1995 only about 50 countries had a competition law, and due to the discussions at the WTO, which resulted in an increased profile, today over 100 countries have a competition law.”

Julian Edwards, Director General of Consumers International, in his welcome address noted that an effective competition policy and law enhances consumer welfare, and that CI members are actively engaged in pursuing the same. CI is currently involved in a multi-country research project which is examining issues under the agreements on agriculture and services, and on competition policy in 16 countries through member organisations. He said that the preliminary results of the research are very enlightening.

Jenny went on to say that no one is suggesting that there should be one uniform style of competition law. One size doesn’t fit all and countries need to design their own law according to their needs, culture and size of the economy. As regards the issue of a multilateral competition policy, he felt that due to its rules-based approach the WTO is the best place to situate it. UNCTAD cannot be a host because it doesn’t have any negotiating mandate or teeth to enforce any future agreement.

George Kiriazis of the European Commission was the third speaker, who kicked off discussions with the classic statement: “With increasing trade liberalization, competition abuses are also growing. The negative effects need to be checked through a good competition law.”

As regards the issue of a multilateral competition policy (MCP), the WTO already has references to competition policy in several agreements such as TRIMs, services and TRIPs so it cannot be considered to be a new issue. All these need to be given strength and we seek their convergence for the purpose of coherence, Kiriazis added.

“Under the proposed MCP, countries will be able to deal with cross border issues through cooperation mechanisms. If the Doha meeting doesn’t agree to having negotiations on an MCP, the EU will go ahead with bilateral and pluritaleral agreements. For example, the Cotonou Agreement with 73 ACP countries already has a provision on competition policy, and we will launch negotiations there”, asserted Kiriazis. “Technical assistance and capacity building will be an integral part of any MCP.”

“At any level, a country requires a competition law, as I have seen in my own country: Slovenia,” said Breda Kutin, head of the Slovene Consumers Association. “We are a transition economy with only 2mn population and also a candidate for membership of the EU. For that reason, Slovenian economy is already open and liberal, and we are already witnessing many restrictive business practices which cost consumers. Therefore, we need effective implementation of our competition law and closer cooperation with other countries.”

In a lively interactive session which followed the preliminary remarks, some participants questioned the necessity of having an international competition policy. Jenny and Mehta drew attention to the international cartels which have a deleterious effect on developing countries and their consumers, and can only be properly tackled through an MCP.

Quoting from the latest World Development Report, Jenny pointed out that developing countries have experienced the effects of cartels in vitamins, electrical equipment, graphite electrodes etc. However, no action has been taken.

Mehta added that in the case of the recent vitamins cartel, action was taken in the USA, Canada and Australia, as result of which over a billion dollar fine was levied on three European manufacturers and six Japanese manufacturers. Even a developing country like Brazil has taken action by getting cooperation from the US Justice Department, but India, where all three companies are operating, has not taken any action.

James Musonda of the COMESA (Common Market for Eastern and Southern Africa) Secretariat noted that cross border mergers and acquisitions are taking place across the region, potentially threatening competition. “The issue of cooperation between different competition authorities is becoming more necessary than ever before, and therefore too an MCP is desirable.”

In response to a question on the link between competition policy and corruption, Jenny pointed out the benefits of a transparent and predictable system on checking abuses. For example, in collusive tendering, where corruption is inherent, an action under competition law has often deterred corruption.

Participants as a whole recognised the potential benefits, but wondered whether WTO is the best place to locate it. It was pointed out that developing countries are not favour of an MCP at the WTO because of several problems there that are not directly related to the outline of the agreement: the inherent inequities in the system; an overloaded agenda and lack of capacity; and how can cooperation be ensured, when it will be voluntary.

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E-mail: cuts@cuts.org

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Afro-Asian NGO Coalition Condemns the Reintroduction of Labour Standards on the Ministerial Agenda

Doha, 12 November 2001.

The attempt to re-introduce core labour standards in the WTO negotiations was widely condemned by a number of NGOs--from Africa and Asia--who are in Doha for the 4^th ministerial conference of WTO.

In a statement released here today a coalition of NGOs from Africa and Asia stated: “Introduction of core labour standards in WTO agenda would once again sabotage the success of the ministerial, as it happened at Seattle. We are not surprised at all. The European Union and other supporting countries are foisting an agenda with the clear intention of annoying the poor countries.” It was issued by Sustainable Development Policy Institute, the Network for Consumer Protection and Noor of Pakistan, CUTS Centre for International Trade, Economics & Environment of India and Zambia, South Asia Watch on Trade, Economics & Environment of Nepal, Bangladesh Environmental Lawyers Association, Zambia Association for Research and Development, Uganda Consumer Protection Association, and Consumer Information Network, Kenya.

Poverty is the major problem in our countries. There are millions of families in Africa and Asia who are depending on the income that their children generate. In Bangladesh they tried to stop child labour and the result was that the working children turned into street beggars and prostitutes.

“Why do they think that one size can fit all? Their issues are entirely different from our issues. I appreciate that they take care of their citizens and try to improve the working conditions in their countries. In most of the cases their social security system is strong enough to protect the livelihood of a family if a person leave the job. However, in our case it is entirely opposite. It is not the matter of choosing the best work conditions. It is the matter of subsistence and livelihood,” said the representative of the Bangladesh Environmental Lawyers Association.

In a country like Nepal, India, or Pakistan where 40 to 50 percent people live below poverty line the main problem is finding a job. If the rich countries are really that sincere in improving the work conditions then their first priority should be to eradicate the poverty not by loans but by better terms of trade etc.

The proponents of the revised effort: EU, New Zealand, Canada etc are not sincere in improving the condition of labour. They just need another excuse to block the entry of developing countries into their markets. The idea of labour standards is too premature to be considered in the new round of issues. The WTO should give top priority to other main issues, such as implementation of the Uruguay Round commitments, better terms of trade, TRIPs and concerns of the poor.

The statement asserted that: “Core labour standards are very important. However, the WTO is not the right forum to deal with the issue. The Dispute Settlement Undertaking of the WTO would penalise countries deemed to operate below the agreed standards. This approach would make the situation worse, especially the least developed countries would suffer the more because the penalty from the WTO will be punitive whereas the International Labour Organisation will try to assist the country reach to an acceptable labour standards.”

Responding to the statement of ICFTU (International Confederation of Free Trade Unions) that introduction of core labour standards would put an end to the WTO’s isolationism from the other bodies of the United Nations, and most notably the ILO, the statement noted: “EU and Canada are hypocrites and have double standards. We are advocating that patenting of life forms under TRIPs should be made compatible with Convention of Biological Diversity. On the issue of patents of medicine we are demanding that the World Health Organisation should decide when the situation arises in a country to give her exemption from TRIPs. Similarly we are trying hard that FAO should decide when a country’s food security is under threat to give her exemptions from tariff reduction, but the developed countries do not pay any heed and now when their own interest is involved they are supporting the proposal of core labour standards. It is simply unethical and we reject it categorically.”

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Capacity Building of the Rich Countries is a Must, if the Poor have to Gain from the WTO

Doha, 11 November, 2001

Capacity building of consumers in the rich countries is essential to enable development of pragmatic standards, which will enable improved market access for producers in the poor countries.

This was one of the key recommendations, which emerged at a panel discussion on “Standards and Market Access” organized by the CUTS Centre for International Trade, Economics & Environment (CUTS-CITEE), India and Zambia; the Sustainable Development Policy Institute (SDPI), Pakistan and the South Asia Watch on Trade, Economics & Environment (SAWTEE) on the sidelines of the 4^th Ministerial Conference of the WTO.

It is often consumers in the rich world who demand quality, which is more stringent than what is normally available, without any substantial safety gains. They need to be educated about the problems which producers in the developing world face, so that the demands are practical and not utopian.

Standards are a tool to gain or block market access in the present international trading system but unfortunately their sole use seems to be to block exports from developing and the least developed countries to the rich world, was the common refrain from the delegates at the meeting.

The meeting was attended by trade officials and representatives of civil society from Uganda, Zambia, Kenya, Zimbabwe, Nigeria, Egypt, India, Pakistan, Nepal, Sri Lanka, Belgium, Austria, Switzerland, The Netherlands, USA, and United Kingdom. Representatives of Consumers International, Oxfam International and IFOAM were also participating.

“Market access is a vast issue and in fact the whole of the WTO is about better market access, but rules, such as Sanitary and Phyto-sanitary Measures (SPS) and Technical Barriers to Trade (TBT) prevent easy entry and are creating problems for the poor countries,” said Mr. Pradeep S. Mehta of CUTS in his opening remarks. “These rules need to be interpreted in a fair and equitable manner otherwise the benefits of trade liberalization will not accrue to the poor countries, thus creating a further backlash against the multilateral trading system.”

Furthermore, certification, testing, and accreditation are major trade barriers for Southern exports and the developed world imposes its standards on developing nations, which are often inappropriate to conditions in the developing world and pose a threat to traditional knowledge, indigenous practices and local customs.

“We ought to leave it up to the discretion of the consumers in the developed world what they want to consume and should not frighten them with false alarms or create a false sense of insecurity,” said Alexander Daniel of IFOAM.

The meeting also noted that the whole issue of standards is in fact being misused to play the dirty game of power politics and the powerful ones are exploiting the powerless nations of the South. Konrad von Moltke, Adviser to the WTO Director General, said that he was surprised to see how negotiators are arguing at the meeting without having any clear goals. “Coming from an environment background, I find a huge difference between trade negotiations and environmental negotiations, which have a clear purpose. Here, people are speaking with each other, without one understanding the other,” said Moltke. “This reflects even in the issue of standards and trade.”

It is simply not possible to have a universally accepted standard or set of standards as ONE SIZE CAN’T FIT ALL. “The developing world should have autonomy to decide whether their products are safe for consumption and the whole business of certification should be made much simpler and easier,” said Henry Kimera, an Ugandan delegate.

“It was wrong to state that the dispute around standards is only between the rich and poor. For example one of the biggest disputes—on the beef hormone case—is between the US and EU,” said Julian Edwards, Director General of Consumers International. “The dispute has its origin in the EU invoking the precautionary principle provision in the SPS Agreement, an issue which needs further study and development. This should not become another trade barrier for the South.”

“Developed nations should look at the ‘end product’ and not on the processing method if they are really sincere in implementing some standards. They ought to understand the culture of the developing world”, said Dr. Abid Suleri of SDPI in summarising the lively discussions. “Standards should not become an end but a means to achieve sustainable development.”

Instead of doing capacity building in the South, they should educate and do the capacity building of their own consumers (who are more sensible than the trade giants) that everything in South is not ‘unhygienic’ and ‘harmful’. This would lead to equitable development as well as to the broader goal of integrating developing countries under the globalisation era.

In proposing the vote of thanks, Dr. Ramesh Arya of SAWTEE stated that their network is engaged in a two-pronged programme: building capacity of testing and other institutions in South Asia, so that producers can cope with standards set in the north, and engaging in political discussions of this nature so that process of standards-setting is more fair, transparent and equitable.

For further information, please contact Ms. Purnima Purohit at CUTS, Jaipur

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CUTS' REPRESENTATIVE FOR DOHA,

CRITICISES GOVERNMENT OF INDIA FOR DISCRIMINATION

Jaipur, 6 November 2001

Consumer Unity & Trust Society (CUTS), a leading international NGO working on trade policy issues, will be represented by its Secretary General: Pradeep S Mehta at the WTO Ministerial Conference at Doha from 9-13 November.

In a press release issued today, CUTS said that Mehta will also be participating in the several NGO events to be organised on the sidelines of the main event, and will be writing for the Financial Express on a daily basis.

Commenting on the constitution of the official delegation, CUTS has severely criticized the Government of India for having ignored their repeated request of being nominated on the official delegation to Doha, and taken other non-officials such as business representatives from chambers of commerce.

"The government thinks that wisdom only resides in the bureaucracy, and that a little more can be found in business representatives, who are willing to kow tow with the government is strident position so that they can continue with their protectionist agendae", said the CUTS press release.

"As consumer representatives, CUTS is a lobbyist for the whole economy". Mehta serves on the Government of India's Advisory Committee on International Trade, and has been actively participating in its deliberations over the last several years. Not only that but Mehta has participated in all the WTO ministerial meetings ever since Marrakesh, and is considered an authority on international trade policy issues.

CUTS states that serving on the Government's trade advisory committee is a sufficient proof of its claim for being nominated on the official delegation. Besides this, it is increasingly a pattern where civil society representatives are taken on government delegations in both developed and developing countries to WTO ministerials.

Mehta is also an UNCTAD expert on trade, investment and competition policy issues and has been consulted widely by several governments including India. He also writes frequently for business papers in India and abroad.

The CUTS Centre for International Trade, Economics & Environment is the specialised body of CUTS dealing in WTO matters, whose advisory committee is chaired by the renowned economist: Professor Jagdish Bhagwati.

For the Government of India to have ignored the CUTS claim the second time is a poor reflection on the part of a country, which is the largest democracy in the world. At the earlier ministerial at Seattle, the government had done a similar act.

For further information please contact:

Bipul Chatterji/Pranav Kumar

CUTS, Jaipur

Em: cuts@cuts.org

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Is our Entire Democracy based on Corruption?

Jaipur, 27 October 2001

“Every Political Party wants to remove corruption from the other parties. But when we come to think of it, our entire democracy is based on corruption. Every political party has to collect cash and this is in the form of black money. Black money is the oxygen for corruption and vice-versa. The political corruption in turn leads to a vicious cycle of bureaucratic corruption, business corruption and criminalisation of politics”.

These are the words of wisdom of Shri N.Vittal, The Chief Vigilance Commissioner, Govt. of India, expressed in his preface for the research report on corruption in Hindi, published by CUTS, titled “Bhrashtachar-Ek Nazar”.

“Bhrashtachar-Ek Nazar” which is to be released on the 3^rd November, 2001, traces the evolution of corruption and corrupt practices in the country over periods of time and makes an analyses of what has bred corruption and what is required to stem corruption in the first place and then to completely eliminate it from the Society. It carries actual cases of reported corrupt practices and also documents as to how these cases of corrupt practices have affected the common man.

According to Srinivas Krishnaswamy, Assistant Director of CUTS, through this research report, CUTS has made an attempt to mobilise civil society to fight corruption, after all corruption cannot be fought by only agencies like the Central Vigilance Commission, Central Bureau of Investigation etc., but is possible only through a mass mobilisation.

While acknowledging and appreciating the efforts of CUTS, Shri N.Vittal said that out of 100 crore people of India, hardly 5 crore may be corrupt. Rest 95 crore non-corrupt people are not united or mobilsed”.

This is perhaps the reason as to why India, which has the potential to become an economic and military superpower has not realised its full potentials. It is corruption that is coming in the way of achieving this objective. Corruption is anti-national, anti-economic development and anti-poor.

Besides the release of the book, CUTS is organising a number of other programmes in order to observe “Vigilance Awareness Week” from 31^st October to 6^th November, 2001, announced by Vigilance Commission of India.

For further information, please contact

Srinivas Krishnaswamy/Garima Srivastava

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Strengthen consumers to fight anti-competitive abuses, cartels

Geneva, 13 October 2001

A strong consumer movement is essential for a healthy competition culture, according to delegates at an international symposium on competition policy and consumer interest in the global economy that took place in Geneva on October 12 and 13.

Representatives of consumer organisations worldwide, from rich, poor and poorest countries - from Bolivia and Malawi to Bangladesh and Zambia, from the United Kingdom and Canada to India and Malaysia, Poland and Slovenia - gathered with competition experts and trade negotiators at the event. Overall, more than 70 delegates from 35 countries were represented at the highly interactive meeting.

The meeting was organised by the Consumer Unity & Trust Society (CUTS), an India-based NGO, and supported by the Canada-based International Development Research Centre (IDRC). Experts from the WTO, UNCTAD, European Commission, Commonwealth Secretariat, the SAARC, and various country delegations deliberated with the participants on a variety of issues.

“Developing countries have been jumping out of the frying pan into the fire by privatising before putting in place independent regulatory regimes, which is bad for both consumers and investors,” said Pradeep S. Mehta, Secretary General of CUTS. “Consumers, especially the poor, suffer when prices go up while companies underinvest because of the unpredictable legal environment.”

The meeting noted that effective competition and consumer protection policies are essential to achieve fair markets and consumer welfare. Developing countries need assistance from developed countries to build capacity in this area and achieve their national social and economic objectives. Delegates cautioned that the assistance should bear in mind that the poor countries often learn from each other better than they can from rich countries.

Consumers all over the world, in both rich and poor countries, are robbed of billions of dollars each year by cartels and over-charging by dominant firms. Competition authorities of developing countries are making efforts to protect their consumers from these abuses. But they will need cooperation from agencies in rich countries, where the cartels are usually located and/or cooked up.

Experts also agreed that there is no ‘one-size-fits-all’ in competition policy. “An ideal law will fail when you try to put it into practices,” said Prof. Hassan Gemei, Vice President of the National Legal Alliance for Consumer Protection of Egypt, who is also advising the government on trade and competition policy.

It was widely agreed that each country should shape its competition law to meet national economic and social conditions. Small economies can take advantage of the strong competition regimes of their large neighbours or a regional arrangement to overcome their own capacity constraints as Nepal can benefit from the Indian regime, or Fiji from Australia and Trinidad & Tobago from Caricom.

At the international level, representatives of India and the EU engaged in a lively debate on whether competition should be on the WTO’s agenda. Developing countries have lost faith in the WTO system because of its inherent inequities the way in which rich countries have reneged on their commitments. Rajesh Agarwal, Counsellor at the Permament Mission of India pointed out that most developing countries do not have the information or the experience to define their needs and take part effectively in international negotiations on the issue.

On the other hand, a multilateral competition agreement may be necessary to combat cross-border competition abuses effectively. Technical assistance to build capabilities on competition issues from the US, EU and others is urgently needed if poor countries are to defend themselves against the powerful firms that are currently exploiting consumers.

For more information, please contact
Ms. Olivia Jensen/Mr. Nitya Nanda
E-mail: cuts@cuts.org & compsymp_cuts@rediffmail.com

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Development Concerns Must be Kept Upfront, said UK’s Minister

London, 10 October 2001

"To discuss the relationship between trade policy, the environment and labour standards, one has to start by looking at the link between trade and the reduction of poverty because this goes to the heart of the debate about globalisation," said Hilary Benn, Under Secretary of State, Department for International Development, UK.

He was delivering the keynote address at the inaugural session of a one-day Symposium titled ‘Linkages: How do we bridge the gap?’ jointly organised by Jaipur, India-based CUTS Centre for International Trade, Economics & Environment and London School of Economics and Political Science in London on 10th October 2001. More than 50 participants from governments, non-governmental organisations, academia and media participated in the discussion.

Benn pointed out that globalisation is helping in eradicating poverty all over the world but its negative aspects need to be looked into as well. Focussing on linkages between trade and labour standards and trade and environment, he said that while it is important to improve these standards, protectionism should not be allowed at any stage. "Trade sanctions approach should not be used to enforce labour and environmental standards in developing countries, and in any future trade negotiations at the World Trade Organisation (WTO) development concerns of developing countries should be discussed and addressed,"

"There are substantial inequities in the existing international trading system. Developed countries have long preached the virtues of openness, but practice lags behind the rhetoric. Despite progress over the last 50 years, developed countries maintain significant tariff and non-tariff barriers against the exports of developing countries. We all agree that there need be changes in the international trading system to better promote the interests of developing countries," he commented.

Welcoming the participants, Pradeep S. Mehta, Secretary General of Consumer Unity & Trust Society (CUTS) said that in the past many rich countries have made use of non-trade issues to deny market access to developing countries. They rightly see these issues as new forms of protectionism. Razeen Sally, Senior Lecturer of International Political Economy of the London School of Economics and Political Science pointed out that the WTO should not be allowed to become an institution governing domestic policy formulation on issues relating to labour standards and environmental standards.

Responding to Benn’s speech, Sanjay Baru, Editor of The Financial Express, New Delhi pointed out that these two linkages – trade and labour and trade and environment – were only the beginning of using trade policies to influence domestic policies. "Trade policies cannot and should not be used to deal with the negative impacts of globalisation on certain groups of people," he argued.

Discussions were held on issues of trade and labour standards, voluntary instruments and fair trade, multilateral environmental agreements and the WTO, and investment and the environment. Noted speakers were Simon James of the Trade Union Congress of UK, Amit Dasgupta of the SAARC Secretariat, Kathmandu, Stephen Pursey of the International Labour Organisation, Fiona Gooch of Traidcraft Exchange of UK, Ritu Kumar of Commonwealth Secretariat, London, Charles Arden-Clarke of the United Nations Environment Programme, Veena Jha of the United Nations Conference on Trade and Development, Oduor Ong’wen of EcoNews Africa, Nairobi.

Speaking at the closing session, Robert Madelin, Director General of Trade, European Commission, discussed EC’s agenda on trade and environment. He said that the European Union wants to promote environmental standards without allowing any scope for protectionism. "Developing and developed countries should come together and sort out the problems in this regard as soon as possible," he suggested.

The symposium was organised as a part of the CUTS-CITEE’s work programme on linkages between trade and non-trade concerns. A series of such events will be organised all over the world to address the issues of linkages between trade and non-trade concerns in an unbiased manner and try to find solutions to the problems by evolving a roadmap through consensus rather than creating roadblocks. The next event, in association with the Brookings Institution, will be held on 19th October 2001 in Washington DC, USA.

For more information, please contact

Mr. Sandeep Singh
E-mail: cuts@cuts.org & linkages_cuts@rediffmail.com

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CONTACT US

Consumer Unity & Trust Society

D–217, Bhaskar Marg, Bani Park,

Jaipur 302 016, India,

Ph: 91.141.2282821

Fax: 91.141.2282485

Email: cutsjpr@sancharnet.in

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