Australia: Competition provisions in international trade agreements - the cart before the horse?

ACCC Chairman Rod Sims has advocated for competition law commitments to be included in Australia's international trade agreements. While this makes sense for trade agreements with developed nations, other more basic issues – such as eliminating tariffs and other trade barriers – should be at the forefront of Australia's negotiations with developing nations.

Australia is in the midst of negotiating an important free trade agreement with our ASEAN neighbours called the Regional Comprehensive Economic Partnership (RCEP).

Australia has a lot to gain from RCEP. It's designed to bring together ASEAN's ten members plus Australia, China, India, Japan, Korea and New Zealand, into a single trading bloc. Together, these countries account for around 70% of Australia's exports. 

At a recent meeting for the RCEP in Brisbane, Mr Sims suggested that, in addition to eliminating tariffs and quotas, RCEP would benefit from complementary provisions that impose competition law and policy commitments on RCEP trading partners, for example to deal with domestic anti-competitive practices.  

Mr Sims comments are uncontroversial.  It's widely recognised that improving market access for foreign entrants (through lower tariffs and quotas) can be stymied by the anti-competitive conduct of domestic competitors.

This conduct can include below-cost pricing by those in the local industry to kill off any new foreign entrants, as well as government subsidies enjoyed by domestic industry participants.

As a consequence, provisions relating to competition law and policy are common in FTAs.  For example, Australia's FTA with the US contains detailed obligations relating to the regulation of state and private monopolies, government-owned enterprises and cross-border consumer protection

Competition provisions should be a second-order issue

It is sensible to expect FTAs among first-world nations to include provisions requiring effective competition regulations to be applied in a transparent, consistent and fair manner, and to a standard that accords with existing practice.

However, it is less reasonable to insist on provisions of that kind in FTAs involving developing nations, such as in a regional bloc like ASEAN.

Although ASEAN's 2007 Economic Blueprint envisages that all member states will introduce national competition laws by 2015, progress has been patchy. 

While most of the member countries have introduced laws to address anti-competitive practices such as cartels and mergers to monopoly, many are still developing the regulatory infrastructure and expertise to effectively administer those regimes. 

A handful of the least-developed countries, including Burma/Myanmar and the Philippines, have no generic competition laws in place at all. 

In this context, Australia must be realistic. A push for more substantive competition provisions has the potential to slow negotiations and detract from the more important and fundamental issue of lowering direct barriers to trade.

In negotiating the RCEP, it is in Australia's interest to call for competition provisions that encourage and assist signatory nations to develop competition regimes without trying to mandate what those regimes should look like or how they are administered, at least not at this time.

A more constructive set of provisions would call for:

  • exchanges of experience regarding the promotion and enforcement of competition law and policy;
  • exchanges of information about competition law and policy;
  • exchange of officials for training purposes;
  • provision of assistance in 'capacity building' on competition law and enforcement; and
  • exchange of consultants and experts on competition law and policy.

A useful reference for RCEP would be the competition provisions in the existing ASEAN-Australia-New Zealand FTA (AANZFTA).

AANZFTA recognises the importance of competition and the curtailment of anti-competitive practices and establishes a broad framework for collaboration in relation to competition law, policy and enforcement, but it explicitly does not prescribe any anti-competitive measures that signatories must implement. 

Further, the chapter on competition in the AANZFTA is expressly excluded from the agreement's consultation and dispute resolution provisions, with the result that any disputes arising in connection with competition matters must be addressed through diplomatic negotiation. 

This reflects a concern that while signatories may agree that competition law and policy is important economically, and that co-operation on competition issues is to be encouraged, each should retain its sovereign right to "develop, set, administer and enforce its own competition laws and policies".

In negotiating the RCEP, there may be a temptation for Australia, whose domestic firms may have felt shut out by historically favourable treatment of state-owned enterprises in Asia, to push for a robust competition law regime.

But with the vast majority of our exports going to nations that form the RCEP bloc, Australia would be wise to focus on realistic goals and put trade barriers ahead of competition provisions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Most awarded firm and Australian deal of the year
Australasian Legal Business Awards
Employer of Choice for Women
Equal Opportunity for Women
in the Workplace (EOWA)

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions