Domestic and international competition law experts on Saturday termed tough competition policy essential for fostering trade and attracting local and foreign investment. This was the consensus of the participants of a two-day-long international conference on 'The Role of Competition in Fostering Trade and Investment' held at the headquarters of the Competition Commission of Pakistan (CCP).
During the second day's session, Professor of Law at George Washington University William E Kovacic explained in detail the competition policy as a spur to trade and investment. "There is a positive correlation between competition policy, trade and investment. Where a country enacts Competition law and creates a competition agency, it sends a signal to all players, locally and international, that it is serious about enforcing competition policy," said Dr Joseph Wilson, a CCP Member.
The session on 'Nexus between competition regime and Trade and Investment' was also addressed by Professor William E Kovacic, a world renowned expert on anti-trust law. In his presentation on 'Competition Policy as a Spur to Trade and Investment', he said that states "must improve domestic competitiveness by improving trade policies to reassure investors. The aims of strengthening domestic competitiveness should be to reduce costs, raise productivity and encourage innovation".
Professor Kovacic said that competition "helps by reducing cost/raising quality of key inputs such as transport, telecommunications, energy, finance, professional services, and public procurement. For improve trade policy, there is a need to discourage protectionism and encourage regional integration". In his presentation, CCP Member Dr Joseph Wilson said that just as a competition agency had a positive obligation of advocacy with the government, all government ministries/departments "whose policies affect commercial activity and free trade must consult with competition agency before issuing such policy".
"Competition policy aims to promote rivalry among business and allocation of resources in which consumer welfare is maximised," Dr Wilson said. According to him, trade policy objectives "are to reduce protection, increase market access for exports and greater global integration. Trade and investment liberalisation is seen as contributing to economic efficiency, competitiveness and export-led growth".
He quoted Professor Kevin C Kenned, Professor of Law, Michigan State University-Detroit College of Law, who described the relationship between international trade, foreign direct investment and competition policies: "These three policies can be mutually reinforcing when pursued with the common goal of encouraging cross-border competition. For example, a liberal trade policy has as its goal the elimination or lowering of barriers to trade in goods, opening foreign markets to goods from abroad, and bringing competition to bear on domestic producers."
Dr Wilson said that in Pakistan, legislation has been made to promote competition. "PTA shall ensure that "fair competition in the telecommunication sector exists and is maintained (Sec. 6(e). Pemra shall ensure that open and fair competition is facilitated in the operation (Sec 23(2)). Ogra shall ensure that open and fair competition is facilitated in the operation (Sec 6(g)). CCP shall prevent...restricting or reducing of competition," he said citing pertinent sections of various laws.
He said that under the Telecom Deregulation Policy of 2003, the policy paved the way for bringing competition in fixed telephony. The objectives, among others, of the Mobile Cellular Policy of 2004 "are to increase choices for customers of cellular mobile services at competitive and affordable price and encourage private investment in the cellular mobile sector." He said that new telecom policies "have helped attracting foreign direct investment in Pakistan".
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