CHAIR'S SUMMARY REPORT

An APEC Workshop was held on competition policy and deregulation in Christchurch, New Zealand on 30 April and 1 May 1999. In addition, workshop delegates held a joint session with the Group on Services on 2 May 1999.

The purpose of the workshop was to further the dialogue within the APEC economies on the interrelationship between competition policy, deregulation and other regulatory policies related to trade and investment.

Session 1: Issues for Developing Economies

Professor David Elliott of PriceWaterhouseCoopers reported on the APEC Competition Law and Developing Economies Study. This was followed by comments by Malaysia from a developing economy perspective. Member economies commended the quality and wide ranging perspective of the study, and identified the following aspects of the study that could be usefully further developed:

Empirical material on implementation of competition law in developing economies;

Four APEC member economies chosen as examples were urged to supply additional material to PriceWaterhouseCoopers;

Analysis of the impact of mergers and size on efficiency;

Details of the historical experience of APEC member economies that had already implemented competition policies and laws, particularly developed economies. It was agreed that APEC developed economies would provide the material for inclusion in an Annex; and

Approaches to implementation.

It was agreed that discussion of concerns about potential risks and costs of competition laws and policies should be focussed on assisting developing economies to engage with domestic constituencies taking a historical perspective. An interest was expressed on the relationship between competition policy and distribution of income, particularly with reference to the experience of Poland.

There was also interest in more detail on implementation choices and the impact of these on the effectiveness of competition laws and policies.

The Workshop agreed the following process for completion of the study:

Member economies to provide final written comments to PriceWaterhouse- Coopers by 15 May 1999;

PriceWaterhouseCoopers to circulate a further draft to the contact group by 31 May 1999 for additional comments to competition policy/deregulation contacts;

A further draft will be circulated for comments by 30 June;

The final study to be submitted to CTI and SOM at their August 1999 meetings; and

The study to be published as a PriceWaterhouseCoopers product produced under contract, subject to agreement by member economies.

The Workshop welcomed presentations from Thailand and Peru, from developing economy perspectives, on their experiences in setting priorities for developing a competition framework. It was noted that the experience of these two economies indicates that technological developments pose particular challenges for regulatory agencies and that the process of regulatory reform is an ongoing one which needs to respond to continuous changes in markets themselves. A further factor to be borne in mind was that where a company operated in several different economies, a change in its situation in one those of those economies could have competition policy implications for the other economies in which it was active.

All economies welcomed the presentation by Dr Kerrin Vautier, on behalf of PECC, of the completed "PECC Principles for Guiding the Development of a Competition-Driven Policy Framework for APEC Economies", a copy of which is attached. There was agreement that this project represented a highly significant and durable contribution to APEC's work on competition policy and regulatory reform. The PECC principles provide the foundation on which to work towards building a consensus on a competition and regulatory reform driven framework for APEC.

The workshop agreed that additional work towards developing a set of high level APEC competition and regulatory principles, which would be non-binding and draw on the PECC principles, should be undertaken for endorsement in September 1999. The Chair explained that these principles would form part of the strengthening markets theme which has been promoted in APEC this year. These principles could provide a framework of policy development rather than a stringent set of rules. These APEC principles would provide scope for implementation in ways that take account of the diverse circumstances of APEC economies.

There was discussion as to how the PECC principles could be used by APEC with:

Some economies suggesting that while the PECC contributions was valuable, it was too detailed for adoption by APEC now, with further discussion of the details required. These economies argued that APEC should start with high level principles;

Other economies arguing that the value of the PECC principles lay in the way in which they integrated a set of core principles with guidance as to their application in practice, while drawing upon and recognising the diverse circumstances of APEC members; and

Some economies suggesting that APEC needed to adopt principles that were "action orientated" in nature so that economies could select from a range of specific actions in the area of competition policy and regulatory reform.

The workshop agreed that the best means of meeting all these concerns would be to carry out both short term and medium term work in this area. In the short term, a set of core principles accompanied by a list of action orientated undertakings could be developed by APEC in September 1999. The Workshop Chair tabled a draft and asked that comment be submitted by members economies by 15 June 1999, in order to arrive at a proposal that could be submitted to the Committee on Trade and Investment and Senior Officials Meetings in August 1999.

In the medium term, it was agreed that work could be undertaken which would allow member economies to reflect the progress achieved in implementing these principles in their IAPs. Some economies suggested this work could, in time, inform the further development of the APEC principles. It was agreed that the PECC principles would be an important reference document for this work. (The Workshop noted that this task was related to the outcome for the recent SME Ministerial Meeting where "Ministers agreed to identify, in consultation with SMEs, the major barriers and compliance costs to SMEs. Ministers agreed to report back directly on these issues next years for later voluntary inclusion in IAPs." The Policy Level Group on SMEs was instructed to develop a methodology for this exercise in conjunction with other APEC Committees and APEC Secretariat).

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The workshop welcomed presentations from the United States and Korea. The first paper discussed the links between trade and regulatory reform. It illustrated the United States steadily increasing and broadly based national commitment to competitive markets, and away from industry specific regulation. The second paper described the rationale for exemptions and exceptions to Korea's competition law and summarised those exemptions and exceptions.

Mr. Adrian Otten of the World Trade Organisation secretariat reported on the work within the WTO to study issues relating to the interaction between trade and competition policy, including anticompetitive practices. It was noted that the future role of the WTO in this area is still under discussion. Mr Otten highlighted the following possible options:

continuation of the educational process;

promotion of forms of co-operation on a voluntary basis;

conclusion of a legally binding agreement; and

the treatment of trade measures from a competition perspective.

The Chair noted the need to continue the information exchange and a constructive dialogue between the WTO and APEC on competition policy issues.

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Session IV: Reports from Member Economies on Projects

Report and Discussion on the APEC Competition Policy and Law Database

Chinese Taipei indicated that most member economies had now provided full or near full information for the database. The next issues were to ensure that information was regularly updated, and for the newest members (Peru, Russia and Viet Nam) to provide the 14 categories of information on the database. Also, it was agreed that Chinese Taipei would develop a proposal for a possible on-line forum for APEC members.

Report and Discussion on technical assistance

Japan reported on the APEC Partners for Progress Technical Assistance Programme 4-day training seminar held in Chiang Mai on 1 �� 4 March 1999 and outlined a proposed 3-day seminar for March 2000. Economies stressed the need for future seminars to adopt an approach based on case studies and focus groups. Korea also reported on its ongoing training courses for Asia-Pacific region economies.

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Joint session with the Group on Services

The Workshop held a joint session with the Group on Services on 2 May 1999. The groups heard from Arthur Grimes, of the Institute of Policy Studies, which explored the application of competition policy principles financial services. I outlined the background to APEC's work on Competition Policy and Deregulation, and the current work programme for Competition Policy and Deregulation to the Group on Services.