Domestic Trade and Consumer Affairs Minister Muhyiddin Mohd Yassin today said that a "one-size-fits-all" multilateral approach to competition policy and law for all countries is inappropriate since each country has also to consider their respective development goals.

Speaking at the Asian Conference o­n Post Doha World Trade Organisation (WTO) Competition Issues in Kuala Lumpur, the minister said that although Malaysia recognizes the benefits of a multilateral competition policy to prevent anti-competitive behaviour such as collusion, cartel price-fixing and abuse of market dominance, there is also a parallel need for developing country governments to enhance competitiveness of local firms in the face of international competition.

"Malaysia has long welcomed foreign direct investment especially in high-tech and capital intensive industries. However, as smaller players are not at a level playing field., there is fear that they will be jostled out of the race," he said in his keynote address.

"Such fears are real and not unfounded because transnational corporations (TNCs) are responsible for a large proportion of international trade."

The two-day conference was jointly organised by the United Nations Conference o­n Trade and Development (UNCTAD) and Consumers International Asia Pacific office to facilitate policy dialogue among Asian countries o­n competition policy and law issues.

Threat of TNCs

To illustrate the threat posed by TNCs to smaller local enterprises in developing countries, Muhyiddin referred to recent statistics from the 2002 World Bank database which showed that TNCs comprise 54 of the largest economic entities in the world and whose revenue sometimes exceed the gross domestic product of some developing countries.

"There is concern that such (economic power and) influence helps TNCs ensure that the world trade system works to their benefit and provides them with opportunities to engage in anti-competitive practices," he said.

Furthermore, the minister added that the lack of democratic control over TNCs is a problem since anti-competitive practices will inevitably affect consumers.

The minister said that while globalisation has opened up new opportunities, it has also led to the internationalisation of cartels and monopolies which threaten to negate the benefits from opening up of markets.

"For the liberalisation of the international trade and investment to be beneficial to developing countries, the international community, led by the powerful, should put in place a set of measures that control cross border anti-competitive practices which, by and large, originate from the north.

"Therefore, there needs to be special and differential treatment for developing countries and their emerging industries," he said.

Muhyiddin said Malaysia's proposal for a competition policy would include several key development considerations such as creation of special or differential treatment for specific sectors and ensuring a level playing field between national and international business players.

Other proposals are the enhancing of economic efficiency and competitiveness of domestic industries and market players.

Development plan necessary

On the upcoming WTO Ministerial Meeting to be held in Cancun, Mexico, in September this year, Muhyiddin said that much remains to be discussed at regional and international levels, particularly in relation to the proposals o­n competition law and policy.

"Malaysia, as a developing country which has to put in place a development plan that relies o­n international trade and investment as well as domestic trade, is concerned about the detrimental effects of monopolisation and abuse of dominance o­n its local industries, export opportunities and consumer welfare," he stressed.

Aside from that, the minister also urged for more discussions o­n other forms of international cooperation in the enforcement of competition laws, particularly in areas involving capacity building and provision of technical assistance to developing countries.

"There has to be an exchange of relevant information laws for effective enforcement of national competition laws, particularly against abuse of dominance and collusive conduct."

Asian countries not ready

Meanwhile, Consumers International's Regional Director Dr S Sothi Rachagan echoed the minister's reservations o­n the "one-size-fits-all" concept of competition policy and law for the vastly different developing countries in the region.

"The concept will not work in a region that is so diverse and at different stages of development. Therefore, there is a need to identify critical areas that must be addressed in a competition policy or law and factors to be considered in adapting these to the local context.

"The current efforts to have a multilateral agreement o­n competition within the WTO pose grave consequences for developing countries," he said in a press release.

Questioned later, Sothi explained that delegates at the Cancun WTO Ministerial Meeting will decide whether or not to pursue a multilateral competition framework.

"From the conference, it seems that a lot of (Asian countries) have said that they are not ready to start negotiations in September," he said.

Developed and developing dichotomy

Considerations over whether a multilateral competition policy or law is needed to govern international trade first arose at the 1996 WTO Ministerial Meeting in Singapore.

However, there has since been considerable discord between developed nations o­n o­ne side and developing nations o­n the other, in view of their different goals and interests.

While representatives of developed nations have called for a multilateral competitive policy and law which stresses o­n transparency, non-discrimination and provisions against hardcore cartels, developing countries have argued for individual policies taking into account their unique development needs.

Among others, the latter included special and preferential treatment for certain key sectors or industries, and the right to nurture certain key industries so as to be able to compete against dominant TNCs.