News From CUTS

Strengthen Consumers to Fight Anti-competitive Abuses, Cartels

13th October 2001, Geneva

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

 10th October 2001, London

Minister Prasad Delivers Valedictory Address to International Meeting in Goa

12^th September 2001, Goa, India

Boost Competition Policy to Crack International Cartels

10^th September, 2001 Goa, India 

Strengthen consumers to fight anti-competitive abuses, cartels

Geneva, 13th 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, 10th 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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Minister Prasad Delivers Valedictory Address to International Meeting in Goa

12th September 2001, Goa, India

The Minister of State for Consumer Affairs, Food & Public Distribution, V. Sreenivasa Prasad said that the Indian Government has accorded high priority to the programme on consumer protection and promotion of consumer welfare. Recalling that India was one of the first countries in the developing world to enact a comprehensive consumer protection legislation, namely the Consumer Protection Act of 1986, he expressed the view that in developing countries, the focus of consumer protection needs to be different from that of developed nations and the right to basic needs has to be given priority in view of the widespread poverty. He also emphasized the need for an integrated national consumer policy to guide all government departments to bring consumer perspective in their decision making process.

He was speaking on the occasion of the closing of the Regional meeting of the Asia-Pacific on New Dimensions of Consumer Protection in the Era of Globalisation held in Goa on 10^th & 11^th September. The meeting organized by the United Nations Conference on Trade and Development (UNCTAD), Consumers International (CI) and Consumer Unity & Trust Society (CUTS) was attended by representatives of consumer organizations from several countries of the region including India, Pakistan, Bangladesh, Nepal, Sri Lanka, China, Malaysia, Indonesia, Thailand, Vietnam, Mongolia, Australia and Fiji.

The meeting was the third in a series of regional events, coming after similar seminars in Latin America and Africa to provide inputs to the forthcoming Expert Meeting on Consumer Interests, Competitiveness, Competition and Development, which is to be held in Geneva on October 17-19, to emphasize UNCTAD’s work in the consumer protection field.

Speaking on the occasion, the Chief of the Competition and Consumer Policies branch of UNCTAD, Philippe Brusick observed that enhancing competition is not only about opening borders but primarily about increasing competitiveness by adopting appropriate competition policy and rules to ensure that competition is protected in the interest of both economic efficiency and consumer equity. To this effect, competition law enforcement should be complemented with appropriate consumer protection systems.

The Secretary General of CUTS, Pradeep S Mehta emphasized that an appropriate competition and regulatory mechanism is essential not only to protect consumer interest but also to enhance competitiveness and promote development. He also observed that a strong and vibrant consumer movement is the sine qua non to proper enforcement of the regulatory policies adopted by the Government.

The meeting agreed that properly implemented competition and consumer policies can make a key contribution to competitiveness and sustainable development. Before concluding, the meeting adopted a set of recommendations that came out as the “Goa Declaration”, pronounced by the Minister, Mr. Prasad on behalf of the participants.

 The “Goa Declaration” calls upon UNCTAD, at its forthcoming Geneva meeting on Consumer Interests, to increase the United Nations’ involvement in consumer protection, and in this respect, to extend the United Nations Guidelines on Consumer Protection taking into account recent developments in globalization and advances in information technology, and to strengthen UNCTAD’s work to monitor the Guidelines’ implementation and to launch further studies on the impact of recent developments on the consumers.  

For further details please contact: Mr. Nitya Nanda 

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Boost Competition Policy to Crack International Cartels

Goa, 10^th September, 2001

An international vitamin cartel operating in the world has ripped off consumers by millions of dollars in the developing world, but no competition authority is investigating the same. However competition authorities in the USA, Canada etc have already fined the carteling companies over a billion US dollars.

This fact came up at a meeting here on a project looking at the competition regimes in the developing countries held in Goa on 7-8 September.

Research partners presented the results of the first year of the 7-Up Project, a groundbreaking study comparing the competition regimes of India and six other developing countries of Asia and Africa: Pakistan, Sri Lanka, Zambia, Tanzania, Kenya and South Africa. The project is being   implemented by the Jaipur-based CUTS Centre for International Trade, Economics & Environment. The project is supported by the Department for International Development of the United Kingdom.

“What emerged as a very crucial recommendation, is that the consumer movements in developing countries must be strengthened if competition policy is to be implemented effectively” noted Mr Pradeep S Mehta, secretary general of CUTS. “Consumer awareness of competition issues is vital to create a vibrant national competition culture that will stimulate equitable growth”.

The Meeting launched the second phase of the project which will examine cross-border competition concerns such as international cartels and the effects of mega-mergers in developing country markets. The second phase is expected to generate valuable insight into developing country interests in relation to multilateral discussions on these issues.

International experts from various organisations such as the UNCTAD, WTO, OECD, World Bank, Consumers International, International Development Research Centre also participated as resource persons to take stock of the progress of the project and share their experiences about the subject.

“India would be the first country to support a multilateral competition arrangement that made the UNCTAD Competition Rules and Principles a binding agreement,” said Dr V S Seshadri, Joint Secretary, Ministry of Commerce at one of the sessions on the international scenario on competition policy.

However, he rejected the EU’s thrust for multilateral competition policy at the WTO, saying it would not be in the interest of developing countries. The discussion of new issues at the WTO could only come after progress was made on implementation issues.

He said the WTO Working Group on Trade and Competition Policy was overstepping its mandate by discussing multilateral competition policy rather than establishing whether there is a concrete relationship between trade and competition policy. Before negotiating multilateral competition policy at the WTO, he said that developing countries needed to have enough experience with competition policy at the domestic level to understand its pros and cons.

Frederic Jenny, Chairman of the WTO Working Group on Trade & Competition Policy, said that the Project would facilitate much needed communication between competition authorities and trade officials on competition abuses which affect trade and vice versa. Jenny emphasised the unique role of CUTS in bridging the gap between competition officials and other stakeholders.

Emphasising the main objective of UNCTAD of a more efficient and more equitable world economy through a competition-rules-based globalisation process, Philippe Brusick, Head of Competition and Consumer Policy, UNCTAD, commended the achievements and future role of the project in strengthening the competition culture in all the project countries.

The Meeting presented the results of the first year of the Project which examined and compared the domestic competition regimes of India, Pakistan, Sri Lanka, South Africa, Kenya, Zambia and Tanzania. The study focused on how the differences in economic structure and policies of these countries affect their competition policy requirements.

The project revealed the importance of a vibrant consumer movement for the meaningful enforcement of competition law. However, most of the project countries lack consumer awareness of these issues.

For further details please contact Ms Anjali Bansal

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