Reply from EU Trade Commissioner Pascal Lamy on HKDF’s Competition Policy for Hong Kong
Mr. Alan Ka-lun Lung
Thank you for your letter of 16 April 2004. I am pleased to see that the remarks I made regarding the role of competition law and policy during my recent visit have been picked up by organisations such as the Hong Kong Democratic Foundation.
As I already made clear during my stay in HKC, I strongly believe that in the globalised economy of today a purely sectoral approach to competition issues is likely to prove insufficient. While a sectoral approach may effectively address the issues in the specific sectors at hand, the absence of a generally applicable competition law means that a range of anti-competitive practices in other important sectors could remain, all at the cost of the consumer-at-large and competitors. In addition to this, as governmental barriers to trade and investment flows are gradually phased out, including through trade liberalisation and regulatory reform, we must all assume the collective responsibility of ensuring that those barriers are not replaced by private barriers to trade, including anti-competitive practices. Experience shows that trade liberalisation cannot be a substitute for sound competition laws and policies. Rather, the two should go hand in hand.
The last 10-15 years has seen a significant increase in the number of economies world-wide who have moved towards the adoption of a generally applicable competition law, including Singapore to take a more recent example.
As regards HKC more specifically, HKC remains a highly competitive economy, also according to organisations such as the IMF. But that is not to say that a generally applicable competition law could not further improve its competitiveness, including perhaps by ensuring competitive markets in some of the areas that you have mentioned in your attachment to your letter of April 16, 2004.
You will know that the EU and others have been advocating the negotiation of WTO agreements on the so-called Singapore Issues, including competition. For competition specifically, this could entail a framework agreement on competition in the WTO containing certain basic elements for inclusion in domestic competition laws and regulations (i.e. the principles of transparency, non-discrimination and procedural fairness, as well as a ban on hard core cartels such as the Vitamins Cartel which is believed to have resulted in massive overcharges for consumers, including in HKC).
However, at Cancun there was no agreement among Ministers on the Singapore Issues. Following Cancun we have offered to treat each Singapore issue on its merits, and have proposed to allow those who wished to pursue those issues which fell outside the Single Undertaking to do so. At present there seems to be growing support for negotiating trade facilitation inside the Single Undertaking. The EU would, of course, be ready to launch negotiations on this. As regards investment and competition, there is clearly no consensus to begin negotiations within the Single Undertaking, although they would remain in the WTO, on the backburner. This leaves the question of transparency in government procurement, where the picture is less clear, but the EU would be ready to join the consensus view on this.
(signed) Pascal Lamy
Cc : Mr. David Ting - Hong Kong Office