Ad Hoc Expert Group Meeting on
the Role of Competition Policy in fostering
Sustainable Growth and Development , Part II
Professor Eleanor Fox
New York University School of Law
UNCTAD 7 July 2014 Geneva
The views expressed are those of the author and do not necessarily reflect the views of UNCTAD
1. The new consensus on growth & development
– we need inclusive growth and development

Relevance of recent inequality literature
2. Looking at the trade agreement clauses
through the eyes of developing countries seeking
efficient sustainable growth and development
 i. liberalization
ii. global value chains
 iii. IP rights
 iv. competitive neutrality
3. Conclusion
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Myth: Arthur Okun, Equality and Efficiency,
The Big Trade-Off (1975)
For almost 40 years “everyone knew that doing
anything to reduce inequality would have at
least some negative impact on GDP.”
But “what everyone knew isn’t true. Taking
action to reduce extreme inequality … would
probably increase, not reduce, economic
growth.” Paul Krugman, March 10, 2014, NYT, re IMF reports
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Literature
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Picketty, Capitalism
Rodrik, The Globalization Paradox
Acemoglu/Robinson, Why Nations Fail
Sliglitz, The Price of Inequality
How this is relevant
If increasing aggregate economic wealth in the
world has been a goal of antitrust/free trade

Developing countries need a counter-perspective:
 Robust markets open to competition on the merits by
those without power

For an inclusive–growth view, we look at trade
agreements thru eyes of developing countries
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Trade liberalization helps make markets work

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Benefits to developing countries are not automatic – need
institutions, infrastructure, skills
Some liberalizations are more pro-development
than others

Martin Wolf – The Hypocrisy of the Rich
 The developed nations pick and chose what to liberalize
 Where developing countries need liberalization the most they
are not sure to get it
 Lifting cotton subsidies; market access for textiles

A special competition challenge:

Liberalization facilitates international cartels, mergers
that may be harmful to developing countries
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Enabling global value chains is liberalization
They are proliferating; they are in theory good for
sustainable inclusive development
 Economic opportunity for producers and consumers

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They are changing patterns of competition and
incentives -- effect on competition to be watched
Might they exploit and unreasonably exclude?

Competition law as an instrument to protect against
anticompetitive exclusion and monopsony
 (but not usually a violation)

South Africa – use of merger approval for safeguarding
public interest in building capacity of local suppliers
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IP protection is important for investment but ..
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Further protections are not necessarily important for
innovation and can be bad for development
Developed countries are driving hard bargains
for protections beyond TRIPS
 Are including in their bargaining agendas even more
protection than they get at home

Even in developed countries

It is widely recognized that the balance between
patent protection and competition too friendly to IP
 Competition enforcement limiting IP–FRAND, generics
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Principle:
No competitive advantage to government business
simply because it is state-owned
 Clauses are in some trade agreements, especially with
Australia; proposed in TPP

 Eg anticompetitive activities of sub-federal enterprises not
to be excluded from antitrust laws

Competitive neutrality is symbiotic with
competition; sympathetic to developing country
needs for growth and development
 and equity for the entrepreneur without political connections
 The worst restraints are often by government and its cronies,
who close markets by privilege and corruption
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1. The aim is INCLUSIVE growth and development
2. This means a consciousness that the new clauses
in trade agreements should look in the direction of
the non-powerful
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Benefits that disproportionately and consistently favor
the rich, the powerful, the enabled, the well-connected
need counter weight
For competition and trade policy what does this
mean?
Opening markets with fair and free access and a lean
against privilege and entrenchment
 In this light we can assess

 What are the best measures of liberalization, GVCs, IP
protection, and competitive neutrality
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