IN THE ZONE: SESSION SUMMARY
SESSION TEN
MARKET DISTORTIONS A KEY CHALLENGE IN ASIAN CENTURY
Countries needed to work together to address market-distorting behaviour that had the
potential to limit the competitiveness of companies in the services sector, the In the Zone
conference at The University of Western Australia was told today.
Mr Shanker A Singham, Partner, Squire Sanders, said that while there had been success in
lowering tariffs, anti-competitive market distortions were a significant problem in international
trade. This was particularly relevant for industries that depended on innovation and intellectual
property protection and a sound regulatory environment.
“The difficulties are immense for Australian services companies in Asia,” he said.
Mr Singham said anti-competitive market distortions by the public or private sectors distorted
the market in ways that damaged economic welfare, including limiting the ability to deliver
competition on the merits of sound organising principles.
“In the US alone, regulatory distortions account for between $1.5 – $2 trillion of the US
economy,” Mr Singham said. “The effects of this on the global economy are very significant.”
He said global distortions included regulations that limited the number and range of competitors
– for example, retail services bans or airline agreements with provisions to damage the ability of
foreign airlines to access markets.
Mr Singham said Australia had a strong competitive advantage in its regulatory frameworks and
pro-competitive approach.
He called for global leadership to tackle market distorting practices. Like-minded countries
should band together to explore new ways to limit their own distortions and respond to areas of
distortion by rewarding companies that embrace competition and levying offsetting penalties
where distortions are causing damage.
Mr Singham said measures in areas such as export control, immigration reform and investment
review processes could be implemented, giving countries better terms in exchange for reduction
in distortions.
“There is a role for competition agencies around the world that have not been traditionally
involved in the trade process, to frame pro-competitive regulations around the world,” he said.
Mr Singham said bilateral negotiations were increasingly hard to negotiate. “One of the
problems is that we have already negotiated the easy stuff, the low-hanging fruit,” he said. “We
are now left with the very difficult areas.
“It is very important that we don’t fall into the trap of simply trying to get a result. If you try to
get a result and don’t deal with the real values, what will happen is the companies who attempt
to access a particular market will find the market stacked against them. They will get very little
market share and may be severely damaged in the process.”
Mr Stephen Wood, Director General, the Department of State Development, said Western
Australia was ideally placed to capitalise on natural links with Asia.
“WA continues to be one of the largest jurisdictions in Australia for net migration, with over a
quarter of people coming from Asia,” he said. “Those direct links as well as business links are
things that we naturally build on. They provide valuable support in the progression of our
services trade.”
In the Zone is an intensive meeting of national and international leaders from the business,
government and academic sectors.
With the theme ‘The Geography of Global Prosperity’, the conference provides an opportunity
for discussion and debate about the increasingly complex global neighbourhood and key policy
questions facing Australia and the region.
The conference follows the success of the 2009 In the Zone Conference and the 2011 Business
Forum.