CCC contributes to the Second Working Group Meeting of UNCTAD/SELA on Trade and Competition in Lima, Peru, 18-19 June, 2012
PROCUREMENT, COMPETITION AND TRADE
Since the debt crisis in Greece and speculations about the financial positions of other countries in the European Union (EU) such as Spain and Portugal, fiscal consolidation has been a priority for many economies around the world.
Many countries are implementing austerity measures targeted at reducing their public expenditure, while at the same time trying to maximize public revenues. Consequently, these measures have had a dampening effect on economic growth, and created higher levels of unemployment in both developing and developed countries.
This Second Working Group Meeting of UNCTAD/SELA on Trade and Competition convenes at an opportune time when regional responses are needed, if the countries of Latin America and the Caribbean (LAC) are to withstand the current economic challenges. At this meeting, the CARICOM Competition Commission (Commission) in particular, welcomes the opportunity to share CARICOM’s experiences in public procurement, trade, and the promotion of competition. We hope to contribute to the development of a coordinated strategy that redounds to the benefit of LAC economies.
Public procurement in particular, is an area in which for many years competition in the CARICOM region has been hindered due to a lack of transparency among Member States. At the regional level, public procurement is estimated at between USD 8 billion and USD 11 billion annually. The large amount of money spent on public procurement therefore makes this market very attractive to regional and extra-regional companies. Nevertheless, many national companies in the Member States rely heavily on public procurement for their continued success. This has led to the emergence of public procurement practices throughout the region that are viewed as biased against regional and extra-regional suppliers, and anti-competitive in nature.
One of the key goals of the regional grouping is the creation of a CARICOM Single Market and Economy (CSME) among the Member States that fosters the development of single economic space for the trading of goods and services. A common policy on Procurement would of necessity deliver benefits of increased range of goods and services at reduced costs to Governments and consumers at lower costs.
Fortunately, CARICOM has recognised that through the introduction of competition in the procurement process, Member States can greater obtain high quality goods and services at the lowest prices. As such, measures to promote competition in the public procurement market are now seen as viable tools for Member States to reduce public expenditure. This is especially important during these times of fiscal constraint. In this regard, steps have been taken at the regional level to promote best practices in public procurement, as well as to establish a Community Regime for Public Procurement.
An agreed regional policy will deliver improved allocation of resources, greater transparency, reduced anticompetitive conduct, reduced costs to the public sector and consumers and improved competitiveness by businesses. These are all key outcomes from the effective enforcement of competition policy and law. A well implemented procurement policy has lasting social and economic impacts in small economies.
Beginning in 2003, a project was initiated with grant funding from Inter-American Development Bank (IDB) and Canadian International Development Agency (CIDA). The objective of this project was to establish an effective regime for public procurement that would: (a) facilitate the full implementation of the CSME; and (b) allow for the effective participation of trade negotiators on public procurement in external trade arrangements. As a result of the project, the CARICOM Framework Regional Integration Policy on Public Procurement (FRIP) in its Fourth Draft was adopted, and the development of a Protocol to amend the Revised Treaty of Chaguaramas, was authorised. Member States agreed to the formation of a Task Force that would be responsible for developing proposals on the implementation of the various dimensions of the framework policy.
The Commission notes that they are some key actions that need to be undertaken to complete the regional project. However, we eagerly await the finalisation of our Community Regime for public procurement, as this not only brings this market in line with the Community Competition Policy, but also serves as an important step to CARICOM becoming a single market. Until then, the Commission stands ready to uphold the Community Competition Policy and remain at the vanguard of all competition issues within the region.
In closing, the Commission would like the participants of the Second Working Group Meeting of UNCTAD/SELA to:
- Acknowledge the economic challenges of the countries of Latin America and the Caribbean, particularly during these periods of fiscal constraints;
- Applaud the organisers of the Second Working Group Meeting of UNCTAD/SELA for convening this meeting at such an important time when remedies are needed;
- Reaffirm the strategic importance of the cooperation between members of SELA, based on mutual respect, shared interests, as well as the continuous commitment to regional integration;
- Encourage the creation of strategic partnerships among the members of SELA and the development of coordinated responses to regional competition and trade issues; and
- Underscore the significance of establishing frameworks that support competition especially in the area of public procurement and trade;