CROSS-BORDER NEGOTIATIONS ARE VITAL FOR COMPETITION IN THE GLOBAL MARKETPLACE

Cross-border negotiations are vital for competition in the global marketplace



Cross-border negotiations are vital for competition in the global marketplace

Negotiation is a very common phenomenon. It is a process that takes place in everyday life when two or more people have conflicting interests and they want to reach a common solution that benefits them both. In business life, it is widely used to form business relations in order to offer both parties some benefits. Face-to-face negotiations are crucial aspects of all inter-organisational relationships. They take place for example when agreeing on joint ventures, mergers and acquisitions, licensing and distribution agreements, and sales of products and services. The amount of foreign trade is increasing heavily and everyday more and more business negotiations take place between people from different countries and cultures. In order to have success in these kinds of negotiations, which can be vital for companies, there are several cultural factors that should be taken into account.

This paper will focus on certain cross-border competition concerns of developing countries and how this concern can be addressed at a multilateral level in the WTO having regard to paragraph 25 of the Doha Declaration. Since this is an issue paper only, it is not exhaustive of all issues to be addressed in this context and highlights selected issues only. This issue paper also discusses the means by which developing countries can constructively and proactively engage in negotiations at a multilateral level with the object of addressing their key competition concerns.

Whilst it is acknowledged that all forms of restrictive business practices (“RBPs”) which distort international trade should be addressed at a multilateral level it may be realistically over-ambitious for developing countries to deal with all forms of RBPs at once. An urgent cross-border competition concern for developing countries is hard-core cartels. It is argued that a prohibition on hard-core cartels requires greater priority than other RBP's(McCall, 2004).

Research has shown that cross-border activities involving mergers, cartels, abuses of dominance and other RBPs have the potential to, among other consequences distort trade to the advantage of the perpetrators, eliminate weaker domestic trading partners, stifle entrepreneurship and ultimately retard economic development. It is widely acknowledged that anti-competitive practices with a cross-border effect can adversely affect trade flows thereby undermining those benefits which would otherwise be delivered by trade liberalisation and open markets. In this regard developing countries are most vulnerable to the effects of such anti-competitive behaviour(Adler, 2009). This situation is compounded by the fact that developing countries, unlike their counterparts in the developed world, do not have the necessary competition policies and framework in place to deal with anti-competitive behaviour of trans-national companies (“TNCs”). National competition laws to the extent that they exist and are implemented in a very limited number of developing countries often lack the necessary extra-territorial reach to counter such anti-competitive practices at a global level.

Major cross-border competition concerns include the activities of “hard-core” cartels, various restrictive business practices (including abuse of dominance and ...