AfCFTA: Effective competition policy needed to safeguard domestic market – Dep. Trade Minister

Ghana won't be among largest gainers of AfCFTA - World Bank

AfCFTA

Deputy of Minister of Trade and Industry, Herbert Krapa, has reiterated the need for an effective competition policy to safeguard gains of African Continental Free Trade Area (AfCFTA) and directly fuel the country’s industrial transformation.

He noted that in order for the domestic market to harness the benefits of AfCFTA while ensuring that trade liberalization is not compromised by cross-border anticompetitive behavior, an effective competition protocol is relevant.

“As businesses seek to maximize their profits, various practices – some anti-competitive – appear: including cartels, vertical restraints, mergers and acquisitions, merger regulation and abuses of dominance. In the absence of safeguards regulating anti-competitive practices, businesses – domestic and foreign ones alike – can abuse their dominant market positions through price-fixing cartels, predatory behavior that eliminates local competition, and other market-sharing agreements.

“Ghana, like many others on the continent, needs to overcome the ever-evolving cross-border anti-competitive issues. We bear the brunt of international mergers and acquisitions, and the anti-competitive practices of foreign firms in our domestic markets; and there is also often a lack of capacity to address such challenges, and in many cases a lack of domestic competition laws, too,” he said

Mr. Krapa maintained that such anti-competitive practices reduce choices and increase prices, thereby denying consumers and excluding some producers from the benefits of trade liberalization.

He made these remarks at the University of Professional Studies, Accra (UPSA) third round-table discussion on the theme ‘The Relevance of AFCFTA’s Competition Protocols on Ghana’s Industrial Transformation’, where he emphasized that it is necessary to ensure consumer welfare is not deteriorated but rather ultimately protected and promoted.

He believes the national competition policy will also nurture and support new industries, especially Small and Medium-size Enterprises (SMEs).

“Establishing competition rules and competition-refereeing institutions to guard against anti-competitive conduct is an imperative prescription for the development of a free and thriving market economy. A National Competition policy is also needed to facilitate domestic implementation of the ECOWAS Supplementary Act on Community Competition Rules,” he added.

The country is currently developing a competition policy as well as laws to protect domestic investment.

AfCFTA and Competition Protocols

The deputy minister said the decision to also launch a Continental Competition Policy Chapter in the African Continental Free Trade Area provides the opportunity to leapfrog domestic gaps and oblige national competition authorities to collectively address extra-territorial effects of anti-competitive firm behavior.

According to him, the AfCFTA Competition Protocol that is currently under consideration is expected to enhance competition on the African market and improve market efficiency, inclusive growth and facilitate the transformation of African economies.

He said when used effectively, the policy will ensure fair prices for both producers and consumers, guarantee the highest product quality, and allow markets to employ more conducive incentives.

“It will strengthen the capacity to deal with anti-competitive practices which have international and cross-border implications; harmonize minimum standards of corporate conduct; provide a continental platform for consulting, cooperating and coordinating on competition policy and law.

“It will also enhance governance and transparency over industrial and competition policy in Africa; and manage the interrelationships of competition regimes and sectoral regulatory laws at the national, regional and continental levels,” he noted.

In view of this, he said, Africa requires functional national and regional competition, and consumer protection laws and policies anchored in continental rules and regulations and embodied in the AfCFTA Competition Policy Protocol.

“The full benefits of free trade can only be realized where regulatory trade barriers, once removed, are not replaced by artificial trade barriers erected by firms operating in the market,” he said.

The deputy minister also urged state parties to progressively eliminate tariff and non-tariff barriers to trade- in-goods; progressively liberalize trade-in-services; cooperate on all trade-related matters, including Customs and trade facilitation measures, investment, intellectual property rights and competition policy to effectively realize the success of AfCFTA.

AGI and Competition Policy

“For us as an association, we believe in competition. I think that when competition is well-structured, it will benefit consumers and the industry as a whole. It will support SMEs development and start-ups. So there’s a need to regulate and sanitize the system to ensure efficiency. As far we are concerned, we are for any measure that will support industrial development,” said Chief Executive Officer of the Association of Ghana Industries (AGI), Seth Twum-Akwaboah.

He added that competition is crucial to industrial development, but what the AGI frowns on is when people come together to create huge mergers which create monopolies and prevent others from entering the space.

Source: BFT

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