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.
For more information about the In the Zone conference: www.zone.uwa.edu.au