RESTRICTEDWORLD TRADE
ORGANIZATIONWT/WGTCP/W/97
8 September 1998
(98-3400)
Working Group on the Interaction
between Trade and Competition PolicyOriginal:  Spanish
COMMUNICATION FROM BOLIVIA
The following communication, dated 28 July 1998, has been received from the Permanent
Mission of Bolivia with the request that it be circulated to Members.
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SITUATION IN BOLIVIA1. Law on the Sectoral Regulation System (SIRESE)
The purpose of establishing the Sectoral Regulation System is to regulate, monitor and
supervise the activities of State-owned enterprises including telecommunications, power,
hydrocarbons, transport, water and other sectors.  It ensures that their activities are being carried out
efficiently and contribute towards the development of the domestic economy and that their services
are accessible to all Bolivians.
One of the tasks of sectoral supervisory departments (Superintendencias Sectoriales) is to
foster competition and efficiency in the activities of sectors regulated under SIRESE and to
investigate any monopolistic, anti-competitive or discriminatory conduct in enterprises and firms in
these sectors, particularly when this is deemed to be against the public interest.
Enterprises and other firms engaged in activities in the aforementioned sectors must
harmonize their activities with principles that gu arantee free competition, eschewing or terminating
activities that prevent, restrict or distort free competition.  In addition, these enterprises may not take
any part in agreements, contracts, decisions and practices whose purpose and effect are to prevent,
restrict or distort free competition by fixing prices, setting limits, dividing up or controlling
production, markets, sources of supply or investments, as well as recourse to other similar anti-competitive practices.
Abusive practices and mergers are also prohibited if their effect is to establish, promote and
consolidate a dominant market position.
2. Market Arrangement Code (Código Ordenador del Mercado) project
Following the establishment of the market economy model in Bolivia, the legal framework
has to be adapted so as to promote, develop and carry out production and commercial activities,  with
State intervention where public legal assets are under threat.
The Deputy Minister for Industry and Domestic Trade has prepared the Market Arrangement
Code project to complement the rules and regulati ons that lay down the bases of the economic model
with a legal framework that defines in clear and precise regulatory instruments the rights, guarantees
and mechanisms to allow economic agents to carry out their activities.WT/WGTCP/W/97
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The current regulatory framework includes sections on competition, protection of consumers,
repression of unfair competition, protection of industrial property, and the National Institute for the
Protection of Consumers, Competition and Industria l Property (INPROCOP), thus covering all the
areas in which economic agents are active.
The structure of these regulations allows each of these closely-related issues to be harmonized
since the ultimate purpose is the same, namely the efficient operation of the market.
Protection of competition
Competition is the governing principle  in any market economy and in terms of personal
freedoms it should be the first and most important form for the exercise of the right to carry out trade,industry or any other lawful activity, as embodied in  Article 7 of the Bolivian Political Constitution.
Anti-competitive practices leave no room for market operators and prevent the entry of new
competitors, thus weakening the aforementioned constitutional right.
The objective of the Third Chapter of the Code is to protect competition as a public legal
asset.  The State, either ex officio or upon receipt of a complaint, is responsible for investigating any
practices that weaken or are damaging to competition on markets.
In accordance with the latest theories in this re spect, the regulations cover two aspects:  anti-
competitive action or agreements and abuse of a dominant market position.  The Regulation on anti-competitive conduct or agreements is flexible and permits exceptions to the scope of the rules.
A third aspect deals with control of economic concentrations before they occur.  A regime to
control such concentrations has been set up because their importance and impact could modify the
structure of the domestic market in a manner that is contrary to the public interest.
TRADE AND COMPETITION POLICY
The relationship between trade and competition policy increases in parallel with the increase
in multilateral disciplines.  Trade measures adopted by governments and restrictive international trade
practices by enterprises have become increasingly important.  In addition, the growing integration of
the global economy means that practices which restrict competition play a more significant role.
The way in which countries treat foreign enterprises established in their countries has given
an impetus to international cooperation to combat practices that may restrict competition.  It should be
noted that this is taking place in a context of prog ress towards an open market with free competition,
which is the ideal economic structure for promoting economic development, where legislation oncompetition is the preferred remedy for combating practices by enterprises that might upset the
operation of markets.
State trading enterprises enjoy exclusive or special rights and monopolies and the effects they
might have on market access for imports have long been a subject of concern in international traderelations.  This can be seen, for example, in Article XVII.3 of the GATT, which recognizes that these
enterprises might be operated so as to create serious obstacles to trade, and also in Article VIII of the
GATS.
It is important to note the following in this connection:  these aspects could lead to problems
in international trade because of the lack of competition on the domestic market;  they concern both
the scope of State measures and the conduct of enterprises;  it would be difficult to determine whether
the restrictive effects on international trade caused by the activities of these enterprises are due to
generally applicable government measures, the discretionary authority of the government, or
autonomous action by enterprises;  competition legislation deals with these issues;  the main approachWT/WGTCP/W/97
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adopted in the WTO Agreement is to regulate market action by such enterprises through the
imposition of obligations on Member States, irrespective of the factors determining such conduct;
lastly, some relevant rules in the WTO apply to private monopolies, as well as to monopolies resulting
from State action.
Furthermore, vertical limitations in markets may have negative effects on market access.
These trade concerns have arisen in situations in  which such limitations prevent foreign companies
from having access to the distribution networks controlled by national suppliers.  These practices
include exclusivity agreements, which prevent distributors from marketing the products of
competitors, conditional sales in which the purchase of a product of a particular make depends on
purchasing another product of the same make.
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