the extent to which they actually address environmental, economic, labor, social, quality and safety issues.<sup>6</sup> Sectoral initiatives have also been taken, for instance in extractive industries where abuses and corruption have long been observed. In agriculture, the World Bank created a Knowledge Exchange Platform for Responsible Agro-Investment<sup>7</sup> .

While the respect of these principles is mostly voluntary, both for business and states, some trade schemes have created incentives to adopt higher standards. This is the case, for example, of the European Generalized System of Preferences (GSP+) that conditions some tariff reductions to the compliance with a number of international conventions pertaining to labor rights, environment protection, etc.

# _(2) Competition_

Participation in GVCs has two aspects: on one hand, it secures demand for production and increases the security and predictability of income; on the other hand, one has to avoid captive relationships where the supplier is a price–taker and foregoes economic freedom. There is an important risk of being dependent upon a single buyer. A number of countries have enacted legislation to address unlawful vertical restraints such as resale price maintenance, exclusive dealing, tying, and certain customer or territorial restraints on the resale of goods (e.g., see US Sherman Act of 2006).

In general, competition law is a key element to prevent abuse of economic power. The World Bank, along with the OECD, and other organizations such as UNCTAD have developed frameworks for the design and implementation of competition law and policy (World Bank-OECD, 1998). GVCs raise new challenges for competition law due to the prevalence of self-regulation and voluntary codes of conduct.

Debates on land grabs and contract farming are related. With regard to land grabs, the World Bank works to improve land acquisition standards, the protection of land rights and land titling (see the Land Governance Assessment Framework). In particular, it recommends that governments map available land and identify what type of investment – such as sugar cane, biofuel or specialty crops – will boost exports or fit into their national economic development strategy. They should then build roads and other infrastructure to support the strategy, and seek bids from responsible investors who can bring agricultural technologies and more economic benefits to locals (Deininger and Byerlee, 2011). Contract farming points at the imbalance of bargaining power between global buyers and small local producers. A number of solutions were identified to minimize this risk, including better organization of local farmers (e.g., regional markets and stocks), better market information, improved negotiation skills, better contracts, etc. This also prevails in sectors other than agriculture.

# **PART 5 – CONCLUSION**

GVCs have changed the shape of international trade, increasing competition and interdependence among countries. While countries compete to attract jobs and investment, they increasingly depend on each other‘s demand, capital and production. With the dramatic growth of outsourcing practices, i.e. the practice of subcontracting non-core activities to independent suppliers, competition between companies has shifted from being horizontal, i.e. firms compete in the same sector for the same customer-base, to being vertical, i.e. firms in the same value chain compete to perform specific and specialized tasks.

Technological advances (in particular of information and communication technologies [ICTs]), political developments (including the integration of formerly communist or closed countries into the world economy, as well as multilateral and bilateral trade agreements), and business strategies (in

> 6 http://www.standardsmap.org/ 7 https://www.responsibleagroinvestment.org/

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