Trade Policy Note Final-rev08 - Development

small farmers find themselves left out due to their inability to meet the quality and
delivery standards imposed by the firms themselves. 153
Conditions for Liberalization
Developing countries are thus seeking trade-offs so as to obtain the benefits of the
presence of large distribution chains while protecting and stimulating the role of small
retail outlets as a source of employment for poor people, and ensuring access to
distribution chains for smal producers. This can be accomplished through techniques
such as limitations on the number of branches of foreign chains, economic needs
tests, (which can be inscribed in GATS commitments), and the support to SMEs
though training in management and distribution processes 154 and credit facilities.
Opening up the retail market without ensuring the necessary conditions for fair
competition has often not yielded the expected welfare gains. Such action may need
to be complemented by the setting up of vigorous and clear anti-trust legislation
aimed at regulating cartels, predatory behaviour, abuses of market power and
deceptive practices, and at promoting consumer welfare; policies aimed at supporting
retail diversity and entrepreneurship; the extension of unfair contract law to businessto-business
contracts; measures aimed at the proper implementation of trade marks
and copyright law; the setting up of franchise law, including mandatory disclosure of
information; and the development of soft law instruments, such as codes of good
practices, which have proved very effective in regulating buyers' anti-competitive
behaviour.
Box 27: Expansion of Supermarket Chains
In the food retail business, there has been an impressive expansion of supermarket chains
both domestic and foreign, with Latin America leading the way among developing regions.
Supermarkets' share rose from 20 percent of total national food retailing in 1990 to 50–60
percent of total turnover in 2002. The development of supermarket chains in Asia and Africa
has followed a pattern similar to that of Latin America, but with a later take-off. The share of
supermarket chains in grocery retail is currently around 33 percent in Indonesia, Malaysia and
Thailand and around 63 percent in the Republic of Korea, Taiwan (China) and the
Philippines. On the other hand, supermarket penetration in India stands at only 5 percent. The
most recent venue for supermarket take-off is Africa, especially Eastern and Southern Africa;
in South Africa, supermarket chains represents 55 per cent of total national groceries sales,
while in Nigeria they still account for only 5 percent.
153 See Chapter 4, UNDP Human Dev elopment Report 2005, op. cit..
154 In Colombia, for example, the modernization and liberalization of distribution services has had a
negative impact on medium- and small-sized companies, which have been displaced from the market.
The Government has, then, implemented a special programme - PYMECO - to support small retailers
through training in management and distribution processes.
154 Ibid., at 9
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