Competition or Co-operation in International Transport Policy - What Are the Choices?

Competition or Co-operation in International Transport Policy - What Are the Choices?


A Baanders, ECORYS / NEI Transport, NL



For an open economy like that of the Netherlands, transport policy is an important factor in the competitive strength of the companies that work in international markets. The policy fields, in which the NL Ministry of Transport is active, have many international aspects. Competition, i.e. strengthening the competitive force of Dutch companies involved in transport, has always been an important element of these policies. This is exemplified by the long standing ?main port strategy? which aims at promoting an important role for the port of Rotterdam and the airport of Schiphol in serving a much wider area than the Dutch national territory.

But the NL Ministry of Transport is increasingly faced with the question if co-operation with neighbouring countries is not a more effective policy than competing with them. Of course, in those domains where there are European or even world-wide agreements and directives, the choice for co-operation has already been made. But there are many fields of government intervention where a choice between competition and co-operation is still relevant, e.g. in the provision of infrastructure or the elaboration of regulations in a number of fields.

The NL Ministry of Transport has commissioned ECORYS / NEI and Instituut Clingendael to do a pilot study into the way in which a trade-off can be made between competition and co-operation policies in the relevant fields. Are advances in European integration and in global co-operation leading to an increase in the number of policy issues for which co-operation rather than competition should be the preferred choice?

The paper describes this study, which is of an exploratory nature. It is based on the theory of international trade (notably the theory of comparative advantages) and on the standardised method for cost-benefit analysis that is now mandatory for the evaluation of all large-scale transport infrastructure projects in the Netherlands (the so-called OEI method). Competition between countries is fundamentally different from competition between companies in a market, who try to increase their own market share at the expense of their competitors. The increase in the welfare of one country does not have to happen at the expense of the welfare of any other country. That is why the notions of policy competition and policy co-operation are used in the study, to make a distinction from market competition by companies.

Using these methods, a decision model was developed, which can be applied to any issue of international transport policy, in order to determine if the best course for this issue is policy competition or policy co-operation. The ?OEI? cost-benefit analysis system was developed earlier for infrastructure projects, but can also be applied to other policy issues. A full cost-benefit analysis can, of course, consume a lot of time and resources. The most appropriate way of using it in this context is as a quick scan. In this way, the domains for which the choice is relevant can be identified. Although the scope of the study did not allow for actual quick scans to be made, some examples of possible applications will be given in the paper. It is noteworthy that cost benefit analysis is an accepted instrument in the evaluation of infrastructure projects in many countries, but is rarely applied to international infrastructure.

The study also looked at the practical experience of international negotiations in policy co-operation. Two case studies were done, one dealing with cross-border high-speed rail infrastructure and the other with international aviation policy. The lessons form these studies will be presented in the paper.

The results of the study will be presented in the paper. These include a number of conclusions about the social trade-off between policy competition and policy co-operation, and about the practice of negotiations that are part of the co-operation. They also include a number of hypotheses about this trade-off for the most important policy issues that were identified in the study. The most important hypotheses are:

* Policy co-operation on the Belgian and Dutch sea ports may be more advantageous than the present policy competition.
* Policy co-operation with Germany on inland container terminals may be more advantageous than the present policy competition
* Policy co-operation may also be more advantageous in a number of cases where there are presently support measures for Dutch transport companies. In those cases, the ?prisoner?s dilemma? plays a role, meaning that a lack of mutual trust between countries makes co-operation impossible, even if this is clearly advantageous to the countries involved.

It is recommended that further case studies be done. Possible cases are the construction of the ?Betuwe? freight railway from Rotterdam to Germany, the reopening of the ?Iron Rhine? freight railway from Antwerp to Germany via Dutch territory, the deepening of the Westerschelde estuary on Dutch territory in order to improve access to the sea port of Antwerp, and the effects in the Netherlands of the regulation proposed by the European Commission regarding competition in public transport.


Association for European Transport