THE call to enact free trade laws and set up a free trade commission was thrown out of the Legislative Council yesterday by only one vote. Legislative Councillors voted 23 to 22 for the amendment moved by Mr Jimmy McGregor, which merely called on the Government to maintain its fair trade policy and take action, if necessary, to prevent unreasonable market dominance. The original motion, moved by Meeting Point member Mr Fred Li Wah-ming, urged the Government to pass free trade legislation and set up a fair trade commission to rectify any unreasonable market dominance, safeguard fair competition and protect consumer interests. While Mr Li's motion was supported mainly by his three Meeting Point colleagues and 13 members of the United Democrats of Hongkong, Mr McGregor's amendment won the backing of 13 Co-operative Resources Centre members and nine independents, including Miss Christine Loh Kung-wai and Mr Andrew Wong Wang-fat. Mr Li said free trade laws were needed to ensure the market was healthy and competitive. ''While it is impossible to charge any company for having unfair trade practices in Hongkong, some market phenomena seen in the local economy would suffice for investigations to be launched in countries which have fair trade legislation,'' he said. Mr Li said the Government had only adopted a piecemeal approach to tackle the problem. ''The Government has no single branch or department responsible for the formulation or execution of fair trade policy,'' he said. An executive body such as a fair trade commission was therefore needed to serve as the co-ordinator, he said. Mr McGregor, however, attacked Mr Li's proposal as ''potentially damaging'' and ''unnecessary and unwise''. Saying Hongkong was one of the most efficient, open and fair trading economies in the world, Mr McGregor said Mr Li's idea ''raises the spectre of bureaucratic interference in the marketplace to a degree which could substantially alter the way business is done in Hongkong now and in the future''. He said the Government already had a fabric of institutional checks and balances to ensure the public was properly protected and these arrangements had been working well. He said other countries needed fair trade institutions because their trade was not free nor fair but ours had always been free to all comers. Mr Ngai Shiu-kit said consumers always used the price level to ascertain the fairness of transactions, and therefore the fair trade commission might turn out to be a price control body. In addition, the territory had a million different kinds of transactions, it was questionable how the commission could have a full grasp of the various trades and operate efficiently, he said. It was also likely that some people would complain to the commission not because of unfair trade practices but because they failed to win certain deals. Mr Martin Barrow said nothing would scare off investors more if they thought Hongkong was to be subjected to the ''bureaucratic steeplechase and delays which exist in some other economies''. He said: ''What keeps the local market fair and competitive is not rules and regulations but the lack of them.'' The Secretary for Trade and Industry, Mr Brian Chau Tak-hay, said the Government was committed to the philosophy of free and fair markets, and the use of appropriate and pragmatic measures to rectify any unfair trade practices. He said the best way forward in the development of a competition policy was to ascertain what anti-competitive trade practices existed. Mr Chau said the Government was waiting for the results of the studies undertaken by the Consumer Council in five industries, including supermarkets, broadcasting and financial services. He added that, on the basis of the findings, the Government would, if necessary, revise existing policies and consider introducing legislative changes to implement them. Agreeing that free competition might not be obtainable or the best solution in some circumstances, he said: ''In such cases . . . we have achieved a reasonable balance between a justified monopolistic or oligopolistic situation on the one hand and the benefits of quality services and fair prices on the other.''