Best Practices Guidelines for IAPs: Discussion Paper

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1. Overview:
   

With the presentation of the Manila Action Plan for APEC (MAPA) at Subic, APEC Leaders noted that they were "committed to build on MAPA, and to improve our individual action plans, including their comparability and comprehensiveness." Likewise, Ministers in their November 1996 Manila Joint Statement, "confirmed that member economies will implement their IAPs starting January 1997 and that APEC will review implementation of these IAPs and make further improvements in accordance with the OAA."

Trade Ministers built on these commitments in Montreal, when they "agreed to commit to the importance of taking Individual Action Plans forward progressively and continuously, with effective means to assess and review them over time."

Accordingly, this discussion paper is meant to contribute to work of APEC members in improving their IAPs, and in assessing the IAPs of other APEC members, by suggesting "best practices" in each of the 14 substantive OAA issue areas. APEC members have on numerous occasions since Subic reaffirmed the importance of IAP improvement. In some OAA areas (e.g., tariffs) it appears clear what should constitute substantive IAP improvement. In order areas, where APEC work is less developed, it is less clear. It should thus be helpful to APEC members to have a set of best practices in each of the 14 issue areas as reference points as they engage in the process of enhancing their IAPs.

Having reference to best practices would also serve as a useful benchmark for economies as they review and assess the IAPs of others. Like many member economies, the United States has begun the process of IAP assessment. In doing so, it has found it useful to have a uniform set of benchmarks against which to reference the information contained in the IAPs. It is sharing its current working set of benchmarks in order to contribute to IAP enhancement, to assist others in IAP assessment, and as a gesture of transparency of its own assessment process.

2. Suggested Approach
   

The following framework follows the 14 areas outlined in the OAA, followed by suggested "best practices" in each area. Substantively, the best practices build on OAA guidelines. The suggestions are not meant to be definitive or all inclusive (and indeed are "working benchmarks" for the United States), but rather to begin a dialogue, and to contribute to the process of IAP improvement and assessment by APEC members. The United States is using this set of best practices guidelines on a working basis, but believes that they can be improved, and that the CTI and its sub-groups and/or convenor areas would benefit from a set of common guidelines. Work on developing a common list of best practices has already begun in several CTI fora, and should be extended to all OAA areas. We propose that such work become a standard and important part of the collective actions of every CTI sub-group or convenor area, with completion of a common set of benchmarks scheduled at the earliest possible time.

3. Proposed Guidelines for Discussion

1. Tariffs

• Progressive liberalization of tariffs, leading to zero tariffs.

2. Non-Tariff Measures

• Immediate elimination of any WTO illegal measures (e.g., those incompatible with current WTO obligations)

• Full compliance with WTO non-tariff measure agreements, including transparency in notification procedures and prior review in areas such as standards.

• Reduction of NTMs to the maximum extent possible to minimize possible distortion to trade (e.g., discretionary licensing regulations)

3. Services

With respect to all modes of services delivery (cross-border, consumption abroad, commercial presence, and temporary entry of natural persons) and all services sectors:

• progressively reduce and ultimately eliminate substantially all restrictions on market access for trade in services,

• progressively reduce and ultimately eliminate substantially all discrimination between domestic and foreign services suppliers,

• progressively reduce and ultimately eliminate substantially all discrimination among foreign service suppliers,

• ensure that regulatory measures are applied in a reasonable, objective, and impartial manner, and

• ensure that all relevant measures affecting trade and investment in services are published or otherwise made public.

4. Investment

• Non-discrimination: The authorities should provide other APEC member investors and investments with the better of national or MEN treatment, including application to the making of investments, with only limited exceptions;

• Performance requirements: The authorities should not impose performance requirements (e.g., local content, domestic sales restrictions, and export commitments) on other APEC member investors and investments;

• Transfers: APEC member foreign investors should be free to make any investment-related transfer, (e.g., profits, capital, royalties and fees);

• Expropriation: The authorities should abide by international law standards for expropriation, including the requirement that compensation in case of a justifiable expropriation must be prompt, adequate and effective;

• Dispute Settlement: APEC member investors and authorities should have access to strong international dispute settlement procedures in cases of investment disputes with other APEC members.

• Key Personnel: The authorities should not restrict other APEC member investors' ability to employ and use top managers and technical support staff with regard to nationality.

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5. Standards and Conformance

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Standards, Technical Regulations, and Conformity Assessment Procedures

• Maximum feasible prevention of unnecessary obstacles to trade resulting from the development and application of standards, technical regulations and conformity assessment procedures.

• Maximum feasible prevention of arbitrary or unjustifiable discrimination or disguised restrictions to trade resulting from the development and application of sanitary and phytosanitary measures.

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Technical Infrastructure Development

• Develop and implement a functioning network of competent nationally recognized bodies (either private or public sector) in basic metrology, legal metrology, calibration, testing and certification, with accreditation processes for ensuring and/or recognizing competence for these bodies by 2010.

• Develop and implement a system of agreed-upon standards and procedures for each of the key infrastructural elements �� metrology, weights and measures, calibration, laboratory accreditation, product certification and quality system registration, deriving, to the maximum extent possible, from international guides and procedures.

• Develop and implement a functioning network of quality system registrars (private sector) by 2005.

• Acceptance between APEC members of ISO-9000 registered firms.

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Mutual Recognition of Conformity Assessment

• Complete functioning mutual recognition agreements in key regulatory sectors (e.g., telecommunications, seafood, food products, electrical and electronic products, environmental management) supported by complementary agreements in the private sector (e.g., quality systems).

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Development and Use of International Standards

• Align, to the maximum possible extent, technical regulations with relevant and appropriate international standards, recommendations and guides.

• Develop a common set of chemical regulatory principles.

• Adopt harmonized standards and regulations on medical devices patterned after ISO-9000.

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6. Customs Procedures

In accordance with the five Guiding Principles (FACTS: Facilitation, Accountability, Consistency, Transparency, and Simplification), full implementation of the following actions:

• Tariff Nomenclature Harmonization

• Public Availability of Information

• Simplification and Harmonization of Customs Procedures on the basis of the Kyoto Convention

• Computerization of customs procedures by adopting the UN/EDIFACT standard by 1999.

• Adoption and implementation of the WTO Customs Valuation Agreement by 2000, while encouraging further acceleration through technical assistance.

• Adoption and implementation of the Border Control elements of the TRIPs agreement by 2000, while encouraging further acceleration through technical assistance.

• The introduction of clear appeal provisions.

• The introduction of an advance tariff classification ruling system.

• The provision of facilities for temporary importation.

• New areas: risk management and common data elements.

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7. Intellectual Property Rights

• Implement the standards of protection established by the TRIPs agreement by the shortest possible time.

• Further improve intellectual property systems, including through improvements to systems for the administration of intellectual property rights, enforcement systems, and the grant of rights to take into account new technologies.

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8. Competition Policy

• Protection of competition �� existence of specific laws and/or regulations. Economies should adopt specific competition laws, with dedicated enforcement agencies and investigatory powers, to ensure the proper focus on maintenance of competitive markets. Specific laws will also further transparency, another OAA goal. Laws, such as the U.S. Sherman Act, can be very simple (although this may be a problem in civil code nations) and enforcement agencies can be relatively small.

• Objectives of national competition laws. Competition laws should have the explicit objective of furthering consumer welfare, innovation, productive and allocative efficiency, and open markets. Other goals such as preservation of small business and consumer protection should be seen as possible benefits of robust competition, but better pursued, to the extent appropriate, in legislation specifically directed to those end and not diluting the laws protecting the competitive process.

• Competition Advocacy role of competition agencies. Competition agencies should play a critical role within national governments in advocating pro-competitive outcomes before other agencies and branches of government, and in furthering a culture of competition throughout domestic economies.

• Scope of application of competition law and exceptions thereto. Exemptions from the coverage of competition law should be minimized, and exempt sectors or practices should not become excuses for harmful anticompetitive conduct or erection of market access barriers. If regulation displaces competition laws, pro-competitive and non-discriminatory regulatory principles (see guidelines for deregulation) must be in place. Coverage of state enterprises and monopolies needs to be addressed to ensure that other trade liberalization measures are not impaired by their conduct.

• General prohibitions �� hard-core cartels and bid-rigging. Certain types of hard-core anticompetitive conduct (price-fixing or market-allocating cartels or bid-rigging) should be universally condemned in all APEC economies as they have no redeeming pro-competitive or efficiency-enhancing benefits.

• Conduct subject to the rule of reason. Provisions relating to this category of conduct, which covers most vertical practices, joint ventures, and unilateral private firm conduct, need to be firmly grounded in economic analysis so as to ensure that rigid prohibitions on practices such as exclusive territorial distribution rights or intellectual property licenses are not automatically imposed. Although these practices can raise market access or entry barriers, there is also a danger that they will be prohibited outright and not judged by their actual effect on competition. Economies also need provisions related to the review of mergers and concentrations, so as to prevent anticompetitive outcomes.

• Enforcement agencies. Enforcement bodies need to be independent of political pressures, and to have adequate resources.

• Investigatory powers of enforcement agencies. Enforcement bodies need to have adequate investigatory powers �� the right to obtain necessary evidence by compulsory process. Competition agencies must also be able to provide adequate guarantees for the protection of confidential business information to ensure the legitimacy of the system. At some point there must be an independent review, most likely by the judiciary, of the enforcement agency's decisions. Transparency of decision-making is critical as well.

• Administrative and/or legal sanctions. Any system of remedies must have adequate remedial and deterrent effect. The precise mixture of injunctive powers, criminal sanctions, civil fines, or private damage suits may vary; the important thing is the overall impact on business conduct. Enforcement agencies, or courts, must also have adequate powers to ensure that necessary structural relief is available.

• Non-discrimination and national treatment. All economies must ensure non-discrimination in the application of their competition laws, and a right for foreign complainants to initiate proceedings before enforcement agencies or to have recourse to domestic courts.

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9. Government Procurement

• Transparency

• The APEC member should publish all laws, regulations and procedures regarding government procurement.

• Government procurement opportunities should be published in an official journal or other readily available publications.

• The APEC member should make available on the APEC Internet home page a thorough description of its procurement regime. The APEC member should list or make procurement opportunities accessible on that home page.

• Tender documentation should clearly enumerate the specific criteria for contract awards.

• The authorities should award contracts strictly on the basis of those specified evaluation criteria.

• The authorities should publicize and follow reasonable deadlines for submitting bids (i.e., sufficient to provide suppliers with meaningful opportunity to submit responsive bids).

• Openness

• The APEC member should establish and maintain a predictable bidding environment where competitive procurement procedures are followed.

• Contracts' technical specifications should be based on performance rather than design characteristics.

• The APEC member should accede to the WTO Government Procurement Agreement.

• Due Process

• The APEC member should make available procedures allowing suppliers to challenge procurement decisions to an independent reviewing authority.

• The APEC member should provide foreign suppliers with equal access to such bid-challenge procedures.

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10. Deregulation

• Freedom from regulation in principle, with regulation the exception. Regulations should be reviewed from the point of view of whether they are broader or more burdensome that necessary to achieve legitimate objectives. Regulations that remain in force should be closely and directly linked to accepted public policy interests such as protection of health, safety, or the environment; protection of national security; or protection of consumers against deception. Regulations not meeting these limited criteria should be revised or eliminated.

• Promotion of market mechanism. The market mechanism, supplemented by an active and effective competition enforcement law and policy, should be relied upon to determine the best and most efficient allocation of resources and the success or failure of individual firms. Private practices that unfairly restrict competition should not be allowed to replace or supplement official regulation, or to prevent deregulation from realizing expected objectives and benefits. Resources and personnel dedicated to competition policy enforcement should be adequate in light of the size and complexity of the economy and should reflect the increased importance of competition policy enforcement in a deregulated environment.

• Broad review. All regulations, whether formal or informal, or whether characterized as social or economic in nature, should be reviewed. This review should be conducted as a routine and integral part of efforts to open economies to competition.

• Enhanced transparency and accountability. Regulations should be based on the principles of transparency and non-discrimination, and regulatory officials should be clearly accountable for their actions. All formal and informal regulations should be in writing and published in publicly-available sources. The specific government entities and officials responsible for the implementation of such regulations should always be clearly identified. Proposed changes to new and existing regulations should be disclosed in advance, with ample opportunity provided for public comment.

Formal procedures should govern the solicitation of advice through study groups, advisory committees, or other groups by high-level as well as working level officials; these procedures also should ensure that meetings with advisory groups are open to the public, that the proceedings of meetings are fully documented, and that documents prepared by such groups are publicly available. Formal procedures also should guarantee public access to all government information, subject only to specific and narrow exceptions for purposes such as to protect national security. Effective appeals procedures should be in place to ensure that interested parties have the ability to challenge improper government decisions or actions.

• Prohibition of delegation of government authority. Delegation of actual or de facto regulatory authority to quasi �� or non-governmental entities, including non-profit organizations and industry associations, should be strictly prohibited unless based on formal and transparent delegation of authority.

• Non-burdensome local regulation. The national government should encourage local governments not to adopt regulations that contravene the efforts made at the national level to deregulate.

• Inclusion of sunset provisions. Sunset provisions, which specify a fixed lifetime for a particular regulation, should be included in regulations wherever appropriate.

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11. Rules of Origin

• Full implementation of the procedural obligations of the WTO agreement on Rules of Origin, including:

• clearly defining the requirements that importers and exporters must meet under any administrative determinations of general application;

• not using non-preferential rules to pursue trade policy objectives, and ensuring that the rules do not in themselves distort trade flows;

• not discriminating in the application of non-preferential rules, either between members or by applying rules to imported or exported goods more stringent than those applied to determine whether a good is domestic;

• publishing all rules of origin, and basing them on a positive standard;

• issuing assessments of origin to particular goods as soon as possible after they are requested, and in no event later than 150 days after a complete request has been submitted;

• establishing an independent avenue of judicial, arbitral, or administrative appeal for origin determinations;

• not applying changes in rules of origin retroactively;

• not disclosing, without specific permission of the supplying firms or foreign governments, any confidential business information they furnish in connection with a ROO determination.

• Full compliance with internationally harmonized rules of origin to be adopted in international fora, and active participation in the development of harmonized rules in the WTO/WCO.

• Ensuring that all rules of origin are prepared and applied in an impartial, transparent and neutral manner.

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12. Dispute Mediation

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Private-Private

• Ensure that arbitration and other means of alternative dispute resolution are fully available for resolving international commercial disputes between private parties from APEC economies in a fair, effective and expeditious manner. This would include:

• providing for the mutual and effective enforcement of arbitration agreements and the recognition and enforcement of arbitral awards:

• Establish a special mechanism for resolution of small-scale international disputes between private parties from APEC economies in an inexpensive and expeditious manner.

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Private-State

• Provide adequate measures to make all laws, regulations, administrative guidelines and policies pertaining to trade and investment publicly available in a prompt, transparent and readily accessible manner;

• Develop and maintain appropriate and independent review or appeal procedures to expedite review and, where warranted, correction of administrative actions regarding trade and investment.

• Accede to the ICSID Convention and the New York Convention.

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State-State

• Support a strengthened and more transparent WTO dispute settlement mechanism.

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13. Mobility of Business People

• The regulations governing issuance and denial of visas and related documentary requirements for temporary entry and temporary stay should be readily available to the public.

• The government should maintain an active program to eliminate unnecessary documentary requirements; to streamline entry application and adjudication procedures; and to facilitate business travel, while permitting the government to meet security concerns.

• When business travelers require a visa for entry, the government should allow for rapid adjudication of applications and for rapid delivery of approved multiple-entry visas.

• Travelers should be able apply for extensions and renewals of legal permission to remain in the territory of the APEC member and/or temporary entry visas without leaving the territory of the APEC member.

• Applications to accept a legitimate offer of temporary employment should be adjudicated in a timely manner, and travel and temporary work permits or visas should be made immediately available to approved applicants. Applications for renewal of temporary work permits or visas should be adjudicated in a timely manner, and approved renewals awarded without the applicant's leaving the territory of the APEC member.

• Administrative appeals and remedies should be available in case where application for entry into the territory of an APEC member economy or applications for extension of stay are denied.

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14. Implementation of the Uruguay Round

• Full implementation of the Uruguay Round by the agreed dates, and on an accelerated basis where possible, with all operational officials applying UR results in efficient, effective manner fully consistent with the spirit and letter of all agreements.

• Active support for and participation in the negotiation and implementation of all Uruguay. The regulations governing issuance and denial of visas and related documentary requirements for temporary entry and temporary stay should be readily available to the public.