CHAIR'S SUMMARY

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An APEC symposium on regulatory reform was held in Kuantan, Malaysia from 5-6 September 1998. The symposium involved business academia and officials as speakers and participants. The holding of the symposium was foreshadowed by the Osaka Action Agenda in the context of the emphasis put on regular dialogue with the business community in the area of regulator reform. The symposium attempted to give a variety of perspectives on regulatory reform, including principles for reform, institutional capacity, an examination of specific issues and the opportunity to discuss the situation in individual economies.

Overall it was agreed that sound approaches to regulatory reform were essential to promote good governance and economic growth. Speakers stressed that in recent years economic globalisation had increased the demand for regulatory reform by exposing weaknesses in the regulatory systems of many economies. Furthermore, there hand been increasing recognition of the need for overall coherence between regulatory, competition and trade policies. Speakers emphasised the role of competition as the central discipline contributing to effective regulation. What was necessary in this context was the promotion of the process of competition rather than the interests of competitors. It was stressed that the essential need was for high quality regulation rather than deregulation per se.

The severe economic problems being experienced in some APEC economies had made it all the more urgent sound approaches to regulatory reform were followed at the national level. At the same time, a number of additional issues needed to be addressed in the context of these difficulties. Approaches to regulatory reform would need to complement and underpin efforts to bring macroeconomic stability to many economies. While the underlying causes of the economic problems were often structural, it was important to provide for macroeconomic stability as regulatory reform took time to achieve, often involving a complex mix of political, institutional and governance issues.

Speakers also stressed that these economic difficulties had underscored the importance of building public understanding of the benefits of regulatory reform to individual economies. In particular, it was important to show that regulatory reform delivered long term gains in terms of consumer welfare, producer efficiency and employment creation for each economy. The principal beneficiaries of regulatory reform in the long run were domestic consumers rather than foreign corporations. The economic problems in fact presented an opportunity for sensible reforms to be undertaken.

The symposium gave particular attention to the capacity constraints facing many developing economies as they attempted to undertake regulatory reform. It was noted that developing economies often lacked the institutions, skills, information systems and policy frameworks needed for success in this area. Effective regulatory institutions required expertise, transparency and accountability. In certain circumstances, attempts to provide for regulatory could lead to severe difficulties if they were not accompanied by strategies for capacity and institutional development. However, it was important to develop such strategies rather than to use their absence as an excuse not to embark on regulatory reform. This involved questions of sequencing and resource allocation which would need to be worked out on an economy by economy basis.

In this context, it was argued that perhaps too much attention had been given to promoting the rationale for regulatory reform and not enough to sound regulatory reform processes. Developing economies had a particular interest in how processes might be put in place that were practical and results oriented. The symposium discussed some of the ways that this might be achieved, including the sharing of experiences within and between economies and between regional and international for a with an interest in regulatory reform. Technical cooperation in designing and implementing regulatory reform needed to be tailored to the needs of individual economies.

The situation in individual economies was discussed, particularly through presentations on Korea, Mexico and China. These underlined the need to take of advantages of "windows of opportunity" for regulatory reform when these presented themselves. They also highlighted the advantages of focussing on the need to reduce business costs while at the same time providing an environment that would allow the most competitive businesses to succeed. In this context a regulatory environment that provided for stability, consistency and equal opportunities was called for.

The discussion on occupational regulation illustrated clearly many of the arguments about approaches to regulation and the reasons for regulating. It highlighted the need for clear identification of the objectives of regulation and the need to identify all of the effects of regulation across the economy when assessing its value and impact.

At the international level it was recognised that all economies faced pressures for policy convergence on regulatory issues with it being recognised that this was an area where APEC could make a positive contribution. There was considerable discussion as to how such convergence might be achieved with the approaches of harmonisation, mutual recognition and convergence around an agreed set of competition and regulatory principles being discussed. In the latter case, interest was expressed in APEC maintaining its dialogue with PECC as PECC developed its competition principles being discussed. In the latter case, interest was expressed in APEC maintaining its dialogue with PECC as PECC developed its competition principles project.