1. Member economies of APEC and the OECD have recognized that regulatory
reform is a central element in the promotion of open and competitive markets,
and a key driver of economic efficiency and consumer welfare. As a result,
agreement for an APEC-OECD Co-operative Initiative on Regulatory Reform
was reached in June 2000 and was endorsed at the APEC Ministerial Meeting
on 12-13 November 2000 in Brunei Darussalam, in order to promote the implementation
of the APEC and the OECD principles by building domestic capacities for
quality regulation.
2. Many economies within APEC and the OECD have individually embarked
on ambitious programmes to reduce regulatory burdens and improve the quality
and cost-effectiveness of regulations. They have collectively endorsed regulatory
reform principles and policy recommendations at the highest political levels,
specifically through:
繚 the 1999 APEC Economic Leader� Declaration, containing
the APEC Principles to Enhance Competition and Regulatory Reform,
繚 the 1997 OECD Policy Recommendations on Regulatory Reform, and
繚 the 1995 OECD Recommendation on Improving the Quality of Government Regulation.
3. A first phase of the APEC-OECD initiative was completed in October
2002, at the High level Conference in Jeju, Korea, where economies agreed
on the need to elaborate an APEC-OECD Integrated Checklist for self-assessment
on regulatory, competition and market openness policies, to implement the
APEC and OECD principles. The second phase of the initiative has focused
on the development of the integrated checklist that will be presented for
approval to the respective Executive Bodies of the APEC and the OECD in
2005.
4. The checklist is a voluntary tool that member economies may use to
evaluate their respective regulatory reform efforts. There is no single
model of regulatory reform, but this does not mean that standards, goals
and well-structured institutions do not matter. Based on the accumulated
knowledge of APEC and the OECD, the Checklist highlights key issues that
should be considered during the process of development and implementation
of regulatory policy, while recognizing that the diversity of economic,
social, and political environments and values of member economies require
flexibility in the methods through which the checklist shall be applied,
and in the uses given to the information compiled. There is little risk
that self-assessment will be an exercise in self-satisfaction. Even countries
that are well-advanced can find room for improvement.
5. While the checklist will not be used for comparative purposes, it can
provide useful information for those economies interested in (i) moving
closer to good international practices; and (ii) reducing the uncertainty
regarding the implementation of regulatory reform principles and institutions,
particularly in relation to the dynamic and interrelated effects of competition,
market openness and regulatory policies. The checklist creates an orderly
framework for decision-making that sets out key concepts to guide administrators
through the complexities of the design and implementation of an effective
and high quality regulatory reform policy. This can greatly assist policy
makers in identifying options and targeting priorities.
6. The checklist is comprised of four sections. The first is a horizontal
questionnaire on regulatory reform across levels of government that invites
reflection on the degree of integration of regulatory, competition and market
openness policies across levels of government, and on the accountability
and transparency mechanisms needed to ensure their success. Regulatory reform
refers to changes that improve regulatory quality to enhance the economic
performance, cost-effectiveness, or legal quality of regulations and related
government formalities. Reform can mean revision of a single regulation,
the scrapping and rebuilding of an entire regulatory regime and its institutions,
or improvement of processes for making regulations and managing reform.
Deregulation is a subset of regulatory reform and refers to complete or
partial elimination of regulation in a sector to improve economic performance.
7. The other three sections of the questionnaires focus on individual policy
areas, and the factors that may be considered to improve their specific
design and implementation. The policy areas are defined as follows:
繚 Regulatory policies: those designed to maximise the efficiency,
transparency and accountability of regulations based on an integrated rule-making
approach and the application of regulatory tools and institutions.
繚 Competition policies: those that promote economic growth and efficiency
by eliminating or minimising the distorting impact of laws, regulations
and administrative policies, practices and procedures on competition; and
by preventing and deterring private anti-competitive practices through effective
enforcement of competition laws.
繚 Market openness policies: those that aim to ensure that a country can
reap the benefits of globalisation and international competition by eliminating
or minimising the distorting effects of border as well as behind-the-border
regulations and practices. These policies influence the range of opportunities
open to foreign suppliers of goods and services to compete with domestic
counterparts in a particular national market (e.g. through trade and investment).
8. In a changing world, government action remains essential to protect
and promote important social objectives, such as safety, health, and environmental
quality, and the international community has taken commitments to several
social and environmental agreements in the past decade. Indeed, as economies
develop, public expectations in such areas tend to increase. More efficient
and dynamic economies will help governments serve these public interests.
Experience shows that reform, if properly carried out, should not adversely
effect, and can often promote, such objectives. There is scope to consider
further how regulatory quality affects social and environmental policy objectives.
9. The Checklist is therefore an integrated self-assessment tool, in three
senses. First, it integrates the APEC and OECD principles on regulatory
reform. Second, it integrates the three policy areas�ompetition, rule-making
and market openness�o provide a coherent whole-of-government view. Third,
it integrates governance perspectives �� transparency, accountability and
performance.
H. Horizontal Criteria Concerning Regulatory Reform
| Regulatory reform refers to changes that improve regulatory
quality to enhance the economic performance, cost-effectiveness, or
legal quality of regulations and related government formalities. Reform
can mean revision of a single regulation, the scrapping and rebuilding
of an entire regulatory regime and its institutions, or improvement
of processes for making regulations and managing reform. Deregulation
is a subset of regulatory reform and refers to complete or partial elimination
of regulation in a sector to improve economic performance. Regulatory,
competition and market openness policies are key drivers for a successful
and coherent regulatory reform. |
H1. To what extent is there an integrated policy for regulatory
reform that sets out principles dealing with regulatory, competition and
market openness policies?
Comments:
The checklist begins with an assessment of the status of the regulatory
reform process.
The point of departure is to ask whether a regulatory reform policy
exists. Such a policy often takes the form of a statement setting out
principles to govern regulatory reform which provides strong guidance
and benchmarks for action by officials, and also sets out what the public
can expect from government regarding regulation. Thus both domestic and
foreign stakeholders would have a statement of government policy for reference,
in addition to other obligations that may govern regulatory action. The
integrated policy can become a touchstone for government action.
An integrated policy is essential in ensuring that policies for
all concerned areas are mutually supportive. It would include key elements,
such as transparency, non-discrimination, and minimal interference with
competition and open markets, consistent with obtaining these policy objectives.
It may set out principles for communication and analysis, including substantive
areas to be considered in analysis. An integrated policy is closely tied
to Question H2 since it provides an opportunity for political leaders
and senior officials to express their support for regulatory reform.
H2. How strongly do political leaders and senior officials express
support for regulatory reform to both the public and officials, including
the explicit fostering of competition and open markets? How is this support
translated in practice into reform and how have businesspeople, consumers
and other interested groups reacted to these actions and to the reforms
in concrete terms?
Comments:
Support and interest in reform activities are key elements for their
success. Reforms often confront powerful interest groups outside or inside
the government. Often the benefits of reforms are masked by transition
costs. But failure to overcome short-term costs and eliminate the economic
distortions brought by inefficient regulations nurtures complacency and
maintains the status quo, which further increases the costs of reforms.
Strong and clear messages and a showing of commitment are needed to build
public consensus for reform. How this support is translated in practice
is important, all the more so as this affects how businesspeople, consumers
and other interested groups react to reforms. This is particularly true
with respect to the enhancement of competition and open markets which,
while benefiting the economy and consumers at large, may face opposition
from particular interests. Political leadership in policy-setting helps
to balance, when warranted, social and environmental factors with economic,
competitive and market-openness objectives in regulatory initiatives.
While a broad integrated policy as recommended in H1 is key, high-level
commitment also needs to be sustained through time, as often the beneficial
impacts of the reforms and enhanced competition and open markets will
need months and years to improve the economic structures and processes.
This is even more important as time and effort will be required to change
the culture of economic actors and regulators.
H3. What are the accountability mechanisms that assure the effective
implementation of regulatory, competition and market openness policies?
Comment:
The assignment of specific responsibilities for aspects of reform
and the creation of a framework for accountability are essential for the
success of the programme. To be effective, reform will have to be co-ordinated
across a number of areas, with clear roles to be played by departmental/ministry
officials, front-line regulators, senior officials, oversight bodies (if
any), the courts, stakeholders, the public, and political leaders.
H4. To what extent do regulation, competition and market openness
policies avoid discrimination between like goods, services, or service suppliers
in like circumstances, whether foreign or domestic? If elements of discrimination
exist, what is their rationale? What consideration has been given to eliminating
or minimising them?
Comments:
Non-discrimination means that laws and policies should refrain from
applying different requirements or procedures to different firms, goods,
services or countries. This includes discrimination either against or
in favour of a particular firm or category of firms (firms, for example,
operating in a particular sector of economic activities or foreign-owned
firms in general, firms from a particular country). An example of �ositive��
discrimination could be with respect to domestic firms considered to be
�ational champions��, etc.
Sometimes regulation is ostensibly non-discriminatory but is nevertheless
perceived to discriminate �e facto��. Such discrimination can occur in
various ways, e.g. the use of �randfather�� clauses that exempt incumbent
firms from more onerous requirements that may apply to new market entrants;
or imposing on foreign firms requirements that they have already satisfied
in their home country under a different form (as when different regulatory
approaches are applied for the same objective) . New and proposed regulation
should be examined to ensure that it does not have avoidable de facto
discriminatory effects. Some de facto discrimination may be the result
of inadequate vetting of regulatory proposals from the market openness
perspective. Effective consultation and co-ordination among regulatory,
competition and trade officials may help to avoid such unintended effects
(see also Question H8 on the inter-ministerial consultation).
This principle is also examined in Question C6.
H5. To what extent has regulatory reform, including policies dealing
with regulatory quality, competition and market openness, been encouraged
and co-ordinated at all levels of government (e.g. Federal, state, local,
supranational)?
Comment:
The regulatory environment where citizens and business operate is
composed of complex layers of regulation stemming from subnational, national
and international levels of government. Historic, political, cultural
and administrative reasons account for the divergences. These variations
can contribute to a lack of coherence and consistency among central, regional
and local regulations reducing the quality of the �ational�� regulatory
environment in which citizens and businesses operate, and thus compromising
competitiveness and market openness of the country. Where regulatory powers
are shared between levels of government, co-ordination may be an essential
element of successful reform. Formal policies or mechanisms for co-ordination
within and between governments on regulation and its reform can be set
up to maximise the benefits of reforms and reduce internal regulatory
barriers to trade and investment.
H6. Are the policies, laws, regulations, practices, procedures
and decision making transparent, consistent, comprehensible and accessible
to users both inside and outside government, and to domestic as well as
foreign parties? And is effectiveness regularly assessed?
Comments:
To build public support for regulatory, competition and market openness
policies, consumers, businesses, investors, lenders, and other stakeholders
must be able to ascertain clearly the content of the policies, as well
as that of related laws, regulations, guidelines, practices and procedures.
In addition, other types of rules, including �oft�� regulation (or �rey��
or �uasi��-regulation) should be transparent to those who are affected.
Thus, administrative guidance, documents, directives, interpretation bulletins
or other rules that do not have the force of law but will have a practical
impact on stakeholders must also be clear and easily and comprehensively
available for domestic and foreign businesses and service suppliers.
Transparent, consistent, comprehensible, and accessible laws are
necessary to ensure compliance and achieve public policy objectives (See
also, Question B6 on transparency within government on competition law).
Among other things, this promotes predictability, fairness and public
confidence. Transparency also contributes positively to the attractiveness
of the investment climate. Both domestic and foreign players require transparency,
but it is particularly important to new market entrants as well as SMEs.
Transparency also relates to the regulatory process, how decisions are
made and how they are applied. A clear system for rule making that is
known to stakeholders and policies governing the enforcement of laws can
ensure that stakeholders know and understand how the law affects them;
furthermore, it ensures consistent application of laws. It is important
to limit conflicts of interest in regulation between the regulated company
and the regulator. Transparency must also extend to forthcoming regulatory
actions, as this is necessary for stakeholder involvement in regulatory
decision-making (see also Question A5 and C4 on public consultation) and
for predictability, an important element in business planning.
Transparency requires the timely publication, or at least the public
availability of all relevant laws, regulations and decisions, as well
as information about the decision-making process. Channels for information
dissemination and notification should be widely accessible, including
those for dissemination and notification to international bodies. The
internet has proven to be an invaluable resource for access to laws, government
services, electronic filings, and identification of single inquiry points.
Other approaches such as public registries of all regulations and �ne
stop�� access to regulatory permits and service centres can be particularly
valuable in federal states where rules from multiple levels of government
may apply to a new market entrant
Because government is increasingly �artnering�� with the private
sector to achieve public policy objectives, transparency of at least some
private sector rules may be an important element of good regulation. Self-regulatory
schemes, whether or not backed by government, may need enhanced clarity
and transparency. Similarly, standards development regimes are often poorly
understood by those who may be affected. A greater effort should be made
to make the standards development process and the standards themselves
more transparent, and to ensure the transparency of qualification and
licensing requirements and procedures.
H7. Are the reform of regulation, the establishment of appropriate
regulatory authorities, and the introduction of competition coherent in
timing and sequencing?
Comment:
Comprehensive reform works better than piecemeal reform. But comprehensiveness
does not mean that all changes must occur at the same time. Thus, it may
not be appropriate to initiate major sectoral reform in all areas simultaneously.
A successful reform policy will need a strategy establishing transitional
steps. These transitional phases should only be temporary, as should regulatory
strategies developed to deal with transitions to more competitive economies.
In that respect, it may be necessary to develop mechanisms for monitoring
implementation to evaluate progress and identify obstacles to further
reform. Furthermore, the necessary regulatory authorities should be established
before structural changes and technical regulatory decisions have been
made in order to make use of and improve the authorities�� expertise. The
introduction of regulatory reform, including creation of appropriate regulatory
authorities prior to market opening in certain service sectors, can be
important in ensuring competition and the effectiveness of regulation
to meet public policy objectives.
H8. To what extent are there effective inter-ministerial mechanisms
for managing and co-ordinating regulatory reform and integrating competition
and market openness considerations into regulatory management systems?
Comment:
To avoid unnecessary duplications and contradictions, all appropriate
official bodies should be informed and consulted when preparing a new
measure or planning a reform. It is particularly important to involve
trade and competition officials who can provide valuable advice and anticipate
trade frictions or anticompetitive impacts that might inadvertently follow
from proposed rules. They can also be invaluable allies in the reform
process and can ensure that the benefits of reform are not dissipated
in a difficult sectoral transition to a more competitive environment.
Given their role in regulating services, independent regulators and private
sector bodies with regulatory responsibilities (e.g., for some professional
services) should be included as appropriate.
It is important in particular to ensure that competition, efficiency
and market openness are considered in the assessment of all regulations
and their alternatives that may have an impact upon markets. This assessment
of instrument choice ought to be guided by the general principle that
competition should be stimulated and maximised except in cases of market
failure or where other legitimate public interest objectives give rise
to a need for continued or even new regulation. In such a case, the competition
distorting impact of the regulation ought to be minimised and the regulatory
regime as a whole ought to be oriented towards promoting efficiency.
If competition and market openness considerations are to be more
closely integrated into the regulatory management system, including both
primary and secondary rule-making and reviews of the stock of existing
regulatory legislation, then this needs to be reflected in institutional
structures, policy development processes, administrative procedures, official
responsibilities, and accountability arrangements.
H9. Do the authorities responsible for the quality of regulation
and the openness of markets to foreign firms and the competition authorities
have adequate human and technical resources, to fulfil their responsibilities
in a timely manner?
Comment:
Strong and effective institutions require expert staff and resources
to provide all core functions. For instance, in the case of the Competition
Authority, a sufficient staff of professional experts, including economists
and lawyers, is needed to carry out the enforcement and advocacy work.
If the regulatory management system includes the involvement of the Competition
Authority and trade and investment officials in key rule-making activities,
then that needs to be reflected in the capacities and resources of these
bodies. In addition, resources, including expertise, must be available
for the development of regulatory processes according to principles of
high quality regulation. (See for example, Questions A2 and A3 on the
analysis of new and existing regulation).
H10. Are there training and capacity building programmes for rule-makers
and regulators to ensure that they are aware of high quality regulatory,
competition and market openness considerations?
Comments:
Building and maintaining capacity must be seen as a crucial element
for a successful regulatory management system. Capacity building involves
more than resources. Expertise and experience need to be developed and
maintained over time so that officials responsible for policy development
and institutional design are more aware and better able to identify what
is necessary for high quality regulation, competition and market openness
issues.
Trade issues and obligations to maintain market openness, as well
as complementary pro-competition approaches, may not be familiar to some
regulatory policy makers, particularly in areas of social regulation.
Officials may require training in the identification of issues, and even
more importantly, on the approaches (including instrument choice) that
might allow them to regulate effectively while restricting the openness
of markets no more than necessary. Specifically, officials may require
training on the use of alternative forms of regulation (see Question A7
on regulatory alternatives).
At the same time, education and co-operation among competition,
trade and regulatory officials may be required to promote greater coherence
in the attainment of legitimate policy objectives in such areas as health,
safety and the environment. It is also important to find mechanisms to
maintain the institutional memories of bodies in charge of regulatory,
competition and market openness policies to compensate for personnel changes.
The mobility of officials however, can disseminate regulatory, competition
and market openness policies.
Ongoing training and information exchange amongst regulators will
be particularly important in sectors where technological change is placing
new demands upon regulators, or where experimentation about the appropriate
regulatory frameworks to underpin liberalisation, especially in some service
sectors, is underway.
H11. Does the legal framework have in place or strive to establish
credible mechanisms to ensure the fundamental due process rights of persons
subject to the law, in particular concerning the appeal system?
Comments:
The fundamental due process rights of persons subject to the law
ought to be safeguarded not only by provisions that articulate those rights,
but also by clear mechanisms designed to ensure the enforceability of
those rights. These steps are necessary to ensure procedural fairness.
Due process rights include the right to appeal final decisions in a timely
manner before an independent third party arbiter; the right to be informed,
prior to and immediately following any such adverse decision, of the concerns
that form the basis of the decision; and the right to make representations
after being informed of such concerns and prior to the point in time at
which a final decision is reached. Providing a fair system that respects
the due process rights of individuals and firms is key to credible and
respected regulatory actions.
It is also important that foreign stakeholders and participants
should not be disadvantaged in their access to the appeal systems. The
appeal process should be accessible, transparent and accountable. This
can be enhanced by clear rule of procedure and practice directives, according
to each economy� technological and budgetary feasibilities, the use of
the internet to provide guidance for those wishing to appeal, and processes
that improve accessibility (e.g., use of electronic filings). Appeals
should be handled on a timely basis for, as has been said, �ustice delayed
is justice denied.��
A. Regulatory Policy
| Regulatory policies are designed to maximise the efficiency, transparency,
and accountability of regulations based on an integrated rule-making
approach and the application of regulatory tools and institutions. |
A1. To what extent are capacities created that ensure consistent
and coherent application of principles of quality regulation?
Comments:
Quality regulation needs a strong involvement and a sense of �wnership��
by regulators in charge of their design and implementation who are committed
to the regulation� objectives and have information on the sector history
and situation. It is important also that a means exists for the co-ordination
of regulatory reform or initiatives, if not by a central body then by
institutions or co-ordinating mechanisms. There are several reasons for
this. It is often difficult for regulators to reform themselves. Special
interests, close identification with the objectives of outdated regulation,
and countervailing pressures from different parts of society make such
self-reform even more complex. In addition, modern regulations and regimes
apply across multiple areas. Regulatory quality control and consistency
may benefit when responsibility is shared between regulators and a central
quality control entity. For example, specific responsibilities for aspects
of a regulatory management system may be assigned to a body that can help
balance the pressures and at the same time ensure accountability for the
success of the reform across a number of areas. Similarly, the rule-making
process must provide for priority setting, co-ordination of regulatory
activities, and the involvement of competition and trade officials in
policy development or review where appropriate.
A2. Are the legal basis and the economic and social impacts of
drafts of new regulations reviewed? What performance measurements are being
envisaged for reviewing the economic and social impacts of new regulations?
Comments:
The Rule of Law means that all properly functioning regulatory systems
and every regulatory action (which by definition intrudes on the activities
of the others) must be based in law. Every well functioning rule-making
process will have a procedure for examining the proposed regulatory action
for legality and compliance with other requirements, such as adherence
to WTO obligations. These procedures may be the responsibility of a central
body (referred to above in A1) or may be assigned elsewhere and may involve
legislative bodies.
In addition, decision-makers and stakeholders should be provided
with information about the effects of new regulation. These requirements
are important for the analytical process of developing new regulation
and for informing decision-makers and stakeholders. Consideration of impacts
should include close analysis of the problem to be solved and alternative
solutions, as well as the impacts of the proposed regulatory solution.
Performance measurement initiatives can be included when reviewing
the economic impact of new regulations. This analytical process ties in
closely with transparency and consultation considerations (see Questions
H6, A5 and C4), and with the need to avoid discrimination between domestic
and foreign stakeholders in regulation (see Questions H4 and C6 on non-discrimination).
The requirement for analysis can apply broadly to both primary and
secondary regulation. Similar considerations should be taken into account
by independent or quasi-independent regulators.
Reviews of regulatory measures (primary laws or secondary regulations)
should be conducted in a fashion that does not discriminate between domestic
and foreign stakeholder by, for example, limiting opportunity for comment
or participation.
A3. Are the legal basis and the economic and social impacts of
existing regulations reviewed, and if so, what use is made of performance
measurements?
Comments:
Most governments have large stocks of regulations and administrative
formalities that have accumulated over years or decades without adequate
review and revision. Regulations that are efficient today may become inefficient
tomorrow due to social, economic, or technological change. Overall, the
constant accumulation of measures often creates duplication and contradiction
in the legal framework, creating unnecessary costs for business and citizens.
This de facto lack of transparency is particularly burdensome for �utsiders��.
(See Question C1 on trade and investment possible implications of regulation).
Complexity due to poor management of the stock of regulation facilitates
non-compliance, leads to loss of credibility, and even corruption.
Various tools, initiatives and triggers can maintain the stock in
optimal shape. They include periodic reviews and deregulation programmes,
�unsetting�� or legislative periodic reviews, as well as codification
and use of plain language reforms. Such reviews, as in most regulatory
policies, need to incorporate a mechanism for input by affected stakeholders,
to build public support and to consult interest groups. These appraisals
also need clear focus to avoid creating unnecessary instability in the
regulatory environment. Policy-makers should ask how performance measurement
instruments are used to review existing regulations.
The credibility of these reviews can be further enhanced if they
are undertaken by bodies other than the regulator responsible for the
regulation. This may be the central regulatory oversight body (See Question
A1), the Competition Authority (see Question B1) or another body with
the expertise to examine regulatory legislation and programs. In some
jurisdictions, the legislature plays a role in reviewing major regulatory
legislation.
In addition to reviewing the economic impacts of regulation, other
matters should be considered. These include the continuing need to assess
alternative policy instruments or alternative types of regulation in a
more maturing regulatory climate; to develop additional provisions including
new enforcement tools, different and imaginative sanctions, and to identify
unexpected impacts other than economic.
A4. To what extent are rules, regulatory institutions, and the
regulatory management process itself transparent, clear and predictable
to users both inside and outside the government?
Comment:
Transparency of the regulatory system is essential to establishing
a stable and accessible regulatory environment that promotes competition,
trade, and investment, and helps ensure against undue influence by special
interests. Transparency in rule-making also reinforces legitimacy and
fairness of regulatory processes. Regulatory transparency also involves
a wide range of practices, including standardised processes for making
and changing regulations; consultation with interested parties; plain
language in drafting; publication, codification, and other ways of making
rules easy to find and understand; controls on administrative discretion;
and implementation and appeals processes that are predictable and consistent.
(See also Question H6 on transparency).
A5. Are there effective public consultation mechanisms and procedures
including prior notification open to regulated parties and other stakeholders,
non-governmental organisations, the private sector, advisory bodies, accreditation
bodies, standards-development organisations and other governments?
Comments:
Regulations should be developed in an open and transparent fashion,
with appropriate and well-publicized procedures for effective and timely
inputs from interested national and foreign parties, such as affected
business, trade unions, wider interest groups such as consumer or environmental
organisations, or other levels of government. Public consultation should
not be limited to insiders, such as already established businesses, but
should be open to all interested parties. Consultation works in both directions
and educates both stakeholders and officials. It improves the quality
of rules and programmes and also improves compliance and reduces enforcement
costs for both governments and citizens subject to rules. Good practice
may be encouraged by clear guidance on how consultations should be conducted.
When collecting information, and to reduce administrative burdens, a register
can be established identifying routine questions addressed by government
to business, perhaps co-ordinated by a central unit.
This should help avoid duplicating efforts and promote the diffusion
of information.
Public notices at various stages of rule-making and consultation
with stakeholders are considered to be fundamentally important for a well-managed
regulatory system. A well-developed set of procedures for notice and comment
may even be codified. In any event, regulators should be provided with
written guidance on consultation requirements and an exchange of �est
practices�� on consultation techniques may also be helpful. The opportunities
for comment by stakeholders should be timed so that there is genuine dialogue
and potential to affect policy development. Regulators should be held
accountable for the consultation and how comments are handled so that
the credibility of the consultation process is maintained. (See also Question
C4 which develops these points with a trade focus.)
A6. To what extent are clear and transparent methodologies and
criteria used to analyse the regulatory impact when developing new regulations
and reviewing existing regulations?
Comments:
High quality regulation is increasingly seen as a prerequisite for
governments to produce the desired results of a public policy as cost
effectively as possible. This includes the goal of growth, to reduce the
frequency and intensity of crises, and their medium and long-term costs.
There is a developing understanding that all government policy action
involves trade-offs between different uses of resources, while the underlying
goal of policy action �� including regulation �� of maximising social welfare
is being explicitly stated and accepted. In a rule-based society, these
trade-offs need to be assessed and discussed in a transparent and accountable
manner. That is, a policy is needed to justify when a governmental regulator
establishes a regulation.
The development of a Regulatory Impact Analysis (RIA) helps to organise
and consolidate all the possible impacts and elements for the decision
at various stages of policy development. In particular, RIA can become
the main vehicle to systematically review the legal basis and economic
impacts of existing or new regulations and to structure the adjoining
decision-making process (see Questions A2 and A3). Indeed, a RIA should
not be thought of as an after-the-fact exercise when the regulatory decision
has been made. Rather, a RIA should help form the policy investigation
and analysis carried out through the development of the rules. The analytical
approach underlying the rules should always be considered to be proportional
to the situation, but consistent guidance should be developed to deal
with the appropriate complexity and level of analysis.
Efforts are often needed to develop the capacity to carry out and
make use of RIA; in their absence, other practices should be adopted to
assess regulatory impacts.
In the case of regulations approved for emergency reasons without
prior assessment (health, environmental safety, security, etc.), an ex
post evaluation of their cost-effectiveness should be made according to
criteria and procedures established for that purpose.
A7. How are alternatives to regulation assessed?
Comments:
A core element of a good regulatory policy is to help the policy
maker to choose the most efficient and effective policy tool, whether
regulatory or non-regulatory. The range of policy tools and their uses
is expanding as experimentation occurs, learning is shared and understanding
of the potential role of markets increases. At the same time, regulators
often face risks in using relatively untried tools, as bureaucracies are
highly conservative, and there are typically strong disincentives for
public servants to be innovative. A clear leading role �� supportive of
innovation and policy learning �� must be taken by reform authorities if
alternatives to traditional regulation are to make serious headway into
the policy system. In particular, awareness of competition and market
openness implications of regulation should lead regulators and policy
makers to consider alternative forms of regulation to achieve their regulatory
objective, such as use of performance rather than design criteria.
A8. To what extent have measures been taken to assure compliance
with and enforcement of regulations?
Comments:
Adoption and communication of a regulation is only part of the regulatory
policy. To achieve policy objectives through regulations, citizens and
business must comply with them and the government must enforce them. A
compliance friendly regulation requires governments to pay attention to
compliance considerations in the decision-making process. Regulations
should be designed, implemented and enforced in a way to ensure that the
highest appropriate level of compliance is achieved. Commonly used tools
to increase the level of compliance are ex ante evaluation of compliance
factors, development of alternative ways for compliance, compliance assistance,
compliance incentives, or providing for a range of enforcement responses.
Regulators should have sufficient capacity to enforce regulations:
�mpty�� regulation undermines the entire system� credibility and leaves
governments open to criticism and other negative consequences. An appeal
mechanism against regulatory abuse must also be in place.
B. Competition Policy and Law
| Competition policy promotes economic growth and efficiency by eliminating
or minimising the distorting impact on competition of laws, regulations
and administrative policies, practices and procedures; and by preventing
and deterring private anti-competitive practices through vigorous enforcement
of competition laws. |
B1. To what extent has a policy been embraced in the jurisdiction
that is directed towards promoting efficiency and eliminating or minimising
the material competition distorting aspects of all existing and future laws,
regulations, administrative practices and other institutional measures (collectively
�egulations��) that have an impact upon markets?
Comment:
Economies are invited to ensure that competition and efficiency
dimensions are brought to the assessment of regulations that may have
an impact upon markets. This exercise ought to be guided by the general
principle that competition should be stimulated and maximised except in
cases of market failure or where other legitimate public interest objectives
give rise to a need for continued or even new regulation. In such cases,
the competition distorting impact of the regulation ought to be minimised
and the regulatory regime as a whole ought to be oriented towards promoting
efficiency. These elements should be part of a general policy on regulatory
reform (see Question H1), as well as in the drafting of new regulation
and the evaluation of the stock of existing regulation.
B2. To what extent do the objectives of the competition law and
policy include, and only include, promoting and protecting the competitive
process and enhancing economic efficiency including consumer surplus?
Comments:
An effective competition law and policy requires clear objectives.
This helps to guide decision-makers, avoid potentially inconsistent treatment
of issues, and resolve ambiguities in the text of the law. �ore�� competition
objectives sometimes are expressed in terms of promoting consumer welfare,
innovation, the efficiency and adaptability of the economy, and international
competitiveness. These are all aspects of protecting the competitive process,
and are not aimed at protecting individual competitors such as national
champions.
If the objectives of competition law or policy include other, non-�ore��
goals, economies are invited to reassess whether the competition law or
policy is the optimal instrument for pursuing such goals, given the availability
of other industrial policy tools that may facilitate the attainment of
such objectives in a more efficient manner. This reassessment should include
provisions in competition laws that explicitly refer to non-�ore�� competition
objectives, as well as �olitical override�� clauses and undefined �ublic
interest�� tests. In addition, economies are invited to reassess the manner
in which trade-offs are made between the �ore�� competition objectives
and such other goals to increase transparency and predictability (see
also Questions H8 and A6).
B3. To what extent does the Competition Authority or another body
have (i) a clear mandate to advocate actively in order to promote competition
and efficiency throughout the economy and raise general awareness of the
benefits of competition, and (ii) sufficient resources to carry out any
advocacy functions included in its mandate?
Comment:
A clear mandate for the Competition Authority to engage in such
advocacy activities can be very helpful in ensuring that any positions
it promotes (e.g., within government circles, to regulators, to business
organisations and other constituencies) are carefully considered. In some
economies competition advocacy has been a primary engine in the revision
of existing regulations and regulatory regimes. Providing the Competition
Authority with an explicit mandate in the competition law to engage in
such advocacy has proven to be particularly effective. (See also Question
A3 on reviewing existing regulations).
B4. To what extent are measures taken to neutralise the advantages
accruing to government business activities as a consequence of their public
ownership?
Comments:
Under the principle of competitive neutrality, government business
undertaking business activities should not have competitive advantages
or disadvantages relative to their private sector competitors simply by
virtue of their government ownership. Competitive neutrality reduces resource
allocation distortions and improves competitive processes. Both effects
promote economic efficiency. A competitive neutrality policy prescribes
a range of measures, including neutralising advantages that may accrue
to public business in the areas of debt financing, preventing anti-competitive
cross-subsidisation between regulated and competitive activities, regulation
and taxation and requiring these businesses to earn a commercial rate
of return. Competitive neutrality does not imply that government businesses
cannot be successful in competition with private businesses, nor that
government has no role in fulfilling public service needs or other special
responsibilities. Government businesses may achieve success as a result
of their own merits and intrinsic strengths, but not as a consequence
of unfair advantages flowing from government ownership.
B5. To what extent does the agency responsible for the administration
and enforcement of the competition law (the �ompetition Authority��) operate
autonomously, and to what extent are its human and financial resources sufficient
to enable it to do its job?
Comment:
The Authority charged with enforcing the competition law should
be able to make its enforcement decisions in an autonomous manner.
Actual and perceived autonomy in regard to decision-making, advocacy
and other activities are necessary to cultivate public confidence that
objective legal standards are being applied without political interference.
Where the law provides for input in certain circumstances from other entities
within the government, potentially adverse implications for certainty
and predictability can be minimised by establishing transparent mechanisms
for the transmission of such input. Government or ministerial budgetary
decisions that impact upon the Competition Authority also ought to be
transparent.
B6. To what extent is the role of enforcement decision-makers
transparent, especially when there are multiple government bodies involved
in decision-making, for example, regarding who the decision-maker was, factors
taken into account by such a decision-maker, and their relative weighting?
Comment:
Transparency in decision-making enhances the predictability of enforcement
decisions which in turn helps to ensure the effectiveness of competition
law. Competition law cannot reach its full potential in terms of promoting
pro-competitive conduct and investment in new products, technology or
entry if it does not offer a minimum degree of certainty and predictability
to persons whose interests may be affected by governmental involvement
in the enforcement process. (Note that the role of appellate bodies is
dealt with separately in B11).
Reducing overlapping legal jurisdiction can help to increase efficient
use of public resources and increase certainty for the general public
and private sector.
B7. To what extent is there a transparent policy and practice
that addresses the relationship between the Competition Authority and sectoral
regulatory authorities?
Comments:
Overlapping jurisdiction between a competition authority and a sectoral
or multi-sectoral regulator creates potential uncertainty for businesses
that must organise their actions in compliance with the law. Statutory
provisions that clearly articulate the respective jurisdictions of these
authorities, as well as .protocols and Memoranda of Understanding have
proven to be effective vehicles for clarifying respective roles and responsibilities.
To ensure that the Competition Authority has an ability to advocate for
pro-competitive or efficiency enhancing policies, explicit statutory provisions
that create a mechanism for such views to be conveyed to other regulatory
authorities can be particularly helpful. Informal contacts between agency
staff members and between decision-makers in the authorities can help
to minimise the risk of inconsistent approaches being taken by authorities
with overlapping authority.
B8. To what extent does the competition law contain provisions
to deter effectively and prevent hard-core cartel conduct, abuses of dominant
position or unlawful monopolistic conduct, and contain provisions to address
anti-competitive mergers effectively? To what extent does the broader competition
policy strive to ensure that this type of conduct is not facilitated by
government regulation?
Comments:
These provisions arguably constitute the essential components of
an effective competition law. A �ard core cartel�� is an anti-competitive
agreement, anti-competitive concerted practice, or anti-competitive arrangement
by competitors to fix prices, make rigged bids (collusive tenders), establish
output restrictions or quotas, or share or divide markets by allocating
customers, suppliers, territories, or lines of commerce. The category
of �ard core cartel�� does not include agreements, concerted practices,
or arrangements that i) are reasonably related to the lawful realisation
of cost-reducing or output-enhancing efficiencies, ii) are excluded directly
or indirectly from the coverage of a Member country� own laws, or iii)
are authorised in accordance with those laws. Hard core cartels are the
most egregious violations of competition law and they injure consumers
in many countries by raising prices and restricting supply, thus making
goods and services completely unavailable to some purchasers and unnecessarily
expensive for others.
Abuse of dominant position or unlawful monopolistic conduct also
negatively affect consumers and businesses who buy goods and services,
for example by exclusionary or predatory conduct that results in higher
prices than otherwise would have prevailed in the absence of such conduct.
In some circumstances the competition law is the most appropriate instrument
to control such conduct, e.g., through a prohibition order or an order
guaranteeing access to essential network facilities to all market participants
on a transparent and non-discriminatory basis; in other circumstances
a better response may be to separate vertically potentially competitive
activities from regulated utility networks and otherwise restructure as
needed to reduce the market power of incumbents. In yet other circumstances,
i.e. where the dominant firm does not face effective actual or potential
competition, the better response may be to use price caps and other mechanisms
to encourage efficiency gains when price controls are needed.
Anti-competitive mergers result in higher prices, lower availability,
slower innovation, reduced service or lower quality of products, relative
to what would have prevailed in the absence of the merger. It is normally
easier to prevent these negative effects by preventing such mergers than
to try to address them later, after the mergers, with other provisions
of the competition law or with regulatory instruments.
B9. To what extent does the competition law apply broadly to all
activities in the economy, including both goods and services, as well as
to both public and private activities, except for those excluded?
Comments:
Generally speaking, and subject to exclusions in the statute or
jurisprudence (including exemptions and defences), an effective competition
law should have general application throughout potentially competitive
sectors of the economy, and should apply to the activities of individuals,
companies, joint ventures, government businesses and other economic undertakings.
This item encourages a reassessment of exclusions or other limitations
on the application of the competition law, with a view to ensuring that
they are no broader than necessary to achieve their underlying public
policy objective.
When exclusions from competition law exist, they need to be narrowly
targeted and no broader than necessary to achieve other legitimate public
policy objectives that cannot be better served in other ways (see also
Question H4).
B10. To what extent does the competition law provide for effective
investigative powers and sanctions to detect, investigate, punish and deter
anti-competitive behaviour?
Comment:
Experience in several jurisdictions around the world has demonstrated
that it is difficult to enforce a competition law credibly without effective
investigatory powers. These powers are necessary to provide competition
authorities with the means to obtain the information they require to do
their jobs. This information can include documents, oral testimony, written
responses to questions, computer records and other evidence as may be
reasonably required to enforce the law.
In addition, it is difficult to induce compliance with the competition
law without effective sanctions for violation of the law. If the sanctions
are too low, or the probability of their being applied is too low, then
subjects to the law may find it preferable to violate the law and face
the possible consequences.
Finally, leniency policies have proven to be a very effective tool
in discovering cartel activity, obtaining strong evidence and sanctions,
and deterring similar conduct from occurring in the future.
B11. To what extent do firms and individuals have access to (i)
the Competition Authority to become apprised of the case against them and
to make their views known, and (ii) to the relevant court(s) or tribunal(s)
to appeal decisions of the Competition Authority or seek compensation for
damages suffered as a result of conduct contrary to the domestic competition
law?
Comment:
This item addresses due process. It is important that firms and
individuals whose conduct is being investigated, or who may have been
adversely affected by anti-competitive conduct, have an opportunity to
make their views known to the Competition Authority in a timely fashion.
Direct access to the judicial system also can provide an important safeguard
by exercising a disciplining influence on competition authorities who
will be aware that their decisions may be scrutinised in a public forum.
To be effective, appeal procedures and rights of private access to the
courts have to permit decisions to be made in a timely manner. Rights
of private access also can provide parties to a dispute that is largely
private in nature with an opportunity to settle their dispute where the
competition authority cannot justify allocating scarce enforcement resources
to the matter. (See also Question H11 on the implementation of regulatory
reform policies)
B12. In the absence of a competition law, to what extent is there
an effective framework or mechanism for deterring and addressing private
anti-competitive conduct?
Comment:
Economies that do not have a competition law need to consider adopting
some other framework or mechanism to deter future anti-competitive conduct
such as hard core cartel behaviour, abuse of dominant position and mergers
that harm competition. Where such conduct is not deterred, and occurs,
a need arises for a means to address the conduct. In some jurisdictions,
this may be at least partially addressed judicially (such as through a
�estraint of trade�� doctrine that renders anti-competitive contracts
unenforceable).
C. Market Openness Policies
| Market openness policies aim to ensure that a country can reap the
benefits of globalisation and international competition by eliminating
or minimising the distorting impact that may result from border as well
as behind-the-border measures, including measures at different levels
of government. These policies influence the range of opportunities open
to suppliers of goods and services to compete in a particular national
market (e.g. through trade and investment), irrespective of whether
these suppliers are domestic or foreign. |
C1. To what extent are there mechanisms in regulatory decision-making
to foster awareness of trade and investment implications?
Comments:
Narrowly-defined and discriminatory regulation can, explicitly or
indirectly, impede the flow of trade and investment to the detriment of
domestic economic efficiency and of consumers. Early consideration of
trade issues, particularly in the development and examination of alternative
policy instruments, can prevent unnecessary restrictions on market openness.
It is as important to seek approaches to reduce restrictions on
market openness in new legislation, as to review the existing stock of
legislation periodically in order to address problems generated by unnecessary
restrictions, cumbersome procedures, and time-consuming processes. Placing
market openness clearly within the terms of reference for reviews of both
primary and secondary legislation would provide a focus for trade officials��
participation during the design and implementation of the regulation.
Systems of regulatory impact analysis should take sufficient account of
market openness considerations.
A key element for fostering such awareness is to ensure that regulatory,
competition and trade authorities work closely together on a regular basis.
Improved co-ordination should also include subnational regulatory authorities,
independent regulators and professional bodies with regulatory responsibilities
where appropriate. Integrating market openness considerations into regulatory
decision-making may require: the creation of appropriate intra-governmental
consultation mechanisms (see also question H8); better focussed efforts
for training regulators; and enhanced assessment, understanding and application
of regulatory alternatives. Co-ordination between regulatory and trade
officials, including at different levels of government (see also Question
H5), should be organised in the context of negotiating international trade
agreements as well, so as to draw on all useful expertise in the design
as well as in the implementation of regulatory aspects of these agreements.
Implementation reviews, in addition to ensuring that policies are still
relevant and efficient, could provide an opportunity for identifying and
sharing best practices from the market openness perspective and contribute
to the ability of regulators to recognise and address trade-related regulatory
issues. Trade authorities should be closely involved in such reviews.
C2. To what extent does the government promote approaches to regulation
and its implementation that are trade-friendly and avoid unnecessary burdens
on economic actors?
Comments:
Approaches to regulation that are trade-friendly and avoid unnecessary
burdens on economic actors can be achieved in various ways, for instance
by assessing whether a proposed measure is the least restrictive option
reasonably available for efficiently achieving a regulatory objective;
by basing regulation on performance rather than design criteria; by taking
account of the equivalence of other countries�� regulatory systems in meeting
a given regulatory objective; by doing away with duplicative or outdated
requirements; and by embracing regulatory alternatives where appropriate.
(See also A7 on assessing alternatives to regulation).
Assessing the impact of proposed regulation on market openness can
facilitate the pursuit of social objectives in the most cost-efficient
way for the economy. Regulations that allow flexibility in the way their
objectives are met and avoid defining specifically how this should be
done will facilitate the development of new, innovative and cost-efficient
solutions. (See Question C7). Efficient co-ordination between involved
departments, including by way of central registries of formalities, helps
streamline demands put on businesses by government administrations. (See
Questions H6 and A5). Periodic reviews of regulations ensure that applicable
requirements are relevant and proportional to the regulatory objectives
(See Question A3). Regulatory efficiency may be strengthened by systematic
consideration of regulatory alternatives. This requires that regulators
have the scope, authority and incentive, as well as the capacity, through
improved communication with trade officials and, where appropriate prior
consultation with other relevant stakeholders, to identify the most trade-friendly
among various, equally effective, alternatives (see also Question A7).
Continuity in pursuing trade-friendliness from one administration
to another is also important, as only medium- to long-term public policies
can establish trade-friendly regulations that last through the useful
life of investments.
C3. To what extent are customs and border procedures designed
and implemented to provide consistency, predictability, simplicity and transparency
so as to avoid unnecessary burdens on the flow of goods? To what extent
are migration procedures related to the temporary movement of people to
supply services transparent and consistent with the market access offered?
Comments:
Measures to simplify border procedures and to avoid unnecessary
burdens on the flow of goods include doing away with unnecessary or outdated
requirements, such as requesting information that is already available
to the authorities, or requesting information more than once for different
departments. This objective also involves updating regulations to take
account of changed contexts, technologies and markets and ensuring that
the implementation process is proportional to the desired result, for
instance that it does not cost more to implement than is actually gained
in Customs revenue. The simplification of border procedures further implies
that applicable controls will take place in a way that does not add unnecessary
costs to traders or generate undue delays at the border, for instance
through the implementation of risk-based and targeted operations and the
replacement of some border controls by post-clearance audits.
The ability of natural persons to supply services in a market, either
as an employee of a firm or as an individual, can be affected by the ease
of use of the system for managing temporary entry. Information on all
relevant temporary entry requirements and procedures should be transparent
and readily available to service suppliers. Relevant schemes should also
take account of the needs of business to move people in a timely and cost-effective
manner.
C4. To what extent has the government established effective public
consultation mechanisms and procedures (including prior notification, as
appropriate) and do such mechanisms allow sufficient access for all interested
parties, including foreign stakeholders?
Comments:
Well publicised, well-organised, highly accessible and well-timed
opportunities for public comment, as well as clear lines of accountability
for explaining how public comments have been handled are important features
of a high-level commitment to public consultation (see also question A5).
Public consultation should not be limited to insiders, such as already
established businesses, but should be open to all interested parties.
Good practice in this area may be encouraged by clear guidance to regulators
on how consultations are to be conducted.
Wide discretion on who is to be consulted and how on given regulatory
proposals may dilute the intended benefits of broad based consultation.
In particular, new entrants, SMEs or foreign stakeholders may be at a
disadvantage in informal consultations. Maintaining balance between open
consultation procedures and the flexibility of informal procedures is
important, with the understanding that specific consideration of access
possibilities by new foreign stakeholders may be required in certain circumstances.
Although responsibility for policy decisions rests with the government,
transparency in the way comments are handled enhances the credibility
of the process and the prospects of regulatory compliance by the economic
actors.
C5. To what extent are government procurement processes open and
transparent to potential suppliers, both domestic and foreign?
Comment:
Transparency of practices relating to government procurement is
another critical determinant of market openness. In many jurisdictions,
government procurement is a significant portion of the economy and open
access to procurement can introduce innovative, efficient players or cost
savings, thus promoting efficiency within the economy (see Question H6
on transparency). Transparency for government procurement can mean easily
available and centralised information regarding procurement opportunities;
this may be done via the internet through the use of e-gateways, for example.
Fair and transparent processes for procurement decisions means that those
seeking contracts know what are the requirements and criteria for awarding
contacts. In a fair process, the criteria and requirements are the same
for all. A fully developed procurement process would include opportunities
to appeal decisions to an independent body where participants consider
that the process was flawed or unfair.
C6. Do regulatory requirements discriminate against or otherwise
impede foreign investment and foreign ownership or foreign supply of services?
If elements of discrimination exist, what is their rationale? What consideration
has been given to eliminating or minimising them, to ensure equivalent treatment
with domestic investors?
Comment:
Limits to foreign investment or ownership in key sectors or for
other essential reasons (e.g., cultural sovereignty) have significant
negative impacts on the attractiveness of an economy for investment and
on prospects for economic development and growth. As countries compete
for new investments, a good quality regulatory environment that is transparent,
non-discriminatory, efficient, timely, based and embedded in law becomes
a powerful tool for countries to attract and maintain investors. (See
also Question H4 on non-discrimination of regulatory policies and reforms).
Equally, discrimination against foreign services or service suppliers
limits the potential for gains from competition and market openness, including
access to higher quality services, lower prices and technology transfer.
Where important public policy objectives can be safeguarded by non-discriminatory
regulation, the rationale for discrimination should be carefully considered
and weighed against the gains from greater openness.
Creating a regulatory culture in which officials are sensitive to
and consider the effects of regulatory actions on foreign investment or
foreign supply of services should be one of the goals of a programme of
regulatory reform. This can be done through, among other means, requiring
that the impact analyses for new regulation and the terms of reference
for reviews of existing regulation pay due attention to anticipated effects
on trade and investment (See Question A6 on RIA). Similarly, independent
regulators, such as sectoral regulators, should be required to make comparable
assessments.
C7. To what extent are harmonised international standards being
used as the basis for primary and secondary domestic regulation?
Comments:
International standards play a vital role in improving market openness.
Compliance with differing national regulations and standards significantly
increases the cost of operating in different markets. Standards developed
internationally may offer a solution to fragmented regulatory systems.
Reliance on international standards is encouraged within several WTO agreements
as the basis of domestic regulation when such standards exist and are
judged to be relevant, effective and appropriate for achieving regulatory
objectives. Such reliance should be a prominent feature of regulatory
reform in all policy areas.
The use of international standards may be considerably strengthened
through the systematic monitoring of related regulatory initiatives.
Provisions that depart from existing international standards should
be based on genuine differences in regulatory objectives or in available
means to achieve them. Regulatory authorities should use open and transparent
procedures when considering to base domestic regulations on international
standards.
C8. To what extent are measures implemented in other countries
accepted as being equivalent to domestic measures?
Comment:
Where foreign regulatory measures differ from those developed domestically,
but nonetheless adequately fulfil the domestic policy objectives, acceptance
of these measures as functionally equivalent to the domestic measures,
where possible, will encourage market openness and stimulate competition.
On the contrary, requiring firms to meet domestic regulations in circumstances
where they have appropriately met regulatory requirements for the same
regulatory objective in their home economy, will increase the costs of
production or doing business. It may also introduce "de facto"
discrimination against foreign goods. Clearly defined criteria for the
acceptance of foreign standards, measures and qualifications and clear
avenues for demonstrating equivalence should be available. Foreign producers
and service suppliers should have an open, transparent and accessible
process available to them if they want to make a case for equivalence.
Clear and thorough regulatory impact statements for new regulation can
be useful in determining the objectives and effects of regulation in order
to demonstrate equivalence. Recognition of equivalence can also be facilitated
through the adoption of mutual recognition agreements.
C9. To what extent are procedures to ensure conformity developed
in a transparent manner and with due consideration as to whether they are
effective, feasible and implemented in ways that do not create unnecessary
barriers to the free flow of goods or provision of services?
Comments:
Conformity to regulations is necessary to achieve public objectives
such as health, safety, environmental and consumer protection. When done
without the outlay of excessive costs and time, procedures to ensure conformity
can facilitate market openness by increasing consumer confidence in products
or service providers. On the other hand, they can negatively affect market
openness when they are duplicative, poorly implemented or when they are
designed in a way that the high cost of meeting them and their complexity
does not contribute to the achievement of regulatory objectives. Governments
should work towards a system that is proportionate, streamlined and well
implemented.
Recognising the equivalence of the results of an assessment performed
elsewhere can greatly contribute to reducing costs associated to conformity
assessment procedures. Mutual recognition agreements (MRAs) signed by
two or more countries on the acceptance of conformity assessment procedures
is one approach to formalise this process. MRAs in the area of conformity
assessment avoid costs to exporting producers by allowing them to attest
to their conformity with applicable requirements through certification
by their own country� conformity assessment procedures. They would then
be deemed to be in compliance with the procedures of the importing economy.
Progress towards a more efficient system can also be made through
the recognition of supplier� declaration of conformity, unilateral recognition
of conformity assessment results reported in other economies, or through
voluntary arrangements between conformity assessment bodies in different
economies. At the same time, governments should encourage the development
of domestic capacity for accreditation and ensure ease of access to the
accreditation process for both foreign and domestic producers.
ANNEX 1: MATRIX
THE APEC-OECD INTEGRATED CHECKLIST ON REGULATORY REFORM
(Note: the place of the cells has no relation to the order
of the rows. That is, questions H4, A4, B4 and C4 are not related)
| H. INTEGRATED POLICIES (HORIZONTAL DIMENSION) |
A. REGULATORY POLICY |
B. COMPETITION POLICY |
C. MARKET OPENNESS POLICIES |
| H1. To what extent is there an integrated policy for regulatory
reform that sets out principles dealing with regulatory, competition
and market openness policies? |
A1. To what extent are capacities created that ensure consistent
and coherent application of principles of quality regulation? |
B1. To what extent has a policy been embraced in the jurisdiction
that is directed towards promoting efficiency and eliminating or minimising
the material competition distorting aspects of all existing and future
laws, regulations, administrative practices and other institutional
measures (collectively �egulations��) that have an impact upon markets?
|
C1. To what extent are there mechanisms in regulatory decision-making
to foster awareness of trade and investment implications? |
| H2. How strongly do political leaders and senior officials express
support for regulatory reform to both the public and officials, including
the explicit fostering of competition and open markets? How is this
support translated in practice into reform and how have businesspeople,
consumers and other interested groups reacted to these actions and
to the reforms in concrete terms? |
A2. Are the legal basis and the economic and social impacts of drafts
of new regulations reviewed? What performance measurement instruments
are being envisaged for reviewing the economic and social impacts
of new regulations? |
B2. To what extent do the objectives of the competition law and
policy include, and only include, promoting and protecting the competitive
process and enhancing economic efficiency including consumer surplus?
|
C2. To what extent does the government promote approaches to regulation
and its implementation that are trade-friendly and avoid unnecessary
burdens on economic actors? |
| H. INTEGRATED POLICIES (HORIZONTAL DIMENSION) |
A. REGULATORY POLICY |
B. COMPETITION POLICY |
C. MARKET OPENNESS POLICIES |
| H3. What are the accountability mechanisms that assure the effective
implementation of regulatory, competition and market openness policies?
|
A3. Are the legal basis and the economic and social impacts of existing
regulations reviewed, and if so, what use is made of performance measurement
instruments? |
B3. To what extent does the Competition Authority or another body
have (i) a clear mandate to advocate actively in order to promote
competition and efficiency throughout the economy and raise general
awareness of the benefits of competition, and (ii) sufficient resources
to carry out any advocacy functions included in its mandate? |
C3. To what extent are customs and border procedures designed and
implemented to provide consistency, predictability, simplicity and
transparency so as to avoid unnecessary burdens on the flow of goods?
To what extent are migration procedures related to the temporary movement
of people to supply services transparent and consistent with the market
access offered? |
| H4. To what extent do regulation, competition and market openness
policies avoid discrimination between like goods, services, or service
suppliers in like circumstances, whether foreign or domestic? If elements
of discrimination exist, what is their rationale? What consideration
has been given to eliminating or minimising them? |
A4. To what extent are rules, regulatory institutions, and the regulatory
management process itself transparent, clear and predictable to users
both inside and outside the government? |
B4. To what extent are measures taken to neutralise the advantages
accruing to government business activities as a consequence of their
public ownership? |
C4. To what extent has the government established effective public
consultation mechanisms and procedures (including prior notification,
as appropriate) and do such mechanisms allow sufficient access for
all interested parties, including foreign stakeholders?* |
*. This Question could be further integrated, in particular with elements
of Question H6 and Question A5.
| H. INTEGRATED POLICIES (HORIZONTAL DIMENSION) |
A. REGULATORY POLICY |
B. COMPETITION POLICY |
C. MARKET OPENNESS POLICIES |
| H5. To what extent has regulatory reform, including policies dealing
with regulatory quality, competition and market openness, been encouraged
and co-ordinated at all levels of government? |
A5. Are there effective public consultation mechanisms and procedures
including prior notification open to regulated parties and other stakeholders,
including non-governmental organisations, the private sector, advisory
bodies, accreditation bodies, standards-development organisations
and other governments? * |
B5. To what extent does the agency responsible for the administration
and enforcement of the competition law (the �ompetition Authority��)
operate autonomously, and to what extent are its human and financial
resources sufficient to enable it to do its job? |
C5. To what extent are government procurement processes open and
transparent to potential suppliers, both domestic and foreign? |
| H6. Are the policies, laws, regulations, practices, procedures and
decision making transparent, consistent, comprehensible and accessible
to users both inside and outside government, and to domestic as well
as foreign parties? And is effectiveness regularly assessed? |
A6. To what extent are clear and transparent methodologies and criteria
used to analyse the regulatory impact when developing new regulations
and reviewing existing regulations? |
B6. If the competition law reserves a role for governmental bodies
other than the Competition Authority under the competition law, to
what extent is this role transparent, for example, regarding factors
taken into account by such decision-maker, and their relative weighting?
|
C6. Do regulatory requirements discriminate against or otherwise
impede foreign investment and foreign ownership or foreign supply
of services?* If elements of discrimination exist, what is their rationale?
What consideration has been given to eliminating or minimising them,
to ensure equivalent treatment with domestic investors? |
| H7. Are the reform of regulation, the establishment of appropriate
regulatory authorities, and the introduction of competition coherent
in timing and sequencing? |
A7. How are alternatives to regulation assessed? |
B7. To what extent is there a transparent policy and practice that
addresses the relationship between the Competition Authority and sectoral
regulatory authorities? |
C7. To what extent are harmonised international standards being
used as the basis for primary and secondary domestic regulation? |
*. This Question could be further integrated for instance moving it to
the Horizontal section and merging it with Question C4.
*. This Question could be further integrated, in particular with elements
of Question H4.
| H. INTEGRATED POLICIES (HORIZONTAL DIMENSION) |
A. REGULATORY POLICY |
B. COMPETITION POLICY |
C. MARKET OPENNESS POLICIES |
| H8. To what extent are there effective inter-ministerial mechanisms
for managing and co-ordinating regulatory reform and integrating competition
and market openness considerations into regulatory management systems?
|
A8. To what extent have measures been taken to assure compliance
with and enforcement of regulations? |
B8. To what extent does the competition law contain provisions to
deter effectively and prevent hard-core cartel conduct, abuses of
dominant position or unlawful monopolistic conduct, and contain provisions
to address effectively anti-competitive mergers? To what extent does
the broader competition policy strive to ensure that this type of
conduct is not facilitated by government regulation? |
C8. To what extent are measures implemented in other countries accepted
as being equivalent to domestic measures? |
| H9. Do the authorities responsible for the quality of regulation
and the openness of markets to foreign firms, and the competition
authorities have adequate human and technical resources, to fulfil
their responsibilities in a timely manner? |
|
B9. To what extent does the competition law apply broadly to all
activities in the economy, including both goods and services, as well
as to both public and private activities, except for those excluded?
|
C9. To what extent are procedures to assure conformity developed
in a transparent manner and with due consideration as to whether they
are effective, feasible and implemented in ways that avoid creating
unnecessary barriers to the free flow of goods or provision of services?
|
| H10. Are there training and capacity building programmes for rule-makers
and regulators to ensure that they are aware of high quality regulatory,
competition and market openness considerations? |
|
B10. To what extent does the competition law provide for effective
investigative powers and sanctions to detect, investigate, punish
and deter anti-competitive behaviour? |
|
| H. INTEGRATED POLICIES (HORIZONTAL DIMENSION) |
A. REGULATORY POLICY |
B. COMPETITION POLICY |
C. MARKET OPENNESS POLICIES |
| H11. Does the legal framework have in place or strive to establish
credible mechanisms to ensure the fundamental due process rights of
persons subject to the law, in particular concerning the appeal system?
|
|
B11. To what extent do firms and individuals have access to (i)
the Competition Authority to become apprised of the case against them
and to make their views known, and (ii) to the relevant court(s) or
tribunal(s) to appeal decisions of the Competition Authority or seek
compensation for damages suffered as a result of conduct contrary
to the domestic competition law? |
|
| |
|
B12. In the absence of a competition law, to what extent is there
an effective framework or mechanism for deterring and addressing private
anti-competitive conduct? |
|
ANNEX 2. DEVELOPING THE APEC-OECD INTEGRATED CHECKLIST
ON REGULATORY REFORM: ADDRESSING REGULATORY, COMPETITION POLICY,
AND MARKET OPENNESS ISSUES
I. THE APEC-OECD INTEGRATED CHECKLIST
Project objective and outputs
1. The APEC-OECD Co-operative Initiative has played an important role
since December 2000 in raising awareness about the importance of regulatory
reform in the 46 economies that are members of these two organisations.
Regulatory reform is accelerating throughout the APEC and OECD economies
as market liberalisation deepens in many sectors, markets open wider
to trade and investment, and reform of public sector institutions enables
more transparent and efficient regulatory regimes to function. These
developments, which are interconnected, help boost sectoral performance,
enhance economy-wide efficiency, innovation and growth, increase consumer
choice and welfare, and help government to maintain high standards of
environmental quality, consumer welfare and safety. The regulatory reform
agenda is based on ideas of �egulatory quality��, or the appropriate
use of regulation to support markets and foster public interests. As
a result, supply-side structural reforms that stimulate investment and
competition and reduce regulatory inefficiencies have become central
to effective economic policy.
2. As the First Phase of the APEC-OECD Co-operative Initiative demonstrated,
there is no �ne-size-fits-all�� model of regulatory reform. However,
Member economies of the two organisations have identified crucial common
elements of reform. It is in this spirit that in 1997 and in 2000 they
endorsed respectively the OECD Policy Recommendations on Regulatory
Reform and the APEC Principles to Enhance Competition and Regulatory
Reform to promote the individual and collective implementation of regulatory
reform.
3. In October 2002, APEC and OECD agreed at the International Conference
on Regulatory Reform in Jeju Island, Korea, to pursue the APEC-OECD
Co-operative Initiative. A central proposal for the Second Phase (2003-2004)
is to work collectively on the creation of an Integrated Checklist to
help countries self-assess their progress in terms of implementing the
common principles on regulatory reform.
-
Australia, Austria, Belgium, Brunei Darussalam, Canada,
Chile, People� Republic of China, Czech Republic, Denmark, European
Commission, Finland, France, Germany, Greece, Hong Kong, Hungary,
Iceland, Indonesia, Ireland, Italy, Japan, Korea, Luxembourg, Malaysia,
Mexico, Netherlands, New Zealand, Norway, Papua New Guinea, Peru,
Philippines, Poland, Portugal, Russia, Singapore, Slovak Republic,
Spain, Sweden, Switzerland, Chinese Taipei, Thailand, Turkey, United
Kingdom, United States of America, Viet Nam.
-
The principles can be found on www.oecd.org/regreform
or as annexes in the agenda of the Vancouver Workshop.
-
See Work Programme 2003-2004 of the OECD-APEC Co-operative
Initiative on Regulatory Reform, www.oecd.org/regreform
4. This project is a joint effort of OECD and APEC member countries
and economies, with contributions from the private and social sectors
and other relevant international organisations. Its central proposal
is to �ork collectively �� on the creation of an integrated checklist
to help countries to self-assess their progress in terms of implementing
the common principles on regulatory reform��. The goal is to foster as
far as possible and feasible, and without compromising the policy objectives,
a triple integration of regulatory practices: an integration of both
sets of principles, of the main policy areas constituting regulatory
reform and of governance perspectives. The APEC-OECD Co-operative Initiative
would act as a catalyst in developing this new integrated tool by bringing
together the expertise of member economies and relevant individuals
and institutions.
5. Previous versions of this Checklist served as a basis for the Fourth
Workshop of the APEC-OECD Co-operative Initiative, held in Vancouver,
Canada on 8 �� 9 October 2003 where participants discussed the framework,
the horizontal aspects and the regulatory policy dimension of the Integrated
Checklist. At the Fifth Workshop held in Paris on 2-3 December 2003,
participants discussed the competition aspects. Market openness was
the focus of discussions at the Sixth Workshop which was held in Pucon,
Chile, on 24-25 May 2004. A conference on 1 November 2004 in Thailand
concluded the preparation of the Checklist and elicited the comments
and support of stakeholders. These events have provided an opportunity
to discuss a multidisciplinary instrument that can be put to practical
use to implement APEC and OECD principles.
II. THE INTEGRATED CHECKLIST
Comparison of the APEC and OECD Principles
6. The Integrated Checklist has been designed to be used as an indicative
tool for the relevant government agencies, departments and ministries
to self-assess country implementation of regulatory reform and in particular
the three key policies that support it: regulatory, competition and
market openness policies (see Box 1).
Box 1. Central definitions
Regulatory reform refers to changes that improve regulatory quality
to enhance the economic performance, cost-effectiveness, or legal
quality of regulations and related government formalities. Reform
can mean revision of a single regulation, the scrapping and rebuilding
of an entire regulatory regime and its institutions, or improvement
of processes for making regulations and managing reform. Deregulation
is a subset of regulatory reform and refers to complete or partial
elimination of regulation in a sector to improve economic performance.
Regulatory, competition and market openness policies are key drivers
for a successful and coherent regulatory reform.
Regulatory policies are designed to maximise the efficiency,
transparency, and accountability of regulations based on an integrated
rule-making approach and the application of regulatory tools and
institutions.
Competition policies promote economic growth and efficiency by
eliminating or minimising the distorting impact on competition
of laws, regulations and administrative policies, practices and
procedures; and by preventing and deterring private anti-competitive
practices through effective enforcement of competition laws.
Market openness policies aim to ensure that a country can reap
the benefits of globalisation and international competition by
eliminating or minimising the distorting effects of border as
well as behind-the-border regulations and practices. These policies
influence the range of opportunities open to suppliers of goods
and services to compete in a particular national market (e.g.
through trade and investment), irrespective of whether the suppliers
are domestic or foreign. |
7. Both sets of OECD and APEC principles share not only the importance
given to the need for further regulatory reform but also basic elements
and principles such as the importance of regulatory quality, competition
and the avoidance of unnecessary economic distortions. They also share
key core values such as transparency, non-discrimination, and accountability.
Both aim at establishing a policy framework and developing capacities
to create a regulatory environment conductive to a well-functioning market
economy.
8. Some aspects of the OECD and APEC Principles differ, and implicit
gaps in one or another can be noted. The seven key OECD policy principles
are built around the need to improve rule-making processes, competition
policy and market openness capacities. The APEC Principles support �pen
and competitive markets�� as key drivers of economic efficiency and consumer
welfare. They promote competition and market openness (such as through
non-discrimination and the avoidance of distortions), which include dealing
with new and existing regulatory programmes and rules that may hinder
competition or otherwise introduce inefficiencies into the marketplace.
The APEC Principles also give a major importance to implementation, stressing
for instance the need for capacity building, resources endowment and recognising
the role of the private sector. Importantly, both sets of Principles address
substantive issues that concern the core and outcome of the reform policy,
as well as the process, institutions and capacities to implement the reform
policy.
9. Nevertheless, there appear to be no major inconsistencies between
the two sets of principles; most of the differences are of emphasis. For
instance, some �rocess�� elements of the OECD list can be derived from
the thrust given to �ccountability�� and �mplementation�� in the APEC
Principles. In sum, the two sets can be seen as mutually supportive and
consistent and their integration should serve to strengthen their accessibility
and implementation. Moreover, any guidelines on these matters will be
most effective to the extent that they are seen as flexible and evolutionary
and allow scope for improvement and refinement.
The Structure of the Integrated Checklist
10. In addition to drawing directly from the APEC and OECD Principles,
the Integrated Checklist incorporates the results of previous discussions
of past APEC-OECD events as well as recent material developed by the organisations.
11. Schematically, the Integrated Checklist can be seen as an edifice
in which a �ediment�� is supported by three pillars. The whole edifice
is made of 39 normative, open-ended questions (11 on �ntegrated�� policies;
8 on regulatory policy; 12 on competition policy, and 9 on market openness
policy) that national authorities should answer when considering the adoption
or revision of regulatory, competition or market openness policies. Under
each question, one or more paragraphs provide further explanatory elements
and criteria. A matrix view of the Integrated Checklist providing a synthesis
of questions can be found in Annex 1.
- For example, the APEC Principles include substantive matters such
as the basic content of competition laws (i.e., broad application of
the competition principles) but also important framework conditions
such as non-discrimination and transparency in the design of the competition
agency.
- In particular the 1995 Recommendation of the Council of the OECD
on Improving the Quality of Government Regulation; the 1997 OECD Report
to Ministers, which set up a comprehensive plan for action on Regulatory
Reform; the 2000 Recommendation of the Council Concerning Effective
Action Against Hard Core Cartels, and the 2001 Recommendation of the
Council Concerning Structural Separation in Regulated Industries and
two major stock taking exercises : Regulatory Policies in OECD Countries:
From Interventionism to Regulatory Governance, Paris, 2002, and Integrating
Market Openness into the Regulatory Process: Emerging Patterns in OECD
Countries, Paris [TD/TC/WP(2002)25/Final].
12. The �ediment�� includes all �hared�� and general issues concerning
the three policy areas that most support regulatory reform (regulatory,
competition and market openness); these include such issues as political
commitment, transparency, public consultation, etc. It is recognised that
the specific means of effective implementation may vary in the different
policy areas, although the amount of detail given in this draft varies
according to the issue. As such, these questions can be seen as horizontal
and already integrated. The three other sections address specific aspects
of each of the policy areas. To further help in the integration, some
cross references to individual questions have been added.
13. It should be noted, however, that the �ediment�� and each of the
pillars do not differentiate �ubstantive�� questions focusing on the core
elements of the policy, and �apacity�� questions addressing the existence
of institutions, processes and other matters needed to implement the APEC
and OECD Principles. Also, no attempt has been made to impose a hierarchy
on the questions appearing in the Matrix or to weight or assign importance
them.
Towards the future
14. The Integrated Checklist translates the general statements found
in the already agreed-upon APEC and OECD Principles into concrete, practical
terms that can be applied in different contexts, and does so in ways that
integrate governance perspectives �� transparency, accountability and performance.
Because of the complexity of the issues involved and the synergies and
occasional trade-offs among competing objectives, the Integrated Checklist
should provide clear guidance and explicit criteria to make evaluation
easier, while helping create a framework in which priorities can be set,
capacities enlarged, and awareness raised.
15. An integrated instrument maximises the synergies among the three
policy areas and the coherence of the reform efforts, while recognising
the political reality confronting many decision-makers in setting regulatory
objectives and establishing modalities. Indeed, a number of issues in
the three categories and some concepts behind �ood practices�� in each
category are similar. The goal is to provide an integrated whole-of-the-government
tool to manage and monitor regulatory reform, providing coherence while
serving the different policy areas.
16. The Integrated Checklist is a unique and major effort for international
development of good regulatory governance practices. It should include
the most relevant and action-oriented questions to indicate whether countries
have in place effective approaches to designing, implementing and building
domestic capacities to ensure that national policies in these three areas
are supportive of regulatory reform. Regulatory reform does not simply
happen when a policy or law is adopted to that end; effective institutions,
policies and tools must be in place, and embedded in an organisational
and political culture, to implement it. The Integrated Checklist should
also function as a repository of APEC and OECD members�� experience, knowledge
and best practices leading to further reforms. This is inherently an open
process, one in which it is as possible and desirable to learn from failure
as from success.
17. Development of the Integrated Checklist is only the beginning. Ahead
lies the work of implementing regulatory reform, which the Checklist,
used as a self-assessment tool initially and thereafter at intervals,
can make easier.
