APEC ECONOMIC COMMITTEE
FIRST PLENARY MEETING FOR 2006
25-26 February 2006
Ha Noi, Viet Nam
CHAIR’S SUMMARY REPORT
The APEC Economic Committee (EC) held its first plenary meeting for the year 2006 on 25-26 February in Ha Noi, Viet Nam. The meeting was chaired by Dr. Kyung Tae Lee of the Republic of Korea, and attended by Australia; Canada; Chile; the People’s Republic of China; Hong Kong, China; Indonesia; Japan; the Republic of Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; the Philippines; Singapore; Chinese Taipei; the United States of America; and Viet Nam.
Representatives from the OECD attended the first half of the meeting on 25 February which was an EC-OECD joint session. The Chairs of Strengthening Economic and Legal Infrastructure (SELI), Competition Policy and Deregulation Group (CPDG), and the Finance Ministers’ Technical Working Group (FMTWG) also attended parts of the meeting.
I. Opening Remarks
The Chair welcomed all delegates to the EC’s first plenary meeting of the year. The meeting started off with introductions from attending delegates.
The Chair commented that this is the EC’s first full year in terms of fully implementing its structural reform mandate. He looked forward to having productive discussions at the meeting on this issue. The Chair welcomed the attendance and participation of the Chairs of related fora at the meeting, that is SELI, CPDG and FMTWG, which will help strengthen coordination and collaboration in the area of structural reform.
II. Adoption of Agenda
New Zealand suggested discussing the whole of the APEC Work Plan towards LAISR 2010 (‘LAISR 2010’) under agenda item V.1.1.3, rather than just focusing on the Public Sector Governance Seminar.
It was agreed that the meeting will begin with a discussion of structural reform related activities given the OECD’s participation in this area. A review of the outcome of CSOM and Leaders’ and Ministers’ meetings in 2005 were moved to the afternoon.
The meeting agreed to the proposals above.
The Committee adopted the draft agenda (Doc. No. 2006/SOM1/EC/001), subject to the amendments made above.
III. Business Arrangements
Viet Nam as the host economy informed the Committee of the business arrangements for the meeting.
IV. Review of the Outcome of CSOM, and Leaders’ and Ministers’ Meeting in 2005
The Chair provided a brief review of the outcome of the Leaders’ and Ministers’ Meeting in 2005, which included endorsing EC projects endorsed, welcoming the APEC-OECD Integrated Checklist on Regulatory Reform and the Structural Reform Capacity Building Symposium, and encouraging further work on structural reform and ongoing coordination with relevant fora. The Chair noted the production of three EC publications in 2005.
The Chair has met with the new CTI Chair and informed members that the EC Chair’s assistant, Dr Sangkyom Kim attended the last FMTWG meeting in December. The Chair acknowledged the attendance of the SELI, CPDG and FMTWG Chairs at the EC meeting.
The Chair noted the following points from the 2005 SOM Tasking Statement (Doc. No. 2006/SOM1/EC/009) that relate to the EC:
- continuing to work with the OECD and helping economies to utilize the Integrated Checklist;
- research on socio-economic disparity issues – however, it has not yet been decided which forum will lead this work;
- behind-the-border issues to enhance business-friendly environment;
- LAISR 2010.
V. 2006 Work Program
The Chair noted that Hong Kong, China; Chinese Taipei; and the United States have volunteered to undertake a self-assessment exercise using the APEC-OECD Integrated Checklist on Regulatory Reform.
1. Structural Reform Related Activities
1.1. Self-assessment by member economies using the APEC-OECD Integrated Checklist on Regulatory Reform, and sharing of experiences through Roundtable Discussion
Mr Josef Konvitz, Head of the Regulatory Policy Division at the OECD, noted that the Checklist was endorsed by the Ministers Responsible for Trade (MRT) in May 2005 and in the 2005 Annual Ministerial Statement. This signifies a clear mandate from Ministers for the EC to move forward and to work with the OECD on the Checklist.
The OECD presented on the three different sections of the Checklist: ‘Regulatory Policy’, ‘Competition Policy and Law’, and ‘Market Openness Policies’:
- Mr Konvitz presented on how the Checklist can be used as self-assessment policy instrument (Doc. No. 2006/SOM1/EC/002). His presentation covered the OECD regulatory policy concept, OECD member reviews, and strategies for assuring regulatory quality.
- Mr Edward Whitehorn, Head of Competition Outreach at the OECD made a presentation on competition policy and law (Doc. No. 2006/SOM1/EC/004a and 004b). His presentation covered the following topics: the competition policy framework, the objectives of competition policy, institutional issues, and the need for competition law.
- Mr Osamu Onodera spoke on the significance of regulatory reform in a “flat world” and why market openness is an important part of regulatory reform. (Doc. No. 2006/SOM1/EC/005).
Japan shared its experiences in the area of regulatory reform (Doc. No. 2006/SOM1/EC/012), touching on the economic benefits of reform in Japan, the framework used for reform, the steps that have been taken to progress reform, and the current state of reform in Japan.
Discussion
The following points were noted and/or discussed under this item:
- The CPDG has played a significant role in orchestrating the work undertaken to develop the Checklist.
- The United States will be using two components of the Checklist in its self-assessment exercise – the horizontal criteria concerning regulatory reform and regulatory policy.
- Chinese Taipei would like to invite the OECD to meet with its senior officials to gain further support for its self-assessment exercise and to conduct training in preparation for this undertaking. The final product will be in the form of a report and an oral presentation at EC II. Chinese Taipei would like to consult the OECD on its preliminary report.
- The EC needs to keep a focus on its message to Leaders on the importance of regulatory reform and what the EC is doing in this area. The quality and efficiency of regulatory instruments as well as institutions need to be considered.
- The OECD is not aware of any indicators to measure the effectiveness of competition policy, although there are studies that examine economic benefits accruing to consumers as a result of enforcement actions. Measuring economic efficiency and its impact on growth is a difficult exercise.
- The way the questions are posed in the Checklist require responses that are relative in nature, i.e. “to what extent”. Regulatory policy development needs to be seen as a dynamic process. Reform involves the reassessment of policies over time and changing them if required.
- It takes resources and coordination between agencies within an economy to make self-assessment a successful exercise. The sharing of results of the exercise with other economies will maximize the benefits of self-assessment.
- Going through the self-assessment process will involve asking questions of how fast , to what extent, and in what order regulatory reform should be undertaken.
- There is merit in examining specific sectors of the economy, identifying potential steps for opening up these sectors, and defining the appropriate role of the government versus that of the private sector.
- The OECD could usefully collate the experiences from different economies so that these can be shared with all EC members.
1.2. Sectoral perspective in OECD regulatory reform reviews
Mr Chang Won-Choi from the OECD presented on the sectoral perspective in OECD regulatory reform reviews (Doc. No. 2006/SOM1/EC/003a and 3b). The OECD has assessed regulatory policies in 21 member countries since 1997. The reviews follow a multi-disciplinary approach and are aimed at assisting governments improve regulatory quality.
Discussion
The Chair noted that the EC needs to discuss the modalities and format of roundtable discussions for sharing of experiences from the self-assessment exercise undertaken by economies.
Canada made the following suggestions:
- Economy reviews should have space for questions to be posed so that ideas can be exchanged. Discussants can be identified in advance so that they can prepare questions that will be useful. The OECD can be included as key discussants.
- It may be useful for those economies who have experienced the OECD peer review process to explain the process and the resulting benefits. This will help place the self-assessment exercise in context.
- There is a need to consider the ultimate result of the exercise and how economies can follow up on the self-assessment.
Malaysia expressed concern that the self-assessment exercise should not duplicate work undertaken under the Individual Action Plan (IAP) Peer Reviews (which focused on five sectors of the economy). The Chair clarified that the Checklist will not be used for sectoral assessment so there will be no duplication.
1.3. Work Plan on LAISR toward 2010
This agenda item comprises an update on the progress of the Public Sector Governance Seminar initiative led by New Zealand, and a discussion on how to progress ‘LAISR 2010’, particularly in terms of policy areas of focus in upcoming years and how to continue to coordinate with relevant APEC fora with regard to structural reform.
i. Public Sector Governance Seminar (Doc. No. 2006/SOM1/EC/013a and 013b)
New Zealand provided an update on the seminar that will be held at the margins of SOM III in Nha Tranh in September 2006. SELI, CPDG and FMTWG have been consulted on the draft project proposal and Japan and Malaysia have agreed to co-sponsor the proposal. A good practice principles paper on public sector governance will be prepared following the seminar, and presented to members at EC I in 2007.
Japan and Malaysia expressed their support for the proposal.
The meeting endorsed the project proposal for submission to BMC I.
ii. Progressing ‘LAISR 2010’
The meeting noted the need to identify key policy themes for 2008 and 2009 under ‘LAISR 2010’. The key points from the discussion were as follows:
- The EC needs to change its modus operandi and mindset in order to respond effectively to its role with regard to structural reform. There was agreement amongst members that the EC should be a policy-oriented forum (as instructed by Leaders), with a recognition that robust policies are based on sound analytics and research.
- There is a need to ensure that the themes identified do not duplicate the work of other APEC fora. Given the EC’s mandate to coordinate structural reform activities within APEC, the EC call upon the resources of relevant fora such as SELI, CPDG and FMTWG, and other bodies such as the OECD and IFIs.
- Japan suggested that economic and legal infrastructure, and corporate governance (the two remaining priorities identified in LAISR) could be the policy themes for 2008 and 2009 respectively.
- Canada suggested the financial sector as a key policy theme for 2008 or 2009, given the importance of capital markets. The EC can work together with the Finance Ministers’ Process (FMP) on this theme. However, Australia noted that the FMP is currently implementing a Financial Sector Reform initiative which can be shared with the EC, so there is no need to duplicate the work undertaken within that group.
- Australia noted that regulatory reform and competition policy are complex issues and have many dimensions. These policy themes can run for two years each to ensure that substantive outcomes are achieved. However, there is a need to clarify how the different issues under each policy theme will be unbundled, discussed and presented to Ministers. Australia suggested working intersessionally to develop a work program for each of these proposed policy themes.
The idea of adopting a policy theme for more than one year was supported by New Zealand and the United States. Japan remarked that if needed the EC can always return to a particular policy theme in future years.
- The United States noted that the EC should retain the flexibility to respond to Leaders at short notice in terms of policy priorities, and therefore should not be tied to a rigid schedule. New Zealand commented that there should be a balance between flexibility and focus.
- China suggested focusing on specific sectors of the public sector in terms of public sector governance.
1.4. Development of regulatory burden indicators and survey on
macroeconomic impacts of structural reform
The brief presentation by Canada on the development of regulatory burden indicators touched on the need to have quantitative indicators for structural reform, the need to consider the goals of structural reform, the criteria for indicators, the possible indicators that can be identified, and a framework in which to think about these indicators in the first instance
1.5. Study on possible models of future regulation
Canada spoke about three possible models of future regulation. A framework may need to be used to help determine what sort of model is relevant.
1.6. Study on human capital development
Japan presented an overview and a progress report of its study ‘Trends and Perspectives on Human Capital in APEC’ (Doc. No. 2006/SOM1/EC/006).
Canada; Hong Kong, China; and Vietnam provided comments on Japan’s proposal. Australia touched on the possible linkage between this proposal and the ageing population issues that are being studied by the FMP.
1.7. SELI’s briefing on 2007 SELI project proposal
For purposes of coordination and information-sharing, the SELI Chair briefed the meeting on the group’s project proposal – ‘Seminar for Sharing Experiences in APEC Economies on Strengthening Economic Legal Infrastructure’ (Doc. No. 2006/SOM1/EC/014).
Australia noted that SELI members had agreed that more information will be provided and comments sought intersessionally by March
2. The APEC 2006 Economic Outlook
2.1. Chapter 1: Economic Performance and Prospects
Under this agenda item, EC members discussed what should be done with Chapter One of the annual APEC Economic Outlook (AEO). The following points were made during the discussion:
- Chapter One in its current form should be stopped because of its lack of usefulness and because it duplicates work undertaken by the FMP and IFIs. There is a strong consensus from the FMTWG that Chapter One duplicates unnecessarily the work done by that forum.
- Chapter One can be modified to become more policy-oriented and relevant, reflecting the LAISR and a domestic focus, to be complemented by updates on the reform process in each economy.
- By modifying the content of Chapter One, the EC can expend its resources more effectively to provide adequate focus to structural reform.
- There will still be a need for the EC to publicize the outcome of its deliberations so that the EC can share its work with the rest of APEC and to those outside APEC. The information produced by the EC should be useful to Senior Officials, Ministers and Leaders.