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2011/SOM2/006
Agenda Item: 4c
APEC 2012 - Proposal for Workshop on Regulatory Coherence
Purpose: Consideration
Submitted by: New Zealand
/ Second Senior Officials’ MeetingBig Sky, United States17-18 May 2011
APEC 2012 - Proposal for workshop on regulatory coherence
(Draft of 12 May 2011)
Proposal
New Zealand proposes to hold a workshop at SOM1 2012 on regulatory coherence. The workshop will be relevant to trade policy specialists, regulatory policy experts and regulators. Drawing on New Zealand’s experience and the experience of other economies, the workshop will provide insights and examples of strategies for regulatory coherence within a broader domestic regulatory quality framework.
Background
Regulatory coherence is not a new concept. The importance of ensuring that domestic regulation does not act in an unnecessary barrier to trade is embodied in a range of international agreements and in the work of many APEC committees.
The emphasis that is currently being placed on regulatory coherence builds on this concept through bringing a sharper focus and more experiences to bear on:
The idea that domestic regulatory frameworks, rules and administration should explicitly take into account broader trade and investment facilitation goals.
The sorts of coordination strategies that can support the achievement of these goals while at the same time taking into account unique local conditions and satisfying domestic regulatory objectives ( a 'win win').
New Zealand has encountered many of the challenges of creating strong domestic regulatory quality frameworks while at the same time pursuing regulatory coherence. The relationship that it has with Australia, underpinned by a single economic market objective, has provided generic lessons that other APEC economies might find useful.
Purpose
The purpose of the workshop will be to illustrate approaches that have been taken by New Zealand to build strong domestic frameworks for assuring best practice regulation and embedding within those frameworks open and competitive market and New Zealand/Australia single economic market objectives. The workshop will illustrate approaches that have been taken to achieve regulatory coherence between New Zealand and Australia and lessons that have been learned that may have application in other APEC economies.
Elements of the workshop
New Zealand's frameworks for assuring high quality regulation and regulatory coherence have evolved over the years. Currently there are five key elements:
A regulatory impact analysis (RIA) regime that aims to ensure that new regulation is 'required, reasonable and robust'.
A systematic approach to scanning all existing regulation having regard to the required, reasonable and robust objective.
A high level assessment of regulatory regimes against a set of best regulatory practice principles (growth focused, proportionate, flexible and durable, certain and predictable, transparent and accountable, capable regulators).
A planning process drawing on the scans and assessment to set priorities for regulatory improvement.
A specific project whereby firms are given the opportunity to identify domestic regulations and regulatory practices that are limiting their export potential, and a process of engagement with regulators to resolve these.
At a high level the goal is 'better regulation' and 'less regulation'. In other words the goal is not deregulation, but rather a threshold for regulation that is based on clear evidence that there is a problem, and all options, including non-regulatory options, have been fully considered. In some cases the goal is achieved through more regulation, as we have seen in financial markets in response to the global financial crisis.
The objective of regulatory coherence is addressed in the first instance by requiring regulators to have regard to open and competitive market objectives, but there is also an underlying assumption that best practice regulation is inherently consistent with market openness. For example:
Regulation that is proportionate (risk and evidence based) ensures that regulators don't place undue regulatory controls on firms whether they are locally based or based in other economies.
Regulation that is flexible permits standards that apply in other economies to be accepted if they achieve equivalent outcomes, and accommodates evolving business practices, for example global supply chains.
Regulation that is certain and predicable reduces transaction costs and risks for firms operating in other markets.
However, New Zealand's experience is that more is required to achieve regulatory coherence. Regulators need to be open to this objective and this may require a cultural shift in some regulators, as well as policies and procedures that support regulatory coherence.
One approach to giving confidence to regulators that domestic policy objectives will not be compromised through regulatory coherence is to provide them with a tool kit that both illustrates that coherence strategies can be fit for purpose, and the costs and risks to regulators can be managed through good instrument choice.
New Zealand has a long history of regulatory cooperation with Australia, but the range of instruments that have been used are many and varied. They include learning from each others’ experiences in regulatory design and implementation, in effect unilateral convergence around best practice, through to more formal instruments such as mutual recognition and joint standards setting (both voluntary and mandatory standards).
The New Zealand/Australian regulatory coordination experience was brought together in a document prepared by officials and published by the Australian New Zealand School of Government in 2007 titled: Arrangements for facilitating trans-Tasman government institutional co-operation. Options for cooperation were described and illustrated by specific examples, and criteria were developed to inform judgments on when to coordinate, and selection of ‘fit for purpose’ coordination instruments.
There have been further developments since this publication was produced, and these will also be drawn upon in the workshop to illustrate modalities for regulatory coherence within a domestic regulatory quality framework. The focus will be on lessons that have been learned that have general application to APEC economies, rather than specific to the New Zealand/Australian relationship. Consideration will be given to expanding the scope of the workshop to include other Economies’ experiences.
Ministry of Economic Development
The Treasury