Trade and regulatory reform : insights from country experience

147 Pages·2001·1.543 MB·English

by  OECD

«
INDUSTRY, SERVICES AND TRADE
Trade and Regulatory Reform Trade and
INSIGHTS FROM COUNTRY EXPERIENCE
Regulatory
As trade barriers at the border have fallen through successive trade negotiations, domestic
Reform
regulation has emerged as a source of residual but potentially significant trade barriers.
Recognising the importance of participating in intensified global competition, countries
increasingly see regulatory reform as an inescapable policy to ensure that the expected
INSIGHTS FROM
benefits of globalisation are realised and that differences in national regulatory systems do
not become barriers to international trade and investment. In this light, OECD has
COUNTRY EXPERIENCE
undertaken a broad-ranging project on regulatory reform, for which market openness is seen
as a key objective.
The papers collected in this volume were presented at a workshop at OECD that aimed to T
r
a INDUSTRY, SERVICES AND TRADE
share national experiences of regulatory reform and trade and to foster consensus-building d
e
on best practices. Such practices include enhanced transparency, non-discriminatory due

a
process, independence of regulators and active implementation of competition policy. Other n
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issues raised at the workshop included the challenges for developing countries in pursuing
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regulatory reform and enhancing market openness? What insights for multilateral trading e
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rule-making emerge from country experiences? u
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The discussions reveal the pervasiveness of the issues raised at the workshop. In examining o
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the recent development of regulatory issues in trade policy making, this volume brings new y

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light to experiences in some parts of Asia and the Western hemisphere as well as to the e
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growing links among trade, regulation and governance. o
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ISBN 92-64-18728-6
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IINNSSIIGGHHTTSS FFRROOMM CCOOUUNNTTRRYY EEXXPPEERRIIEENNCCEE
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and which came into
force on 30th September 1961, the Organisation for Economic Co-operation and Development (OECD)
shall promote policies designed:
– to achieve the highest sustainable economic growth and employment and a rising standard of
living in Member countries, while maintaining financial stability, and thus to contribute to the
development of the world economy;
– to contribute to sound economic expansion in Member as well as non-member countries in the
process of economic development; and
– to contribute to the expansion of world trade on a multilateral, non-discriminatory basis in
accordance with international obligations.
The original Member countries of the OECD are Austria, Belgium, Canada, Denmark, France,
Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain,
Sweden, Switzerland, Turkey, the United Kingdom and the United States. The following countries
became Members subsequently through accession at the dates indicated hereafter: Japan
(28thApril1964), Finland (28th January 1969), Australia (7th June 1971), New Zealand (29th May 1973),
Mexico (18th May 1994), the Czech Republic (21st December 1995), Hungary (7th May 1996), Poland
(22ndNovember 1996), Korea (12th December 1996) and the Slovak Republic (14th December 2000). The
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Convention).
© OECD 2001
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FOREWORD
As trade barriers at the border fall through successive trade negotiations, it is increasingly evident
that domestic regulation may represent a significant source of residual trade barriers. With the
increased importance of the global economy today, regulatory reform may be necessary to ensure that
the expected benefits of globalisation are realised and that different national systems do not become
barriers to international trade and investment.
In this light, the OECD regulatory reform project recognises market openness as a key element of
reform. It has identified six efficient principles of regulation to ensure an environment that takes
account of the trade effects of regulation and can underpin further trade liberalisation. These are
transparency, non-discrimination, avoidance of unnecessary trade restrictivenesss, use of
internationally harmonised measures, recognition of equivalence of foreign regulatory measures and
competition principles.
The OECD Trade Committee has devoted efforts to increasing understanding of the impact of
regulations on international trade. Over the past four years, a number of studies have been undertaken
on regulatory issues in the trade policy field and two workshops have been held with international
attendance. Following sectoral and thematic work that concluded in 1997, the OECD undertook a
programme of multidisciplinary country reviews of regulatory reform, which examined, among other
things, the linkage of domestic regulation to market openness on the basis of the six principles of
efficient regulation. The Trade Committee has also conducted three analytical studies in the field of
technical barriers to trade.
Against this background, it seemed relevant to hold a third workshop, “Regulatory Reform and
the Multilateral Trading System: Insights from Country Experience", which took place on
7-8 December 2000. The workshop was part of a broad programme of policy dialogues between
Members and non-members that seek to foster consensus building among participants and thus
contribute to the fuller integration of non-members into the international economic system. Invitations
were also extended to business and civil society. The discussion covered a wide range of regulatory
issues relating to trade and investment in sessions structured in accordance with the six efficient
principles of regulation. This publication consists of selected contributions from speakers and
discussants at the workshop who participated in a personal capacity. It is hoped that the perspectives
that emerged from the workshop appear useful for promoting discussion of regulatory issues in the
trade policy area at national and international levels.
The workshop, as well as this publication, were co-ordinated by Keiya Iida of the OECD Trade
Directorate under the supervision of Mr. Anthony Kleitz of the Trade Directorate. The proceedings are
published on the responsibility of the Secretary-General of the OECD.
Jean-Marie Metzger
OECD Director for Trade
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TABLE OF CONTENTS
Chapter 1. Trade and Regulatory Reform: Insights from the OECD Country
Reviews and Other Analyses
by Keiya Iida................................................................................................................11
Part I: Experience and best practices with the transparency principle
Chapter 2. Transparency Issues and the WTO Working Party on Domestic Regulation
by Dale B. Honeck.......................................................................................................29
Chapter 3. The Experiences of the IMF and Its Membership with Transparency
and Related International Financial Reforms
by Anne McGuirk........................................................................................................33
Chapter 4. Transparency: A Business Perspective
by John Serocold..........................................................................................................43
Chapter 5. Consumer Interests in Regulatory and Trade Policies
by Jill Johnstone, Naja Felter and Marcus Lenzen ......................................................47
Part II: Experience and best practices in applying the principles of non-discrimination,
avoiding unnecessary trade restrictivenesss and competition
Chapter 6. International Trade as a Vector in Domestic Regulatory Reform: Discrimination,
Cost-Benefit Analysis and Negotiations
by Joel P. Trachtman....................................................................................................55
Chapter 7. Regulatory Reform in Infrastructure: The Indian Experience
by S. Sundar.................................................................................................................69
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Part III: Experience and best practices in internationally harmonised measures
and recognition of foreign equivalent measures
Chapter 8. “Deeper” Integration in Services Trade in the Western Hemisphere:
Domestic Regulation and Mutual Recognition
by Sherry M. Stephenson.............................................................................................79
Chapter 9. Harmonisation and Recognition: What Have We Learned?
Some Preliminary Reflections
by Kalypso Nicolaidis..................................................................................................97
Chapter 10. Internationally Harmonised Measures and Recognition of
Foreign Equivalent Measures
by Julian Arkell..........................................................................................................115
Part IV: Future perspectives
Chapter 11. Keynote Speech: Trade, Regulation and Governance
by Jonathan T. Fried...................................................................................................121
Chapter 12 Regulatory Diversity and Trade and Investment Liberalisation
by Michael Trebilcock...............................................................................................127
Chapter 13. The Approach to Economic Reform in China: An Outline
by Larry Lee...............................................................................................................137
Chapter 14. A Personal View of the Issues
by Julian Arkell..........................................................................................................143
Annex
List of Speakers and Discussants...................................................................................................159
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ACRONYMS
ANZCERTA Australia New Zealand Closer Economic Relations Agreement
APEC Asia-Pacific Economic Cooperation
APLAC Asia-Pacific Laboratory Accreditation Cooperation
ASEAN Association of Southeast Asian Nations
BCBS Basle Committee on Banking Supervision
BIS Bank for International Settlements
BSE bovine spongiform encephalitis
CAB conformity assessment body
Caricom Caribbean Community and Common Market
CERC Central Electricity Regulatory Commission (India)
CTS Council for Trade in Services (WTO)
DSBB Dissemination Standards Bulletin Board (IMF)
ECA European Co-operation for Accreditation
FDA US Food and Drug Administration
FDI foreign direct investment
FERC Federal Energy Regulatory Commission (United States)
FPT Code Code of Good Practices in Fiscal Transparency
FSAP Financial Sector Assessment Program (IMF-World Bank)
FSF Financial Stability Forum
FTA free trade agreement
FTAA Free Trade Area of the Americas
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GAAP Generally Accepted Accounting Principles
GATS General Agreement on Trade in Services
GATT General Agreement on Tariffs and Trade
GDDS Generalised Data Dissemination System (IMF)
GMOs genetically modified organisms
IAA International Association of Actuaries
IAIS International Association of Insurance Supervisors
IAS International Accounting Standards
IASC International Accounting Standards Council
IBRD International Bank for Reconstruction and Development
ICSA International Council of Securities Associations
ILO International Labour Organisation
IMF International Monetary Fund
IMFC International Monetary and Financial Committee (IMF)
IOSCO International Organisation of Securities Commissions
ISO International Organization for Standardization
MEA multilateral environmental agreement
Mercosur Common Market of the South
MFN most-favoured nation
MFPT Code Code of Good Practice on Transparency in Monetary and Financial Policies
MNC multinational corporation
MRA mutual recognition agreement
NATA National Association of Testing Authorities (Australia)
NATFA North American Free Trade Agreement
NGO non-governmental organisation
NTB non-tariff barrier
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NVNI non-violation nullification or impairment
OERC Orissa Electricity Regulatory Commission (India)
PIN Public Information Notice
RIA regulatory impact analysis
RIAS Regulatory Impact Assessment Summaries
ROSC Reports on the Observance of Standards and Codes
SDDS Special Data Dissemination Standard (IMF)
SDOC suppliers’ declaration of conformity
SEB State electricity Bord (India)
SEC US Securities and Exchange Commission
SECOFI Ministry of Commerce and Industry (Mexico)
SIA Securities Industry Association
SPS Agreement on the Application of Sanitary and Phytosanitary Measures
SRA sub-regional agreement
TAMP Tariff Authority for Major Ports (India)
TBT Agreements on Technical Barriers to Trade
TRAI Telecom Regulatory Authority of India
TRIPS Agreement on Trade-Related Aspects of Intellectual Property Rights
UNCITRAL United Nations Commission on International Trade Law
UNCTAD United Nations Conference on Trade and Development
UNDP United National Development Programme
UNEP United Nations Environmental Programme
WPDR Working Party on Domestic Regulation (WTO)
WPPS Working Party on Professional Services (WTO)
WTO World Trade Organization
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Chapter 1
TRADE AND REGULATORY REFORM:
INSIGHTS FROM THE OECD COUNTRY REVIEWS AND OTHER ANALYSES
by
Keiya Iida
OECD Secretariat
As trade barriers at the border fall through successive trade negotiations, it is increasingly evident
that domestic regulation may represent a significant source of residual trade barriers. Current national
regulatory systems were developed when the nation-state was seen as the primary economic unit; with
the increased importance of the global economy, regulatory reform may be necessary to ensure that the
expected benefits of globalisation are realised and that the different national systems do not become
barriers to international trade and investment.
In this light, the OECD regulatory reform project recognises market openness as a key element of
reform. It has identified six efficient principles of regulation to ensure an environment that takes
account of the trade effects of regulation and can underpin further trade liberalisation: transparency,
non-discrimination, avoidance of unnecessary trade restrictiveness, use of internationally harmonised
measures, recognition of equivalence of foreign regulatory measures and competition principles.
Under the project, a wide range of studies has been undertaken on regulatory issues in the trade
policy field. Country reviews of experience with regulatory reform started following the completion of
eleven sectoral and thematic studies in 1997; eight country reviews were completed in the first two
years. Three analytical studies have also been conducted in the field of technical barriers to trade. The
six principles of efficient regulation have been providing the basic framework for the country reviews
as well as for these analytical studies.
With a view to the current discussion of domestic regulation in the WTO, this chapter takes stock
of the studies conducted so far and considers insights for future multilateral trade rule making with
respect to each of the six principles of efficient regulation.1 The analysis here is thus complementary to
and more focused than previous studies. A final section addresses the question of whether the practices
identified in the regulatory reform exercise are applicable to developing countries.2
Transparency
Transparency in regulation should provide interested parties full access to information on
regulatory measures. The countries reviewed so far recognise the importance of this principle and have
been strengthening their application of it. Most of the WTO agreements require members to publish all
relevant measures, at the latest by the time of their entry into force. Some agreements also require that
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