Seeking a common understanding of standards
We don’t define good regulations per se; what we define are good practices for developing the most efficient and effective regulations.
When businesspeople talk about regulations, they normally think of cost-effective ways to adapt their products to different rules, standards and requirements in a given market.
These are some of the business challenges that were raised in Washington, DC in early March to identify 21st century challenges to trade and investment.
Many of the participants agreed at an APEC Trade Policy Dialogue on Next Generation Trade Issues that if the Asia-Pacific region is to enjoy the next wave of productivity gains and technological advancements, these issues will need to be addressed soon.
APEC, hosted by the United States this year, is focusing on expanding regulatory cooperation and advancing regulatory convergence, which are among the top three priorities for the forum.
“In 2011, we intend to elevate and marry these streams of work by pushing forward practical, concrete outcomes related to regulatory convergence and cooperation,” Michael Froman, Deputy Assistant to US President Barack Obama, Deputy National Security Adviser for International Economic Affairs, and Chair of the 2011 APEC Senior Officials’ Meeting, told delegates at the first APEC Senior Officials’ Meeting (SOM1) also in March in Washington, DC.
Much of the work of marrying regulations and its processes is led by APEC’s Sub-Committee on Standards and Conformance (SCSC). Reducing the negative effects of differing standards and conformance arrangements and promoting open regionalism are some of the key objectives of the SCSC.
Importantly, the group works to encourage greater alignment of APEC member economies’ standards with international ones.
Better alignment of standards across all economies in the Asia-Pacific region would help businesses “make inroads into new markets and for citizens to find jobs” said US Secretary of State, Hillary Clinton in her address to APEC officials at SOM1.
“We must improve the quality of our regulations to ensure that they are not unnecessarily burdensome. And we must refrain from using local content requirements that discriminate against foreign companies.”
“We want to work with APEC economies to strengthen the implementation of good regulatory practices to prevent technical barriers to trade,” Secretary Clinton added.
APEC agrees that promoting and sustaining good regulatory practices among members is one of the best strategies to not only support economic growth, job creation, innovation, and cross-border trade and investment, but also to protect public health and welfare.
In fact, good regulatory practices improve both the effectiveness and efficiency of a regulation in achieving its protective objectives, while maintaining a business-friendly environment and without compromising on quality.
“It comes down to a proper examination of what economies in the region are doing, how they’re doing it and why they’re doing it,” says Tony Nowell, New Zealand’s APEC Business Advisory Council (ABAC) representative and Founding Director of Valadenz Limited, a company helping SMEs become ‘Export Fit’.
“Then looking at your own regulatory framework in your economy and saying why is ours different? Is it producing a different outcome for the consumer? Or is it just a process that is different?”
Similar questions were raised at the APEC SCSC’s 6th Conference on Good Regulatory Practice that concluded last month in Washington, DC. It brought together government officials, leading economists and representatives from the private-sector, the World Bank, the World Trade Organization, as well as other regulatory agencies and consumer protection groups.
The two-day conference served to strengthen the technical understanding and implementation of good regulatory practices in APEC economies by engaging regulators and stakeholders in discussions on how to best promote transparency and cooperation in rulemaking.
The issues discussed were wide-ranging, covering topics from food and toy safety, to commercial green buildings standards, to regulating medical devices.
Sharing Malaysia’s experience in regulating the medical sector at the conference, the head of its regulatory authority for medical devices reminded participants that testing and quality systems are critical to the whole process of manufacturing – and any ensuing costs need to be considered when developing regulations.
“Health and safety of the people – that’s the crucial thing,” says Zamane bin Abdul Rahman, who is the Director of Malaysia’s Medical Device Bureau in the Ministry of Health. At the same time, he adds, “our policy is to facilitate trade and industry.”
Malaysia is the world’s leading exporter of rubber products including medical examination gloves and catheters. These products are exported to more than 140 markets around the world.
At the conference, participants from various APEC economies had the opportunity to learn from each others’ experiences and find out which approaches are best to achieve both business and regulatory objectives.
“We don’t define good regulations per se; what we define are good practices for developing the most efficient and effective regulations,” explains Julia Doherty, who is the Chair of the SCSC and a key organizer of the APEC SCSC’s 6th Conference on Good Regulatory Practice. She is also the Senior Director for Non-Tariff Measures in the Office of the United States Trade Representative in Washington, DC.
“What a regulation looks like would reflect each economy’s set of values, each economy’s set of needs in terms of protecting its citizens. What we talk about is how to put in place mechanisms and processes within your government to craft the best quality regulations,” she adds.
Strengthening internal coordination of regulatory work, conducting regulatory impact assessments, and facilitating public consultation are the key mechanisms and processes Doherty outlines that would lead to better regulations and better regulatory environments.
What bolstering coordination internally means is improving communication among multiple agencies across sectors within an economy. This ensures that trade and business issues are considered through increased transparency and accountability in the rulemaking process. In effect, regulations become mutually supportive and legitimate objectives are met.
A regulatory impact assessment, on the other hand, is a structured process for collecting and evaluating information about the economic and social impacts of proposed rules to find good solutions. In other words, regulators ask themselves if a particular rule or requirement is efficient and effective.
Routine public consultations from a wide variety of stakeholders – civil society, consumer groups, industry and trading partners – are perhaps the most important part of the process to ensuring an accountable and transparent regulatory system.
“It’s important because the information that you collect through that process can help that rule be a better rule and be more effective,” explains Doherty. “The regulator will [then] understand how that product is traded which can affect how you’d craft the rule.”
With these efforts, APEC’s Sub-Committee on Standards and Conformance hopes to bring these processes closer together through convergence and to minimize unnecessary divergences.
The intent here is to create a higher quality regulatory environment that reduces the emergence of unnecessary technical barriers to trade in a given market – because economies with open and transparent regulatory systems tend to have higher rates of economic growth.
“Making improvements to regulatory systems to produce better outcomes overall [however] is a difficult thing to do,” admits Doherty. “One of the things we’d like to see coming out of this year is recharging the political support for this very important topic.”
“So giving wind on our sails, so to speak, to getting economies able to better implement the types of processes and mechanisms that are beneficial to not only their own economies but, more broadly, to trade and investment in the region.”
As APEC works toward the goals that Doherty describes, individual consumers and whole economies will benefit. For businesses, it means a clearer set of rules to follow – which means products find their way more easily onto store shelves, and into homes and businesses around the region.