OECD Reviews of Regulatory Reform Regulatory Reform in Mexico

307 Pages·1999·3.098 MB·English

by  OECD

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REGULATORYREFORM IN MEXICO R M
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Regulatory reform has been key to the transformation of the Mexican economy O
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over the past 15 years. Formerly inward-looking and heavily regulated, the L
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Mexican economy today is relatively open and market-based. The rapid pace, E
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broad scope, and depth of regulatory reforms exceed those of most OECD T Regulatory Reform
Regulatory Reform
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countries. These reforms have already produced major benefits for Mexico, not
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least by increasing economic flexibility so that Mexico rebounds more quickly
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from economic crises. But benefits of reforms have been slowed by the D
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macroeconomic crises of the 1990s. Sustained attention is needed now to N in Mexico
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complete and implement reforms to establish conditions for vigorous market F
competition and entry, while strengthening the capacity of the Mexican state to O
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use high quality and transparent regulatory instruments in carrying out public O
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policies. A multi-year period of policy stability supportive of market-led growth I
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could produce enduring and broad-based benefits for Mexican consumers and I
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businesses.
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Mexico was one of the first OECD countries to request a broad review by the P
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OECD of its national regulatory practices and domestic regulatory reforms. This O
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report – the result of intensive assessment by the OECD and review by its -
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Member countries – is unique in that it presents an integrated assessment of
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regulatory reform in framework areas such as the macroeconomic context, the

quality of the public sector, competition policy and enforcement, and integration C
of market openness principles in regulatory processes, and in sectors such as I
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telecommunications. The policy recommendations present a balanced plan of
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action for both short and longer-term based on best international regulatory
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practices.
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Further Reading
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In the same series: Regulatory Reform in the United States, Regulatory Reform in

Japanand Regulatory Reform in the Netherlands.The general policy analysis that R
is the basis for these country reviews is presented in the OECD Report on O
Regulatory Reform: Synthesis, and the supporting two-volume OECD Report on F

Regulatory Reform: Sectoral and Thematic Studies, published in 1997.
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OECD Reviews of Regulatory Reform
REGULATORY REFORM
IN MEXICO
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
Pursuant to Article1 of the Convention signed in Paris on 14thDecember 1960, and which came into force
on 30thSeptember 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 (28thApril 1964), Finland (28thJanuary 1969),
Australia (7thJune 1971), New Zealand (29thMay 1973), Mexico (18thMay 1994), the Czech Republic
(21stDecember 1995), Hungary (7thMay 1996), Poland (22ndNovember 1996) and Korea (12thDecember
1996). The Commission of the European Communities takes part in the work of the OECD (Article13 of the
OECD Convention).
Publié également en Français sous le titre:
LA RÉFORME DE LA RÉGLEMENTATION AU MEXIQUE
© OECD 1999
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FOREWORD
The OECD Review of Regulatory Reform in Mexico is among the first of a series of country reports
carried out under the OECD’s Regulatory Reform Programme, launched in 1998 in response to a man-
date by OECD Ministers.
The Regulatory Reform Programme is aimed at helping governments improve regulatory quality –
that is, reforming regulations which raise unnecessary obstacles to competition, innovation and growth,
while ensuring that regulations efficiently serve important social objectives.
The Programme is part of a broader effort at the OECD to support sustained economic develop-
ment, job creation and good governance. It fits with other initiatives such as our annual country economic
surveys; the Jobs Strategy; the OECD Principles of Corporate Governance; and the fight against corrup-
tion, hard-core cartels and harmful tax competition.
Drawing on the analysis and recommendations of good regulatory practices contained in the 1997
OECD Report to Ministers on Regulatory Reform, the Regulatory Reform Programme is a multi-disciplinary
process of in-depth country reviews, based on self-assessment and on peer evaluation by several
OECD committees.
The country Reviews are not comprehensive, but, rather, targeted at key reform areas. Each Review
has the same structure, including three thematic chapters on the quality of regulatory institutions and
government processes; competition policy and enforcement; and the enhancement of market openness
through regulatory reform. Each Review also contains chapters on sectors such as telecommunications,
and an assessment of the macroeconomic context for reform in the country under review.
The country Reviews benefited from a process of extensive consultations with a wide range of
government officials (including elected officials) from the country reviewed, business and trade union
representatives, consumer groups, and academic experts from many backgrounds.
These Reviews demonstrate clearly that in many areas, a well-structured and implemented
programme of regulatory reform has brought lower prices and more choice for consumers, helped stim-
ulate innovation, investment, and new industries, and thereby aided in boosting economic growth and
overall job creation. Comprehensive regulatory reforms have produced results more quickly than piece-
meal approaches; and such reforms over the longer-term helped countries to adjust more quickly and
easily to changing circumstances and external shocks. At the same time, a balanced reform programme
must take into account important social concerns. Adjustment costs in some sectors have been painful,
although experience shows that these costs can be reduced if reform is accompanied by supportive
policies, including active labour market policies, to cushion adjustment.
While reducing and reforming regulations is a key element of a broad programme of regulatory
reform, country experience also shows that in a more competitive and efficient market, new regulations
and institutions are sometimes necessary to assure that private anticompetitive behaviour does not
delay or block the benefits of reform and that health, environmental and consumer protection is
assured. In countries pursuing reform, which is often difficult and opposed by vested interests, sus-
tained and consistent political leadership is an essential element of successful reform efforts, and trans-
parent and informed public dialogue on the benefits and costs of reform is necessary for building and
maintaining broad public support for reform. 3
OECD 1999
Regulatory Reform in Mexico
The policy options presented in the Reviews may pose challenges for each country concerned, but
they do not ignore wide differences between national cultures, legal and institutional traditions and
economic circumstances. The in-depth nature of the Reviews and the efforts made to consult with a
wide range of stakeholders reflect the emphasis placed by the OECD on ensuring that the policy
options presented are relevant and attainable within the specific context and policy priorities of each
country reviewed.
The OECD Reviews of Regulatory Reform are published on the responsibility of the Secretary-
General of the OECD, but their policy options and accompanying analysis reflect input and commentary
provided during peer review by all 29 OECD Member countries and the European Commission and
during consultations with other interested parties.
The Secretariat would like to express its gratitude for the support of the Government of Mexico for
the OECD Regulatory Reform Programme and its consistent co-operation during the review process. It
also would like to thank the many OECD committee and country delegates, representatives from the
OECD's Trade Union Advisory Committee (TUAC) and Business and Industry Advisory Committee
(BIAC), and other experts whose comments and suggestions were essential to this report.
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ACKNOWLEDGEMENTS
This series of Reviews of Regulatory Reform in OECD countries was prepared under the direction of
Deputy Secretary-General Joanna R. Shelton. The Review of Mexico reflects contributions from many
sources, including the Government of Mexico, Committees of the OECD, representatives of Member
governments, and members of the Business and Industry Advisory Committee (BIAC) and the Trade
Union Advisory Committee (TUAC), as well as other groups. This report was peer reviewed in
March1999 in the OECD’s Ad Hoc Multidisciplinary Group on Regulatory Reform.
In the OECD Secretariat, the following people contributed substantially to the review of Mexico:
Head of Programme: Scott H. Jacobs; Lead Drafters: Michael Wise and Scott H. Jacobs; Document
preparation: Jennifer Stein; Economics Department: Chapter 1 was principally prepared by Richard
Kohl, and benefited from work by Giuseppe Nicoletti on regulatory indicators; Public Management
Service: Cesar Cordova-Novion; Trade Directorate: Denis Audet; Directorate for Financial, Fiscal and
Enterprise Affairs: Darryl Biggar, Patricia Heriard-Dubreuil, Patrick Hughes, Bernard J. Phillips, Sally Van
Siclen, Michael Wise; Directorate for Science, Technology, and Industry: Patrick Xavier, Dimitri
Ypsilanti; General Secretariat: Pierre Poret.
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TABLE OF CONTENTS
Part I
Executive Summary.......................................................................................................................................... 11
Chapter 1: Regulatory Reform in Mexico...................................................................................................... 15
Chapter 2: Government Capacity to Assure High Quality Regulation...................................................... 43
Chapter 3: The Role of Competition Policy in Regulatory Reform............................................................ 55
Chapter 4: Enhancing Market Openness through Regulatory Reform...................................................... 67
Chapter 5: Regulatory Reform in the Telecommunications Industry........................................................ 79
Chapter 6: Conclusions and Policy Options for Regulatory Reform.......................................................... 87
Notes.................................................................................................................................................................. 105
Annex 1: Figures.............................................................................................................................................. 109
Annex 2: Regulatory Reform in Road Transportation................................................................................. 117
Bibliography...................................................................................................................................................... 121
Tables
1.1. Regulatory reform in Mexico................................................................................................................. 29
1.2. Potential impacts of regulatory reform in Mexico.............................................................................. 33
Annex Figures
1. Mexico exports, imports and trade balance......................................................................................... 110
2. Mexico income indicators........................................................................................................................ 110
3. Mexico external inflows and outflows.................................................................................................... 111
4. Real exchange rate and external balances............................................................................................ 111
5a. Mexico growth performance in manufacturing vs OECD countries..................................................... 112
5b. Mexico performance in levels in manufacturing vs OECD countries.................................................. 112
6a. Mexico growth performance in electric power vs OECD countries..................................................... 113
6b. Mexico performance in levels in electric power vs OECD countries.................................................. 113
7a. Mexico growth performance in telecommunications vs OECD countries.......................................... 114
7b. Mexico performance in levels in telecommunications vs OECD countries....................................... 114
8a. Mexico growth performance in air passenger transport vs OECD countries..................................... 115
8b. Mexico performance in levels in air passenger transport vs OECD countries.................................. 115
Boxes
1.1. What is regulation and regulatory reform?.......................................................................................... 17
1.2. Financial reform and the Mexican banking crisis............................................................................... 23
2.1. Managing regulatory quality in Mexico................................................................................................ 45
4.1. Customs procedures in Mexico............................................................................................................ 71
5.1. Key features of the 1995 Federal Telecommunications Law............................................................ 80 7
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Regulatory Reform in Mexico
Part II
Background Report on Government Capacity to Assure High Quality Regulation................................... 127
Background Report on the Role of Competition Policy in Regulatory Reform......................................... 179
Background Report on Enhancing Market Openness through Regulatory Reform................................... 213
Background Report on Regulatory Reform in the Telecommunications Industry..................................... 249
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