Regulatory reform in the global economy : Asian and Latin American perpsectives.

143 Pages·1998·0.551 MB·English

by  OECD

S
G
D
N REGULATORY
REFORM
C
I
IN THE
D
GLOBAL ECONOMY
E
ASIAN
E
AND LATIN AMERICAN
E
PERSPECTIVES
C
O
O
R
P
OECD PROCEEDINGS
REGULATORY REFORM
IN THE GLOBAL ECONOMY
Asian and Latin America Perspectives
PUBLISHER’S NOTE
The following texts are published in their original form to permit faster distribution at a lower cost.
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
ORGANISATION FOR ECONOMIC CO-OPERATION
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FOREWORD
“What does Asia’s crony capitalism have in common with Europe’s mad cow scare? The answer is
that both show different aspects of a growing world-wide phenomenon: Both incidents underlie the
growing costs of failure to regulate markets effectively. As the borders come down in the world
economy, the repercussions of inadequate or flawed regulation are becoming more immediate and
more likely to cross national frontiers.”
Guy de Jonquières, Financial Times, 2 March 1998
It is increasingly recognised that domestic regulation can have a strong effect on international
economic patterns. The decline of border barriers to international trade and investment in recent
decades has been accompanied by a remarkable period of technological innovation, which has
provided strong opportunities for greater efficiency and competition through the globalisation of
products and markets. Yet “behind-the-border” barriers – which are typically regulations aiming at
achieving domestic objectives such as health, safety, environmental or consumer protection – may at
times impede trade and competition and encourage inefficient resource allocation.
Domestic regulations can serve as barriers to trade and investment in two main cases: i) when the
regulations are overly stringent; or ii) when there are significant differences in regulations involving
different markets. In both these cases, there is frequently a lack of transparency and predictability.
While such situations may affect market participants generally, they are often felt most keenly by
non-incumbent foreign producers, for whom they may simply make the costs of market entry seem
prohibitive.
To be relatively economically efficient and trade-friendly, regulation need not be exactly the same in
all countries. Regulatory heterogeneity is natural and justifiable; it is the result of choices made by
governments and reflects differences in national history, resources, infrastructure, and social
preferences; but it may nevertheless entail significant costs which should be consciously recognised.
Reform may make it possible to reduce these costs by designing regulations whose side-effects are
more neutral and which are more appropriate for achieving multiple policy goals, such as a healthy
country with a strong economy.
The purpose of reform should be to design more efficient regulations which are less costly for
business, consumers, and the overall economy. As regulations are often primarily a response to
domestic concerns and as regulatory decisions tend to give less attention to the concerns of foreign
stakeholders, regulatory reform also provides an opportunity to consider the implications of
regulation for trade and investment. Thus, the notion of regulatory “efficiency” includes an
international perspective.
Within the context of the OECD, guidelines for reform have been identified. Referred to as “efficient
regulation principles”, they draw on concepts developed by the World Trade Organization (WTO)
and other international bodies. They include transparency of regulatory procedures, non-
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discrimination between products or firms of different national origins, avoidance of unnecessarily
restricted trade, use of harmonised international standards, recognition of other countries’ regulatory
standards and conformity assessment procedures when possible, and application of competition
principles to guard against anti-competitive behaviour by private firms once regulations are
liberalised.
The OECD Trade Committee has recognised the increasing significance of regulatory issues to trade
liberalisation and has devoted efforts to increase understanding of the impact of regulations on
international trade. It held a symposium in July 1996 (“Regulatory Reform and Market Openness”),
the proceedings of which were subsequently published under that title. In parallel, an OECD-wide
project on regulatory reform led in mid-1997 to a report containing policy recommendations in
various fields of government policy, including trade. The report was welcomed by the OECD
Ministers in 1997 and was published (The OECD Report on Regulatory Reform: Summary;
Synthesis; Sectoral Studies; Thematic Studies).
Follow-up work is being pursued in several directions in the OECD. One involves “deepening” the
work through an upcoming series of reviews of progress on regulatory reform in particular OECD
countries. Another involves “widening” the scope of the discussion. A better understanding of the
situation in dynamic economies outside the OECD area, particularly in Asia and Latin America, will
add to the insights gained from previous findings and analysis.
It is in this context that the OECD Workshop, “Trade Policies and Trade Relations: Regulatory
Reform and International Market Openness”, was held on 2-3 December 1997. The workshop was
part of the ongoing policy dialogue between OECD countries and the dynamic non-member
economies (DNMEs) of Argentina, Brazil, Chile, Chinese Taipei, Hong Kong (China), Malaysia, the
Philippines, and Thailand. Invitations were also extended to China, India and the business and
academic communities of Indonesia. The discussion covered a wide range of regulatory issues
relating to trade and investment, and one session was devoted to the agro-food sector. This
publication consists of contributions from a number of the discussants at the workshop who
participated in a personal capacity. The workshop was organised by the Trade Directorate and the
Directorate for Agriculture, Food and Fisheries. The perspectives that emerged from this Workshop,
which are summarised from pages 121 to 131, indeed appear useful for promoting discussion on
regulatory reform from the trade perspective.
The workshop as well as this publication were co-ordinated by Akira Kawamoto of the OECD Trade
Directorate, in co-operation with Wayne Jones and Eirikur Einarsson of the Directorate for Food,
Agriculture and Fisheries, and under the supervision of Mr Anthony Kleitz of the Trade Directorate.
These proceedings are published on the responsibility of the Secretary-General of the OECD.
Gerhard Abel
OECD Director for Trade
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TABLE OF CONTENTS
Foreword.................................................................................................................................... 3
Abbreviations............................................................................................................................. 7
PART I EFFECTS OF DOMESTIC REGULATIONS ON INTERNATIONAL
TRADE AND THE BENEFITS OF REFORM................................................ 9
Costs Associated with Divergent National Product Standards and
Conformity Assessment Procedures and the Impact on International Trade
by Spencer Henson............................................................................................... 10
The Regulatory Dilemma in Southeast Asia
by Deunden Nikomborirak.................................................................................... 25
Regulatory Reform and International Market Openness
by Djamester A. Simarmata.................................................................................. 29
Regulation as a Trade Issue from a Chilean Perspective
by R. Fischer........................................................................................................ 36
Regulatory Reform and the Opening up of Brazil’s Economy
by Pedro Da Motta Veiga..................................................................................... 42
International Trade and Regulatory Reform: A Korean Perspective
by Dr Jong Seok Kim........................................................................................... 47
PART II TRADE AND REGULATORY REFORM IN THE AGRO-FOOD
SECTOR............................................................................................................ 49
Section A Agro-food Trade and Regulatory Reform.......................................................... 50
Agro-food Trade and Regulatory Reform: An Overview
by Wayne Jones and Eirikur Einarsson................................................................. 50
Regulatory Issues Affecting Trade in Agro-food Products and Role of
Regulatory Reform: An Exploratory Note from Thailand
by Dr Suthipand Chirathivat................................................................................. 60
Trade and Regulatory Reform in the Agro-food Sector
by Alberto de las Carreras.................................................................................... 67
Agricultural Trade Policies and Trade Relations
by Christopher Haskins........................................................................................ 70
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Section B Role of Governments and Institutions................................................................ 72
Trade and Regulatory Reform in the EU Agro-food Sector: Issues of Food
Quality, Food Safety, Health and Hygiene
by Hans-Christian Beaumond.............................................................................. 72
Agriculture in Brazil: Development, Trade and Competition
by Carlos Nayro Coelho and Renato Antonio Henz............................................... 82
PART III INTERNATIONAL MECHANISMS TO ADDRESS DOMESTIC
REGULATIONS IN A GLOBALISING ECONOMY..................................... 93
Japanese Experience with Promoting Regulatory Reform
by His Excellency Yoshiji Nogami........................................................................ 94
Regulatory Reform, Trade and Telecommunications Goods and Services
by John Sullivan Wilson....................................................................................... 96
Consolidation of the Southern Common Market (Mercosur)
and Co-ordinated Domestic Reform
by Uziel B. Nogueira............................................................................................ 110
Regulatory Reform from the Perspective of Chinese Taipei
by Fadah Hsieh.................................................................................................... 118
CLOSING SESSION......................................................................................... 120
DNME Workshop on Trade Policies and Trade Relations: Regulatory
Reform and International Market Openness, 2-3 December 1997:
Summary of Discussions....................................................................................... 121
A Personal Interpretation of the Debate and the Task Ahead
by Geza Feketekuty.............................................................................................. 126
ANNEX.............................................................................................................. 132
List of Speakers and Discussants....................................................................... 133
Participants........................................................................................................ 136
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ABBREVIATIONS
AEBF Asia-Europe Business Forum
AGF Government Acquisitions Programme (Brazil)
AIPO ASEAN Interparliamentary Organization
APEC Asia-Pacific Economic Cooperation Forum
APROC Asia-Pacific Regional Operational Centre
ASEAN Association of Southeast Asian Nations
BNDES National Social and Economic Development Bank (Brazil)
BSE bovine spongiform encephalopathy
CET common external tariff
CISPR International Special Committee on Radio Interference
CMC Common Market Council (Mercosur)
Codex Codex Alimentarius Commission
DNME dynamic non-member economy
EC European Commission
EDI electronic data interchange
EGF Government Marketing Credit Programme (Brazil)
EU European Union
FCC Federal Communications Commission
FDI foreign direct investment
FMD foot and mouth disease
FTA free trade agreement
FTAA Free Trade Area of the Americas
GATS General Agreement on Trade in Services
GATT General Agreement on Tariffs and Trade
GBT Group on Basic Telecommunications
GDP gross domestic product
GII global information infrastructure
GMC Common Market Group (Mercosur)
GMO genetically modified organism
HACCP hazard analysis and critical control points
IEC International Electrotechnical Commission
IIIC International Information Industry Congress
IMF International Monetary Fund
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INTAL Institute for Integration of Latin America and the Caribbean
IOE International Office of Epizootics
IPPC International Plant Protection Convention
ISO International Organization for Standards
ISO/IEC International Organization for Standards/International
Electrotechnical Commission
IT information technology
ITA Information Technology Agreement
ITI Information Technology Industry Council
LDC less developed country
Mercosur Southern Common Market
MRA mutual recognition agreement
NAFTA North American Free Trade Agreement
NRC National Research Council (United States)
NRCS National Rural Credit System (Brazil)
NTB non-tariff barrier
PPP “polluter pays” principle
SPS Agreement on the Application of Sanitary and Phytosanitary
Measures
TABD Transatlantic Business Dialogue
TBT Agreement on Technical Barriers to Trade
TISI Thai Industrial Standards Institute
TRIM Trade-related Investment Measures
TRIPS Trade-related Aspects of Intellectual Property Rights
TRQ tariff-rate quotas
UR Uruguay Round
URAA Uruguay Round Agreement on Agriculture
VAT value-added tax
WTO World Trade Organization
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PART I
EFFECTS OF DOMESTIC REGULATIONS
ON INTERNATIONAL TRADE
AND THE BENEFITS OF REFORM
9