French business minister's innovative consultation of companies

On 23 February, the minister in charge of small business, Mr Frédéric Lefebvre, announced that the first meeting of the "Simplification Sittings" will be held on 3 March in Compiègne. The Sittings (in French: "Assises") will be spread over about three months. To feed the discussion, the minister is counting on reports from ministry staff recently "embedded" in companies in a bid to document the difficulties that entrepreneurs face in their daily relations with administrations. A life-cycle approach (in French "moments de vie") will help focus on the hurdles faced by companies at key stages such as the setting up and operation of the firm. A series of regional sittings are also planned, to be crowned by National Sittings where all the proposals from business will be listed and prioritised, to focus future reforms. The ministry website provides details including recent press releases.

NAO draws critical picture of UK RR achievements

The National Audit Office (NAO) of the UK published a report on "Delivering Regulatory Reform" on 17 February. The aim of the review was to examine why "despite considerable efforts to improve the business experience of regulation, there has been little discernable progress in improving business perceptions of regulation." The report therefore examines the overall management of regulation across central government, focusing on the impact of regulation on business (Part One), how departments choose to regulate (Part Two), and the implementation of regulation (Part Three).
On the NAO website, the summary in one sentence of the report is: "The Better Regulation Executive and government departments are not yet in a position to achieve value for money in their management of regulation. However, they have developed important elements of a structured approach to achieving sustainable reductions in regulatory costs and have delivered significant benefits." Recommendations include "clear accountabilities and effective incentives for departments, a detailed plan for delivery and longer term management of the flow of regulation."
The NAO website includes a wealth of information on RR in the UK, in particular an October 2010 briefing paper presenting an overview of regulatory reform, the background to the system and the recent work that the National Audit Office had conducted in the area.

Small Business Act review hits red tape

Yesterday (23 February) the European Commission published its long-awaited review of the Small Business Act, promising to do better to cut red tape, improve access to financing and try to harmonise tax systems among EU member countries (see press release for a summary). The Small Business Act has 10 guiding principles, including improving access to finance, drawing up bankruptcy rules to give entrepreneurs a second chance and upgrading skills. After much discussion of its contents (see excellent Euractiv dossier) the final report includes, inter alia:

• the promotion of the "only once" principle whereby public authorities and administrative bodies should refrain from requesting the same information, data, documents or certificates which have already been made available to them in the context of other procedures;
• a commitment to enhance electronic interoperability in the Internal Market, in particular delivering on the Single Market Act’s proposal for a decision by 2012 to ensure mutual recognition of e-identification and e-authentication across the EU and the revision in 2011 of the Directive on electronic signatures.
• Proposing an instrument of European Contract Law for SMEs that want to enter new markets.
• Setting up a uniform procedure to facilitate cross-border debt recovery.
• Speeding up and reducing the cost to start a business to a maximum of three days and €100.

 

 

Administrative cooperation for better governance (Internal Market)

Earlier this week (21/02/2011) the Commission issued a Communication (COM(2011)75) developing its future course of action for expanding and developing the Internal Market Information System ('IMI') in keeping with its promise made in the 27 October 2010 Communication "Towards a Single Market Act" (see earlier post). The idea is that the benefits of the single market will not materialise unless EU law is correctly applied and the rights it creates are upheld to allow a truly borderless single market to emerge. This requires administrative cooperation between MS, based on the exchange of information.
IMI was launched in February 2008 to support the revised Directive on the Recognition of Professional Qualifications (2005/36/EC) and since December 2009, MS are legally obliged to use IMI to fulfil the information exchange obligations of the Services Directive (2006/123/EC).
The new Communication reviews the strategic objectives of IMI, examines the actions needed to achieve them, and proposes criteria for determining which new functions could be added to IMI. With its practical emphasis on end-results provided to business and citizens, this component of the Single Market strategy is one of the most promising BR ventures underway.

Commission proposes interconnecting business registers

In a major step forward towards better access to information concerning companies, the European Commission adopted yesterday a proposal to interconnect business registers within the EU. Company registers provide company information that is essential for consumers and business partners alike, such as information on a company's legal form, its seat, capital and legal representatives. This should bring about a big improvement for companies when setting up branches, conducting cross-border trade or providing cross-border services in the EU. Business registers are currently organised at national, regional or local level, and lack the capacity to share information in an efficient and transparent manner. The proposal, which requires amendments to EU Company Law, will now pass to the Member States and the European Parliament for consideration. For background and details see press release.

RR helps Gross National Happiness (Bhutan)

According to a recent press release, IFC is working with Bhutan’s Ministry of Economic Affairs and the Gross National Happiness Commission to identify and minimize regulatory constraints, an initiative designed to improve the ease of doing business in Bhutan. The initiative aims to increase economic activity, reduce costs and risks of business operations, and improve the government’s capacity to build and sustain momentum for reform. The regulatory simplification project will focus on high-priority areas likely to include industrial licensing, approval process for foreign direct investment, and other clearances.  The project aims to improve access to information on requirements for business licenses and permits by creating an e-licensing portal. Bhutan had recently been within the scope of a regional study by Jacobs and Associates assessing regulatory practices, business environments, and related reforms across South Asia (summary available). As illustrated by the Doing Business ranking, the pace of reforms needs to be sustained for significant improvements to be achieved.
A post for a regulatory reform specialist, funded by ADB, was recently closed.

Food for thought: OECD conference proceedings

Last October, the OECD held a landmark conference with the stated objective of redefining the agenda for regulatory policy and discussing key challenges in the aftermath of the economic crisis. Economic, social and environmental challenges have to be addressed jointly as to what to regulate, when and for whom. As already reported on this blog, the conference discussed the future in terms of integrating regulatory governance with regulatory management, in a new framework. Regulatory management must be supported by strengthened regulatory governance based on competence, vigilance and dedication to the public interest to fully achieve its intended results. The goal is to promote a robust regulatory environment for growth and help win back consumer confidence and trust in government. The full proceedings of the conference are now online, presenting an overview of current thinking in Regulatory Governance, which will provide food for thought for experts interested in the evolution of our profession.
Also hot of the press: "Simplification simplification in Poland: making policies perform" by our friend Daniel Trnka.

L. Allio examines IAB report on RIA in the EC

The Impact Assessment Board (IAB) is the European Commission internal oversight body providing quality control and assistance to the services on Impact Assessment (IA). IAB acts independently from the various Directorates-General, and it accounts directly to President Barroso. IAB reports on its activities annually and the latest report was published at the end of January, covering IA performance during the year 2010.
 The document is to be welcome. General improvements are emphasised, notably on procedural matters -- for instance the increased rate of timely submissions by the services of draft IAs to the Board, which allows for better planning, and the more diffused practice to consult on early stages. But what strikes most is the fact that this year's report is far less indulgent than the previous ones (although you have to read the entire document before coming to such a conclusion). IAB clearly states that the IA system in the Commission has now reached cruising speed, and services are expected to deliver substantially more than it is currently the case: the Board "does not yet feel that a sufficient quality standard is being met on a consistent basis." (p.23) Such clear stance signals a firm commitment to now thoroughly look into more "evidence-base". This is not necessarily reflected by the statistics provided. As IAB itself qualifies, these are only relatively significant, for scrutiny criteria have been tightened compared to the previous years. More interesting are the concrete examples of how the intervention of IAB has actually changed the course of decision-making within the Commission, leading services to change their initial proposals (p.18-20). Those examples prove that IA should be an iterative, structured process, and not just drafting an analytical report.
But the content and quality of the (economic) analysis also matter. In this respect, the report could have been more explicit on the ways forward to further improve current performance (p.22-25). Especially considering that only one quarter (27%) of all draft IAs examined in 2010 were based on "comprehensive quantitative modelling" (p.22 - but what does this means concretely?), it would be interesting to investigate what are the actual causes for such difficulties, and it is legitimate to ask for more information on what are the concrete remedies IAB intends to apply to tackle this deficit.
One may wonder why it took four years for IAB to reach such a level of scrutiny. The logics of learning and acceptance followed by IAB so far may be well placed here. By progressively turning the screws of its oversight, IAB has consistently profiled itself as a help-desk support to the services rather than a sanctioning and naming&shaming gatekeeper. As a result, its internal legitimacy and credibility have arguably increased, although it is difficult to imagine that the quality control precess always unfolds without tensions and resistance. As one former OIRA/OMB administrator put it, a certain discontent among line departments is actually healthy for it is the sign that the central oversight body is doing its job properly. IAB has let the services know that it is now doing its job as it should, and all the services must count with it (LA).

Vietnam simplification program in the limelight

OECD has just published "Administrative Simplification in Viet Nam: Supporting the Competitiveness of the Vietnamese Economy", a new country review in the cutting Red Tape series. This report examines recent reforms, including the flagship "Project 30", launched in 2007 to reduce administrative procedures by 30% as part of ambitious reforms to modernise the public service and simplify the regulatory environment for businesses. The evaluation was conducted at the request of the governement of Vietnam and is intended to help Vietnam prepare a ten-year programme for regulatory reform. Findings were discussed by the OECD Regulatory Policy Committee in October 2010, and at an ASEAN meeting in Hanoi in November 2010. See also previous post on Vietnam results.
The impetus gathered last year with the evaluation is not being lost. In a recent interview, the prime mover of the project, the Minister, Chairman of the Government Office Nguyen Xuan Phuc reviews the success factors of the operation and lists some recent achievements, like the abolition of prior approval of invoice forms by the ministry of finance, a move expected to save businesses around VND400 billion ($20 million) a year. In many ways, Vietnam exemplies, for other emerging nations engaged in simplifying the regulatory environment for business, how to successfully review and streamline legislation (with a tip from Daniel Trnka).

US President order on regulatory review (2)

Owing to its importance in the development of Regulatory Reform, I am devoting a second post to President Obama's Executive Order, enlarging on my 18 January post.

1. Content: the Executive Order on "Improving Regulation and Regulatory Review", offers a complement to fundamental, many times updated Presidential Order 12866 (1993 )on regulatory planning and review. The new order requires Federal agencies to design cost-effective, evidence-based regulations that are compatible with economic growth, job creation, and competitiveness. It outlines following guiding principles (some of which are new):

• Cost-effective and cost-justified: consistent with law, agencies must consider costs and benefits and choose the least burdensome path.
• Transparent: the regulatory process must be transparent and include public participation, with an opportunity for the public to comment.
• Coordinated and simplified: Agencies must attempt to coordinate, simplify, and harmonize regulations to reduce costs and promote certainty for businesses and the public.
• Flexible: agencies must consider approaches that maintain freedom of choice and flexibility, including disclosure of relevant information to the public.
• Science-driven: regulations must be guided by objective scientific evidence.
• Necessary and up-to-date: existing regulations must be reviewed to determine that they are still necessary and crafted effectively to solve current problems. If they are outdated, they must be changed or repealed.

2. The Executive Order was accompanied on the same day by a memorandum for the heads of executive agencies and departments on regulatory compliance which also breaks some new ground, as it requires federal enforcement agencies to make publicly-available compliance information easily accessible, downloadable, and searchable online, to provide citizens with information they need to determine when entities fail to comply with the law.

3. Background: the Office of Information and Regulatory Affairs (OIRA) manages a very rich website reginfo.gov on current initiatives, including the impressive Unified Agenda and Regulatory Plan. The site also publishes the numerous (183 at this date) submissions received during the recent consultation prior to the 18 January Executive Order which constitutes a particularly rich source of ideas for discussion (tip from Manos) .

Business licensing: a concern on both sides of the Atlantic

Our network now comprises an expert in business inspections and licensing reform, Florentin Blanc, who has just drawn our attention to the rise in the number of regulated professions. He points us to a Wall Street Journal article highlighting the "insane proliferation of professional licensing cartels" across American state government and examining some of the political economy behind it, which is that the licensing fees charged by licensing agencies can turn into profit centers reducing the need for more transparent forms of taxation.
This article has naturally sparked a lively discussion in the blogosphere (see example of such a post). The main issue is whether licensing mostly serves as a form of protectionism, allowing veterans of the trade to box out competitors who might undercut them on price or offer new services.
This type of development is of course in contradiction with the principles underlying the recent landmark Executive Order from President Obama which is too general to directly address such an issue. In the European Union, on the contrary, the Services Directive was the starting point of a major review of all regulatory requirements against the criteria of nondiscrimination, necessity and proportionality. This investigation covered different types of requirements such as prior authorisations, registration requirements, territorial restrictions, etc), which may constitute unjustified barriers to the functioning of the Single Market (obstacles to cross-border provision of services). The results to the "mutual evaluation process" have just been published by the Commission (27 January 2011). Merci Florentin !

NL cabinet defines new BR strategy

We are informed that the Dutch government has tabled today in Parliament a White Paper on Regulatory Policy 2010-2015 (info from JN). No announcement yet in English on the web. The new policy will give more importance to RIA.

BR supports EAC regional integration

Your blogger attended a P2P learning event in Mombasa last week where the five countries of the East African Community, joined by neighbouring states (Zambia, RDC) and OHADA, shared ideas and exchanged best practices about building the Common Market launched in 2009 between Kenya, Uganda, Tanzania, Rwanda and Burundi. The Investment Climate Advisory Services of the World Bank Group, organiser in partnership with Kenya and donors, had placed the event under the banner of Regulatory Reform and invited experts from the EU and ASEAN to draw lessons from these more integrated groups on how to apply RR principles to manage regulation, harmonize national commercial laws, monitor implementation of reform by the use of scorecards and efficiently inspect enforcement.

All material will soon be online (URL so be communicated here), following the two previous events in Arusha 2008 (on cutting red tape) and Kampala 2010 (multi-level). Participants also gave updates about their respective RR projects and results and called for the development of a regional set of regulatory quality standards similar to the OECD ones. See also press report.

French simplification boss states programme

This blog has reported on various occasions (see "France" category) on the French approach to simplification, including on the appointment of a clearly identified official in charge, Mr Rémi Bouchez, who will be working from the PM's office.

In aninterview to a business paper, just published, the new incumbent states his purpose and working methods. The intentions are in keeping with standard practice, but the resources allocated (one stafff) are limited:

• emphasis is on helping businesses, while the main thrust, within DG Modernisation's programme, encompasses also citizens and is not specially attuned to business needs;
• measuring administrative burdens, dropped by DG Modernisation, makes a comeback, within RIA. New standing instructions will be issued shortly by the PM will task ministries.