This independent blog collects news about projects or achievements in regulatory reform / better regulation. It is edited by Charles H. Montin. All opinions expressed are given on a personal basis.
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31 January 2012

European small business against exemptions

A difficult topic for us Smart Regulation experts is how widely should we use exemptions to ensure the best possible effects to regulation. That is the question posed by the European Commission's proposals in November 2011 to alleviate the regulatory burden on SMEs, and already discussed on this blog, when the ACCA (Chartered Accountants) published its position paper recommending that ""Smart regulators must be able to tell regulatory burdens from regulatory capital."
Now the European Association of Craft, Small and Medium-sized Enterprises (EUAPME), a leading stakeholder organisation in Brussels, has also come out against the EC policy, explaining in a Position Paper issued 27 January why "exempting micro enterprises from EU legislation is not an option." While they welcome the recognition that compliance with regulation is more burdensome for small companies, UEAPME believe that "Standards and regulations which are related to the quality aspects of enterprises, their products and their services must also be respected by smaller enterprises, if they want to be successful and remain competitive on the market, even locally."

Belgium launches new red tape programme

Kris Blancke has posted interesting news about Belgium on the Smart Regulation LinkedIn Group: on Friday 27 the federal government launched a new administrative simplification programme to be implemented over the three year period 2012-2015. Directed mainly at making life easier for business by reducing administrative burdens, the plan will take stock of and coordinate with existing simplification initiatives. Details on the MR party site, with nothing yet on the ASA (simpl. agency) website.
Also on the LindekIn group, the 25 comments generated by Scott Jacobs's discussion "in defense of RIA."

Italian simplification decreto legge

In a move widely reported on news media (examples Reuters or Italia Oggi) the Italian government announced measures to reduce bureaucracy last Friday 27 to help boost productivity and growth. Prime Minister Mario Monti wants to convince markets the sluggish economy can be reformed and that the quality of life of citizens can be improved by simplifying regulation. The decreto legge package aims to make it easier to set up businesses and simplify Italy's inefficient public administration, partly by allowing citizens to take steps such as residency changes or electoral registration over the Internet. The new measures cut the number of controls, administrative procedures and documentation necessary to set up a company or hire staff from outside the European Union. They also aim to develop broadband internet access across the country. The package was the latest effort to trim a 1.8-trillion-euro debt and restore competitiveness. It follows an austerity plan passed in December and a reforms approved by the cabinet last week to deregulate some service sectors and professions.

26 January 2012

Regulatory reform in Africa (OHADA)

For a good update on regulatory reform efforts in mostly francophone Africa, a newly released IFC/ World Bank “report, “Doing Business in the OHADA 2012”, draws on data from the annual global Doing Business study and takes a detailed look at business regulations in the 16 OHADA economies.
Founded in Mauritius in 1993, OHADA is a system of business laws and implementing institutions adopted by 16 West and Central African nations. OHADA is the French acronym for "Organisation pour l'Harmonisation en Afrique du Droit des Affaires."
The average ranking of the OHADA member states is 166 out of the 183 economies measured in the global Doing Business 2012 report. Mali, with a global rank of 146, is the easiest place among OHADA member states for an entrepreneur to do business, followed by Burkina Faso (150) and Senegal (154). In the past six years, all 16 OHADA member states made it easier to do business. Across the region, the average cost of starting a business decreased from 338 percent to 110 percent of the average per capita income. The average time required to register property also decreased by 28 percent.
The importance of international trade for all economies makes it worthwhile to pool information with a view to improve national and regional competitiveness.
One of OHADA's priorities is to establish a uniform legal framework to govern business activities in the region's economies, hence making the region more attractive to FDI and foreign business. This year, the first revision of the body of commercial laws in the region simplified business entry in eight member states and strengthened secured transaction laws in all 16 member states.

How to simplify company law (UK)

A stakeholder consultation, with a company law and commercial law focus, is launched today by the UK Red Tape Challenge. D. Trnka comments that this new approach can be seen as "an interesting example of how social networks can be used for crowd-sourcing efforts to improve regulatory framework" and is therefore quite worth checking out. Quote from press release "Companies of all shapes and sizes have today been asked for their views on how to tackle unnecessary bureaucracy in company and commercial law.
For the next three weeks, the latest phase of the Red Tape Challenge will focus on more than 120 company law regulations, guidance and enforcement processes that businesses deal with on a daily basis.
The campaign asks for a variety of suggestions about how regulations can be improved, simplified or abolished, whilst maintaining a company law framework that gives companies the flexibility to compete and develop effectively.
Examples of areas open for comment include:
  • Internal workings of companies and partnerships: Rules on shares and share capital, requirement to hold information at business premises and rules on meetings and resolutions.
  • Accounts and returns: The content, form and auditing requirements of financial accounts and other reports.
  • Business names: The rules covering company names.
  • Disclosure of company information: The regulations covering the information companies must supply to the official register."

23 January 2012

Comparative Reg Ref: Korea and Japan

An interesting comparison between these two countries is to be found in an online article of a Korean newspaper two days ago. It is based on how Korea and Japan reacted to crises and made the necessary structural adjustments, particularly by regulatory reform. Written by the editor-in-chief of http://www.mrglobalization.com/ and former OECD and ADB official, it shows how Korea's competitiveness advantage orginated in several reforms, unparalleled in Japan: lifting restrictions to market access, improving the regulatory environment of business, fighting bribery. Indicators such as the OECD FDI Regulatory Restrictiveness Index and the WBG Doing Business indicator have measured this progress.

South Australia Red Tape report

The South Australian Government (Competitiveness Council) released a report on action taken in 2010-2011 to reduce red tape for business at the state level. The programme sets out to cut administrative burdens by $150 million a year. The first tranche finished $18 million ahead of target and the second (to be completed by April 2012) is ahead of schedule.
Regulatory costs to the broader community are also to be addresse. Also of note at the South Australian level: in December 2010, a Better Regulation Handbook was issued to all agencies in order to improve transparency in reviewing and designing regulation. (tip from S. Trnka).

"Red Tape Challenged?" (UK government)

A new report released last month by the British Chambers of Commerce (BCC) shows that the government’s new regulatory architecture "is inconsistent and lacks transparency." Through analysis of Impact Assessments (IAs) by government department, and the feedback on these by the Regulatory Policy Committee, the BCC examined the progress made by the government to improve regulatory policy and reduce the effects of red tape on business.
During 2011, in spite of the "Reducing Regulation" policy, the "Red Tape Challenged?" report (32 pages) finds that the systems and processes put in place to achieve burden reductions for business are still inconsistent and must be strengthened. The report found, inter alia:
  • The burden of regulation on business remains too high
  • The regulatory process is opaque, and not open to effective scrutiny
  • “One-in One-Out” policy not applicable to 42% of regulations
Thank you, Daniel Trnka, for pointing out this good read.

20 January 2012

French president announces legal programme for "quality of norms"

On 16 January, President Sarkozy, speaking at a New Year function for magistrates, annouced a major "legal effort" for the improvement of the quality of norms, similar to the general review of public policies which has been conducted since 2007. The multi-annual programme, to be prepared by the Prime minister, would be spearheaded at the highest level by the Government. This is in keeping with the widely held view in France that the main issue is the excessive number of regulations, requiring a legal approach.

Canada: two exemplary assaults on red tape

On Thursday, the Canadian Red Tape Reduction Commission, created in January 2011, as part of the Economic Action Plan, released new findings concerning irritants to business, identified thanks to an extensive survey (published in the What Was Heard Report, in September 2011). Having found 2,300 specific irritants about how regulations cause unnecessary cost and frustration, the Commission set out to identify causes of red tape, and recommending solutions. It has now produced 90 specific recommendations involving 18 Government of Canada departments and agencies. The Commission, which is composed of six MPs, an an equal  number of business representative,  inter alia recommends introducing the "one-in, one-out" system for new legislation. See press release and the appended dossier for more. The Government has reacted favourably to the report. The communication is also available in French.
At the same time, The Canadian Federation of Independent Business (CFIB) recently released its annual Red Tape Report Card, which ranks Canadian public authorities according to the friendliness of the business environment. In an approach similar to that of the Doing Business subnational indicators of the World Bank (see also 2012 report page 18), the report evaluates federal and provincial governments’ progress to date on regulatory reform. It looks at measurement, political leadership, constraints on regulators and a permanent commitment to report. Not unexpectedly, the scorings are widely reported and commented, for instance Nova Scotia got a "D" score, for having slackened its effort, after several years of good rankings, while Manitoba was ranked "F" (the lowest grade). British Columbia earns top marks for its leadership. In addition to measuring the red tape burden for a decade, it recently passed first-of-its-kind legislation requiring an annual report on regulation. For a summary of the report, go to the CFIB site or consult Canada Newswire.
These two initiatives are, by international standards, cutting-edge ventures and may inspire other countries wishing to improve their business environment.

Enabling regulatory frameworks (Africa)

A good summary of the question in the Southern part of Africa is provided by a recent online news article (Johannesburg Financial Mail) reporting insights from a legal firm director, with a special emphasis on prospects for the continent's green economy. "Countries such as South Africa have established enabling legislation, including the Integrated Resource Plan to attract investment into the green economy, but politicians also needed to send the right message about the country embracing FDI. (...) Many African countries have implemented regulatory reforms to specifically attract FDI. Out of the 15 SADC member states, for example, 12 have a specific law governing private investment, and/or foreign investment or have established an investment promotion agency. Countries such as South Africa, Lesotho and Botswana have no specific FDI legislation, but have liberal investment regimes. FDI legislation is under review in Namibia, Seychelles and Zimbabwe, while Botswana’s Industrial Development Act, which deals with licensing, is also under review. According to a recent survey by Ernst & Young capital inflows into the continent are expected to reach US$150 billion by 2015, yet Africa still attracts less than 5% of global FDI projects. (...) With each of Africa’s 54 countries having different legal frameworks in place, bi-lateral investment treaties have proved successful in setting the ground rules for attracting FDI. Most of the major African countries, including Botswana, Nigeria, and South Africa, have bi-lateral treaties which set up specific conditions for investors in the host country. For example, some treaties set the rules for how disputes will be arbitrated, while others determine issues regarding tax incentives, double taxation, local procurement and trade." "Enabling" regulation is an approach quite different from deregulation, and entails an effort to inform stakeholders and streamline administrative processes, especially licensing. South Africa for instance announced that "within a year to a year and half a clear, legal regulatory framework will be in place so as to provide foreign and local business a clear picture of how to go about investing in South Africa."

18 January 2012

Ethiopia: trade to be boosted by RR

According to an Ethiopia Press Agency report, the Ethiopian Government is launching a business and trade reform to attract foreign investment. The new policy is based on the idea that the Ethiopian trade system has failed to modernized and operate within the legal framework. The reforms that the trade ministry is undertaking will enforce existing policies and eliminate various loopholes. They include simpler and more rapid licensing procedures, more transparent competition and wider use of identification systems. To reduce the informal economy, all businesses are now required to obtain licensing although in the past businesses with a capital of less than 5000 Ethiopian birr (225 euros) were not required to register.

Smart regulation : next steps

The general secretariat of the Council has released the indicative provisional agendas of the Council meetings in the next 6 months, under Danish presidency. On page 46 of this document, we can note that Council conclusions are planned to be discussed at the 20-21 February 2012 meeting of the Competitiveness Council, along with an orientation debate on the Europe 2020 strategy. See 19 December post for priorities of the Danish presidency concerning smart regulation. See also the Danish PM's speech today in the European Parliament.

US Congress hyper-active on RR

Regulatory reform has been a major legislative theme for the 112th Congress. After the winter recess, members of Congress will discuss a spate of bills currently pending in various stages before the House and Senate. In addition, last week President Obama announced that when Congress returns he will be asking for authority to merge six government agencies that interact with businesses in an effort to make government "leaner, smarter and more consumer-friendly." In two parts, a blog edited in cooperation with the Program on Regulation of the University of Pennsylvania Law School, RegBlog reviews ten bills that if adopted would alter, in some cases significantly, the current federal regulatory process. RegBlog remarks that "while few of these bills are likely to be approved by both chambers, and fewer still can be expected to win President Obama’s signature, they clearly reflect, when considered with other legislation, a rising tide of interest in reforming the U.S. regulatory process." See also previous post (19 December) on this blog.

08 January 2012

Commission improves consultation on new legislation

Earlier this week the Commission issued a press statement announcing changes to its consultation procedures effective 1 January 2012, among which :
- the extension to 12 weeks of the response time for those wishing to make known views during open consultations (from 8 weeks);
- the creation of a new “alert service” for upcoming legislation.
Though in principle these steps are consistent with smart regulation recommendations, and an improvement on the 2002 minimum standards, there are a number of practical and legal issues apparently not completely settled. For an informed analysis of the changes by an expert, there is an excellent article on his blog by Alberto Alemanno.

In defense of RIA (Scott Jacobs contribution)

Scott Jacobs, a top influencer on this network and leading consultant on regulatory reform has started a discussion on the sister site, the Group Smart Regulation on LinkedIn. Noting that RIA has come under increasing skepticism from some quarters due to the lack of clear evidence that countries that implement RIA do better economically, Scott thinks that a good evaluation of RIA results - covering its governance, economic, and democratic impacts – is necessary and he is now writing a paper in defense of RIA. He has posted a first list of sources on its impacts which is well worth reading, and asks us, members of the network if we have any additional sources/anecdotes/studies from countries on the impact of RIA?
So do become a member of the LinkedIn group and share with others your information or views. With 14 new members joining today, the group is now very close to 600 participants.

04 January 2012

New package for SME's (France)

As mentioned in a 2 December post, the French ministry in charge of SMEs has published 1/ a second set of measures (16) to reduce red tape on companies and 2/ a status report on the government's SME policy. Among the 16 measures, most notable could be the creation of a hotline for SMEs, the extension of RIA to secondary legislation affecting business, raising the threshold for public tenders, lightening company law obligations, creating one-stop-shops for classified facilities, and for air-transport taxes, and streamlining various procedures. Each measure is presented as a response to business concerns. The status report also gives an update on how each of the government's 80 measures announced in April is being implemented, and lists the measures put forward by the July 2011 Warsmann report to the government, which the government is addressing in priority, distinguishing between those requiring legal adjustments, from those that can be applied without any prior legal change. To support the impact assessment of intended business-related regulation, the ministry of economy, finance and industry is going to set up a dedicated evaluation structiure which will work in connection with the Commissaire à la simplification who operates from the Prime minister's office. To capitalise on the recent consultation of business, an advisory national council is also being planned.

French senate critical of government's simplification proposals

Experts interested in how France tackles quality regulation will be keen to peruse a newly published official parliamentary commission report (n°221, dated 21 December 2011) taking stock of simplification, as practiced since the early 2000's. As explained in several previous posts (see category "France of this blog) the Senate does not see eye-to-eye with the National Assembly on how to reduce legal complexity and its report on the 6th simplificaiton bill (in April 2011) had been quite scathing. Now, with a 7th omnibus law tabled in December after approval by the NA, the higher chamber has another opportunity to criticise and make proposals. According to the author, the new bill indeed suffers from much the same faults as its predecessorrs: though more focused on business, the measures are still too heterogeneous. They are not sufficiently explained and impacts have not been properly anticipated. The multiple changes to company law do not give the impression that the end result will be easier to understand and apply. The Senate suggests to simplify legislation, as the occasion arises, when sectoral bills are tabled, in order to preserve parliamentary scrutiny.