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02 June 2015

New challenges for better regulation (OECD Forum)

Your blogger attended the first day of the 2015 OECD Forum, where "leaders and influencers ...  gather to debate the most pressing social and economic challenges confronting society." This year's instalment was not directly connected to regulation, but this was not a reason to stay away: we smart regulators do not work in a vacuum, we try to apply or skills to assist governments and regulators in achieving all regulatory outcomes, so it is necessary now and again to take a look at the bigger picture. And the general theme "Investing for the future: people, planet, prosperity" promised to cover all the major challenges confronting policy makers. Please refer to the OECD Forum website for excellent introductory statements and access to resources, my comments are limited to what may interests regulators.
1. The session on "Unlocking investment" naturally examined the role of regulation for fostering the right investment climate . But 80% of participants (polled instantly) thought a return to pre-crisis levels would not come from regulation. Though compliance costs were mentioned as a hindrance to investment, it seemed to me that better regulation policies and tools were not sufficiently well-known. The panel and audience seemed to put more faith in bringing about  a public-private dialogue ensuring a co-ordinated approach between the private and public sectors to develop a new investment culture, where social goals would be on a par with profit. Innovative business models, and Social impact investment approaches were a prime example of that trend. See also blog by Eric Solheim, chairman of the OECD Development Assistance Committee.
2. The Trade & Investment for development session examined how countries could unlock the full growth-inducing potential of trade, which has not retrieved its pre-crisis levels. Speakers agreed that FTA were no longer focused on tariffs, but increasingly addressed NTBs, mainly of regulatory origin. Prime examples of the trend were the  TTIP (Transatlantic Trade and Investment Partnership) and TTP (Trans-Pacific Partnership). Much attention was given to the fragmentation of markets resulting from NTBs, with the ensuing increase in compliance costs (such as mutiple national certification procedures for the same product) and loss of trading possibilities, with corresponding reduced growth estimated at 2% of GDP. Removal of these obstacles could greatly benefit SMEs, as was shown from NZ and CZ examples, who could participate much more in Global Value Chains. More than ever, regulatory coherence was necessary. A new challenge for governments, especially in developing countries, was also to preserve the quality of investment, i.e. that it contribute to sustainable and inclusive growth, and not seek immediate profit.
3. The session on Sustainable Development Goals (SDGs) only rarely touched on regulatory issues but provided a prime example of an integrated policy inspired by international consensus and facing all the challenges of implementation that better regulators are familiar with. The discussion therefore covered very familiar territory: the main challenge, said one of the speakers, was political will  (the audience voted - by 38% - the lack of measurability as the top obstacle), lack of accountability and transparency of governments in pursuing non-binding commitments, need for more evidence-based decisions with data-collection strategies. It was quite surprising, even touching, to note the extent to which the private sector (including multinationals) vowed to support these mainly social goals, apparently to build a good reputation.

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