Dodwell in SOM3 Medan - Post 7

July 01, 2013

Back in 2011, our Marshall School report revealed that 77% of interviewees saw inconsistent standards and regulations across economies as a significant barrier to trade. In the same year the pacific Economic Cooperation Council (PECC) survey cited regulatory impediments in overseas markets as the second biggest challenge to doing business in the region.

In short, we in the business community have been anxious for a very long time to see officials in the region move towards harmonization of regulatory standards. For companies operating along long and complex supply chains, regulatory “friction” in each economy along a production chain can accumulate to add massive extra costs to production. The incentive to reduce or minimize such cumulative costs can mean economies are “bypassed” by such companies, who today account for a very large share of total trade. The result: that country’s export potential is stunted.

To be fair to our region’s officials they have listened hard, and have begun to take note. And a very good example was the massive two-day “Good Regulatory Practice” workshop held in the midst of the current Medan SOM cluster. Demands from other working groups meant that I was only able to attend part of this comprehensive event, though I was able to make a presentation on good regulatory practice and the value of Regulatory Impact Assessments underpinned by substantial preparation and research from our NCAPEC colleagues in Seattle, who have long been ABAC’s champions in this area.

The messages were simple: trade costs resulting from divergent regulations are significant and need to be minimized. At present they amount to a significant behind the border barrier to trade and investment.

Around the hope for regional convergence on regulations, our presentation emphasized that regulation should facilitate trade of goods and services, stimulate competition between economies and contribute to economic growth. Regulatory Impact Assessments are pivotal to minimize any negative impacts of regulations. At best, good RIAs are tools that enable governments to allocate national economic, social and environmental resources better, and improve citizens’ quality of life.

In sum, our ABAC presentation called for APEC economies to work collaboratively to reduce regulatory difference. While the principle seems to have been acknowledged and agreed, we believe implementation lags. We are calling for best-practice sharing on how RIAs are built; on capacity building to facilitate implementation; consistency and transparency.

The process has proven to be a slow one, but credit to our colleagues in the US for continuing to work so hard and persistently on this issue. The size of attendance at the workshop suggests we have many officials already strongly committed to supporting us.


⇒  More blog posts from the SOM3 Medan meetings series.

⇒  Dodwell's other meetings blogs.


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