Implementing Regulatory Reform: Building the Case
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IMPLEMENTING REGULATORY REFORM: IMPLEMENTING REGULATORY REFORM: BUILDING THE CASE THROUGH RESULTS BUILDING THE CASE THROUGH RESULTS PROCEEDINGS OF THE MEETING OF THE GROUP ON REGULATORY POLICY PROCEEDINGS OF THE MEETING OF THE OECD, PARIS, DECEMBER 2007 GROUP ON REGULATORY POLICY OECD, PARIS, DECEMBER 2007 This report discusses some of the major challenges for implementing regulatory reform, from a political perspective. It draws on the experience and evidence from OECD countries when building the case through results and developing strategies for advocacy. This reflects the discussions held at the meeting of the OECD Group on Regulatory Policy in December 2007. Core issues concern how to create common consensus to support reform and which actors and stakeholders to integrate in achieving reforms. The issues of sequencing and timing are extremely relevant. Citizens and the public also need to understand the economic benefits of liberalisation and cutting red tape through regulatory reform. Specific chapters analyse the role of advocacy bodies for regulatory reform, as well as competition policy, discussing their incentives and how they operate in their cultural, political REFORM: BUILDING THE CASE THROUGH RESULTS IMPLEMENTING REGULATORY and administrative environment. They should perform as powerful drivers and engines for reform, integrating the views of business and citizens in the policy process. An example is presented in the form of a case study assessing the political viability of centralised regulatory oversight as an institutional strategy based on the United States’ experience. Concerning competition policy advocacy, the report examines the balance between institutional independence and objectivity that are necessary for enforcement. Finally, the report also discusses how to interlink market-openness policies in a friendly reform environment, drawing lessons from trade and structural adjustments. It underlines the role of international negotiations as a means to harness political support, and strategies for managing and sustaining market-opening reforms. For further information, please contact: Stéphane Jacobzone Principal Administrator OECD Regulatory Policy Division 2, rue André-Pascal 75775 Paris Cedex 16, France E-mail: [email protected] This report is available online via the link www.oecd.org/regreform. Implementing Regulatory Reform: Building the Case Through Results Proceedings of the Meeting of the Group on Regulatory Policy OECD, Paris, December 2007 2008 Regulatory Policy Division Directorate for Public Governance and Territorial Development TABLE OF CONTENTS – 3 Table of contents 1. The Lessons of Experience: Highlights of the Discussions ................................................... 7 Introduction ......................................................................................................................... 7 Creating common public values to support reforms ........................................................... 8 The need for consensus ..................................................................................................... 10 Building constituencies and coalitions supporting reform and maintaining support throughout the process ......................................................................................... 11 Establishing ownership for reforms ............................................................................ 12 Some lessons from Norway, the Netherlands and Italy .............................................. 12 Ensuring continuity through senior officials ............................................................... 13 Timing and sequencing of reform ..................................................................................... 15 Recovering from failure ............................................................................................. 16 Reforming in response to a crisis ............................................................................... 16 Maintaining momentum and a sense of urgency in the absence of crisis .................. 17 Crises may also lead to select less appropriate policy instruments ............................ 18 And the electoral cycle imposes its constraints ......................................................... 18 Successful strategies for reform through engaging open and inclusive participation of stakeholders at the political level ............................................................. 19 Conclusion ........................................................................................................................ 21 2. The Benefits and Challenges of Implementing Successful Regulatory Reform ............... 25 Introduction ....................................................................................................................... 25 What are the economic benefits of liberalisation? ............................................................ 26 Progress with liberalisation ........................................................................................ 26 How are the benefits of regulatory reform realised? .................................................. 28 The political challenges of implementation ...................................................................... 32 Policy drivers, institutional capacity and the importance of political support ........... 33 Reaching out to businesses and citizens .................................................................... 34 Sequencing of reforms and building synergies towards consensus ........................... 37 Weighing adjustment costs as well as the cost of inaction ........................................ 37 The importance of multi-level regulatory coherence ................................................. 38 Promoting cultural change within administrations is a dynamic process .................. 39 Bibliography ..................................................................................................................... 43 Annex 2.A1. Product Market Regulation 1998-2003 ..................................................... 45 Annex 2.A2. OECD Work on Regulation, Competition and Economic Performance ............................................................................................... 47 IMPLEMENTING REGULATORY REFORM: BUILDING THE CASE THROUGH RESULTS – © OECD 2008 4 – TABLE OF CONTENTS 3. The Role of Advocacy Bodies – Building Drivers and Engines for Reform: Integrating Business and Citizens in the Regulatory Quality Process .............................. 51 Introduction ....................................................................................................................... 51 The role of advocacy bodies in policy making ................................................................. 52 What is a regulatory reform advocacy body? ............................................................ 52 The importance of advocacy bodies for promoting high-quality regulations ............ 55 Elements of the advocacy function ............................................................................ 58 Key roles of advocacy bodies in promoting regulatory policies ................................ 58 Central components and features of advocacy bodies ...................................................... 61 Setting the advocacy mandate .................................................................................... 61 Permanent vs. temporary and ad hoc mission ............................................................ 64 Mixing governmental or non-governmental experiences .......................................... 65 Selecting the reform advocates .................................................................................. 66 Freedom of operation and openness of advocacy bodies ........................................... 68 Key elements contributing to the success of advocacy bodies .......................................... 69 How to evaluate the performance of advocacy bodies .............................................. 69 Balancing independence and accountability .............................................................. 70 Strengthening the credibility of the institution .......................................................... 71 Ensuring the potency of the “voice” .......................................................................... 72 Building a political constituency for reform .............................................................. 73 Resources and working methods ............................................................................... 76 Main lessons ...................................................................................................................... 77 Bibliography ...................................................................................................................... 83 Annex 3.A1. Reports of the BRTF – BRC, 1998-2006 .................................................. 85 Annex 3.A2. United States Think Tanks Advocating Regulatory Reform ..................... 87 Annex 3.A3. Overview of Key Features of Advocacy Bodies Across Selected OECD Countries ......................................................................... 89 4. Supporting a Strategy for Reform: the Role for Competition Policy and Consumer Advocacy .............................................................................................................. 97 Competition policy aspects of reform strategies ..............................................................