APEC DEREGULATION REPORT 2000

APEC Economies will facilitate free and open trade and investment in the Asia-Pacific Region by, inter alia:

(b) eliminating those distortions arising from domestic regulations that restrict trade or investment and are not necessary to achieve a legitimate objective.

(a) explore economy-wide processes for the transparent identification and review of those domestic regulations that may cause distortions that restrict trade or investment, ensuring that reviews consider whether identified distortions are necessary to achieve a legitimate objective; and

(b) consider the adoption of regulatory reform programs that seek to reduce the costs of regulation of particular industries or sectors whilst maintaining the achievement of legitimate objectives.

APEC Economies will take Collective Actions with regard to regulatory review in the agreed areas. The main focus of the collective action plan is to promote information sharing, dialogue and study

The APEC Leader’s Declaration of September 1999 endorsed the following Principles: Non Discrimination

(i) Application of competition and regulatory principles in a manner that does not discriminate between or among economic entities in like circumstances, whether these entities are

(ii) Broad application of competition and regulatory principles to economic activity including goods and services, and private and public business activities.

(iii) The recognition of the competition dimension of policy development and reform which affects the efficient functioning of markets.

(iv) The protection of the competitive process and the creation and maintenance of an environment for free and fair competition.

(v) The recognition that competitive markets require a good overall legal framework, clear

(vii) Clear responsibility within domestic administrations for the implementation of the competition and efficiency dimension in the development of policies and rules, and their administration.

Mexico’s federal regulatory improvement program aims not only to produce higher quality regulations so as to achieve legitimate social goals at the least possible cost, but also to instil a process through which regulatory decisions are made on the basis of careful analysis, transparency and open public consultation.

The focus of the program has gradually evolved from deregulation, beginning in 1989, to the consolidation of an integrated regulatory management system through legislative reforms proposed

by President Zedillo and approved unanimously by Congress in the spring of 2000. The reforms created the Federal Regulatory Improvement Commission to co-ordinate the program with the assistance of a Regulatory Improvement Council, comprised of business, academic, labour, agricultural and government representatives; promote transparency in the development and enforcement of federal regulations; and help regulations produce the greatest net benefit to society.

To ensure that interested parties participate in the review process, the law now requires public

disclosure of all legislative and administrative proposals and their regulatory impact statements, at least 30 working days before they are issued. The Commission makes the complete texts available through the Internet (www.cofemer.gob.mx), and the list of all proposals under review is

published monthly in the federal government’s gazette (Diario Oficial de la Federación).

All federal ministries and decentralised agencies are responsible for implementing their respective regulatory improvement programs. With the support of the Council, the Commission co-ordinates and supervises the establishment of agencies’ reform commitments. The Ministry of the Comptroller General then verifies that federal ministries and decentralised agencies implement and correctly enforce the measures established in their regulatory improvement programs.

*Mexico’s Approach to Regulatory Review in 2000*
*Criteria*	*Improvements Implemented since the 1999 IAP*	*Current Regulatory Review* *Policies/Arrangements*
General Policy Position	Mexico’s Federal Administrative Procedures Law was amended on March 23^rd, 2000. The amendments broaden the scope, strengthen and ensure the continuity of Mexico’s regulatory reform programme; require transparency in the drafting of regulations by the executive branch; promote public participation in regulatory affairs; give legal certainty to citizens with respect to the enforcement of formalities and other regulatory requirements; and aim to produce net benefits not only to businesses, but also to consumers and citizens in general. The amendments created the technically and functionally autonomous Federal Regulatory Improvement Commission (COFEMER). (www.cofemer.gob.mx)	The regulatory improvement programme focuses on four main activities: The review of existing regulations (stock) The review of all new proposed regulations or legislative proposals (flow) The proposal of legislative reforms to improve Mexico’s regulatory framework in general terms or in specific industries, and Providing support for regulatory programmes at the state and local levels.
*Identification and Review of Proposed Regulations*	Procedural requirements have been extended beyond federal ministries to decentralised agencies (such as PEMEX and the Federal Electricity Commission), and financial authorities other than the central bank. The review and registration processes now apply not only to business formalities, but also citizen formalities. Rules relating to social security and technical standards have also been included within the scope of the law. Formalities The Federal Registry of Formalities and Services is now based in law.	Formalities Proposed formalities and government services are systematically reviewed and updated in the Federal Registry of Formalities and Services. New regulatory proposals All regulatory projects that imply compliance costs for citizens must be submitted to COFEMER, along with corresponding regulatory impact statements, for review. Reviews are conducted with the help of a Regulatory Improvement Council (business,

*Mexico’s Approach to Regulatory Review in 2000*
*Criteria*	*Improvements Implemented since the 1999 IAP*	*Current Regulatory Review* *Policies/Arrangements*
	Users will have complete positive security by 2003 (no unregistered formalities may be applied), and registered formalities may only be applied as they appear in the Registry. New regulatory proposals Proposals must be submitted to COFEMER at least 30 days before they are issued. COFEMER must make all draft proposals public (on the Internet and in the government’s official daily) and take public comments into account in its review process. Over 800 regulatory proposals have been reviewed from 1995 to 2000, and over 300 in 2000 alone.	academic, labour, agricultural and government sector representatives) Drafts of regulations must be made public and public comments considered in the review process.
*Identification and Review of Existing Regulations*	Review and identification of existing regulations (other than formalities) The reforms to the Federal Administrative Procedures Law have extended COFEMER’s review powers. It can now diagnose and propose reforms in specific economic sectors and regulatory areas. This means that COFEMER can take a more pro-active stance in proposing changes to existing regulations. Formalities Existing formalities in the areas of social security, technical standards, the financial sector, and those relative to citizens (non-business formalities) are now subject to review and registration in the Federal Registry of Formalities and Services. _{Review of the Transportation and Communications}	Review and identification of existing regulations (other than formalities) In conjunction with the Federal Regulatory Improvement Commission and ad hoc private sector working groups, COFEMER analyses the regulatory framework for existing regulation (even in specific economic sectors), and can propose legislative and administrative reforms to the President’s Legal Counsel. COFEMER’s web page includes a legal compendium of laws, implementing regulations and presidential decrees currently in force, and a complete listing of mandatory and voluntary technical standards. Formalities

*Mexico’s Approach to Regulatory Review in 2000*
*Criteria*	*Improvements Implemented since the 1999 IAP*	*Current Regulatory Review* *Policies/Arrangements*
	Ministry Formalities completed, and legal implementation is at 75%. Review of 11 of 12 ministries has been completed and total legal implementation of the changes is at 87%. Seven ministries have completed implementation, and three have implemented over 90% of the changes. Preliminary review of finance ministry formalities is complete.	Existing formalities and government services are systematically reviewed and updated in the Federal Registry of Formalities and Services.
*Reform of Industry/Sector Specific Regulation*	The Federal Administrative Procedures Law was amended in order to consolidate and give permanence to federal regulatory reform efforts. New bankruptcy and secure transactions laws were enacted in order to improve the allocation of business sector resources and create necessary conditions for increased private sector credit. Legislative reforms recognising the legal validity of electronic signatures were enacted in order to facilitate electronic commerce. New asymmetric regulation applicable to the dominant telephone operator has been issued. Also, new lower interconnection rates were set by the telecommunications regulator (COFETEL). The Federal Competition Commission issued a resolution regarding the sale of the federal government’s stake in Cintra, the holding company for Mexico’s two network airlines. The resolution states that the airlines must be sold separately in order to conform to constitutional and legal requirements. The airlines will be sold within a three year timeframe.	In conjunction with the Federal Regulatory Improvement Commission and ad hoc private sector working groups, COFEMER analyses the regulatory framework for existing regulations in specific economic sectors and regulatory areas, and can propose legislative and administrative reforms to the President’s Legal Counsel.

*Improvements in Mexico’s Approach to Regulatory Review since 1996*
*Criteria*	*Position at Base Year (1996)*	*Cumulative Improvements to Date*
*General Policy* *Position*	Since 1989, regulatory improvement and deregulation had been central aspect of Mexico’s structural reform program. The Economic Deregulation Unit was created within SECOFI in 1989. Agreement for the Deregulation of Business Activity (ADAE) signed in 1995, by President Zedillo. The ADAE was designed to reduce the costs of opening and operating businesses in Mexico. The basic regulatory reform strategy was established by the ADAE: (i) the review of existing regulations (stock); (ii) the review of all new proposed regulations or legislative proposals (flow); (iii) the proposal of legislative reforms to improve Mexico’s regulatory framework; and (iv) providing support for regulatory programmes at the state and local levels. In 1996, ministries were in the process of identifying their respective formalities and submitting them to the Economic Deregulation Unit for review. Regulatory impact statements (RIAs) were not yet used in the review of new regulatory proposals. Transparency and public consultation requirements were uneven and generally lacking.	The Federal Administrative Procedures Law was amended in 2000. Among the more salient features of the reforms are: Creation of a technically and functionally autonomous Federal Regulatory Improvement Commission (COFEMER), which replaces the Economic Deregulation Unit. Broadening and deepening of the scope of the regulatory reform programme. Legally mandated review of regulatory proposals and their RIAs. Establishment of clear transparency and public consultation requirements. Creation of the Federal Registry of Formalities and Services, meaning greater legal certainty for compliance with formalities. COFEMER can now propose reforms to existing regulations in specific economic sectors and regulatory areas. Creation of Registry of Authorised Users. Establishment of the Regulatory Improvement Council in law (comprised of business, academic, labour, agricultural, and government sector representatives), including competition and consumer protection authorities.
*Identification and Review of Regulations*	*Formalities* The creation of the inventory of federal business formalities was in process, and not yet available on the Internet. Sequential review of ministries’ formalities began with	*Formalities* To date, 11 of 12 federal ministries (Commerce, Foreign Affairs, Health, Labour, Tourism, Environment, Education, Agriculture, Energy, Transportation and Communications and

Improvements in Mexico’s Approach to Regulatory Review since 1996

Criteria

Position at Base Year (1996)

Cumulative Improvements to Date

the Ministry of Commerce (later sequential review was dropped in favour of simultaneous review).

New Regulatory proposals

Regulatory proposals were reviewed by the Economic Deregulation Unit with the help of the Economic Deregulation Council (comprised of business, academic, labour, agricultural and government representatives), but RIA programme not yet implemented.
Lack of horizontal legislative obligation for transparency and public consultation.

Scope of review

Scope of review process was limited to business formalities, and there were many exemptions.

Interior) have gone through the review process, resulting in the elimination of approximately

50% of formalities. Legal implementation of the

changes is at 87%.

The Federal Registry of Formalities and

Services is available on the Internet

(www.cofemer.gob.mx). The registry will give

users complete positive security by 2003, and formalities registered must be applied exactly as they appear in the registry. 17 states now also have online registries of formalities.

To date, there are only nine federal business formalities (name registration, fiscal, labour and social security requirements) that are

universally required of all firms with at least one employee; and four for businesses with no employees.

New regulatory proposals

Since 1996, over 800 legislative (over 300 in

2000 alone, because of the legal reforms) and administrative proposals have been reviewed and modified as necessary in areas such as health, labour, environment, water, mining, natural gas and electricity.

RIAs required for all regulatory proposals.
Drafts of regulations must be made public and public comments considered in the review process.
A compendium of laws and presidential-level regulations is available and constantly updated

*Improvements in Mexico’s Approach to Regulatory Review since 1996*
*Criteria*	*Position at Base Year (1996)*	*Cumulative Improvements to Date*
		on the Internet. An online library of mandatory and voluntary technical standards is also available. Scope of review Procedural requirements have been extended beyond federal ministries to decentralised agencies (such as PEMEX and the Federal Electricity Commission), and financial authorities other than the central bank. The review and registration processes now apply not only to business formalities, but also citizen formalities. Rules relating to social security and technical standards have also been included within the scope of the law.
*Reform of Industry/Sector Specific Regulation*	Roads (1989) Seaports (1989) Freight Transport (1989-1992) Telecommunications (1995) Natural Gas (1995) Satellites (1995-1996)	Among the more important sector reforms carried out since 1996: Bankruptcy and secure transactions laws (2000) Administrative Procedures Law (2000) E-commerce legislative reforms (2000) Telecommunications -- asymmetric regulation for the dominant carrier and lowered interconnection rates (2000) Civil aviation -- Federal Competition Commission resolution requiring the separate sale of Mexico’s two network airlines (2000) Airports (1999, 1997) Labour inspections (1998) _{Co-generation and self-supply of electricity}

APEC Agreements and Declarations

APEC DEREGULATION REPORT 2000 - MEXICO