Mexico’s Federal Regulatory Improvement Programme: Experience and Future Priorities

1. Mexico’s Federal Regulatory Improvement Programme: Experience and Future Priorities Carlos Arce Macias Head, Federal Regulatory Improvement Commission Mexico (52) 57.29.92.30 carce@economia.gob.mx Singapore, February 2001

2. The need for regulatory improvement • Began in 1989 as a natural complement to the process of trade liberalisation (1986) • Financial crisis of 1994-1995 gave added impetus to the reform process • General need to improve economic performance and job creation in an environment of fiscal austerity.

3. Reform of the Federal Administrative Procedures Law (2000) • Unanimously approved by Congress • Strengthened and consolidated regulatory improvement programme • Created Federal Regulatory Improvement Commission (COFEMER), with technical and functional independence, and greater review powers • Created Regulatory Improvement Council (business, academic, labor, rural and government representatives)

4. Review, elimination and simplification of formalities • Federal Registry of Formalities and Services containsinformation on requirements, processing times, office locations and forms for nearly all business formalities. • Citizen formalities must be included by May 2003. • Number of formalities reduced by 45% from 1996 to 2000, and 95%of remaining simplified. • Formalities not registered by May 2003 will no longer be applicable. • Register of Accredited Persons must be created. Allows faster processing of formalities. Complement to e-government.

5. Review of draft regulations • Since 1996, more than 800 draft legislative and administrative proposals reviewed in detail with the help of the Regulatory Improvement Council and ad hoc private sector working groups. • All regulatory proposals are public, and must be sent to COFEMER at least 30 working days before adoption. • Transparency and analysis-based review process (regulatory impact statements, public consultation, net benefit to society).

6. COFEMER reform proposals • COFEMER can diagnose the quality of existing regulation in specific regulatory areas and propose reforms to the head executive. • Reforms carried out include: natural gas law and implementing rules (1995), civil and mercantile judicial procedures (1996), standards Law (1996), mining law (1996), competition law implementing rules (1998), and Federal Administrative Procedures Law (2000). • New diagnoses have been prepared for: water distribution and conservation, medical devices, fertilizers and pesticides, electricity reform, and freedom of information.

7. Regulatory reform across levels of government • Since 1995, the need for better co-ordination and congruence between the federal, state and local governments was explicitly recognised. • COFEMER provides technical advice to states and municipalities. • Most state governments have created their own regulatory improvement programmes, and 23 have signed agreements with their main municipalities. • National state regulatory reform meetings every 6 months. • The private sector publishes an annual state regulatory rankings.

8. Benefits of reform Market openness and deregulation of entry, exit and pricing in tradable goods has: • Increased competition and innovation • Improved quality of services • Lowered prices • Increased resilience to economic shocks Regulatory reform also: • Directs public resources to their most productive uses • Improves policy co-ordination • Creates transparency and supports democratic values • Strengthens rule of law

9. Future priorities • Consolidation of the programme (implementing rules for review criteria and impact assessments). • Training and capacity building. • Co-operation with states and particularly municipalities. • Public consultation and higher public profile for COFEMER. • Reform of electricity sector and freedom of information act.

10. APEC-OECD 2002 • Mexico presidency of APEC. • Importance of continued Asia-Pacific cooperation in regulatory reform. • Plans for regulatory reform workshop in Merida, Yucatan in spring 2002.