Policies to improve Regulatory Quality: the Mexican case

3. Policies to improve Regulatory Quality: the Mexican case Federal Regulatory Improvement Commission (COFEMER), MEXICO Good Governance for Development in Arab Countries Initiative: Working Group IV Tunis, Tunisia. February, 2007

4. COFEMER is Mexico’s Federal Regulatory Improvement Commission. COFEMER was created in year 2000, through a reform to the Federal Administrative Procedures Law. COFEMER is an autonomous agency of the Ministry of the Economy. COFEMER is supported by the Federal Regulatory Improvement Council which is comprised by five ministries, a number of government agencies, as well as representatives of the private and social sectors, and scholars. COFEMER’s personnel: 60 professionals, mainly experienced on fields such as Economics and Law. ¿What is COFEMER?

5. COFEMER's Mission Ensuring transparency in the regulatory process Promoting that regulation’s benefits exceed its costs Federal Regulatory Improvement Commission Achieving, through good regulation, the greatest benefit for society and not just for certain groups

6. Regulatory Impact Assessment (RIA) and the Presidential Order for Regulatory Quality Collaboration Agreements with States and Municipalities, and the Rapid Business Start-up System COFEMER Federal Register of Government Formalities and Services Public-Private Dialogue within its Council COFEMER’s main tools for Regulatory Improvement

7. RIA is an ex-ante analysis which facilitates knowing what effects, in terms of expected costs and benefits, a regulation will create when implemented. It also helps to analyze regulatory alternatives to the original project of the regulator. In principle, all federal ministries and agencies are obliged to send their draft regulatory instruments and their respective RIA to COFEMER, in order to obtain the latter’s opinion. No regulatory instrument might be published in the official Gazette, and therefore enter into force, without obtaining firstly COFEMER’s opinion. RIA and the Presidential Order for Regulatory Quality

8. In addition to the RIA process mentioned before, a new instrument to reinforce Regulatory Quality was issued by President Felipe Calderón on February 2, 2007: the Presidential Order for Regulatory Quality. The Presidential Order establishes a procedure that federal ministries and agencies must fulfill before COFEMER, previous to submitting the RIA. The Presidential Order's goal is to oversee: i) that the draft regulation has a positive effect on citizens and productive activities; and ii) that no regulation is enacted if it hinders investment, job creation and, in general, the competitiveness of the Economy. RIA and the Presidential Order for Regulatory Quality

9. Federal agencies may issue new regulation, only when the latter complies, subject to COFEMER’s decision, at least with one of the following criteria: The draft regulation derives from an emergency situation. The federal ministry or agency is complying with either an obligation established in law or in regulations issued by the President. The draft regulation is complying with an international obligation. The regulation has to be up-dated periodically due to its nature. The benefits of the proposed regulation are superior to its compliance costs. RIA and the Presidential Order for Regulatory Quality

10. SARE is a permanent program, created in year 2002 by the Federal Government, that promotes, in a joint manner with state and municipal authorities, the establishment and start-up of new businesses in 72 hours(comparable to the best practices in this subject in OECD countries). SARE is a one stop shop in which all relevant federal, state and municipal procedures (7-9, depending of the city in which the business intends to open) can be fulfilled. As of January, 2007 there are 110 SARE offices working throughout the country (in those municipalities 46% of the total gross production is located). For year 2007, approximately 20 additional SARE offices will be opened. Rapid Business Start-up System (SARE)

11. The RFTS was created on year 2000 and is run by COFEMER. It took a three year period for the Registry to be totally integrated. The objective of the Registry is to bring certainty and transparency to all individuals and businesses with regard to federal formalities and services. The RFTS is a public online catalog available at www.cofemer.gob.mx, with information regarding the specific steps, authorities involved, terms for responding, legal grounds, applicable formats, etc., of most federal folmalities and services Federal ministries and agencies are obliged by law to inform COFEMER of the creation of a new formality or service or the modification of an existing one, in order to reflect the relevant situation in the RFTS, keeping the latter updated. Federal Register of Government Formalities and Services (RFTS)

12. The Public-Private dialogue has built a new vision of regulatory improvement, achieving: Improvement of 63 high impact formalities in specific sectors of the Economy. Establishment of a Regulatory Moratorium from 2004 to 2006, which reduced the issuing of regulation with compliance costs in around 23%. Development of a Systemic Approach to define 36 regulatory improvement priorities to promote competitiveness by analyzing complete regulatory systems, in order to propose and implement solutions to the detected situations. Public- Private Dialogue within the Federal Regulatory Improvement Council

13. Due to the positive results obtained with the Public-Private dialogue, federal authorities and the private sector agreed to formalize their work relationship. As of August, 2006 the Council's Rules were modified to create two new levels of work with public-private participation: the Executive Committee and the Working Groups. The objective of creating such new levels is to have an agile structure to promote discussion, definition and implementation of regulatory changes to foster competitiveness. Public- Private Dialogue within the Federal Regulatory Improvement Council

14. PPD in Mexico: Future Tasks COUNCIL COMPETITION ECONOMY CONSUMER PROTECTION FINANCE Regulatory Improvement Council (High level political decisions). Minister level and its equivalent in the private sector LABOR COFEMER ACADEMY COMPTROLLER GENERAL PRIVATE SECTOR Executive Committee (High level technical decisions). Underminister level and its equivalent in the private sector. Executive Committee Foreign Trade and Customs Working Groups Working Groups (Technical Work) Director General level and its equivalent in the private sector. Business Start-Up Energy Health Social Security Labor Technical Standards Financial Migration Telecommunications Transportation