The effectiveness of regulatory cooperation contributes to the creation of new jobs and other benefits to industry.
If past work on easing trade restrictions is any indication, the APEC region is poised to make doing business across the region even easier. APEC has long been leading the global economy in reducing overt barriers to trade and, according to figures cited recently by the region’s Leaders, simple average applied tariff rates were reduced from 8.2 percent in 1996 to 5.4 percent by 2008. At the same time the world average was 10.4 percent.1
On the back of this significant progress, APEC Leaders, Ministers and officials are planning to tackle unnecessary non-tariff barriers to free trade and investment.
Regulatory and conformance barriers to trade and investment relate to the minimum standards and qualifications set by governments for goods and services to be distributed in their economies. These standards cover areas as diverse as voltage and testing certification for electrical goods, pest control rules for agricultural products, product labelling and consumer information requirements and minimum safety expectations for foods. Standards relate also to recognition of skills such as tertiary education and trade qualifications, to legal infrastructure and financial accounting.
While these standards and regulations serve a legitimate purpose in ensuring the safety and interoperability of products and services at a domestic level, they also have the potential to intentionally or inadvertently impose barriers on the movement of goods, services and people between economies.
It is the intention of APEC member economies to ensure that standards and regulations serve a genuine and useful purpose and, where this is possible and desirable, are harmonized across the region.
At their 2010 meeting in Yokohama, APEC Leaders called for regulatory cooperation to be “broadened and deepened” specifically noting that “trade costs should be minimized and bureaucratic inefficiencies removed.”
Leaders issued this directive as part of broader APEC efforts to remove barriers to the movement of goods and services and so make it “cheaper, faster, and easier for businesses to trade and operate in the region.”
Taking the reins, the United States, as 2011 APEC host economy, has indicated that expanding regulatory cooperation and advancing regulatory convergence will be a priority during the 2011 APEC year.
Speaking at the Informal Senior Officials’ Meeting that was held in Honolulu in December 2010, United States Senior Official, Kurt Tong, made special note of the importance of confronting these behind-the-border barriers to trade in preparation for the 2011 APEC Economic Leaders’ Meeting.
Tong said dealing with barriers associated with “technical regulations, standards and conformity assessment requirements” were “essential to lowering the costs of doing business and strengthening regional economic integration.”
The 2011-2012 Chair of the APEC Committee on Trade and Investment (CTI), Monica Contreras Rosales, welcomed the increased focus on the promotion of regulatory cooperation and convergence in the APEC region noting that the benefits to economies would be clear and tangible.
“Improving the business environment in this regard we can realize benefits, namely economic growth, further trade in goods and services, lower costs for consumers, business, producers, and governments,” Rosales said.
“This is particularly the case for small and medium size enterprises.”
Driving much of this work is the APEC Sub-Committee on Standards and Conformance (SCSC) established to assist the CTI in reducing the negative effects that differing standards and conformance arrangements have on trade and investment flows. The SCSC has made a number of advances on bridging standards and conformance gaps. The 2010 SCSC Chair, Tatsuo Yamamoto, said an obvious benefit derived from greater integration of regulations is the reduction in the cost of trade in the region.
“If we had the same standards and testing procedures which are aligned with the latest international standards, all industries in the region could import or export more effectively and smoothly,” Yamamoto said.
“The effectiveness of regulatory cooperation contributes to the creation of new jobs and other benefits to industry.”
“This is one of the most efficient and effective tools to progress regional economic integration in the Asia Pacific.”
Promoting regulatory cooperation and convergence through APEC also works towards the objectives outlined in the WTO Agreement on Technical Barriers to Trade. This agreement seeks to ensure that technical and certification procedures do not create unnecessary obstacles to trade, while ensuring the health of human, animal and plant life is not undermined by cross-border interaction.
APEC’s work in this area goes further than not only ensuring elements of environmental protection, but employing certification to enhance product safety and encourage responsibility. To this end, APEC Ministers made a particular point of ensuring the increased alignment of standards, labeling and conformity assessment procedures work to “support innovation, safety, security, and solutions to energy and environmental issues, including the promotion of energy efficiency and use of renewable energy.”
Further efforts are being made through the APEC Regulatory Cooperation Advancement Mechanism (ARCAM) on Trade-Related Standards and Technical Regulations. Launched by the CTI in 2010 the ARCAM is a process through which trade officials, relevant regulators and other stakeholders are able to conduct work on emerging regulatory issues that have relevance to APEC’s agenda to strengthen regional economic integration. The purpose of this work is to develop a shared understanding of relevant issues, increase transparency and promote better alignment of technical requirements and standards.
APEC’s work in the area of regulatory cooperation and convergence is broad covering areas such as harmonizing standards for the digital economy relating to the development of innovative information and communications technologies, common standards for life sciences research and standardized safety testing of electronic equipment and children’s toys.
The SCSC is undertaking numerous projects supporting regulatory cooperation including the work of the Good Regulatory Practice (GRP) and Joint Regulatory Advisory Committee (JRAC). A highlight in this work is the Electrical and Electronic Equipment Mutual Recognition Agreement (EEMRA) that seeks to reduce the “time to market” for the export of electronic goods and enables regulators to have greater visibility of corresponding standards in other APEC economies. The EEMRA is being implemented in three areas relating to information interchange, the acceptance of test reports and the acceptance of certification.
By forging such agreements, and through further cooperation and dialogue, APEC is sure to bring its economies still closer together on these issues in 2011. And through cooperative strategies of this robust and dynamic regional group, APEC is well on its way towards achieving greater regional economic integration and development.