Expected costs and benefits of regulatoryco-operation and divergence: the Pacific Alliance

experience

1

JOINT MEETING OF THE REGULATORY POLICY COMMITTEE ANDTHE TRADE COMMITTEE ON TRADE AND INTERNATIONAL CO-OPERATION

Paris, FranceNovember 5, 2015

I. Background

2

a) Emergingmarkets withhigh growthrates

III. Oportunities

b) A third of Mexico’s exports in Latin America has the PA as destination

c) México´s share of the total imports from PA countries is

only 2%

I. Importance a) A political, economicand commercialplatform to the world

e) 209 million potentialconsummers

b) Free progresiveliberalization of goods, services, investment and persons II. Objetives

b) Only free trade initativein the LA region

c) 9th Global Economy

(1,908 Billion)

d) 8th ExportPower

(534 Billion)

I. Backgorund (Cont.)

Integration initative launched on April 28, 2011 by Chile, Colombia,México and Perú.

34 Observers from all regions. Panama may join as full members in thefuture.

Mexico’s participation in Alianza del Pacífico is part of a wider strategyto increase integration in Latin America.

The Alianza del Pacífico is working in the following areas:

• Trade and integration

• Services and capitals

• Business persons movility

• Cooperation

June 6th, 2012: Framework Agreement (Acuerdo Marco).

February 10th, 2014: Additional Protocol (Protocolo Adicional) with 19th Chapters).

• Objectives:

• increase and facilitate international trade;

• ensure that standards, technical regulations and conformity assessment

procedures do not create unnecesary barriers to trade.

• Parties recognize the existence of differences among their respective conformity

assessment procedures and commit to work to make them compatible to the greater

extent possible.

• Ambitious transparency and regulatory cooperation commitments.

• Includes the posibility of launching the negotiation of specific Annexes that will be

implemented as a part of the Technical Barriers to Trade Chapter.

• However, the Regulatory Cooperation activities preceded the negotiation of the TBT

and SPS disciplines.

II. Regulatory Cooperation in the AP

Technical Barriers to Trade

• The Parties have agreed on a “Regulatory Cooperation Pathway”, which consists of a specificprocedure to select initiatives of interest for the four countries.

• This Pathway aims to facilitate international trade through the establishment of two-yearprograms in specific sectors of interest agreed by the four countries.

• It is based on a public consultation process and the involvement of the relevant regulatoryauthorities and the private sector.

• The first Workplan was focused in the following sectors:

- Pharmaceutical products: with the objective of streamlining the registration of this products in each of the countries.

- Cosmetics: with the following objectives:

– I. Armonized definition of cosmetic products;

– II. Establishment of a “market surveillance system”;

– III. Elimination of the free sale certificate;

– IV. Homologation of the ingredients’ revision systems;

– V. Armonization of labeling requirements;

– VI. Armonization of good manufacturing practices requirements.

II. Regulatory Cooperation in the AP (Cont.)

Results of the First Regulatory Cooperation Work Plan

- On June 20th, 2013 the four countries’ sanitary authorities subscribed the Inter-institutional Cooperation Agreement on Pharmaceutical Products.

- Regarding the cosmetics sector, from 2012 to 2014, the TBT Working Group, supportedby the four countries’ sanitary authorities and industry, worked on a document thatformalized the objectives agreed to by the four countries.

- On July 3, 2015, that document was signed as the “Annex on the Elimination ofTechnical Barriers to Trade in Cosmetic Products.”. The document will be incorporatedinto the Treaty as an Annex to the TBT Chapter

- Nowadays, the TBT Working Group has already undertaken consultations and isdefining the contents of the Second Regulatory Cooperation Work Plan. The Groupexpects to define, during 2015, the specific sectors in which the Work Plan will focus.

II. Regulatory Cooperation in the AP (Cont.)

- Coverage

- Consensus

- Feasibility

- Expected outcome

- Impact in Trade.

II. Regulatory Cooperation in the AP (Cont.)

Criteria to include sectors:

• Medical Devices• Pharmaceutical

products• Food Supplements• Telecommunications

Equipment• Personal care

products• Paints

II. Regulatory Cooperation in the AP (Cont.)

Yes

No

Usefulness

of the

regulation

i. Attends

a risk

Yes

No

iii. Generate

unnecessary

costs

Yes

No

1. To confirm or

create4. To cancel 3. To modify in order

to armonize with

international

standards

2. To modify

to elliminate

unnecessary

costs

ii. Is

armonized

internationally

8

• The following methodology was suggested:

Measurement

of the

economic

impact

• Unnecessary transaction costs

• Underinvestment in the specific sector

• Productivity below international references

• Economic impact: measures as a GDP porcentage.

• Frequency of the use and coverage of the regulation.

1. To define specific activities and concrete goals, withtimeframes and well identified steps.

2. To involve and act as a result of an interest from privatesectors in all the relevant Parties.

3. To prefer “measures” rather than “sectors” to defineactivities.

4. To create follow up and assessment mechanisms.

5. To formalize commitments between regulators

III. Lessons learned

1. What may work for one sector, may not for another.

2. To obtain mandates and empowerment from the PoliticalLevel and High Level Officals.

3. To be flexible with the timeframes and deliverables,

4. To find balances/reciprocity in general and not necessarily ineach activity.

5. Lack of methodology and criteria to determine the economic-impact of each activity: is it relevant?

III. Lessons learned (Cont.)

Juan Antonio DORANTES

Director General for International Trade Rules

Secretariat of Economy / MEXICO

“juan.dorantes@economia.gob.mx”