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					Regulatory Impact
Assessment: Methodology
and Best Practices

David Shortall
INMETRO International Workshop on Conformity Assessment
Rio de Janeiro, Brazil
December 11-12, 2006

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Impact of Regulations
   At their best:
    – Achieve social and environmental goals
    – Provide consumer protection
    – Improve economic performance by promoting
      competition

   At their worst:
    – Create unintended and often unavoidable barriers
      to trade
    – Present unnecessary burdens to business
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What is Regulatory Impact
Assessment
   Examines and measures the likely
    benefits, costs and effects of new and
    changed regulation
    – A key decision making tool for governments
    – Underpins regulatory reform
    – Used in most OECD countries
    – No single model fits all situation

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Purpose of Regulatory
Impact Assessment
   Systematically and consistently examine
    selected potential impacts arising from
    proposed government regulations
   Promote balanced decisions that trade off
    problems against wider economic and
    social goals
   Communicate the information to decision
    makers
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Benefits of RIA (1)

   Furnishes empirical data to make
    appropriate regulatory decisions
   Exposes impacts and linkages among
    policies and gives decision makers a
    capacity to weigh trade offs




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Benefits of RIAS (2)

   Provides a public accounting of each
    regulation
   Provides a clear explanation of the
    regulation, its purpose, the analysis
    substantiating it and expected impacts
   Enables policy makers to understand
    and take personal responsibility for
    regulatory decisions

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RIA in Canada
   Regulatory impact assessment
    statement introduced in 1999
   RIAS Writers Guide, Guide to the
    Regulatory Process
   Independent oversight
   Regular audits for compliance
   Systematic reduction of regulatory
    burden experienced
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Regulatory Impact Analysis
Statement (RIAS)
   Written at the end of the policy analysis and
    development process and is a summary of
    the analysis done
   Pre-published in the Canada Gazette, Part I
   Where relevant notified to WTO for
    comment by trading partners
   Pre-publication and notification offers a
    further opportunity for public comment and
    input
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Components of the RIAS
1. Description: outlines the
   regulations, defines the problem and
   shows why action is necessary
2. Alternatives: lists options beside
   regulation and other types of
   regulation
3. Benefits & Costs: quantifies the
   impact
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Components of the RIAS

4. Consultation: shows who was
  conferred with and the results
5. Compliance and enforcement:
  explains the policy on conformity
  to the regulations and tools to
  ensure it is respected

                                   10
1. Description
   Outlines the regulation, defines the
    problem and shows why action is
    necessary
     – All problems detected are defined and
       described
     – Each fully analyzed to understand nature and
       implications
     – Analysis of health, safety, environmental risks
     – Justification of government intervention
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2. Alternatives

   Considers alternatives (regulatory,
    non-regulatory and status quo)
    – Demonstrate that new or revised regulations
      will help solve the problem
    – Consider solutions based on performance
      requirements as alternative to prescriptive
      standards
    – Use equivalent means where possible to
      achieve regulatory objective
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3. Benefits and Costs
       Quantifies the impact of different options
    –     Address direct and indirect benefits and costs and
          impacts on environment, government, business,
          workers, consumers, etc.
    –     Address impacts on sustainable development and
          balance societal and economic goals
    –     Analysis of regulatory burden required on all alternatives
    –     Specific effects on small business required through the
          business impact test
    –     Recommended solutions must impose least costly
          information and administration burden
    –     Verification system ensures that all elements have been
          fully considered

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4. Compliance and Enforcement

   Explains the policy on conformity to
    the regulations and tools to ensure it
    is respected
    – Designed to minimize government liability
    – Identifies and informs those responsible for
      regulatory actions
    – Compliance objectives reflected in operational
      plans and budgets
    – Redress mechanisms established
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5. Consultation
   Shows the results of consultation
    – Regulatory proposals require timely and
      thorough consultations with interested
      parties
    – Authorities must set out process used to
      obtain input and identify stakeholders
      consulted


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6. Other Elements
   A regulation must be reviewed to
    determine any impact on obligations
    under an international agreement or
    treaty, including WTO TBT Agreement
   Environmental Assessment – required
    where relevant



                                          16
OECD Best Practices
1. Maximize political commitment to
  RIA
  – Support needed from highest level of
    government (laws, decrees)
  – Integrate RIA into the policy process
       Attach RIA to legislation
       Ensure quality control


                                            17
OECD Best Practices

2. Allocate responsibility for RIA
   programs carefully
    – Elements should be shared between
      ministries and central control body
    – Tool to improve skills




                                            18
OECD Best Practices
3. Train the regulators
   – Need to start when RIA introduced
   – Training manuals/writers guides very
     useful
   – Use simple concrete examples and
     case studies and practical guidance on
     data collection and methodologies


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OECD Best Practices
4. Use consistent but flexible analytical
   methods
  –   Quantitative cost/benefit analysis
      (socio/economic impact, business impact, cost-
      effective analysis)
  –   Other methods including qualitative
      assessments (efficiency, fairness)
  –   Need for flexibility in selecting among
      analytical methods
  –   Apply standardized guidelines for each method
                                                   20
OECD Best Practices

5. Develop and Implement Data
   Collection Strategies
  – Quality of data used to evaluate a
    proposal determines usefulness of RIA




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OECD Best Practices

6. Target RIA efforts
  – Target efforts at proposals which have
    largest impact on society and ensure
    that all such proposals are subject to
    RIA scrutiny




                                             22
OECD Best Practices
7. Integrate RIA with the policy-
   making process (beginning as
   early as possible)
  – If undertaken early in decision-making
    process, RIA does not slow process
    down
  – Integration is long term process which
    leads to cultural change among
    regulators and legislators
                                             23
OECD Best Practices

8. Communicate the results
  – Test assumptions and data used in RIAS
    through public disclosure
  – Means to improve the quality of the
    data and therefore the regulations
    themselves



                                          24
OECD Best Practices
9. Involve the public extensively
  – Consultation can yield important
    information on the feasibility of
    proposals, range of alternatives and
    likelihood affected parties are to accept
    proposed regulation




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OECD Best Practices

10.Apply RIA to existing as well as
   new regulation
  – Involves fewer data problems so quality
    of resulting analysis is usually higher
  – Local government regulations as well as
    actions of independent regulators
    should also be subject to RIA


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Conclusion
For more information:
   Canada’s RIAS:
    http://www.pco-bcp.gc.ca/raoics-srdc


   OECD Best Practices:
    OECD 1997: Regulatory Impact Analysis:
    Best Practices in OECD Countries, Paris

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