Regulatory Guillotine™: A new tool to assist countries in rapid regulatory simplification

Countries in transition face an enormous task of reviewing and updating the legacy of laws, rules, and other instruments dating back decades. Yet reviewing, assessing, and revising the hundreds and even thousands of rules on the books imposes huge administrative, legal, and political costs, and takes a long time.

One of the most rapidly spreading regulatory reform innovations is the Regulatory Guillotine™, a reform strategy that has been used over the past decade in several countries, and that has been refined and developed by Jacobs and Associates for application in a wide range of countries.

In 2005-2006, Jacobs and Associates helped several governments launch
guillotines:

• The Kenya Guillotiners: The Working Committee on Regulatory Reforms for Business Activity in Kenya is carrying out a guillotine program on 1,500 business licenses in 2005-2006. On the right of Scott Jacobs is Working Committee Chair Ben Musai, and on his left is Peter Ladegaarde from the Foreign Investment Advisory Service.

  Kenya in 2005 launched a guillotine process that is reviewing, by Spring 2006, 1,500 business licenses that are crippling business performance. The first phase reviewed 80 licenses and eliminated 26 in only 8 weeks.
  
  
  
• In 2005, Moldova adopted guillotine to streamline 1,130 formal ministerial acts over a six month period. Of these, 35 % were amended and 12 % were eliminated. The guillotine is, in 2006, being carried out for laws.
  
  
• Ukraine issued a decree in June 2005 on "rapid deregulation," adapting the Jacobs and Associates guillotine approach. In only a few weeks, almost 10,000 regulations were reviewed and over 55 % slated for elimination.
  
  
• Macedonia's Prime Minister announced in 2005 that the government will adopt a Regulatory Guillotine™ law in 2006, on the advice of Jacobs and Associates.

The guillotine has also proved successes in other countries in transition:

• Mexico used the guillotine in the 1990s to eliminate 47 percent of government formalities and create its famous Federal Registry of Formalities and Services.
  
  
• As part of its economic recovery after the financial crisis of 1997, Korea used the guillotine to review 11,000 business regulations and eliminate 50 percent in less than a year.
  
  
• In its economic transition, Hungary used the guillotine effectively in reviewing, eliminating, and replacing regulations not consistent with a market democracy.
  

The Guillotiners: The Secretariat of the National Working Group on Implementing Regulatory Reform in Moldova are carrying out a rapid guillotine program on hundreds of business regulations in 2005.

In general, the Regulatory Guillotine™ operates in the following way:

1. The government establishes the scope of the guillotine.
2. The government instructs all public bodies to establish, by a certain date, lists of their regulations within the scope of the guillotine.
3. Each regulation added to the list is justified in writing, using a simple checklist assessing the need for the regulation (Is it needed for future development in the country?), its legality (Is it legal?), and its market-friendliness (Is it clear and simple for businesses?).
4. Three reviews (filters) are carried out: first, by the regulator, second, by an independent review group, and third, by stakeholders such as businesses.
5. Any regulation that fails the tests in the checklist is either rejected or simplified.
6. A centralized list is created of all regulations that pass the tests.
7. When the deadline is reached, any regulation not on the list is automatically cancelled by a framework legal decision (the guillotine drops).
8. The list becomes a comprehensive registry of all regulations in force under the scope of the guillotine, and is recognized in law as the legal data base of regulations for purposes of compliance. The registry should have legal security - no regulation not in the registry can be enforced against the public.
9. All new regulations and amendments to existing regulations are entered into the registry within one day of adoption and/or publication.