Research Report
Ⅰ. Background and Purposes
□ As the competition has accelerated in the economic sector due to globalization, market opening and technology advancement since 1990s, Germany has consistently adopted deregulation policies to improve the national competitiveness.
○ The federal government has been institutionalizing various tools such as the Regulatory Impact Assessment and Standard Cost Model since 1999 to systematically implement the regulation reform and to improve the legislative procedures at the federal level.
○ To facilitate deregulation and bear tangible results, the federal government has recently laid out a very practical method by which costs required for administrative procedures under relevant laws are objectively determined and cost-cutting goals are set accordingly.
□ This study outlines Germany’s methods for estimating compliance costs, researches the standards for estimation, and examines implications for practice from the results of the study.
Ⅱ. Major Contents
□ Compliance costs (Erfullungsaufwand) are defined as the sum of all measurable time (Zeitaufwand) and costs (Kosten) incurred when public, economic, and administrative sectors comply with the federal regulations.
○ Compliance costs are estimated before they are incurred (ex ante), and are estimated not only for draft Acts but also for draft decrees and administrative rules. The cost estimate is conducted in public, economic, and administrative sectors, all of which are potentially subject to relevant bills.
□ The estimate of compliance costs is limited to the calculation of costs incurred in public, economic, and administrative sectors in connection with the implementation of requirements or procedures under relevant bills, excluding the evaluation of a broad range of contexts, including the utility, enforceability, understandability, etc. of laws and regulations.
○ Estimating the costs ex ante, not ex post, makes it possible to include them in the proposal of a bill which would help lawmakers to look over the entire expenditure required when they examine a bill.
Ⅲ. Conclusions
□ Cost estimates for bills preformed in Korea when administrative or legislative branches submit bills. The cost estimates are required to include estimates of net increase in government expenditure or net decrease in government revenue to be incurred if those bills are enforced.
○ Caution is needed against imprudently adopting Germany’s methods for estimating compliance costs because Germany and Korea have different political conditions and systems. However, by looking into Germany’s case, Korea can learn one way of evaluating costs incurred in public, economic, and administrative sectors when a bill is enforced.
○ Korea must take the concept of compliance costs seriously and keep refining the concept so that it fits into Korea’s circumstances.
□ Prerequisites for introducing the system of compliance costs include developing methodological techniques to estimate the costs and raising awareness among all lawmakers participating legislative activities about the concept of compliance costs.