Deregulation System
The government has put the overall regulation system into operation for the first time in 16 years. A total regulation cost quota system will be applied to all administrative regulations including legislation by Assembly members, and reform will be executed through evaluations before and after the regulations.
The Office for Government Policy Coordination under the Prime Minister reported the amendment of the Framework Act on Administrative Regulations to President Park Geun-hye at a cabinet meeting held by the President on August 19, and announced to submit this amendment to the National Assembly within this week.
First of all, the government decided to create a total regulation cost quota. Under this new system, when a new regulation is created or enhanced, one existing regulation with equivalent cost to the new one must be removed or reduced.
The total regulation cost quota system already began in July in eight government departments including the Ministry of Land, Infrastructure and Transport and the Ministry of Maritime Affairs and Fisheries. If the amendment passes the National Assembly, this system will be applied to all administrative regulations except those regarding safety.
Moreover, when a new administrative regulation is created, prior administrative notification as well as an assessment by the Ministry of Government Legislation is required. The legitimacy of the new regulation shall be reviewed within six months from implementation, and reorganization must be done within two years.
Corporate regulations are restructured for economic revival. With the negative method, entrance to new markets and new businesses of companies are approved in principle, and only exceptions are prohibited by regulations.
To companies intending to enter into new industries, the government shall inform the company if regulations are applicable. Depending on the circumstances, some companies might be exempted or given improved regulations. This is a Korean version of the Grey Zone Settlement System of Japan.
Evaluation procedures of regulations before and after will be enhanced as well. Those designated as “Important Regulations,” which shall be reviewed by a Regulatory Reform Committee beforehand, will be defined in a presidential decree so that anyone can understand the criteria with transparency. The Office for Government Policy Coordination has an internal standard for important regulations such as the ones which incur over 10 billion won (US$9.7 billion) of regulation effect costs, or which are applied to over 10 billion people annually so far, but the standard is not legally binding.
Regarding Important Regulations and regulations legislated by Assembly members, regulation effects shall be reviewed after a certain period after implementation. This is especially significant, since legislation by Assembly members does not go through regulation effect analysis during the bill proposal and the deliberation of the National Assembly.
The government intends to pass this amendment of the Framework Act on Administrative Regulations during a regular session of the National Assembly in September, and begin regulation restructuring next year. An associate of the Office for Government Policy Coordination said, “If this amendment is passed, the legitimate infrastructure for regulation reform can be established that people and companies can actually feel. The government’s regulation restructuring will be sped up even more.”
However, since this amendment includes regulations over legislation by Assembly members, it will not be easy to pass in the National Assembly. The opposition party has a stance that the ex post facto evaluation of legislation by Assembly members is a violation of legislative rights that ignores the separation of legal, administrative, and judicial powers. Even some ruling party members feel uncomfortable.