# **5. Suggested Topics for Policy Dialogue**

Central America should view the NTM agenda as a crucial issue in enhancing regional integration, increasing private sector competitiveness, and reducing poverty. Sanitary registrations for processed food and beverages are a hindrance to deeper regional integration. To enable goods to enter the market, companies need to obtain a sanitary registry. On average, it takes 70 days to obtain this document (INCAE 2012), and costs an average of US$400 the first time a product enters the market. Even though countries have already approved a regulation for mutual recognition of sanitary registries for food and beverages, the implementation process is stymied by regulatory and technical constraints. The first registry is done in the producer’s country, but the company needs to manually re-register the product in the other Central American countries and provide physical documentation. This process is costly, unharmonized, and bureaucratic. It takes 3-8 days to reregister a product by mutual recognition and costs an average of US$250 in each of the remaining countries. These lengthy and costly procedures, as well as the lack of a centralized system for mutual recognition of sanitary registries, increase the cost of doing business in the region. A solution that could make great strides in this arena is the formation of a regional, electronic database that centralizes documentation about the credentials that each firm submits to meet the sanitary registration requirements. This would lessen the time and cost burden on exporters, who currently have to gather all the documentation each time they apply for a sanitary registry.

Other potential problems could be identified through a well-organized consultation process with the private sector. Technical solutions should be sought through careful analysis and public-private dialogue with the aim of reducing the burden of the regulatory environment on the economy. The underlying philosophy of streamlining NTMs is similar to what is known as “regulatory improvement” or “Regulatory Impact Assessment” (RIA).<sup>7</sup> However, whereas RIA is for ex-ante analysis of measures, a competitiveness agenda should include a review of existing measures in response to specific demands from countries struggling with legacies of complicated and penalizing regulations. Dealing with existing measures has the advantage of responding to an immediate need and focusing on measures whose effects are known. It can be thought of as the first stage of a process of regulatory improvement covering not just the stock of existing measures, but also the process of creating new ones.

Central America can address the NTM agenda by setting up a regional secretariat to improve national and regional competitiveness and by convening a forum to consider setting up a public-private steering committee. This should include the main agencies that regulate trade as well as representatives from the business chambers and other key stakeholders such as consumer protection organizations from all member countries. Efforts to anchor NTM reforms in regional integration have led to various forms and levels of implementation of regional secretariats across the world, which mostly depend on the political economy, capacity of national and regional institutions, and the approach adopted.

Despite these challenges, some regions have been more successful than others in effectively addressing and streamlining NTMs. The Association of Southeast Asian Nations (ASEAN) has adopted the most ambitious NTM agenda amongst developing countries. Low-income economies in Southern Africa, also determined to address NTMs regionally, have achieved effective results in terms of transparency. Finally, the EU offers the most comprehensive example of economic integration in NTMs.

> 7 See Cadot and Malouche (2012) for a complete overview of these processes.

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