For years, the foreign business community has called for greater transparency and opportunities to provide more input into China’s legislative and regulatory rule-making processes. In a small step forward, on July 19, the Legislative Affairs Office of the State Council (“SCLAO”) released draft revisions to the Regulations on Procedures for Formulating Administrative Regulations (“Draft Revisions”) that trend towards greater transparency. These regulations govern the drafting of “administrative regulations” that are promulgated by the State Council, and first went into effect in January 2002. This post summarizes key aspects of the proposed revisions.
Transparency & Public Comments
Since China joined the World Trade Organization, the State Council has often sought public comments when formulating administrative regulations. This practice however has never been codified. The Draft Revisions propose mandating at least one round of public comments in the rule-making process. Unless specifically excepted by the State Council, a ministry or ministries designated by the State Council to draft an administrative regulation would have to release a preliminary draft to the general public with at least a 30-day period for public comment.
A second round of public comments with at least a 30-day period is recommended, but not required, when a draft is ready for final approval. The promotion of public comment periods in these Draft Revisions are a welcome step towards greater transparency, even though in practice it may still be difficult for foreign industry associations and other affected parties to prepare well-considered comments in Chinese within such a tight time frame.
Relatedly, the Draft Revisions provide that the State Council’s annual legislative work plan should, after approval, be released to the public. This may create greater visibility and provide some advance warning for businesses and other parties who may be affected.
Input During Drafting
In many countries, third parties (including industry) play an important role in providing input to resource-strapped regulators. The Draft Revisions allow more opportunities for such engagement during the drafting process. They state that SCLAO may collect recommendations from the public for administrative regulations, including new proposals and suggestions for adjustments ―something that already happens to a limited extent on an ad hoc basis.
Under the proposed revisions, ministries designated by the State Council to draft administrative regulations may also invite relevant experts and organizations to participate in the drafting process, and may even entrust them with some degree of responsibility for drafting. Additionally, legal experts or organizations may be invited to weigh in on controversial points in drafts pending final approval. It remains to be seen whether foreign experts and organizations will be invited to participate during the drafting process more frequently than they have been in the past.
Post-Promulgation Assessments of Administrative Regulations
Finally, the Draft Revisions incorporate explicit language stating that SCLAO and ministries may organize post-promulgation assessments of regulations, and make adjustments as necessary. If a regulation is deemed unsuitable for economic and social development or for deepening reform efforts, or if it is found to be in conflict with superseding laws, recommendations may be submitted for it to be amended or canceled. While post-hoc reviews of regulations are not new, the inclusion of explicit language suggests a desire to emphasize or even systematize them. More systematic efforts to review regulations could create new openings for businesses to provide input to regulators on how they have been affected and seek modifications to ameliorate negative effects.
Public comments are due by August 20. Interested parties may submit comments to the State Council using the methods outlined in the announcement.
Zhijing Yu of Covington & Burling LLP contributed to the research and drafting of this article.