A legal framework should facilitate the attainment of the
objectives of urban food marketing policy. The effectiveness of the legal
framework must be evaluated against these policy objectives and not only against
the criterion of economic efficiency. Since different countries have different
policy objectives, it is not possible to define a universal set of criteria for
evaluating such legal frameworks. However, it is informative to discuss national
regulatory frameworks on the basis of the three criteria of: flexibility and
responsiveness to the needs of participants in the food marketing system;
certainty regarding the law and transparency regarding its implementation; and
the enforceability of laws and contracts. Indicators in respect of each of the
criteria are also set out below to facilitate evaluating the performance of a
regulatory framework against the criteria. Applying these criteria should give a
very general indication of the extent to which the legal framework is conducive
to encouraging efficient private sector involvement in urban food
marketing.
1. Flexibility and responsiveness to the needs of
participants in the food marketing system.
Indicators:
- The extent to which participants were involved in the preparation of new
legislation (how wide was the consultation, what opportunities were created
for private sector input in the drafting process etc.).
- The degree of support among participants for new rules before and after
implementation.
- The degree to which participants have flexibility to find the most economically
efficient means to achieve an objective (i.e. if the law prescribes what practices
are acceptable rather than merely prohibiting unacceptable practices, it may
reduce flexibility and restrict the freedom of participants to seek more economically
efficient alternatives).
- Low compliance costs (i.e. participants do not have to spend unreasonably
large amounts of effort, time and money in order to comply with the law).
The level of compliance costs will usually be higher where: there is poor
communication of the law to those affected by it, multiple authorisations
are required, and the conditions for obtaining authorisations are unnecessarily
complex.
2. Certainty and transparency concerning the law and its
implementation.
If the meaning of all relevant laws is clearly understood by
participants, the law is implemented and enforced in a consistent manner, and
there is an effective mechanism for enforcing compliance with contracts, there
will be greater legal certainty, the risks to participants will be significantly
reduced and the system will operate more efficiently. “Transparency”
refers to the degree to which the workings of a regulatory system are clear and
“visible” to those affected by it. Making a regulatory system more
transparent can help reduce the possibility of corruption and increase the
predictability of administrative decision-making, by making officials more
accountable to the public. This creates greater certainty about how a law will
be implemented and reduces the risk of those affected by it.
Indicators:
- Legislation which is clear and easy to understand.
- A practice of communicating changes in the law to all affected parties
well in advance of implementation of the laws.
- Licencing procedures which: require a licence to be granted if certain
clear criteria, published in advance, are met, require reasons to be given
for any refusal of a licence, and provide for a right of appeal.
- Consistency of interpretation and application of law by different officials
and authorities in different areas.
3. Enforceability of laws and contracts
Indicators:
- The use of economic and other incentive to encourage compliance with the
law.
- Few cases where there are strong economic or other incentives not to obey
a particular rule (the introduction of such rules is usually only appropriate
where very important social issues are at stake).
- Statistics on monitoring legal compliance and successful prosecutions (for
example if a new licencing law is being well enforced one would expect to
some level of non-compliance initially followed by a sharp increase in successful
prosecutions which then declines as compliance increases).
- Adequate institutional capacity to enforce laws (generally it is wise to
avoid bringing rules into force until the capacity exists to enforce them).
- Low regulatory costs (i.e. costs to the state of implementing and enforcing
relevant laws).
- A degree of private sector “self-regulation” which is adequately
monitored by the state (e.g. rule-making and enforcement or market by-laws,
produce quality standards and minor dispute resolution by market committees,
traders associations etc.).
- Availability of inexpensive, quick and effective conflict resolution mechanisms,
particularly for smaller claims.
