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Operating Plan and Proposed Budget for a Regulatory Guillotine Reform in Ukraine Final Draft May 27, 2015 In partnership with:

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Page 1: Final draft operational plan ukraine guillotine

Operating Plan and Proposed Budget for a Regulatory Guillotine Reform in

Ukraine

Final Draft

May 27, 2015

In partnership with:

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Contents 1. The Purpose of This Operational Plan .............................................................................. 2

2. Background ............................................................................................................................ 4

3. Summary and Goals of the Reform in Ukraine ................................................................ 6

4. Benefits, Costs, and Risks of the Guillotine Reform ....................................................... 8

a. Benefits of the Guillotine .............................................................................................. 9

b. Costs of the Guillotine ................................................................................................. 12

c. Risks of the Reform ........................................................................................................ 14

5. Detailed Operational Plan .................................................................................................. 15

a. Scope of the Reform ................................................................................................... 16

b. Political Leadership and Role of Institutions in the Reform .................................. 18

c. The Process of the Reform ............................................................................................ 24

d. Use of IT Management Software .............................................................................. 29

e. National Target for Cost Cutting, Cost Impact Assessment, Key Performance Indicators in the National Guillotine, and the Role of the National Reform Council .... 31

f. PR, Communications and Consultation Strategy ....................................................... 34

g. Transition to Long-Term Regulatory Quality Strategy ........................................... 37

Annex 1: Draft Mandate for the Guillotine in Ukraine ........................................................... 39

Annex 2: Baseline budget for the Guillotine ........................................................................... 41

Annex 3: Ukrainian Regulatory Institutions in the Scope of the Guillotine ........................ 47

Annex 4: Gantt chart for Guillotine Reform, Ukraine ............................................................ 49

Annex 5: Human Resources of the Guillotine Unit ............................................................... 53

Annex 6: Meetings held by the JC&A and EB teams 24-30 April 2015 ............................. 57

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1. The Purpose of This Operational Plan At the request of Government, this report proposes a detailed operations plan for an

expedited national regulatory guillotine in Ukraine, with a proposed baseline budget that can be up-scaled or down-scaled as needed. The task facing Ukraine is urgent in the current economic downturn, given the thousands of outdated and anti-market regulations inherited from past regimes. These rules foster corruption and waste State and economic resources. The purpose of the national regulatory guillotine is, within a broader economic reform program aimed at important constraints to economic development, to deepen and broaden current deregulation efforts to establish a national regulatory environment that strengthens the rule of law and good governance, better protects the environment and human health and safety, reduces cost and risk burdens, and better promotes private sector activity and economic development.

This plan represents Phase 2 of the national deregulation strategy formulated by the

National Reform Council. The guillotine is a necessary part of a much bigger program based on “better regulation” principles, which includes alignment with European standards under the EU-Ukraine Association Agreement and the Deep and Comprehensive Free Trade Area (DCFTA), writing multiple new laws and rules to fill in gaps, upgrading inspection and judicial procedures, and sustaining “better regulation” through institutionalizing impact assessment and quality control processes. All of these must be coordinated so that they support each other.

This document is the blueprint for the guillotine reform for the Government of Ukraine, an

elaboration of the components of this complex process needed for success. That is critical so that

Key points in the design of the guillotine in Ukraine

Comprehensive approach across all legal norms at national level affecting businesses and citizens, estimated at 7,000 to 10,000

Coordinated to support other important reforms such as alignment of Ukrainian and EU standards

Potential benefits to Ukraine are estimated at a little over $1 billion to $1.3 billion/year, depending on the benchmark used.

Reform to be completed progressively over 36 months, with very early results beginning from month 2 when the first priority reform packages can be produced.

A CMU Resolution would set up the legal framework and substantive targets, assigning responsibility to a Special Committee of Government for Deregulation, the Minister of Economic Development of Trade, and a Guillotine Unit attached to the Ministry.

Active engagement of key political stakeholders including Prime Minister.

Full transparency and participation from civil society and business groups.

Full baseline budget for core teams and processes is $9.96 million over 3 years.

Smaller rapid start-up budget of $1.52 million (part of the full budget) is estimated to get the reform underway quickly with available staff, while at the same time procuring the full resources for the 36-month reform.

After inventory is completed in months 2-3, the need for up or down scaling will be assessed depending on timetable of Government.

Over the course of the project, guillotine team will assist in setting up prevention. mechanisms and building capacities in government staff to sustain the gains of the reform in future.

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the reform can be launched smoothly with full understanding of what, who, and how. To accomplish that, this document provides:

A customization document that adapts the Regulatory Guillotine approach to the Ukraine context, in the sense of scope, institutions, procedures, timing, results, and budget, as well as other reforms underway. The most widely used regulatory guillotine process1 requires extensive customizing and local input to work within the context of a particular government, political setting, and administrative process.

A political document for the Government that enables its decisions to move ahead with the reform. The plan and its executive summary lays out the rationale and benefits of the reform, and the concrete decisions and steps needed for the guillotine to operate. It lays out options when choices must be made that affect performance. A consultation document that reflects the views of the political leaders and social partners. The purpose and process of the guillotine should reflect national views about what is needed for Ukraine.

A budgeting and staffing document that sets out the resources and conditions needed for the guillotine to operate, with the flexibility to upscale or downscale as the work proceeds. The budget component of the document is meant to provide the basis for resource and hiring decisions by the Government of Ukraine, that also will be helpful to donors in developing their own procurement documents such as specific project plans and TORs within the scope of their respective programs. A financing strategy is necessary at the outset to ensure that the project is fully resourced so that it can proceed effectively and on schedule. Sources of financing will likely be mixed among the Government of Ukraine and donors, and should be confirmed through discussions and agreement with donors on the basis of a clear project description and budget. Typically, the government wants to finance parts of the budget, either in cash or inkind, such as by providing office premises and the salaries of civil servants involved in the ministries and agencies. The budget is written as a modular document to maximize flexibility and allow different sources of financing to be used for different inputs, including GoU and donor financing. For example, a small “start-up“ budget is identified that will allow the reform to get off the ground quickly, while the procurement processes for the full reform are underway. And, since it is impossible to anticipate every eventuality in the original plan, periodic reviews to adapt the resources to changing circumstances are built into the plan.

A vision document that defines the performance that should be achieved, and means of measuring and reporting that performance so that the Government and donors can compare performance to promises. We believe that the guillotine should be economically relevant, that is, to produce cost reductions and improvements in economic freedom that are substantial enough to change economic behavior in the real economy. As in best practice guilllotine reforms, we propose a rigorous cost testing of legal norms and reforms against clear targets, reported by period and by ministry or agency so that performance against schedules and cost reduction targets are clear to all.

This plan reflects discussions with high-level Government officials, members of the National Reform Council and the Parliament, private sector stakeholders, and donors in Ukraine (see Annex 6). It is based on best practices in the regulatory guillotine method, drawn from the experiences and evaluations in a dozen countries that have implemented the method over the

1 Jacobs, Cordova & Associates has trademarked Regulatory GuillotineTM for its particular guillotine design, but the term has become broadly used to mean a generic program of rapid and systematic regulatory reform.

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past several years. It is prepared by a team from Jacobs, Cordova & Associates, and the Easy Business NGO in Ukraine. Thanks is given in particular to Minister Aivaras Abromavičius, Ukrainian Minister of Economic Development and Trade, for his support in developing this strategy.

2. Background

In the face of continuing sharp economic decline in Ukraine, appropriate strategies for national economic recovery are top government priorities. At the regulatory level, several related strategies are underway, including domestic regulatory reform and integration into international markets, particularly the European Single Market.2 While Ukraine moves to implement the Deep and Comprehensive Free Trade Area (DCFTA) with the EU through harmonization of laws, norms and regulations in trade-related sectors, the government of Ukraine (GoU) wishes to move as rapidly as possible to Phase 2 of its national deregulation strategy.

Coordination of the two strategies will have mutual benefits, as Ukraine will more

effectively implement European standards and compete better in external markets by reducing unnecessary costs, corruption, legal uncertainties, and market barriers in its domestic regulatory system.

The aim of this reform is similar to what the EU is doing to reform its own rules, such as

the European Commission’s 2007 Action Programme for Reducing Administrative Burdens on business and the Commission's new Regulatory Fitness and Performance (REFIT) programme aimed at reviewing and making EU law simpler and reducing regulatory costs, contributing to a clear, stable and predictable regulatory framework supporting growth and jobs. Countries moving to approximate European standards have successfully used the guillotine process to remove impediments to approximation (see Box 1).

These kinds of regulatory reforms can have substantial economic benefits (Box 2), but

these benefits will be amplified within a larger group of market reforms that address key constraints on business activity in Ukraine.

Phase 1 of the national deregulation strategy (see Figure 1), supported by international

partners of Ukraine (primarily WBG and EU) and the Easy Business NGO working with the Ministry of Economic Development and Trade and the National Reform Council (NRC), has carried out a series of targeted deregulation of laws and other kinds of regulations that were identified as particularly burdensome or constraining for businesses working in Ukraine Some of these reforms have now been implemented, such as elimination of 26 licenses and a number of certificates, such as such as obligatory quarantine certificate for internal grain transportation or reduction of time for issuance of phytosanitary certificate for grain export from 5 days to 24 hours. Businesses have responded that they already feel the positive effects of these specific reforms in their day-to-day operations, which is where the results of regulatory reform must be felt if it is to have real impacts on economic development.

Phase 2 foresees that, building on the momentum, relationships, and capacities

established in Phase 1, deregulation will be broadened, deepened, and systematized to produce

2 The Ukraine–European Union Association Agreement is a treaty between the European Union (EU) and

Ukraine that commits Ukraine to economic, judicial, and financial reforms to converge its policies and legislation to those of the European Union.

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far larger effects in the economy. The NRC’s strategy for Deregulation and Entrepreneurship Development, developed by one of the 18 Reform Task Forces that were set up to design and implement reforms in different spheres, proposed consideration by the GoU of a broad Regulatory GuillotineTM, using best international practices, to count, review, and streamline the national regulatory frameworks affecting business activity and the day to day lives of citizens.

Phase 3 will institutionalize the disciplines and processes that safeguard regulatory quality

in the government’s continuing regulatory initiatives, using good international practices in regulatory impact assessment (RIA), stakeholder consultation, regulatory quality reviews, and other approaches. Phase 3 is already underway in some respects, such as with the nascent RIA unit of 15 people contained in the State Regulatory Agency. More could be done in Phase 3 in parallel with Phase 2, and the guillotine project should seek synergies to this aim whenever possible.

Ukraine is highly regulated, with over 78,000 legal norms on the Unified State Register of

Legal Acts dataset in the Ministry of Justice, and with more regulations added every week (because many items in the Unified State Register of Legal Acts database are amendments to earlier regulations, the actual number of legal norms is unknown, but estimated by this team to be between 7,000 and 10,000). There are almost 70 regulatory bodies at national level in Ukraine (Annex 3). As in every country, the incentives for reform in Ukraine are mixed, with interests in support of the status quo present in public and private sectors.

Many of these legal norms are sensible and well designed, and some have been recently

updated. However, there are contradictions, inconsistencies, and complexities through the legal framework that are burdensome for citizens and businesses, and that discourage investment in Ukraine. Many of these legal norms generate opportunities for corruption that increase risks of doing business in the country. The World Bank Group warned recently that "the top concern of

Box 1: Some examples of the guillotine in support of European approximation

Croatia used the guillotine process during its accession process to eliminate confusion and

inconsistency in regulations and contribute towards a well-structured and organized process for

approximation of legislation. Three key inputs into the approximation process were the

availability of a centralised inventory (significantly rationalized after the review process), a

structured partnership between different ministries aimed at securing collaborative efforts to

tackle cross-sectoral issues under the approximation agenda, as well as well as dialogue with

businesses and citizens. All these are aspects of the guillotine proposed for Ukraine.

Hungary also used a national guillotine to prepare its economy for competition after independence. Systematic reviews embraced a complete, itemized assessment of the entire stock of regulations. The first review occurred in 1989–90 and focused on removing elements of the previous regime from laws, subordinate regulations (such as government decrees), quasi regulations (such as guidelines), and local measures. A second review, in 1994–95, had more ambitious goals—including improving the efficiency and effectiveness of the public administration. Both reviews took a guillotine approach, which involved automatic repeal after a prescribed period of targeted measures that could not be justified by a line ministry to a challenging body.

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investors is that they do not feel secure when they invest in this country because of corruption."3 Others block or distort economic activity. Economic freedom in Ukraine continues to be rated as “repressed” by the 2014 Economic Freedom Index (EFI), standing last out of 43 countries in Europe, and 155th out of the total of 178 countries in the rankings.

Figure 1: National Regulatory Reform Strategy of Ukraine: Three Phases

3. Summary and Goals of the Reform in Ukraine

Tackling this large and complex legacy of regulations built up over decades requires a focused, organized, transparent, and decisive process with sustained political support. Other efforts have been made to reform regulations in Ukraine. Notably, in 2005-2007, a national guillotine process was carried out, with disappointing results. Lessons learned from that process, and confirmed in more recent guillotines around the world, include the need for high level political engagement, a structured process based on sound economic principles, and an independent and dedicated group of reformers who drive the reform against resistance. Those lessons are reflected in this plan.

The reform presented here will, over 36 months of public-private process, inventory,

catalogue, and review one-by-one those legal norms that affect businesses and citizens (perhaps around 7,000 to 10,000 legal norms), and eliminate or simplify those that are not legal, needed, business friendly, or that are vulnerable to corruption. It will proceed through a careful case by

3 See “World Bank slashes war-torn Ukraine's economic outlook”, April 29, 2015, at

http://news.yahoo.com/world-bank-cuts-ukraine-2015-growth-forecast-minus-092905107.html

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case review to ensure that regulations needed in Ukraine to protect health, safety and environment, such as appropriate SPS rules, are maintained and strengthened as unnecessary requirements that distract regulators and businesses from the important protective regulations are removed. While this reform does not directly address the critical area of inspection reform, it will improve transparency and efficiency of inspections by removing requirements vulnerable to corruption, and other requirements not demonstrated to be needed to accomplish the mission of the regulator.

It will produce very early packages of concrete changes as soon as 2 months after project

start-up, and then a stream of packages over the life of the project. This is an ambitious and rapid framework plan. Its goals are to:

Substantially reduce the costs and risks of regulations affecting businesses and citizens by simplifying or abolishing rules such as procedures, and produce concrete and visible results in 2015, and then regularly through 2018;

Provide full transparency in the reform process by setting targets for improvements and reporting publicly on improvements in regulations by regulatory agency over time;

Reduce corruption and business uncertainty resulting from complex and discretionary procedures;

Prepare for trade agreements, particularly implementation of the transparency and sanitary and phytosanitary (SPS) measures included in the EU DCFTA, by identifying regulatory impediments, rationalizing and clarifying the current regulatory regimes in place, including aspects of review based on DCFTA criteria, and supporting the approximation process;

Build sustainable capacities such as RIA for better regulation;

This operating plan states the roles and responsibilities of the various institutions involved. To achieve the goals of the reform, the guillotine should seek, beginning in late Summer 2015, to:

Complete and re-organize the inventory of legal norms held by the Ministry of Justice (the “Rada” legal database) so that it includes all consolidated legal norms used at national levels that affect businesses and citizens, including any unregistered ministerial norms, together with basic descriptive data.

Carry out a transparent review of every legal norm affecting businesses and citizens against clear and standardized criteria to determine its legality, need, and business-friendliness including corruption vulnerability. This will be done in three stages: first, by the Ministries, second by an organized stakeholder consultation process, and third by an expert central unit (the Guillotine Unit) reporting through the Minister of Economic Development and Trade to a Special Committee of Government for Deregulation chaired by the Prime Minister;

Develop concrete recommendations, as well as the draft legal documents needed, to simplify or abolish all legal norms that are not legal, needed, or are cumbersome for businesses. The recommendations will be transferred to the Government and, as needed, to the Parliament, for adoption, in a series of packages through the life of the reform. The Parliament should consider adopting a fast track process in which, after the first reading, these deregulation packages are referred to the floor for an up or down vote;

Support the political debates with clear information on benefits for Ukraine of reform;

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Create transparent performance reporting to track cost savings and other benefits of the reforms adopted, and identify where the process has slowed or produced fewer results than expected;

Build capacities wherever possible in the ministries and agencies, including the State Regulatory Agency, to continue with Phase 3 of the national deregulation strategy to sustain the reform and safeguard the gains of the reform so that another guillotine is not needed in ten years.

This plan recommends that implementation of the guillotine should be assigned by Council

of Ministers (CMU) Resolution to a Special Committee of the Government for Deregulation, chaired by the Prime Minister with the Minister of Economic Development and Trade acting as Deputy Chair. Technical work will be done by the national ministries, stakeholders through an organized consultation process, and, finally, a technical unit (the Guillotine Unit) reporting to the Minister of Economic Development and Trade and thence to the Special Committee of the Government for Deregulation.

Organizing and providing a sound method that these institutions can use to succeed on

schedule is necessary. Implementation of this reform program is based on four key principles:

1. Active political commitment and involvement in the reform from the highest levels of the government, including a public commitment to a major reduction in the burdens and risks of legal norms;

2. Independence and professional capacity in the guillotine unit that is responsible for driving

the reform, communicating with the public, and developing recommended actions;

3. Transparency and the full involvement of key stakeholders, including business representatives and other interested parties in civil society, in the review of legal norms.

4. Standardized and effective filters and review methods for the reform – based on clear

principles of microeconomics, rule of law, and new public management - to ensure that it proceeds consistently, transparently, efficiently, and credibly across multiple institutions and many legal norms.

4. Benefits, Costs, and Risks of the Guillotine Reform

The guillotine reform should produce both benefits and costs. Implementation costs are likely to be $9.96 million for a three-year reform, as presented in the budget below. If Ukraine matches the performance of other middle-size economies who carried out the guillotine, between $1 billion and $1.5 billion per year. Other costs include a possible loss of short-term government revenues as charges and fees are eliminated, which will be calculated for each reform. These revenue losses to the government are reflected as benefit gains to the private sector, however. These estimates are discussed in more detail below.

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a. Benefits of the Guillotine

Potential economic benefits are difficult to measure, since the costs of regulation in Ukraine have never been measured, and hence we do not know the baseline costs. If we use the Vietnamese guillotine as a benchmark, a socialist economy where the guillotine produced cost-savings of around $1.5 billion p.a., or 1% of GDP after a review of 6,000 legal norms, the benefits in Ukraine would be around $1.3 billion p.a. (based on a 2015 GDP of $136 billion). If Ukraine matches the South Korea performance,4 where benefits were estimated at 8.57% of GDP over ten years after a review of 11,000 legal norms, annual economic benefits in Ukraine would be $11.66 billion over ten years.

Those are annual increases in national wealth, enjoyed year after year if the government

does not replace the eliminated regulations with new regulations. (The benefit of sustaining these reforms is the key argument for better performance on RIA for all new legal norms.)

These numbers, while abstract, represent reduced costs on businesses and citizens,

freeing up resources for investment and job creation. Relative to the actual cost of regulation,

4 South Korea faced a huge regulatory reform task. Before the guillotine reform in 1998, 63 percent of all

industries – 205 out of 325 -- had regulations controlling market entry. Results of the reform were estimated by Ha, Byung Ki, et al. (1999) The Economic Effects of Korea’s Regulatory Reform, KIET (in Korean), Seoul. Ha attempted to estimate the macroeconomic effects of the 1998 deregulation. His study mainly examined regulatory reforms in economic fields such as employment, entry barriers, price cap, inward investment, environment, and the land use regulations are investment, environment, and the land use regulations. First, he estimated the direct effects and the direct net benefits of the 1998 deregulation measure. Then, using input-output table analysis, he estimated the effects of deregulation on major sectors of the Korean economy. He then used these results in a macroeconomic model to estimate an overall economic effect of the deregulation measure. Ha estimated that the level of real GDP in Korea would rise by 8.57% in ten years, compared to the base case where there was no deregulation. Such increase in the level of GDP is equivalent to an addition of 0.64% in the annual Korean growth rate. Further, the deregulation effort would lower consumer prices by 7.18% and lower the unemployment rate by 0.91% in ten years compared to the base case without deregulation.

Box 2. The Need for Better Regulation in Ukraine Deregulation and building “better regulation” capacities are part of a larger group of reforms needed to sustainably reduce costs and risks facing businesses in Ukraine. Many regulations are necessary to protect public interests such as safety, health and the environment, but regulation should be the minimum needed to achieve policy objectives, should be designed consistent with competition principles, and should be carried out transparently and predictably. Unnecessary regulatory costs and risks impede investment, business growth, real wage increases, and competitiveness. Major problems confronting businesses in Ukraine are:

High regulatory compliance costs (both operating and capital costs) reduce profitability (and therefore reduce investment), real wages (and therefore depress human capital formation), and job creation (and therefore increase unemployment), and increase consumer prices (and therefore increase poverty). The cumulative costs of many regulations can be high. In economies that have not carried out thorough programs of regulatory reform, such as Ukraine, direct compliance costs have been estimated at 10% to 15% of GDP, not including efficiency losses.

High levels of corruption that sap the energies of businesses and distort competition;

High regulatory risks greatly reduce expected returns on investment. Risks stem from lack of transparency and predictability in the development and application of regulations, such as during the inspections process. Regulatory risk reduces both the quantity of investment and the value of investment. The more uncertain and risky is the legal/administrative climate in which economic activity occurs, the more likely it is that aggressive rent seeking and short-term profit taking will replace longer-term investment in a competitive climate.

These regulatory problems greatly reduce the anticipated benefits of other market reforms such as integrating into the European Single Market. They contribute to corruption and the growth of the grey economy. The dynamic impacts are hard to measure, but international evidence is mounting that reducing regulatory and administrative barriers to market entry has important economy-wide effects, including accelerating multifactor productivity growth, reducing the cost of capital, boosting innovation, and contributing to poverty reduction.

Source: Adapted from Jacobs, Cordova & Associates, 2008

Potential economic benefits are difficult to estimate since a baseline regulatory cost estimation has not been done, but, if Ukraine performs like South Korea or Vietnam in the guillotine process, could be in the range of $1 billion/year to $1.3 billion/year, plus unquantified dynamic

effects.

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they seem ambitious but feasible. Regulation imposes high invisible costs on businesses and consumers. In the United States, for example, national regulation is estimated to impose invisible annual costs of nearly $2 trillion, or 14% of GDP. Costs of regulation are even more important at the microeconomic level, due to high opportunity costs of firm-level resources. The disproportionate negative impact of regulatory compliance costs on small and medium enterprises

(SMEs) has been repeatedly documented.5

These rough estimates of potential benefits will be revised through the reform itself as

priorities are set and the cost-savings of individual recommendations are calculated. The reform should set a public goal of reaching at least some level of cost-savings to improve performance. This is discussed in the section below on key performance indicators.

The relatively low ranking of Ukraine in the 2014 Economic Freedom Index (EFI),

combined with the large number of legal norms in Ukraine, suggests that Ukraine’s regulatory challenges have some resemblance to those in South Korea. The South Korean reforms, which eliminated half of all business regulations on the books, were assisted by direct involvement in the reform process by the Prime Minister and President, and these lessons are incorporated into the proposed plan for Ukraine.

Other important potential benefits of the guillotine process in Ukraine include important

dynamic effects of higher levels of investment, job creation, innovation, and productivity growth, which are not quantitatively calculated here (see Box 2).

Improving Ukraine’s rankings on various international indicators relevant to good

regulations, such as the World Bank’s Doing Business indicators, and the EFI mentioned above, can be a good communication channel for international investors. This reform will seek when possible to make recommendations relevant to these indicators, keeping always in focus the primary goal of reducing business costs as severely as possible while maintaining good regulations needed for health, safety, and environmental protection.

There are several possible sources of other cost savings from this kind of comprehensive

regulatory reform program. Cost-savings to the government through simplified administration. While the guillotine

process does not itself reduce public staffing, its effects are to eliminate unneeded activities and to provide flexibility in the budget process for cost-savings. If a recommendation will produce clear savings to government costs, the reform will assess those savings on a case by case basis.

Anti-corruption effects by reducing the complexity and discretion related to regulation.

Some guillotines have included explicit “corruption vulnerability” assessments in the review criteria, and, given the corruption costs in Ukraine, these might be considered for the Ukraine guillotine.

5 See for example OECD (2001): Businesses Views on Red Tape: Administrative And Regulatory Burdens on Small and Medium-Sized Enterprises, Paris.

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Table 1. Benchmarking Ukraine: Results of Regulatory guillotine reforms in 10 countries

Type of review Target rules

Number of regulations

before cleanup

% of regulations eliminated

% of regulations simplified

Economic gains if

estimated

Korea (11 months)

Legality, Need, Cost

Regulations 11,125 48.8% 21.7%

1,066,200 new jobs Business cost savings: +4.4%

of GDP $36.5 billion extra FDI over 5

years6

Mexico (9 months)

Legality, Need, Cost

Formalities 2,038 54% 27% Not estimated

Kenya (18 months)

Legality, Need, Cost

Licenses and fees

1,315 24% 29% Savings to businesses estimated at US$ 146

million/year, or .06% of GDP7

Moldova (6 months)

Legality Regulations 1,130 44.5% 12.5% Not estimated

Legality Fee-based

Permits 400 68% 20.3%

Not estimated

Ukraine (12 weeks)

Legality Regulations 14,000 36% 7,2% Not estimated

Bosnia /RS (4 months)

Legality, Need

Formalities 331 27% 42% Direct savings to business

estimated at US$ 2 million/year, and indirect

savings of US$ 13 million/year8

Legality Inspections 2,473 43% 31%

Croatia (9 months)

Legality, Need, Cost

Business Regulations

1,451 15% 10% Savings of US$ 65.6

million/year. or 0.13% of GDP9 (actually implemented)

Serbia

Legality, Need, Cost

Formalities, including

local levels NA NA NA

US$ 106 million (including recommendations from local level implemented at national

level)

Montenegro

Legality, Need, Cost

Business Regulations at municipal

level

NA NA NA

Municipalities only US$ 4 million if all recommendations

are implemented

Vietnam (3 years)

Legality, Need, Cost, WTO impact

All procedures at

all levels of government

5,700 underway Underway=

Full package estimated at $1.45 billion/year

Source: Jacobs and Associates, 2014

6 Projection, using input-output tables, as cited in Byungki Ha, 1999, Economic Effect on Regulatory Reform in Korea, Seoul, Korea Institute for Industrial Economics and Trade. 7 Measuring Impacts: Monitoring and Evaluation of the Government of Kenya’s Business Licensing Reform. Study

conducted by Jacobs and Associates, July –October 2008 under FIAS Contract in Support of FIAS/World Bank

Group's Kenya Regulatory Performance and Capacity Building Program. Final draft report October 2008 8 http://limun.hr/en/main.aspx?id=560374&Page=1 9 An evaluation of the SCM measurements done as part of the regulatory reform work in Croatia, Final draft report,

5 June 2009, Report submitted by short term consultant Peter Bay Kirkegaard. Prepared under contract with

FIAS/World Bank Group

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b. Costs of the Guillotine

The guillotine has two main costs: short-term revenue losses and project implementation costs.

Short-term revenue losses to government. Some regulations raise revenues for government coffers. A common example is a fee associated with a license or a customs procedure. When these regulations kill economic activity, they may sacrifice medium-term revenue gains through economic growth and diversity in favor of short-term revenue targets. It is impossible calculate in advance of the reform the potential revenue losses of recommendations.

To ensure full transparency and objectivity, the guillotine reform will calculate, for each

recommendation, the potential loss to short-term government revenue, so that decision-makers can clearly see the revenue losses and make appropriate transitional plans. The focus of the guillotine is on increasing government revenues through a growing and diversified market economy. To build the environment for increases in medium-term revenues, the guillotine will recommend elimination of those regulations that are damaging economic growth, even where short-term government revenues might be affected.

Implementation costs. There are many uncertainties about the full cost of a

comprehensive guillotine, because at this stage some basic workload issues are not answered. For example, it is not yet clear how many legal norms will be reviewed, nor the level of technical input required. These questions will answered after the inventory stage, and as the reviews commence.

The strategy in this proposal is to put into

place the complete infrastructure and essential operating procedures and staff of the guillotine (the baseline budget), and, as the reform progresses, to upscale or downscale labor and skills inputs to complete the full reform. The guillotine process, once underway, is easily up scaled or downscaled as needed to get the work done on schedule. We have budgeted the critical mass needed to get the process underway, and as the work clarifies the magnitude of the task, the team should determine the exact scope of the work needed, and the capacities of the ministries and central unit. The team should then adjust the process, the labor inputs, or other aspects of the reform to get the work done on schedule. Methods of quickening or upscaling the guillotine work include:

adding more staff to the central review unit;

supporting reviews with more expertise from outside, such as international experts;

improving the quality or speed of business reviews;

prioritizing reviews and spending more time on high priorities and less time on low priorities;

adding a few more months to the work of the existing team.

The strategy in this plan is to put into place the complete infrastructure and essential operating procedures and staff of the guillotine (the baseline budget), and, as the reform progresses, to upscale or downscale labor and skills inputs to complete the full reform. A smaller 6-month “start-up” budget is presented here to facilitate early financing needed for a rapid launch by a core team while procurement is underway for the full budget.

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Annex 2 contains the baseline proposed budget for the guillotine to put into place the essential infrastructure, launch the process, and sustain the reform over a period of 36 months. The guillotine process requires several kinds of inputs, summarized in Table 2 below. The largest cost is the labor cost of Ukrainian experts in the central guillotine unit. Other inputs are itemized. The full reform cost is likely to be around $9.98 million to review 7,000 to 10,000 legal norms in 36 months.

Table 2: Summary of baseline budget for Ukraine % of Total

Labor costs Ukraine $ 6,373,719.77 64.0%

Labor costs international $ 2,125,058.91 21.3%

IT and software costs $ 458,600.00 4.6%

PR costs $ 258,000.00 2.6%

Office costs $ 747,901.00 7.5%

Total $ 9,963,279.67 100%

A financing strategy will be necessary to ensure that the project is fully resourced from the beginning so that it can proceed effectively and on schedule, and can sign contracts for staff. Sources of financing should be mixed among the Government of Ukraine and donors, and should be confirmed through discussions and agreement with donors on the basis of a clear project description and budget, such as is contained in this operating plan.

A successful approach used in other countries is a multi-donor platform, in which

interested donors select “modules” in the budget, such as provision of experts for review of specific technical areas (such as financial services or SPS regulations) or the Ukrainian staffing in the central unit, for financing under their ongoing programs. This has allowed more rapid and flexible financing of the various activities of the guillotine, but care should taken that financing gaps are not created that slow down the project mid-way through. Multi-donor financing requires good coordination, planning, and reporting capacities between Government and participating donors.

As part of the baseline budget, this plan estimates a “start-up” budget of $1.52 million,

summarized in Table 3,that is designed to permit organization of more rapid financing on a smaller scale. The start-up budget is not in addition to the full budget, but part of the full budget. The start-up budget is based on transferring existing capacities and staff from Phase 1 of the national deregulation strategy, combined with the early components of the full reform. This start-up package is intended to permit the guillotine reform to begin putting together deregulation packages as quickly as possible after the government has adopted the reform, and requested that donors provide financing. As the GANTT chart in Annex 4 shows, rapid financing of the “start-up” budget together with rapid deployment of core staff would permit the first deregulation packages to reach the government for action within 8 to 10 weeks after financing is available.

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Table 3: Start-up 6-Month Budget for Rapid Launch % of Total

Labor costs Ukraine $ 518,949.55 34.11%

Labor costs international $ 237,580.00 15.62%

IT costs $ 459,600.00 30.21%

PR costs $ - 0.00%

Office costs $ 305,300.00 20.07%

Total $ 1,521,429.55 100%

c. Risks of the Reform

A broad and rapid reform of this kind can fail if certain elements are not present. The risks presented below are based on earlier deregulation efforts in Ukraine, such as the 2005 first guillotine, and the experiences of other countries. The key risks are these:

Sustained political commitment in Government might fade in the face of strong resistance. The broad application and organization of the guillotine is intended to reduce the conflict of reform by using a consistent and transparent process across the whole of the government, but resistance from powerful groups inside and outside the government is likely. It is important that even controversial issues go through the normal guillotine process, and do not short-circuit the structure. The proposed structure of Prime Ministerial and Minister of Economic Development and Trade leadership in a Special Committee of Government for Deregulation with a clear legal mandate (CMU Resolution) and active oversight from the Cabinet of Ministers is intended to establish strong political credibility of the reform process.

Difficulties passing the laws through the Parliament. Ukraine’s Parliament has a record of amending draft bills in ways that reflect the needs of special interests. This risk will be always be present in a democracy, but the program can manage the risk in a few ways: 1) Engage Members of the Parliament in key discussions before law drafts are submitted to the Parliament for registration; 2) Actively utilize the Council of the Coalition as a platform to discuss drafts with MPs and achieve support on a political level; 3) Discuss important or controversial issues in the National Reform Council to gain the support of political parties before submission to the Parliament; and 4) Support consideration in the Parliament of changes to the procedural rules of Parliament to allow expedited treatment of certain kinds of legislative proposals. For example, omnibus deregulation proposals could be given a first reading, and then go directly to the floor for a vote either up or down, without amendment.

Day to day leadership. The head of the guillotine unit might be unable to carry out a credible reform, keeping both the integrity of the process and the trust of the political leadership that the guillotine is making the right decisions. The management and political skills of the head of the unit are critical.

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Staff skills in law, business affairs, and cost estimation will not be available to staff the central unit. This is a low risk – no country that has operated the guillotine has yet been unable to put together a capable staff for the central unit.

Organization of business participation might be slow or ineffective. A small unit of dedicated staff is needed to support business organization and participation. The budget contains a small staff dedicated to civil society facilitation, whose job it will be to help organize and build capacities in civil society organizations for their full and constructive participation in the guillotine process.

Ministry organization might be slow or poor quality, and ministerial resistance at mid-levels might slow the process. The staff of the central unit will be tasked with training and assisting the ministries to carry out their internal reviews. Resistance at mid-levels is typical in these kinds of reforms. The guillotine process is designed specifically to work in environments where resistance is expected. For example, the civil society reviews in the reviews of the central guillotine unit will proceed with or without input from the ministry. Normally, in the guillotine process some ministries cooperate more than others, and cooperation increases as the guillotine proceeds and the credibility and visibility of the reform increase.

5. Detailed Operational Plan

A national guillotine program rests on a series of strategic and operational decisions that together form the design of the program. The decisions in guillotine program design are discussed below in this operational plan, with milestones, timing, desired results, and resources and budgeting needed to complete the guillotine successfully on schedule.

The proposed budget was discussed above and is presented in Annex 2. Government

and donors should work together to finance the reform. A mix of inputs is needed in this project, including human resources and both Ukrainian and foreign experts, software and hardware to support the IT strategy, resources for communications and outreach, and equipping of the office that supports the work. This operational plan is intended to be the basis for approval by the key political officials, development of the necessary legal text, and commitments by civil society and donors of resources that are needed.

In operation, the guillotine is a flexible method for rapidly reviewing a large number of

regulations, and eliminating those that are no longer needed. It is a highly-organized, top-down approach that centralizes the key decisions in a high-level review group to move fast and ensure that ministries cannot protect unneeded regulations. The basics of the guillotine work like this:

1. The government adopts the reform at a Cabinet of Ministers Meeting, and creates a legal framework through a resolution of the Cabinet of Ministers (CMU Resolution).

2. The government establishes the scope of the guillotine, that is, defines precisely the kinds of regulatory instruments to be included and the regulatory bodies.

3. The government creates a central guillotine unit at the center of government that manages the whole reform and carries out independent reviews. It also consults with the ministries and civil society during the process.

4. An inventory of all legal norms in the scope of the guillotine completes an electronic

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database that is used to manage the reform.

5. In the guillotine process, each regulation must be justified to the central unit as meeting basic criteria. That is, the burden of proof is on the regulator to defend why the regulation should be kept. Three typical criteria are: Is the regulation legal? Is the regulation necessary for future policy needs? Is the regulation business-friendly? This review is done by the ministries themselves, then by stakeholders, and finally the final review is done by the central unit.

6. The final recommendations are sent by the central unit to the Government for adoption as a single package.

7. Surviving regulations are placed into a comprehensive electronic registry that improves legal security and transparency as it is maintained in the future. The registry can be the basis for one stop shops combining various procedures, and can further incorporate smart forms through a continuous process of improvement in future.

The Ukrainian guillotine follows this basic process. The key steps and timing of the

Ukrainian guillotine are listed in the Gantt chart in Annex 4, and discussed in more detail below.

a. Scope of the Reform

One of the most important decisions to be made in a broad guillotine program is the scope of the reform across three dimensions: institutions, legal instruments, and reference groups. Together, these dimensions define the “comprehensiveness” of the reform, which is important particularly from the viewpoint of the regulated entity, which experiences regulatory costs and risks as a product of the entire regulatory system. Getting the scope right is a key to successful reform. The most effective scope is a reform that extends across all institutions and regulatory instruments. These decisions are summarized in Table 4 and discussed below.

Table 4: Recommendations on the Scope of the Guillotine in Ukraine

International Good Practice

Recommendation for Ukraine

Institutions: Broad application

The scope of the guillotine is recommended as follows: almost all ministries and regulatory agencies at national level. They are listed in Annex 3. One national body (State Nuclear Regulatory Inspection) is recommended for exclusion because it regulates highly scientific and technical areas (nuclear technology) not suited to the guillotine process.

Legal instruments: Broad application

The scope of the guillotine in Ukraine is recommended to cover all levels of “legal norms” which are broadly defined as any requirement placed on the business sector or on citizens. This will require the ministries and agencies to validate the “Rada” inventory of all legal norms they are enforcing, plus any legal other normative documents issued by them as well as all other documents including forms, official letters, notices, guidelines, instructions and other administrative documents related to legal norms.

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It is unknown at this time how many legal norms of this kind exist at the national level in Ukraine, but, based on the databases and other countries, it is probably from 7000 to 10,000.

Reference groups: Either businesses or citizens or both.

The scope of the Ukrainian guillotine is recommended to cover both effects on businesses and citizens.

Priority sectors: Set early priorities

Reforms should be packaged into groups of recommendations, starting with priority packages as early as 2 months into the reform under the rapid Start-up Budget. Priority packages could focus on:

Deregulation proposals already considered by the Easy Business NGO in Phase 1

Doing Business procedures such as construction permitting

Annoying citizen procedures where impacts could be easily seen.

Institutions. To produce the best results, the Ukrainian guillotine should include the list of

almost 70 institutions listed in Annex 3. A truly national reform will apply to the broadest possible range of institutions so that businesses and citizens see maximum results. Where regulatory systems are complex, with many layers of regulations that offer much potential for overlap and inconsistency, operation of the reform across the entire state administration will produce the best results, because many relevant problems occur at the interface between institutions (inconsistent or duplicative regulations).

Legal instruments. A simplification program can operate at any level of regulation. The

Ukrainian guillotine includes the full range of legal instruments used in Ukraine including both those with formal legal normative status and those that are used to impose requirements on the businesses and citizens without formal legal authority. This broad scope will be clearly stated in the instructions to ministries. Instruments included in this reform are:

Table 5: Legal Norms Included in the Scope of the Guillotine

Legal Norm Total Number of Norms*

Codes 23 Laws 5,286 CMU Resolutions 20,863 Presidential Decrees 5,024 Decrees of Ministries 7,728 Legal acts adopted before 24.08.1991 5,317 Legal norms contained in Rada database held by Ministry of Justice, including amendments

78,245

*These results are from the Rada database held by the Ministry of Justice. Not all of these legal norms have normative effects on businesses or citizens. Many are not separate legal acts, but amendments to earlier acts. Over 3,000 of the total are local government decrees. The inventory phase will identify those included in the guillotine process and consolidate amendments.

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This broad scope means that the inventory of regulations affecting citizens and businesses

should be comprehensive, listing all laws and all other legal norms down to the lowest possible level (letters and instructions) for which each ministry is responsible. The reform will not cover legal norms affecting internal management of the government or individual costs, such as an individual licensing decision.

Reference group. Both businesses and citizens face high regulatory costs in Ukraine. The

decision in Ukraine is to include legal norms imposing requirements on both businesses and citizens.

The proposed scope of the Ukrainian guillotine across legal instruments and reference

groups is summarized in Table 6 below:

Table 6: Scope Across Legal Instruments and Reference Groups

Laws and other legal norms affecting:

Inventory stage

Review stage

Internal management of the government

Not included Not included

Individual cases Not included Not included

Citizens in non-commercial activities (general regulatory effect)

Yes Yes

Businesses in commercial activities (general regulatory effect)

Yes Yes

Sectoral priorities. Once the inventory phase is well underway, and the number of administrative procedures is better understood, the Guillotine Unit will establish priorities for the review based on consultation with the Government, ministries, and key stakeholders.

b. Political Leadership and Role of Institutions in the Reform

International Good Practice Decision in Ukraine

The reform should be founded on clear legal authority and commitment from the top-levels of government, and should be implemented quickly through clear legal procedures.

The legal framework should be based on a resolution issued by the Cabinet of Ministers setting up a Special Committee of the Government on Deregulation chaired by the Prime Minister, with Deputy Chair Minister of Economic Development and Trade, who will oversee the reform and work of the central guillotine unit. Regular progress reports will be circulated to the Special Committee of the Government to ensure that the reform stays on schedule.

Independent and expert Unit with clear authority from the top of government implements the project and reviews all administrative procedures, in consultation with the responsible

Responsibility for implementation of the reform should be given to the Minister of Economic Development and Trade, who should partner with the Guillotine Unit with a dedicated staff (about 50 people) who will organize the ministries, carry out technical reviews and other aspects of the reform.

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ministries, as well as enterprises and the public

The Guillotine Unit will coordinate with the State Regulatory Agency to create a capacity for cost impact assessment of the legal norms under review

A Stakeholder Advisory capacity is needed to enable key stakeholder groups to review legal norms and provide recommendations for change

A multifaceted civil society consultation process should be organized at national and regional levels with a range of opportunities for participation, including online reviews of legal norms, and a number of working groups focused on reviewing and recommending changes to bodies of technical regulations, such as in financial services or communications.

This plan sets out the step-by-step process of the reform. It establishes the procedures,

the constituencies, and the institutions that can be used to sustain the reform to good results. If it is to succeed, the strategy must be deliberately planned to overcome the obstacles that have impeded many such reforms, such as passive or active resistance by insider groups, political fatigue and wavering commitment, lack of accountability for results, lack of expertise in the reform area, and high administrative costs of reform.

The central institutions of this reform are the Government, the Prime Minister chairing a

Special Committee of Government on Deregulation, the Minister of Economic Development and Trade acting as Deputy Chair of the Special Committee, and an ad hoc, expert and dedicated Guillotine Unit attached to the Ministry of Economic Development and Trade to carry out the technical work. They will work with almost 70 national ministries and regulatory bodies, as well as with supportive donors, to implement the reform. These institutions are organized and their relationships are summarized in Figure 2, which presents the 17 steps of the reform process:

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Figure 2: Organization of the Ukrainian Guillotine

The Prime Minister should lead this reform through:

Endorsing this operating plan;

Supporting adoption in government of a CMU resolution setting out the legal framework for the reform;

Chairing a small Special Committee of the Government on Deregulation of reform-minded leaders who will oversee the reform and approve packages of recommendations for submission to the full government;

Supporting deregulation packages through the Government.

The Minister of Economic Development and Trade should

Act as Deputy Chair of the Special Committee of the Government on Deregulation

Take responsibility for implementation of the reform under the Ministry and issue guidance and instructions to the other institutions participating in the reform

Receive the packages of recommendations from the head of the Guillotine Unit for the guillotine reform, and transmit them to the Special Committee of Government for Deregulation for approval

Refer important issues as appropriate to the National Reform Council for discussion

Oversee the work of the Guillotine Unit.

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The Special Committee of the Government on Deregulation should:

Under the authority of the CMU Resolution, oversee the guillotine project for the Government;

Issue legal normative documents to the appropriate channels that are necessary to carry out the plan and implementing final recommendations.

Review the packages of recommendations transmitted to it by the Minister of Economic Development and Trade

Receive regular progress reports from the Minister of Economic Development and Trade, and take whatever corrective action is needed to maintain the reform on schedule with the desired results stated by the Government

The National Reform Council should:

Integrate key performance indicators from the guillotine reform into its oversight and reporting activities;

Assist with any corrective action when the guillotine falls behind schedule or behind expected results;

Deliberate on important or controversial issues raised by the guillotine process, as referred to it by the Minister for Economic Development and Trade

The Guillotine Unit should staff up to about 54 fulltime people initially (see baseline

operating budget), as follows:

The Head of the Unit would be appointed by the Minister for Economic Development and Trade.

The Guillotine Unit would be under the direct authority of Minister for Economic Development and Trade, with day to day implementation by the Guillotine Unit Head.

The staff would be hired from outside the government to meet the specific skills required for the task. The staff would work in a highly professional environment focused on performance, and would be trained in the methodology of the reform.

Expansion of the staff of the Guillotine Unit as needed and as resources become available.

The staff of the Guillotine Unit should include a skill mix of business experts, economists, lawyers, with a few IT and PR support experts. Its human resources and TORs for key staff are in Annex 5. Donor resources should be used to support temporary experts in different fields under review. In some countries, such as Croatia, business associations supplied some experts to work with the team. They would work according to defined processes and schedules, using a staff performance measurement system supported by the eGuillotine software.

The Guillotine Unit will perform the following tasks:

Instruct the bodies under the scope of the CMU Resolution on the procedures needed to comply with the Decree, and assist these bodies in complying on schedule. Bodies covered under the CMU Resolution shall comply with these guidelines and other guidelines issued by the Head of the Guillotine Unit;

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Inform the Minister of Economic Trade and Development regularly and whenever problems arise that threaten the successful completion of the reform;

Use the project management software (the eGuillotine) to improve the consistency, quality, transparency, and speed of the reform;

Carry out independent reviews of the legal norms, considering information provided by the ministries, other state bodies, and civil society such as businesses and the public;

Inform and encourage input from organizations such as business groups and other stakeholders in the review of legal norms, and hold consultative seminars, workshops, meetings, or other forms of communication as needed to ensure transparency in the process of the reform;

Develop a web site to enable the public to comment on legal normative documents and proposed changes, and develop a national plan for PR, marketing, and communications to support a national dialogue on better regulation, including use of social media to involve the youth of the country;

Publish the legal norms and submissions from state agencies on the Internet on the website of the guillotine reform, together with a description of the reform and the opportunities for the public to provide comments, as well as recommendations and proposed changes. The website will permit any member of the public to provide comments and information relevant to this reform.

Assess the economic impacts, fiscal revenue impacts and social cost-savings of recommendations for changes;

Develop the final recommendations and prepare the necessary draft legal normative documents to implement those recommendations, and transmit those recommendations and draft legal norms to the Minister of Economic Development and Trade for transmittal to the Special Committee of Government on Deregulation;

Prepare the contents of the electronic database and electronic Registry for operational status;

Generate the legal and analytical information needed for the Guillotine Unit reviews;

Monitor and evaluate the process and its results, and submit periodic progress reports to the Minister, the NRC, and involved donors;

Monitor and evaluate the implementation of the recommendations by ministries and agencies.

Ministries and regulatory agencies. Each ministry and regulatory agency under the

scope of the reform should, as directed by the Minister of Economic Development and Trade or the head of the Guillotine Unit, identify each legal norm that it enforces on businesses and citizens, regardless of the document or legal form, and shall provide each legal norm to the Guillotine Unit in the form and on the schedule requested by the Guillotine Unit, as well as all currently valid legal normative documents issued by the ministry or agency and all other documents containing procedures being enforced by the ministry or agency such as official letters, notices, instructions guidelines or other documents issued by the ministry or agency or any of its departments or sub-departments, as well as higher level legal normative documents that the ministry or agency is responsible to implement.

Each ministry and agency shall conduct a review of each legal norm and procedure to

determine if it is legal, necessary, and business friendly, using the checklist and criteria

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determined by the Guillotine Unit, and shall submit the results of the review to the Guillotine Unit in the manner and on the schedule requested by the Guillotine Unit.

To prepare its inventory and to carry out its reviews, each ministry and state agency

should:

Identify a contact person or persons responsible for overseeing the inventory preparation and reviews for the institution. For most ministries and agencies in Ukraine, this is likely to be the legal department.

Create a small group reporting to the head of the agency to oversee the development of the inventory and reviews

Prepare a comprehensive list of all legal norms enforced by the institution on citizens and businesses, using the Unified State Register of Legal Acts database of the Ministry of Justice, and the inventory form required by the Guillotine Unit;

Collect the full text of each legal norm, form, and fee schedule, and provide these in paper or electronic copy or both;

Compile all currently valid legal norms issued or implemented by the ministry or agency and all other documents containing procedures being enforced by the ministry or agency such as official letters, notices, instructions guidelines or other documents issued by the ministry or agency or any of its departments or sub-departments, as well as higher level legal normative documents that the ministry or agency is responsible to implement and keep these documents in a central location in paper or electronic copy or both, as well as submit paper or electronic copies thereof to the Guillotine Unit no later than the deadline provided in the schedule;

Prepare an inventory form for each legal norm in the standard electronic format, and a review form;

Submit the inventory and review forms to the Guillotine Unit as forms are completed;

Respond to any questions from the Guillotine Unit and supply any information that is requested, such as statistical data and other information needed to prepare the cost impact assessments ;

Consult as necessary with stakeholders to carry out these task at a high level of quality;

Promptly implement the recommendations of the Guillotine Unit once they are adopted.

Civil society stakeholders will be an essential part of the guillotine process. Multiple

opportunities for participation will be organized by the Guillotine Unit as appropriate to suit the capacities and resources of the key stakeholder groups. The reforms cannot be done in isolation inside the ministries or the Guillotine Unit, because only the affected stakeholders fully understand the impacts and problems created by rules and procedures in day-to-day life. Participation of business and other relevant stakeholders, including media and academia, is important for two reasons: 1) stakeholder groups are needed to mobilize the political system for continued change. That is, pro-reform elements of civil society must act as a pressure group for change; 2) the business sector in particular holds unique information about regulatory impacts that will greatly boost the impact of any reform.

The proposed budget for the Guillotine Unit contains a small group of people who will work

to facilitate civil society participation in the reform. They will brief society representatives, trained

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them as necessary to build capacities and understanding for constructive participation in the reform, organize opportunities for participation, and coordinate the timing and content of their participation with the schedule of reviews by the ministries, agencies, and NGO. For example, a series of focussed working groups will be set up to provide structured review and input for related groups of regulations in technical areas such as SPS and mining.

Working through the appropriate channels, civil society stakeholders will work with the

Guillotine Unit to carry out three tasks:

Cooperate directly with the Guillotine Unit (such as by setting up working groups) to provide stakeholder comments on individual legal norms to identify problems and assist in a high quality review;

Monitor the overall progress of the reform and report to the Government, the media, and the parliament on satisfaction with progress;

Review the final recommendations for action developed by the Guillotine Unit.

Be supported by a small group in the Guillotine Unit that will work to identify specific contributions of civil society groups and to organize working groups and other opportunities to provide high-quality and timely information on administrative procedures.

Donors should be requested to support the guillotine reforms by providing technical

assistance and financial resources necessary to complete the reform. As noted, a multi-donor platform for financing and coordinating this reform has proven to provide flexibility with respect to both timing and to evolving needs over the course of the reform. The budget is presented in a modular format to facilitate participation of multiple donors in various aspects of the reform. Possible modular support can include:

Financing the Guillotine Unit, TA, IT, and other non-Government staff inputs of the reform, as outlined in the proposed budget in this plan;

Providing international experience and advice to the Government and the NGO;

Financing international or domestic experts in specific fields under review by the Government, such as communications, finance, mining, SPS, or other areas relevant to donor programs;

Facilitating donor participation through, for example, a donor coordination group;

Providing other inputs such as IT procurement and support.

c. The Process of the Reform

Figure 2 shows, as well as the main institutions, several of the steps needed to complete the guillotine reform. The timing of these steps and many more detailed steps is shown in the GANTT chart in Annex 4. The 22 steps contained in the guillotine process are summarized below:

Step 1. This operational plan is considered by the relevant authorities, is revised as

needed, and, once agreement is reached, is formally adopted by the Government as the basis for phase 2 of the national deregulation strategy of Ukraine.

Step 2. If the guillotine institutions are to function effectively, there must be clear legal

authority and the roles and responsibilities of the various institutions must be authorized from the highest level. In Ukraine, a resolution from the Cabinet of Ministers should set up the reform

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(see draft in Annex 1), and should establish the Special Committee of the Government for Deregulation, with Chair and Deputy Chair being the Prime Minister and the Minister for Economic Development and Trade, respectively, and elaborate the roles and responsibilities of the various institutions involved. The CMU Resolution should also state a clear and ambitious target for the reform, such as 50% reduction in regulatory costs in Ukraine. Endorsement by the Prime Minister and NRC of this operating plan will be another useful step to speed up political agreement and enable financing commitments from donors.

Step 3. A financing strategy is developed with the supporting donors, in two phases. First,

agreement is reached on financing the rapid startup phase (maximum of 6 months), in which a core team is hired, IT customization is done, and work begins as quickly as possible so that the first results can be seen within 8 to 10 weeks of program launch. Second, financing is obtained and procurement is completed for staffing and other costs for the full 36 month reform.

Step 4: The institutions are established and staffed in month 1 for the start-up phase, and

by month 6 for the full reform.

Start-up Phase (maximum of six months) Step 5: Guillotine Unit core team begins to develop first and second packages of fast-track and high-priority reforms for submission to the Minister of Economic Development and Trade. These fast-track reforms are based on existing work from phase 1 of the deregulation strategy, mature suggestions from key stakeholders, and reforms that produce highly visible improvements, such as to Doing Business procedures. First package moves forward in 8 to 10 weeks, and the second package is 15 to 16 weeks

Step 6: Beginning the inventory work in the startup phase, the Guillotine Unit issues the

instructions and forms for the inventory phase to the ministries and regulatory agencies, and trains them. To reduce cost, the inventory will rely to the maximum extent possible on the Unified State Register of Legal Acts database held by the Ministry of Justice. Other databases such as the Liga (a private database of legal acts) would be used as available and needed. The data elements in the inventory form are intended to satisfy several information needs:

First, each legal norm must be precisely identified as to the enforcing institution and the instrument itself. This is because the titles of many norms are similar and other procedures overlap or duplicate. There must be precision in order to manage each dossier properly. As the Guillotine Unit receives the Inventory Forms, it will assign a unique inventory number to each norm. This unique inventory number will link the inventory to the reviews.

Second, all amendments must be consolidated into single acts, so that reviews are done on consolidated and up-to-date versions of legal text.

Third, each norm must have some basic descriptive information about the nature of the procedure, such as whether it affects businesses or citizens, or involves a license, or has forms attached, or requires fees. This is to allow the Guillotine Unit to manage the process and establish priorities in the review phase by identifying these kinds of high cost norms.

Finally, there should be a contact point for each norm in order to facilitate quality control and the collection of further information if necessary.

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Step 7: Customization of the software that will be used to manage the entire process should be completed during this phase, the software should be tested and installed.

Step 8: Initial rounds of training should be completed. Three levels of training are planned

within the Ukrainian reform:

Training for trainers in the Guillotine Unit to be provided by experienced regulatory guillotine experts (international TA) on all aspects of the operational work starting from the inventory phase and ending with implementation of recommendations. The purpose of this training is to focus on quality control, and checkpoints for insuring the quality of each submission before inventorying and starting the review. The training establishes a prioritization system to target efforts towards maximum impact, standard procedures for reviewing measures such as data gathering, preparing case documentation, managing meetings with regulators and stakeholders, and assessing and preparing opinions.

Training for a small team in each ministry and state agency who is responsible for delivering inventory lists and review reports for legal norms. This is to ensure the understanding and the quality of inputs provided by state agencies in completing the forms. Such training can be done through several training sessions of 4-6 hours. Training groups will not be bigger than 25-30 individuals. This training is planned before the beginning of the inventory phase and at the beginning of the review phase.

Training for interested representatives from civil society and business groups. This is to inform and explain to identified stakeholders the scope and objectives of the reform, guide them through the Instructions on how to complete the reviews. This training is organised during the inventory or at the beginning of review phase. It will be repeated depending on interest and need throughout the reform.

Step 9: Ministries and state agencies submit inventory forms by uploading to the software. The Guillotine Unit reviews the forms for completeness and quality, and, as needed, works with the ministries to complete the inventory.

Step 10: Guillotine Unit completes the electronic inventory, and makes the entire database

available online for public access, searching and comment. This allows, for the first time, a clear estimation of the legal norms included in the scope of the guillotine and creates a management database that is used for the entire reform.

Step 11: Communication and consultation strategy begins to inform civil society of the

database that is now accessible to them, and of the plans to carry out a full review of the legal norms. Website is established. A list of key stakeholders is begun, and discussions with them begin on strategies for ensuring their full knowledge of the reform process, and on modalities of participation.

Step 12: Based on the completed inventory, two important management decisions are

taken: 1) the full schedule of reviews is determined, covering all items of the database and all ministries and state agencies in the scope of the reform, and considering priorities of the Government for faster action in some areas; 2) a review is done of the budget and work program considering the final count of norms in the inventory, and the workload needed to complete the reform. Recommendations in these two areas are sent to the Minister for Economic Development and Trade, for transmission to the Special Committee of Government for Deregulation for its approval.

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Full review phase (up to 36 months)

Step 13: The guillotine reviews are precisely targeted and structured to identify unneeded regulatory costs and risks, while ensuring that needed health, safety, environment, worker protections, and SPS regulations are maintained and, as appropriate, aligned with EU standards.

Either in the start-up phase or the full phase, the review process will begin with

development of the standardized review method. To reduce subjectivity and to provide a consistent approach to reviewing the quality of legal texts, it is important that a transparent and scientific basis for the review be established. Based on principles from microeconomics, the rule of law, and new public management, the actual review form should be created in the form of simple checklist that can be filled out by every regulator and stakeholder for each regulation under review. The draft checklist should be thoroughly reviewed, discussed, and piloted by experts before being submitted to the Special Committee of Government for Deregulation for approval. The review checklist normally organizes the review criteria into three sections that ask a series of highly focused questions:

1) Is the legal norm legal?

The questions to check legality are extremely important for the success of the

review. If a norm is found not to be legal, it will be recommended for elimination. Lack of legality can be in many circumstances, such as inconsistency between legal norms, lack of authorization by higher legal norms, violation of trade commitments, or violation of publication requirements. This review will be coordinated with the Ministry of Justice in cleaning out the so-called “dead legal acts” and identifying overlap and duplication in legal norms.

2) Is the legal norm needed?

If a legal norm is not needed, it will be recommended for elimination. This is the most difficult of the criteria, yet is extremely important because many of the regulations on the books in Ukraine represent market interventions that are unnecessary or damaging in the current market development strategy. In this section, the typical guillotine checklist asks several questions, drawn from principles of good regulation and economic freedom, that attempt to separate legal norms with unnecessary or damaging purposes, such as control of the market or inappropriate intervention into commercial decisions, from those with genuine public policy purposes such as protection of human health or the environment.

3) Is the legal norm business friendly and are risks of corruption minimized?

If a rule or procedure is found to be both legal and needed, but not business

friendly, the result will be a recommendation from the Guillotine Unit for simplification. There are many ways of measuring business friendliness. The questions in the checklist normally select a few simple standards for business costs, such as the length of time that a license is valid, the duplication of information, and the use of ex ante rather than ex poste requirements. It will be important, given the large number of norms in Ukraine, to identify those norms that have contradictions with other legal norms.

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To customize the process to Ukraine, we propose to add a phase of the review aimed at

identifying relevant SPS and animal welfare legislation under the DCFTA, and supporting the process of approximation to EU standards. In this phase, relevant Ukrainian legislation will be identified, flagged, and reviewed by competent legal experts as part of the process of developing recommendations.

We also propose including in this section questions on corruption vulnerability, using

methods developed in Italy and Russia by legal experts to detect where legal text allows undue discretion in application, and where lack of clarity or where other opportunities for corruption might arise.

Step 14: Once the checklist is finalized, the Guillotine Unit will issue online review forms

based on the checklist, and trains ministries and state agencies in how to conduct the reviews. Training in application of the evaluation criteria is necessary at both the level of the central unit and in ministries.

Step 15: Using the schedule of reviews agreed by the special committee of government

for deregulation, Ministries and state agencies submit reviews to the Guillotine Unit. This is staggered, so early priority areas are reviewed first, followed by other reviews through the entire reform process.

Step 16: Simultaneously, civil society and business groups carry out their own reviews

and submit their recommendations. This is staggered as well to accelerate priority areas. Step 17: As reviews by ministries and civil society are completed, the Guillotine Unit

carries out its own reviews, which are timed to complete each package of recommendations on schedule. For each recommendation, the Guillotine Unit estimates the impacts on tax revenues and business/citizen cost savings (discussed below).

Step 18: As each package is completed, the Guillotine Unit will send it forward to the

Minister of Economic Development and Trade, for his submission to the Special Committee of Government on Deregulation. The Minister or Special Committee will decide if specific issues are to be discussed by the National Reform Council to prepare them for submission to the government, or if further consultation is needed with ministries and state agencies. The Special Committee will review and prepare the package, when it is ready, for submission to the full Government.

Step 19: Quantitative performance targets will be reported for each package and

compared to the targets and goals of the Government for this reform. These indicators are also reported to the National Reform Council for integration into its performance monitoring and reporting to the Government, the Parliament, the President, and civil society.

Step 20: As decisions are made by the Special Committee and the Government, the

Guillotine Unit drafts or amends legal text as needed to implement the recommendations and assembles the final package.

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Step 21: Once agreed by the full Government, the recommendations that affect changes to law will be packaged into omnibus legal packages and transmitted to the Parliament for action.

Step 22: Guillotine Unit monitors adoption and implementation, registers full

implementation in the performance indicators, and reports to the Minister for Economic Development and Trade.

A further step, not included in the guillotine reform itself but which is part of the follow up

sustainability reforms, is use of the guillotine database to create an online, user-friendly electronic registry of all legal norms and procedures, with positive legal security, so that businesses can rely on a central information source for all legal obligations. This registry can be elaborated to provide a range of business services, such as online forms, smart forms, tracking processes for applications, online submission of data, and so forth. It can also be linked to a central government portal for stakeholder consultation.

d. Use of IT Management Software

The management and consultation of thousands of different dossiers across many different institutions is more efficient, faster, more transparent, more accessible and better structured with IT tools. The most successful guillotine projects, such as Vietnam and Armenia, have used increasingly sophisticated document-collaboration-process management software specifically designed for the regulatory guillotine. To develop the reliable infrastructure and IT tools needed for efficient and transparent implementation of projects based on the regulatory guillotine principles, an IT strategy is needed. The proposed budget contains financing for the project management software, based on the open-source software system used in Vietnam, Egypt, Armenia, Croatia and now Kyrgyzstan.

The aim of the IT strategy should be to:

Provide information and functional specification of an effective electronic tool for managing the documents, processes and public access in all phases of the regulatory guillotine project

Improve communications, engagement and facilitate collaboration between the government, stakeholders, businesses and civil society i.e. general public.

Promote transparency and inclusion of stakeholders and interested parties (e.g. donor community, international organizations) in all aspects of the regulatory guillotine project,

Ensure that all IT hardware and software needs are addressed and optimized for their best use within the guillotine project.

Enable management of the project by the Guillotine Unit and others to monitor performance and manage the process.

The IT strategy should in a simple but structured way assist the project’s implementation

unit’s staff to process, manage and archive documents (e.g. legal documents, administrative procedures) in electronic form and securely accessible. To assist procurement of the IT tools, the important specifications are set out below. The software supporting the IT strategy should:

prevent unnecessary duplication of tasks of project staff and teams

protect the integrity and security of the network, the connected systems and the stored data

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manage roles and responsibilities within the project primary stakeholders (e.g. secure access for different with selected view, edit or manage rights)

make the best use of expertise and resources

foster collaboration among the project, government and public by creating the direct feedback mechanism and Internet visibility of the project

ensure full transparency of the different information collected in the project

simplify the interfaces for internal processes of tasks and document management

enable responsive / adoptive graphical user interface automatically adjusted for any operating system, browser, or device (e.g. smartphones, tablet computers, MAC or PCs)

simplify the interfaces for communication

promote state of the art IT solution and best international practice

provide staff and management of the project with secure access to collected information and other resources for which they have authorization, at any time and regardless of where they happen to be

enable simple expansion abilities i.e. further development of software functionalities

provide open-source source code with no need for purchase additional expensive server or client licenses,

simple and fast use with no need for any software installation on client computer devices.

The IT Strategy is a set of guidelines for the development and use of IT solutions and tools

covering:

Hardware and software (database) components for the processing, storage and transmission of documents for inventory and review project phases from different sources

Operating system and additional tools needed

How applications such can be built on these components

Information security and the other elements which turn systems into services (such as documentation and training).

The guidelines should include following tasks and activities needed for development of the

appropriate IT infrastructure and environment for use of an effective application:

Planning central systems to ensure compatibility and integration with other systems i.e. database server and application server

Defining location of the database

Ensure maintenance of the database throughout the project life and beyond

Ensure funds for the hardware and database

Develop standards and rationalization to avoid duplication of tasks

Train staff in the implementation unit and other primary stakeholder groups regarding the use of the software

Establishing a central server for internal documentations with appropriate folder structure.

A good management software should provide a structured approach to the inventory and

review process used in regulatory guillotine methodology, with traceability to public comments and statistical analysis, versioning, and create the platform for a public web-based fully functional electronic registry of legal documents (and administrative procedures, if required). It is important

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to ensure increased legal, judicial and administrative transparency of the project and establish the two-way communication channel for broader public through development of a state-of-the art open source, web-based internet portal. This portal should be used to manage the process, document citizen and business proposals/complaints, and inventory all administrative procedures in the project scope.

By using a structured database and processes for this reform, resources will be optimally used and operations costs will be significantly reduced as well. IT solutions for regulatory guillotine should be able to ensure timely monitoring of performance and progress.

e. National Target for Cost Cutting, Cost Impact Assessment, Key Performance Indicators in the National Guillotine, and the Role of the National Reform Council

If it is to change behavior of businesses operating in competitive markets, the guillotine

reform must be economically relevant. Economic relevance means, in this case, that the costs and risks of doing business in Ukraine must change substantially, concretely, and visibly. Such changes should set in motion a series of positive changes in the micro economy such as increased investment, increased risk-taking, and increased innovation.

In the 2005 Ukraine guillotine, there was no clear performance indicators for the reviews,

which accounts partly for the disappointing results. Some countries have set performance standards based on number of rules eliminated, such as eliminating 30% of current regulations. However, number of regulations eliminated has no relevance to economic results, as it is easy to delete “dead” or trivial regulations that have no real impact on business life. Economically relevant impacts are those that directly affect the market, such as costs, risks, or reduction of barriers to entry, and the guillotine reform should be continually focused on those economically relevant targets.

Phase 2 of the 2015 Ukraine deregulation strategy needs more relevant and clear

indicators for measurement purposes. Clearer monitoring is needed for three reasons:

To enable performance management of the review teams in ministries and the Guillotine Unit and to identify where teams were falling short of the target;

To communicate performance of the ministries and the Guillotine Unit to the Government and civil society;

To communicate results to donors and others providing resources for the work. It has been found in guillotines around the world that clear performance targets greatly

facilitate and speed up the reform work. Recent guillotines have adopted quantitative targets based on cost cutting. For example, the Armenian government stated, at the beginning of its guillotine process: “The goal of the reform is to cut the costs of doing business and services provided by the GoA in Armenia by at least 50%”, which should set into motion a series of beneficial, pro-growth reactions in the business and investment communities that will contribute to overall growth. A number of other key performance indicators are used to report the results of the Armenia guillotine to the political level are shown in Box 2 below.

It is recommended here that Ukraine adopt a similar approach by setting a quantitative

performance target that can be used to determine performance across the entire reform and also

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the performance of individual institutions involved in the reform. The 50% reduction in costs facing businesses in Armenia seems equally relevant to Ukraine, and hence the 50% cost reduction target is recommended.

Adopting a quantitative target requires a low-cost but reliable quantitative methodology for

measurement of baseline and reform costs. A simple yet rigorous cost impact assessment method was developed, tested, refined, and applied in Armenia to ensure that the performance indicators of reductions in business costs were based on sound analysis. The intent of the method was to capture real costs, and therefore cost estimation should be based on good consultation practices with stakeholders. This method could be applied in Ukraine as well. It is based on three quantitative measures of different components of regulatory cost (operating costs, capital costs, and opportunity costs), and a qualitative measure of barriers to economic freedom. Likewise, impacts on tax revenues must be estimated. Such impacts can be either negative or positive. Direct negative impacts can result from simplification such as of customs procedures. Positive impacts can also be seen. For example, taxes not collected at the border are passed through in the form of higher business profits, and collected as income taxes.

Whatever method it used, it is important that a standardized method be developed and

tested to ensure that all performance indicators are consistently and reliably developed during the life of this project.

This work requires dedicated capacity in the Guillotine Unit. The recommended budget

includes staffing a Cost Impact Assessment Team in the Guillotine Unit. Its work will be crucial to the work of the entire unit, since the performance of the entire project is cost based. It will be important to coordinate and share the cost impact assessment work with the 15-person RIA team based in the State Regulatory Agency. Ukraine does not need to separate cost impact assessment methods, with two sets of manuals and two sets of trainings. The method used by the RIA team and the method used by the guillotine team should be harmonized so that capacities are built that can be used after the guillotine is completed. We would recommend that the Guillotine Unit seek opportunities to use its resources to build capacities in the State Regulatory Agency RIA unit.

It is also useful to include both the baseline and reform costs in the project management

software, so that cost reductions can be calculated for every legal norm, procedure, ministry or state agency, and Guillotine Unit reviewer, at the push of a button. This allows detailed scrutiny of performance across a wide range of participants in the reform.

Independent reporting of performance can be a useful way to improve accountability and

transparency. Of course, the guillotine process can be facilitated by regular progress reports from the Guillotine Unit to the Minister for Economic Development and Trade, the Special Committee of the Government for Deregulation, the Government, and the Parliament, so that when the recommendations are finally presented, there is a clear understanding of their purpose and importance. But more is needed. Ukraine’s National Reform Council is building up a set of key performance indicators for various reforms underway across the government. It would be useful to integrate the key performance indicators developed for the guillotine project in the monitoring and reporting activities of the NRC. This team has met with members of the NRC, and there seems to be openness to this approach.

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Box 3. Examples of key performance indicators from the Armenia guillotine

A package of reforms submitted to the Government of Armenia in Feb 2015 included a range of quantitative indicators of impact:

1. They will, once fully implemented, reduce costs to businesses and citizens by 12.8 billion dram per year, or 30.5% of the total baseline costs of Armenian legal acts.

2. These 41 actions will save businesses and citizens a total of 2,655,424 hours of time each year. That is the equivalent of 332,000 days of time of Armenians that is now wasted in unnecessary procedures and red tape – now available for other activities such as productive work once the 41 items are implemented.

3. Because of faster action by governments that reduce waiting time for businesses, businesses in Armenia will be able to operate an additional 189,879 days per year. Currently, without reform, they cannot carry out commercial activities during that time because they are waiting for government permissions. Faster action by governments means more business activity and higher profits in Armenia.

4. Armenians will make 720,000 fewer trips to government offices each year. Currently, these 41 legal acts require Armenians to visit government offices and other locations 1.2 million times a year. These 41 recommendations eliminate 720,000 trips through online payments and document submissions, simplification of procedures, and other common sense steps. For example, people who want to get their pension payments directly in their bank accounts today have to visit 5 offices to carry out the formalities, but under the recommendations they have to make only 3 trips.

5. Businesses will save 740 million dram per year that they now have to spend on unneeded supplies and equipment. The savings are due to simplification and elimination of requirements that have no purpose.

6. Businesses and citizens will save 1.7 billion dram per year that they now have to pay to lawyers, notaries and accountants. The savings are due to simplification and elimination of unneeded paperwork, stamps, and certifications.

7. Businesses and citizens will pay 895 million dram less to government in the reform of fees and charges of all kinds. This represents a loss of income to government offices, but this income is mostly for unneeded work by government in red tape that can be simply eliminated

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f. PR, Communications and Consultation Strategy

International Good Practice Decision in Ukraine

Strategy prepared before the project start - engage a PR Associate to assist in Communication and consultation strategy development and branding, as well as leading it throughout the whole reform

Using reform champions (on national and regional levels) that will play critical role in making reform visible, encouraging public participation and ensuring society’s support

Enabling political debates and widely dissemination of public statements in media

Effective partnerships established with business, industry, professional academic and other associations

Manage media campaign and building consensus from public

Hot line responds to questions of regulators and comments from the public

Include small group of PR and Communication Facilitators in Guillotine Unit.

Design, consult with stakeholders and implement throughout the reform process an effective communication and consultation strategy

Developing and implementing a comprehensive communication and public consultation

strategy will be a critically important component of the reform process. This strategy should be aimed at communicating to the key stakeholders and public the key messages that this initiative is aimed at reviving the economy of Ukraine, increasing its competitiveness in Europe and elsewhere through enabling private sector-led economic growth, opening new opportunities for people, ensuring decent living standards for the citizens, and, more importantly, spreading the benefits of reform broadly across society.

Effective reform efforts often encounter resistance in society, thus key pillars for a

successful communication and public consultation strategy should be built on10:

Strengthening understanding of reform issues. Key stakeholders in Ukraine have a poor understanding of regulatory reform issues and how they affect their own self-interest.

Increasing ownership. The soundest technical design cannot bring about change if those implementing the changes, and who will live with those changes, do not understand, accept, and take ownership of the new policies or regulations.

Combating entrenched special interests. While reforms may benefit many, they can greatly disadvantage a few who enjoy privilege and can form a very vocal minority.

Building effective transmission channels from stakeholders to decision makers. There may be few institutionalized mechanisms for stakeholders to communicate their wishes to key decision makers.

10 “Strategic Communications for Business Environment Reforms: A Guide to Stakeholder Engagement and Reform Promotion”, SME Department of World Bank, October 2007

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Overcoming inertia. It takes time to build interest and commitment even if issues are not contentious, governments are willing, and there is broad support for reform.

The Ukraine guillotine process should be highly visible and communicated to the public

through a proactive media campaign. This part of the process will be handled by the PR machinery in the Guillotine Unit itself. A strategy will be developed to document how information will be disseminated to, and received from, all stakeholders of the project. This communication and public consultation strategy will support the rollout and implementation of the Ukrainian reform. The communications and public consultation strategy will be developed during the start-up phase and implemented in the full phase. It will be adapted and expanded as required to accommodate progress of the project and to ensure that public communications effectively reflect the development and information of the guillotine reform. Ideally, a national dialogue on regulatory reform by stakeholders across the country, based on innovative communications such as social media, would help safeguard and sustain the reform against resistance.

Key elements of the communication strategy should be:

Branding so that the reform is identifiable and attractive to the public;

A market research program to ensure that communications effectively meet public needs;

A media engagement strategy to ensure that news media receive timely, accurate and authoritative information to support their reporting;

A continually updated website with performance indicators and training aids;

National and regional champions of reform who enable public awareness and serve as communication channels for participation of regional stakeholders in review and feed-back processes;

A national information campaign using a range of media, including electronic, print and online media, and social media;

Direct-access information services, such as call centers and websites, to provide up-to-date information and advice. Branding of reforms helps create a government reputation for reform. Without good

communication, the public in Ukraine will be largely unaware of the impact that the reform is having on their lives and the positive effects of the reforms. Developing a new brand is a difficult step in the communication process, but one of the most important to communicate to the public. The brand identity will be repeatedly communicated to the public, in multiple ways with frequency and consistency throughout the life of the project. An effective brand will create a unique identity that differentiates the reform from others. It should carry a simple but strong message. A branding expert might be engaged to assist the NGO in identifying an appropriate brand and design of the brand logo. The words that could be considered in finding the right brand for Ukraine could be related to words and phrases such as: transparent, quick, decisive, cut, simplification, ease of doing business, freedom, etc. For example, Croatia used the term “Fast Cut”, while other countries used the term “guillotine.”

Branding is only one step. To develop an effective communication strategy, other tasks should be carried out:

Communication mechanisms should be used such as written reports, training seminars, and special training events for journalists, workshops, conferences, political debates on national TV channels, videos, e-mails, newsletters, TV ads, essay competitions among youth, open lectures at universities, country-wide contests, etc.

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Key elements of information to be distributed by the different mechanisms will be identified, including frequency and information collection and collation

Roles and responsibilities of key individuals responsible for ensuring that communication is adequate / appropriate and timely

Identification of how unexpected information from other parties (including stakeholders) will be handled within the scope of the activity.

As the following Table 7 indicates, a series of complementary communication tools are

needed that target different audiences during the evolving reform process.

Table 7: Communication tools needed in the guillotine process

Guillotine Process

Communication objectives

Communication instruments

INVENTORY PHASE Raise awareness among regulators and stakeholders

Improve compliance by regulators

TV ads

e-Guillotine web site

Newspaper ads

Interviews

REVIEW PHASE By the Guillotine Unit in consultation with businesses and the public

Improve stakeholders inputs

Build constituencies for the future

Build private sector support for the project

Enable engagement of business associations and civil society actors

Continued PR

Contest for the best proposal (award)

Feedback on consultation

National conference on proposals

RECOMMENDATIONS

Increase awareness of the project results and experts engaged in review

Public summaries of proposals, impacts, and responses

Press releases on success stories

Testimonials

An important condition for success is to build efficient consultation mechanism throughout

the whole reform effort. While peculiarities will have to be addressed in communication and public communication strategy that is suggested to be drafted at the inception stage of the reform, some key recommended mechanisms are the following:

Staffing of experienced Consultation Facilitators at the Guillotine Unit

Establishment of informal/formal consultation task forces that will be comprised from key business associations and civil society actors (such as AMCHAM and EBA) that will meet periodically to discuss the progress and future actions

Partner with business associations and other actors (such as CIPE) strongly represented in the regions of Ukraine to carry out comprehensive rollout process in the regions

Prepare annual action plans on consultation related activities – workshops, seminars, sectoral consultations, debates with the engagement of prominent experts, opinion polls, etc.

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g. Transition to Long-Term Regulatory Quality Strategy

The guillotine is a failed reform if reform stops once it is finished. The national deregulation strategy already contains phase 3, which is institutionalization of the disciplines and control mechanisms needed to ensure the new laws and regulations meet the standards of efficient, market friendly, and effective regulation. Ukraine, which is already launching RIA, should use the guillotine to begin a continuous process of converging with international good regulation practices. The elements of the guillotine – the quality control process, the central unit, the public consultation, electronic registry – should be institutionalized and maintained for all future regulations.

Planning for institutionalization should begin early in the guillotine process, and drafts

should be submitted through the political process, so that this reform is in place and ready to move forward at the conclusion of the guillotine. This process should begin as early as possible, particularly given the fact that components of the national regulatory strategy are already being implemented (such as RIA).

The national guillotine process proposed in this planning document contains some

elements of capacity building for Phase 3, both in the public sector and in civil society. The cost impact assessment team will be coordinated with the RIA team in the State Regulatory Agency to ensure that a standardized cost impact assessment method is used across the government, and that capacities are built during the guillotine process that will be sustained once the guillotine is completed.

The components of the national strategy should be based on international good

experiences and tools, such as the model shown in Figure 3 below.

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Figure 3: A Map of the Quality Control Functions of a Modern Regulatory System

.

Flow of Regulations (Ministries)

Stock of Regulations (Ministries)

Institutions For Better

Regulations

• Regulatory guillotine

• “Doing Business”

agenda

• Sectoral reviews & re-engineering

• WTO convergence strategy

• Clear quality standards for new regulations

• Central review & quality control

• Regulatory Impact Analysis

• Stakeholder consultation

• Checks for WTO conformity

• Electronic regulatory registry

• Rationalize inspectorates

• Silence is consent

• One stop shops

• Due process

Monitor Results,

Adapt Rules

Council of

Ministers Governmental

Committee

Business Advisory Council

Public Consultation

Central Unit

For regulatory

quality RIA

Legal controls

Parallel Unit in

Parliament

Reform units in Ministries

Copyright Jacobs and

Associates 2014. No

reproduction without

permission

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Annex 1: Draft Mandate for the Guillotine in Ukraine

DRAFT CABINET OF MINISTERS RESOLUTION FOR LAUNCHING THE GUILLOTINE

SUBJECT: Launching a National Guillotine Reform, Phase 2 of the National Deregulation Strategy

DATE: xxx

Given the need to increase the economic competitiveness of the country to meet the socio-economic challenges faced by Ukraine, promote rapid recovery through dramatic improvement of the business enabling environment and boosting investments by improving the quality of state regulation in economic activities, the Cabinet of Ministers of Ukraine decree:

1. To launch a “National Regulatory Guillotine” reform based on the principles and actions prescribed below to revise the regulatory framework and eliminate inefficient and anti-market formalities with a target to reduce business compliance costs by 50% within three years;

2. Foresee that the reform will begin in July 2015 and will conclude by June 2018. The first reform recommendations should be produced by October 2015.

3. Establish a Special Committee of Cabinet of Ministers for Deregulation chaired by the Prime Minister, with the deputy chair Minister of Economic Development and Trade, to oversee the reform and discuss recommendations to remove provisions hampering the business environment and market relations and reducing entrepreneurship and investment; to improve and simplify services rendered to citizens by the state by cutting costly and improper procedures and proposing solutions to necessary procedures; and to improve relevant normative legal acts effective in this area as well

4. Prescribe that, after its decision to proceed, the Special Committee shall send to the Government the final packages of recommendations. After adoption by the government, changes to law shall be packaged in an omnibus form, and transmitted to the Parliament for action. All adopted reforms shall be implemented promptly by state agencies.

5. Stipulate that the reform will include all legal norms and similar actions that affect businesses and citizens in Ukraine. It includes all laws, decrees, licenses, permits, approvals, certifications, authorizations, concessions, permissions, clearance or payment of fees for any commercial activity, or any legal document requiring or setting out procedures for official permission to carry out a commercial activity or any document affecting procedures or requirements for citizens in the normal course of private life.

6. Approve the list of agencies to be covered by the reforms process stipulated under clause 1 of this Resolution;

7. Task the Minister of Economic Development and Trade to mandate a Guillotine Unit to carry out the work and oversee its activities, as well as to establish the procedures and requirements of the work through instructions issued to state agencies;

8. In coordination with existing procedures for donor relations, mandate the Minister of Economic Development and Trade to negotiations with international organizations and donor agencies aimed at ensuring the funding for reform and sign any committeemen deemed appropriate for securing success;

9. Propose to the Kiev Mayor, Chairman of the National Bank of Ukraine, Chairman of

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Antimonopoly Committee of Ukraine, and other independent state agencies to cooperate with the Special Committee and Guillotine Unit ensuring its operation in the frames of the process stipulated under Clause 1 of this Resolution.

10. Suggest to the National Reform Council to take a lead on regular monitoring and reporting of performance over the reform effort;

11. Define that:

11.1 A civil society consultation strategy should be created to support this reform;

11.2 The Guillotine Unit shall work with the maximum transparency possible, including through a Web-based approach to publish announcements, press releases and results, and shall inform and encourage inputs from organizations and other stakeholders in the review of norms.

11.3 Public-private processes should be used to:

Inventory all legal norms and similar actions that affect businesses and citizens in Ukraine;

Review these norms against standardized criteria of need, legality, business friendliness, and corruption vulnerability, using a public-private process;

Determine which norms should be eliminated and simplified;

Assess the impacts on costs to businesses and citizens, and on tax revenues, of the recommendations;

Recommend to the Prime Minister and the Government packages of reforms that will reduce regulatory cost and risk in Ukraine by at least 50% in total;

Conclude with an online electronic registry of legal norms that improves transparency and security in Ukraine.

12. This Resolution shall become effective on the day following its official promulgation.

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Annex 2: Baseline budget for the Guillotine

Ukraine Guillotine Project for 70 regulatory institutions and 7000-10,000 regulatory reviews - Baseline Budget 1

ITEM UNITS

Monthly Cost (total built up cost, including social taxes and charges and typical firm margins)

DURATION (one month = 22 days) or other units SUB TOTAL Totals Notes

Staffing of Guillotine Unit USD/month Months

Management

Head 1 $ 14,351.41 36 $ 516,650.63

Deputy heads 2 $ 6,517.02 32 $ 417,089.26

Team leaders 4 $ 4,335.14 34 $ 589,578.36

Support staff - financial 1 $ 2,286.45 34 $ 77,739.20

Support staff - Secretarial 2 $ 1,053.34 32 $ 67,413.45

IT operations 1 $ 2,286.45 32 $ 73,166.30

Expert staff

Legal specialists 15 $ 3,551.70 32 $ 1,704,815.42

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Business specialists 15 $ 3,551.70 32 $ 1,704,815.42

Cost Impact Assessment Team 7 $ 3,551.70 33 $ 808,011.48

PR communications 1 $ 2,286.45 34 $ 77,739.20

Civil Society Facilitation 3 $ 3,551.70 32 $ 336,701.05

Total STAFF of Guillotine Unit 52 $ 6,373,719.77 $ 6,373,719.77

Support Units in Ministries

This work will be paid from existing Ministerial budgets

Ministerial (Set up a small unit of 2-4 people in 70 bodies) 0 $ - 0

$ -

Total Staff Support in Ministries

$ -

$ -

International TA

STTA project support and management on guillotine reforms 1.00 $ 31,900.00 19.00 $ 606,100.00

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Expert STTA inputs for specific sectors 1.00 $ 39,600.00 7.00 $ 277,200.00

Long Term Senior Advisor in Central Unit 1.00 $ 30,399.60 30 $ 911,988.00

All Travel and Per diem in Ukraine, including long-term advisor $ 329,770.91

TOTAL INTERNATIONAL TA $ 2,125,058.91 $ 2,125,058.91

IT Procurement and customization

Legal support to research, complete, and facilitate transfer of the legal database 0 $ - 1

$ -

National project management software, including licensing, customization, and 36 months application support, with travel 1 $450,000.00 1 $ 450,000.00

Website design and development 1 $ 5,000.00 1

$ 5,000.00

Website hosting and support 1 $ 100.00 36

$ 3,600.00

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TOTAL SOFTWARE $ 458,600.00

$ 458,600.00

Media, Communications Campaign

Brand strategy development (Based on Fedoriv marketing agency) 1 $ 18,000.00 1 $ 18,000.00

TV ad idea development 1 $ 18,000.00 1 $ 18,000.00

TV ad production (30 seconds) (2-2.5 mln UAH) 1 $ 50,000.00 1 $ 50,000.00

TV ad on air (6-7 weeks of TV ads (intensive) - 6.5 mln UAH (Starlight Alliance - Inter, Noviy Kanal, STB, ICTV, other niche TV channels) 80% of TV ads market) 1 $ 90,000.00 1 $ 90,000.00

Outdoor ads (Throughout Ukraine - 400 thsd UAH) 1 $ 7,000.00 0

$ -

Online ads (Online afs per month - 200 thsd UAH) 1 $ 5,000.00 1

$ 5,000.00

Radio ads 1 $ 5,000.00 1 $ 5,000.00

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Newspaper ads (Per month (key national magazines and local newpapers) 1 $ 5,000.00 6 $ 30,000.00

Publications 1 $ - 1 $ -

Conferences 1 $ 10,000.00 3 $ 30,000.00

Social media ads and campaign (70 thsd UAH) 1 $ 2,000.00 6 $ 12,000.00

$ 258,000.00 $ 258,000.00

Task Force premises and services Units

Office (lease/square meter) 1 $ 20.00 52 $ 468,000.00

Number of meters needed at 15 square meters per person

Office furniture 1 $ 400.00 52 $ 20,800.00

Office expenses 1 $ 4,400.00 32 $ 140,800.00

Translation (pages) 1 $ 1.00 1 $ 1.00

Domestic travel airfare 100 $ 150.00 1 $ 15,000.00

Domestic travel accomodation 400 $ 50.00 1 $ 20,000.00

Domestic travel per diem 400 $ 25.00 1 $ 10,000.00

IT requirements

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Laptops 1 $ 900.00 52 $ 46,800.00

Office IT infrastructure 1 $ 1,000.00 1

$ 1,000.00

Xerox WorkCentre 1 $ 7,000.00 1 $ 7,000.00

Printer 1 $ 500.00 1 $ 500.00

Server, OS, and maintenance for eGuillotine software 1 $ 18,000.00 1 $ 18,000.00

TOTAL OFFICE $ 747,901.00 $ 747,901.00

GRAND TOTAL $ 9,963,279.67

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Annex 3: Ukrainian Regulatory Institutions in the Scope of the Guillotine Many regulatory bodies exist in Ukraine at the national level. Below is a list of almost 70 bodies with regulatory authority relevant to citizens and businesses that, preliminarily, could be included in the scope of the national guillotine.

1) National Bank of Ukraine 2) Antimonopoly Committee of Ukraine 3) Ministry of Economic Development and Trade of Ukraine 4) Ministry of Infrastructure 5) Ministry of Social Policy 6) Ministry of Agrarian Policy and Food 7) Ministry of Internal Affairs 8) Ministry of Ecology and Natural Resources 9) Ministry of Energy and Coal Mining Industry 10) Ministry of Foreign Affairs 11) Ministry of Information Policy 12) Ministry of Culture 13) Ministry of Defense 14) Ministry of Education and Science 15) Ministry of Youth and Sport 16) Ministry of Healthcare 17) Ministry of Regional Development, Construction, and Communal Living 18) Ministry of Finance 19) Ministry of Justice 20) National Bank of Ukraine 21) State Aviation Service 22) State Archive Service 23) State Executive Service 24) State Treasury Service 25) State Migration Service 26) State Penitentiary Service 27) State Border Service 28) State Assay Service 29) State Registration Service 30) State Sanitary and Epidemiological Service 31) State Service on Geodesy, Cartography and Cadastre 32) State Service of Geology and Mineral Resources 33) State Service of Mining Supervision and Safety 34) State Intellectual Property Service 35) State Statistics Service 36) State Service on Drug Control 37) State Emergency Service 38) State Service on Drugs 39) State Service on Personal Data Protection 40) State Regulatory Service 41) State Service for Financial Monitoring 42) State Veterinary and Phytosanitary Service 43) State Export Control

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44) State Fiscal Service 45) State Highways Agency 46) State Water Resources Agency 47) State Environmental Investment Agency 48) State Agency for Energy Efficiency and Energy Conservation 49) State Agency of Land Resources 50) State Agency of Forest Resources 51) State Reserve Agency 52) State Agency for Fishery 53) State Agency for Tourism and Resorts 54) State Architectural and Building Inspection 55) State Ecological Inspection 56) State Inspection for Schools 57) State Agricultural Inspection 58) State Inspection of Ukraine on Safety in Maritime and River Transport 59) State Inspectorate of Ukraine on Land Transport Security 60) State Inspection on Price Control 61) State Inspection on Consumer Protection 62) State Inspection on Labor 63) State Financial Inspection 64) National Commission for State Regulation of Communications and Information 65) National Commission for State Regulation of Energy 66) National Commission on Securities and Stock Market 67) National Commission for State Regulation of Financial Services Markets 68) National Commission for State Regulation of Utilities

Excluded from the guillotine:

1) State Nuclear Regulatory Inspection

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Annex 4: Gantt chart for Guillotine Reform, Ukraine

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Annex 5: Human Resources of the Guillotine Unit Building good organization and human resources is crucial because the implementation challenge of carrying out a government-wide reform involving thousands of procedures and regulations is enormous, and extremely risky when unorganized. Fortunately, a number of experiences from other countries demonstrate how different approaches and organizational structures can be used, so that the key elements of the organizational structure of the Guillotine Unit are now clear. A typical organization is given in Figure 4 below:

Figure 4: Typical organization of a guillotine unit

For efficient use of human resources, the project management approach will be used to structure the organization, staff responsibilities and management. It has been proven in other countries that this approach ensures higher performance of the staff, higher level of flexibility, and adaptation to changes through project implementation. The human resource needs – both permanent and temporary expertise – are estimated at the beginning of the project. The initial budget in Annex 2 makes a first attempt to estimate the staff needed to complete the inventory and review at the national level. Estimates of the number of experts and support staff required to successfully implement the project are developed by assuming the volume of norms to be processed through the inventory and review phases. Because the actual number is highly uncertain at the beginning of this reform, a level of contingency should be taken into consideration when planning on staff needs, and this is the reason for the evaluation at the end of the inventory stage, with recommendations for upscaling. The budget recommends that the number of permanent staff within the Guillotine Unit should be about 50 dedicated exclusively to guillotine tasks. In addition, the Guillotine Unit should use business stakeholders to help mobilize part-time experts from private companies to assist in the review of business related norms. These experts can be best used through development of ad hoc working groups focused on a particular sector or particular group of norms.

Copyright: www.hitrorez.hr 13

Head

Chief Lawyer Chief Economist Business administrator

Business administrator Legal analyst

Legal analyst

Legal analyst

Legal analyst

Business analyst

Business analyst

Business analyst

Business analyst

Deputy Head

Experts

Analysts

Organizational chart of the Special Unit

Head

Chief Lawyer Chief Economist Office Manager

Administrator Legal analyst

Legal analyst

Legal analyst

...

Business analyst

Business analyst

Business analyst

...

Chief Operations Officer

Legal advisors

Administrator

Management

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To facilitate the financing of the external senior experts who provide necessary skills and knowledge that is missing in the Guillotine Unit, the Croatian experience recommends creation of a list of best local experts for the regulatory framework – reputable and committed individuals from academia, business consultants, law expert and law offices, union representatives, NGO representatives, etc. These lists should be compiled for presentation to the donor community to find the financial sources to cover the cost of such temporary experts. Statements of Work of the Management and Staff Management team:

Director of Guillotine Unit (1)

Ensure performance of the Guillotine Unit to meet the schedule and targets of the reform, including access to adequate resources

Inform the Minister and Special Committee of progress and any problems, request adjustments as needed for the success of the reform, and submit periodic progress reports to the Minister and involved donors

Represent the Guillotine Unit on the Special Committee Represent the Guillotine Unit on the Donor Coordinating

Committee Liaise as needed with Ministers and heads of state agencies

to resolve any issues Ensure implementation of the communications campaign,

and represent the Guillotine Unit in media and public appearances as needed to carry out the communications campaign

Advise the Minister and Special Committee on other regulatory reforms as may arise in the course of delivery of the tasks

Present the final recommendations to the Minister and Special Committee, and the recommendations on the next phase of regulatory reform

Assist the Minister and Special Committee and Government as needed in adopting the recommendations

Ensure quality control within the Guillotine Unit in preparation of the recommendations

Work with eGuillotine management portal application and approves publication of eGuillotine data for the web

Deputy Directors (2)

Overall day to day management of the Guillotine Unit, including the system for the orderly flow and review of documents to make best use of the Guillotine Unit’s resources

Liaise at the working level with ministries and agencies to ensure that they comply fully with the reform

Ensure that the Head of the Guillotine Unit has the information needed to carry out his/her tasks

Oversee implementation of the operating and financial plans for carrying out the CMU Resolution

Organize training as needed to build the capacities of the Guillotine Unit

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Prepare progress reports for Head of NGO review Maintain a performance system to track progress in

successfully completing the reform Maintain eGuillotine functions and entry quality Review the work of the team to ensure quality Assist in carrying out reviews of procedures

Legal Team Leaders

Instruct the public administration bodies under the scope of the reform on the procedures needed to comply

Liaise with the Ministry of Justice to it is prepared to support the reform throughout the process

Monitor and assist the preparation and adoption of the law on the electronic registry and its implementation, and ensure that the Registry is fully operational

During the reviews of individual procedures, oversee preparation of the necessary draft legal normative documents needed to implement recommendations and prepare the contents of the Registry for operational status

Assist in carrying out reviews of procedures Work with eGuillotine management portal application and

provide quality control of inputs

Business Expert Team Leaders

Oversee consultation and input from organizations and other stakeholders in the review of norms, and hold consultative seminars, workshops, meetings, or other forms of communication to ensure transparency and input in the process of the reform

Ensure that the economic and business dimensions of the review are fully considered, and that the staff is capable of reviewing these dimensions

Liaise with the Ministry of Economy and the tax authorities on managing any negative impacts on revenues

During the reviews of individual procedures, oversee the analysis of need and business friendliness, and preparation of recommendations based on these criteria

Assist in carrying out reviews of procedures Work with eGuillotine management portal application and

provide quality control of inputs

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Technical Staff

Legal Experts

Carry out an assigned number of reviews of procedures, in collaboration with a business expert

Generate the legal and analytical information needed for each review and make a recommendation on action

Ensure that the draft normative documents needed to implement recommendations legal normative document(s) needed to implement each recommendation is completed

Consult as needed with stakeholders in the course of each review

Assist in managing the flow of documents and reviews Work day to day with eGuillotine management portal

application

Business Experts

Carry out an assigned number of reviews of procedures, in collaboration with a legal expert

Generate the legal and analytical information needed for each review and make a recommendation on action

Assess the business impacts and revenue implications of the procedures

Consult as needed with stakeholders in the course of each review

Assist in managing the flow of documents and reviews Work day to day with eGuillotine management portal

application

Support Staff

Administrators

Assist in managing the flow of documents into and out of the office

Maintain an electronic tracking sheet to ensure that the location of each procedure in the review is tracked and that the work is handled in an orderly and efficient fashion

Assist the Head and Deputy Head of Guillotine Unit in their tasks

Work with eGuillotine management portal application

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Annex 6: Meetings held by the JC&A and EB teams 24-30 April 2015

24 April

Who on our team

Meeting with Time Place Comments/key issues

SJ11, TS12, EB Team13

Aivaras Abromavicius, Minister of Economic Development and Trade of Ukraine Ganna Onyshchenko, Minister of the Cabinet of Ministers of Ukraine Kseniia Liapina, Chairperson of the State Regulatory Administration of Ukraine

09:00 – 10:30

Cabinet of Ministers Building

Kick-off meeting to discuss the scope of the mission, key issues to be studied and the timeline for the effort to prepare Operational Plan.

SJ, TS, EB Team

Anna Derevyanko, Executive Director of European Business Association

11:00 – 12:30

EBA Office Current activities in the field of deregulation, participation of civil society actors in reforms, possible role of business associations in Regulatory Guillotine Reform

SJ, TS, EB Team

Taras Kachka, Vice President of the American Chamber of Commerce in Ukraine

14:00 – 15:30

AMCHAM Office

Current activities in the field of deregulation, participation of civil society actors in reforms, possible role of business associations in Regulatory Guillotine Reform

SJ, TS, EB Team

Internal meeting 16:00 – 18:00

EasyBusiness Office

Organization of mission, first discussion of key questions

25 April

Who on our team

Meeting with Time Place Comments/key issues

SJ, TS, EB Team

Victoria Ptashnik, Deputy of the Verkhovna Rada of Ukraine, Member of the Committee on Economic Policy Anna Kozhemiachenko, Adviser to Victoria Ptashnik

14:00 – 16:00

EasyBusiness Office

Discussion of the role of Verkhovna Rada in Regulatory Guillotine Reform, possible collaboration modalities with active deputies and their involvement at earlier stages

11 Scott Jacobs 12 Tigran Sukiasyan 13 Easy Business Team

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27 April

Who on our team

Meeting with Time Place Comments/key issues

SJ, TS, EB Team

Internal meeting 09:30 – 11:30

EasyBusiness Office

Detailed discussion of the structure of Operational Plan, identification of the information needed to be collected and meetings to be organized

SJ, TS, EB Team

Victor Galasyuk, Deputy of the Verkhovna Rada of Ukraine, Chairman of the Committee on Industrial Policy and Entrepreneurship

12:00 – 13:30

Verkhovna Rada of Ukraine

Discussion of the role of Verkhovna Rada in Regulatory Guillotine Reform, possible collaboration modalities with active deputies and their involvement at earlier stages, possibilities provided by legislation to organize expedited hearings and voting of reform packages.

SJ, TS, EB Team

Valeriy Pekar, GOSH Strategic Centre NGO (Member of the National Reform Council)

14:30 – 16:30

NGO Office The role of civil society organizations in the National Reform Council, and possible role Regulatory Guillotine Reform; monitoring scorecard and civil society oversight over the reform

SJ, TS, EB Team

Christian Doering, Project Director, Support to Public Finance Management Reform Tetiana Ventsel, Project Expert for the Economic Development and Good Governance Project

17:00 – 18:00

GIZ Office Briefing about scope of the mission, time-line for submission of the Operational Plan and further steps, discussions of the donor’s priorities and possibilities of participation to the multi-donor consortia

28 April

Who on our team

Meeting with Time Place Comments/key issues

SJ, TS, EB Team

Lalita Moorty, Country Sector Coordinator PREM,

10:00 – 11:30

WB Country Office

Kick-off meeting with the client to discuss the scope of the mission, coordination

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Europe and Central Asia region, World Bank Eugeniu Osmochescu, Project Manager of IFC Ukraine Investment Climate for Agribusiness Project, World Bank

issues, donor engagement strategy and Government counterparts’ liaison issues, key issues to be studied and the timeline for the effort to prepare Operational Plan.

SJ, TS, EB Team

Kseniia Liapina, Chairperson of the State Regulatory Administration of Ukraine Key staff of the Administration

12:00 – 13:30

Offices of State Regulatory Administration of Ukraine

Current activities in the field of deregulation, role and initiatives of Administration, possible participation modalities and capacity building issues

SJ, TS, EB Team

Pavlo Petrenko, Minister of Justice of Ukraine Anton Yanchuk, Deputy Minister of Justice of Ukraine Sergey Benedisyuk, Head of State Registration Department of the Ministry of Justice of Ukraine

15:30 – 17:00

Ministry of Justice of Ukraine

Briefing by the JC&A on the key structure of possible reform effort, legal arrangement necessary to launch the reform, availability of comprehensive database that includes all legal acts and possibility to use it, number of legal acts that would be targeted for review, synchronisation issues with parallel initiatives

SJ, TS, EB Team

Andrii Palianytsia, WB Expert (Skype call with the team)

17:30 – 18:30

- Discuss the organizational structure of the possible reform effort

29 April

Who on our team

Meeting with Time Place Comments/key issues

SJ, TS, EB Team

Sevki Acuner, Country Director for Ukraine, EBRD Ukraine Resident Office Dimitri Gvindadze, Lead Economist, EBRD Ukraine Resident Office

11:00 – 12:30

EBRD Ukraine Resident Office

Presentation of the Regulatory Guillotine approach, discussion of the liaison issues with EBRD’s ongoing support to NRC, possible participation modalities to the donor consortia

SJ, TS, EB Team

Internal meeting 13:00 14:30

EasyBusiness Office

Progress of the mission and open issues still to be addressed

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SJ, TS, EB Team

Presentation at the State Regulatory Administration of Ukraine (for 30 core staff members)

15:30 – 16:30

State Regulatory Administration of Ukraine

Presentation of the Cost Impact Assessment methodology used by JC&A

SJ, TS, EB Team

Aivaras Abromavicius, Minister of Economic Development and Trade of Ukraine

17:30 - 16:30

Cabinet of Ministers building

Discussion of early findings on the organizational structure of the reform effort and future timeline

SJ, TS, EB Team

Oleksandr Danyliuk, Representative of the President at the Cabinet of Ministers of Ukraine

17:00 – 18:30

EasyBusiness Office

Collaboration issues of the President Office, CMU and Verkhovna Rada

SJ, TS, EB Team

Dmytro Shymkiv, Deputy Head of the Presidential Administration of Ukraine, Executive Secretary of the National Reform Council Andrey Lobach, Head of the EBRD’s Project Management Office to support National Reform Council

19:30 – 20:30

Presidential Administration of Ukraine

Discussing 3 staged deregulation reforms in Ukraine, responsibilities of the National Reform Council, structure of Regulatory Guillotine exercise, KPI and system of indicators to monitor reforms, as well as issues related to the broader Better Regulation Agenda.

30 April

Who on our team

Meeting with Time Place Comments/key issues

SJ, TS, EB Team

Ambassador Clifford G. Bond, US Assistance Coordinator Stephen Goneyea, Director Office of Economic Growth, USAID Michael Torreano, Deputy Director Office of Economic Growth, USAID Evgenia Malikova, Project Management Specialist at the Office of Economic Growth, USAID

Oksana Bedratenko, Economic Specialist at the US Embassy to Ukraine

11:30 – 12:50

US Embassy to Ukraine

Briefing about scope of the mission, time-line for submission of the Operational Plan and further steps, discussions of the donor’s priorities and possibilities of participation to the multi-donor consortia

SJ, TS, EB Team

Internal meeting 13:00 – 14:30

EasyBusiness Office

Open issues related to the preparation of Operational

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Plan, to do list for each member of the team, timeline

SJ, TS, EB Team

Jerome Vacher, IMF Resident Representative in Ukraine

15:00 – 16:30

IMF RR Office in Ukraine

Briefing about scope of the mission, time-line for submission of the Operational Plan and further steps, discussions of the donor’s priorities and possibilities of participation to the multi-donor consortia, as well as IMF conditionality for structural credits

SJ, TS, EB Team

Berend de Groot, First Counsellor, Head of Cooperation, Delegation of the EU to Ukraine Juana Mera Cabello, First Counsellor, Head of Section, Economic Cooperation, Social and Regional Development, Delegation of the EU to Ukraine Nicholas Burge, First Counsellor, Head of Trade and Economic Section, Delegation of the EU to Ukraine Boris Filipov, Attaché, Private sector Development Sector Manager, Delegation of the EU to Ukraine

17:00 – 18:00

EU Delegation to Ukraine

Briefing about scope of the mission, time-line for submission of the Operational Plan and further steps, discussions of the donor’s priorities and possibilities of participation to the multi-donor consortia, as well as issues related to the approximation of the legislation within the framework of Association Agreement and DCFTA