UNCLAS SECTION 01 OF 02 ROME 005568

SIPDIS

E.O. 12958: N/A
TAGS: EFIN ECON PREL ETRD ECON PREL ETRD ITALY'>IT EUN ITEFIN EUN
SUBJECT: BETTER REGULATION: OMB ADMINISTRATOR GRAHAM
PROMPTS LIVELY DEBATE

REF: SECSTATE 178272

UNCLASSIFIED

PAGE 02 ROME 05568 01 OF 02 151704Z


1. SUMMARY. REACTION TO OMB ADMINISTRATOR JOHN GRAHAM'S
MESSAGE ON REGULATORY REFORM IN THE U.S. AND EUROPE RANGED
FROM A LIVELY GIVE-AND-TAKE AMONG SENIOR GOI OFFICIALS,
INCLUDING A NOTED EU PARLIAMENTARIAN, TO POLITE CURIOSITY
AMONG BUSINESS LEADERS. WHILE BOTH AUDIENCES ACKNOWLEDGED
THE UTILITY OF DOING STUDIES ON THE IMPACT OF PROPOSED
REGULATIONS, THERE WAS NO CONSENSUS WHETHER THE EUROPEAN
COMMISSION SHOULD MAKE SUCH STUDIES MANDATORY BEFORE ISSUING
REGULATIONS. GOI OFFICIALS REPRESENT A POTENTIAL BASE OF
SUPPORT FOR THE USG AS WE MAKE OUR CASE BEFORE THE COMMISSION
ON THE EU'S PLANNED REGULATORY REFORM. GETTING ITALIAN
BUSINESSES ENGAGED IN THE ISSUE WILL BE A MORE DIFFICULT
TASK. END SUMMARY.


2. OMB ADMINISTRATOR JOHN GRAHAM CAME TO ROME ON NOVEMBER 13
AS PART OF A PUBLIC-AFFAIRS SPONSORED PROGRAM, WHICH INCLUDED
STOPS IN BERLIN, COPENHAGEN, BRUSSELS AND PARIS. THE EMBASSY
HOSTED A ROUNDTABLE WITH NOTABLE ITALIAN GOVERNMENT
OFFICIALS, INCLUDING: GIUSEPPE GARGANI, EU PARLIAMENTARIAN
AND CHAIR OF THE EU PARLIAMENTARY COMMITTEE ON LEGAL AFFAIRS
AND THE INTERNAL MARKET; ALESSANDRO PALANZA, VICE SECRETARY
GENERAL, CHAMBER OF DEPUTIES; MADDALENA FILIPPI, JUDICIAL
ADVISOR TO THE MINISTER OF PUBLIC ADMINISTRATION AND A MEMBER
OF THE OECD WORKING GROUP ON REGULATORY REFORM; STEFANO
RODOTA, PRESIDENT, ITALIAN DATA PRIVACY COMMISSION AND CHAIR
OF THE EU WORKING GROUP ON DATA PRIVACY; AND CLAUDIO
TUCCIARELLI, DIRECTOR GENERAL, REFORMS MINISTRY AND ADVISOR
TO THE PRIME MINISTER OF REGULATORY REFORM. AN AFTERNOON
SESSION WAS HOSTED BY CONFINDUSTRIA, ITALY'S LARGEST
EMPLOYERS ASSOCIATION, WITH INVITED MEMBERS OF THE ITALIAN
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PAGE 03 ROME 05568 01 OF 02 151704Z
BUSINESS COMMUNITY.


3. DURING THE EMBASSY'S ROUNDTABLE, QUESTIONS FO

R GRAHAM
FOCUSED ON SEVERAL KEY ASPECTS: WHAT TYPE OF COST-BENEFIT
ANALYSIS IS DONE? WHAT IS THE BALANCE OF EXPERTISE IN OMB
AMONG ECONOMISTS, TECHNICAL SPECIALISTS, SOCIAL POLICY
EXPERTS? WHAT IS THE METHODOLOGY USED? WHAT IS OMB'S
(GRAHAM'S OFFICE) RELATIONSHIP WITH STATE AND LOCAL
LEGISLATORS, AUTHORITIES AND REGULATORS? WHAT GUIDELINES ARE
USED TO DETERMINE WHEN A REGULATION IS NEEDED? WHAT IS OMB'S
RELATIONSHIP WITH INDEPENDENT REGULATORY AGENCIES, SUCH AS
THE SEC AND THE FEDERAL RESERVE BANK? WHAT ARE THE PRIVACY
CONSIDERATIONS? WHAT REVIEW, IF ANY, DOES OMB CONDUCT OF
LEGISLATION PASSED BY CONGRESS THAT IN EFFECT, ARE REGULATORY
IN NATURE? GRAHAM HIGHLIGHTED MANY ASPECTS OF U.S. POLICIES
AND PROCEDURES: COST BENEFIT ANALYSES INCLUDE QUANTITATIVE
ECONOMIC MEASUREMENTS AS WELL AS CONSIDERATION OF FAIRNESS
AND EQUITY ISSUES; HIS 50-PERSON STAFF REPRESENTS ALL THE
SOCIAL SCIENCES; GUIDELINES/METHODOLOGY ARE ON OMB'S WEBPAGE.
HE NOTED THAT OMB HAS NO REGULATORY OVERSIGHT OVER THE SEC
AND THE FED, AND CAN ONLY PROVIDE ADVISORY OPINIONS ON DRAFT
LEGISLATION.


4. OMB'S POLICY TO CONDUCT REGULATORY IMPACT STUDIES OF THE
MOST IMPORTANT DRAFT REGULATIONS GENERATED THE GREATEST
INTEREST. PALANZA OF THE CHAMBER OF DEPUTIES AND JUDICIAL
ADVISOR FILIPPI SEEMED TO ACKNOWLEDGED THE DESIRABILITY, IF
NOT NECESSITY, OF DOING SUCH STUDIES BEFORE REGULATIONS WERE
ISSUED. PALANZA ACKNOWLEDGED THE UTILITY OF THE OECD'S
WORKING GROUP ON REGULATIONS AND REGULATORY REFORM, AND
QUESTIONED WHETHER THE EU COULD ADOPT SIMILAR PROCESSES.
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FILIPPI ALSO EXPRESSED INTEREST IN EX-POST-FACTO REVIEW OF
REGULATIONS ONCE IMPLEMENTED.


5. THE EU'S PLAN FOR REGULATORY REFORM ALSO PROMPTED A
GIVE-AND-TAKE DISCUSSION. GRAHAM RAISED THE QUESTIONS ABOUT
WHOM IN THE COMMISSION WILL BE RESPONSIBLE FOR QUALITY
CONTROL AND PEER REVIEW. IN RESPONSE, GARGANI NOTED THAT
EUROPE HAS NO STANDARD FOR REGULATORY IMPACT STUDIES; THERE'S
NO UNIVERSAL TRADITION OF DOING SO. HE EXPRESSED THAT AMONG
HIS COMMITTEE MEMBERS, THERE'S SOME SKEPTICISM THAT SUCH
STUDIES SHOULD BE DONE; HE SEEMED TO HEDGE HIS PERSONAL
OPINION. HE QUESTIONED HOW THE U.S. DEFINES EFFICIENCY AND
FAIRNESS IN ITS COST-BENEFIT ANALYSES, WHICH GRAHAM HAD
UNDERSCORED ARE PART OF THE U.S. REVIEW ALONG WITH A PURE
QUANTITATIVE IMPACT ANALYSIS. GARGANI ALSO NOTED, SUBTLETY,
THAT COSTS AND EFFICIENCY ARE NOT ALWAYS THE DECIDING FACTORS
BEHIND REGULATIONS, PARTICULARLY IN CASES OF LEGISLATION
PASSED BY PARLIAMENTS THAT IN EFFECT, CREATE REGULATIONS.
ACKNOWLEDGING THIS IS SOMETIMES THE CASE IN THE UNITED
STATES, GRAHAM ARGUED, HOWEVER, THIS IS NOT A REASON TO
IGNORE REGULATORY IMPACT ANALYSES.


6. DESPITE THE DIFFERENCES IN OPINIONS AMONG THE ROUNDTABLE
PARTICIPANTS, ALL WERE EAGER TO READ THE OFFICIAL U.S.
COMMENTS ON THE COMMISSION'S REGULATORY REFORM ACTION PLAN.
THEY EXPRESSED APPRECIATION OF ACTIVE U.S. ENGAGEMENT IN THIS
ISSUE.

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PAGE 01 ROME 05568 02 OF 02 151704Z
ACTION EUR-00

INFO LOG-00 NP-00 AGRE-00 AID-00 CEA-01 CIAE-00 COME-00
CTME-00 DODE-00 ITCE-00 DOTE-00 SRPP-00 DS-00 EAP-00
EB-00 EXME-00 E-00 FAAE-00 UTED-00 VC-00 FRB-00
H-01 TEDE-00 INR-00 ITC-01 L-00 VCE-00 AC-01
NSAE-00 NSCE-00 OES-00 OMB-01 DHS-00 OPIC-01 PA-00
PM-00 PRS-00 ACE-00 P-00 SCT-00 SP-00 SSO-00
SS-00 STR-00 TEST-00 TRSE-00 T-00 USIE-00 FMP-00
EPAE-00 PMB-00 DSCC-00 PRM-00 DRL-02 G-00 NFAT-00
SAS-00 /008W
-------------- 09387A 151725Z /38
R 151548Z NOV 02
FM AMEMBASSY ROME
TO SECSTATE WASHDC 6934
INFO EU MEMBER STATES COLLECTIVE
AMCONSUL FLORENCE
AMCONSUL MILAN
AMCONSUL NAPLES
USEU BRUSSELS 2957

UNCLAS SECTION 02 OF 02 ROME 005568

SIPDIS

E.O. 12958: N/A
TAGS: EFIN ECON PREL ETRD ECON PREL ETRD IT EUN ITEFIN EUN
SUBJECT: BETTER REGULATION: OMB ADMINISTRATOR GRAHAM
PROMPTS LIVELY DEBATE

UNCLASSIFIED

PAGE 02 ROME 05568 02 OF 02 151704Z

7. IN CONTRAST TO THE LIVELY DEBATE OF THE ROUNDTABLE, THE
SESSION HOSTED BY CONFINDUSTRIA DEMONSTRATED ITALIAN
BUSINESSES' MINIMAL ENGAGEMENT IN THE ISSUE OF REGULATORY
REFORM. WITH THE EXCEPTION OF THE REPRESENTATIVE FROM THE
ITALIAN CHEMICAL MANUFACTURERS ASSOCIATION, THE PARTICIPANTS
LISTENED TO GRAHAM WITH POLITE ATTENTION. IN CONTRAST, THE
CHEMICAL MANUFACTURING REPRESENTATIVE SPOKE PASSIONATELY AND
INTELLIGENTLY ABOUT THE RISK OF DISENGAGEMENT, USING THE
COMMISSION'S WHITE PAPER ON CHEMICAL PRODUCTS AS AN EXAMPLE.
GRAHAM ALSO NOTED THE FLAWS IN THIS WHITE PAPER, AND
QUESTIONED HOW THE COMMISSION COULD IMPOSE THE SAME TOXICITY
TESTS FOR CHEMICALS THAT COULD PRESENT WIDESPREAD EXPOSURE
RISK AND THOSE WITH MINIMAL EXPOSURE RISKS. THE CHEMICAL
MANUFACTURERS' REPRESENTATIVE UNDERSCORED THE DESIRABILITY OF
HAVING INPUT FROM THIRD PARTIES, INCLUDING THE UNITED STATES,
ON REGULATORY REFORM ISSUES. IN RESPONSE TO GRAHAM'S INQUIRY
ABOUT HOW ITALIAN BUSINESSES LOBBY ON ISSUES IN BRUSSELS,
PANELISTS ACKNOWLEDGE THE DIFFICULTY IN BEING EFFECTIVE AND
IN BEING "LISTENED TO", THEY REMARKED.


8. COMMENT: POST BELIEVES ADMINISTRATOR GRAHAM'S VISIT COULD
HELP GENERATE A MORE IN-DEPTH EXCHANGE WITH GOI OFFICIALS,
ESPECIALLY THOSE WHO HAVE HANDS-ON INVOLVEMENT WITH
REGULATORY REFORM, ON THE COMMISSION'S PLANS. WE APPRECIATE
WASHINGTON AND USEU'S SUPPORT FOR THIS VISIT.
SKODON

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2002ROME05568 - Classification: UNCLASSIFIED