The paradox of absence of regulations

The automobile and aviation industries are on a diet. They are trying to make vehicles and aircraft lighter, safer and more efficient. And carbon fiber is at the center. Carbon fiber is one-fourth the weight of steel yet 10 times stronger. It is widely used in prosthetics, instruments, notebook cases, aerospace, defense and architecture.

While carbon fiber is the new material of the future, there are few systematic grounds in Korea. A manufacturer based in Wanju County, North Jeolla, wanted to produce a lighter and safer model of a CNG container using carbon fiber, but the company realized that the project was a challenge. The regulations on materials for CNG containers only apply to steel, not carbon fiber. Ironically, the business was not approved because there were no regulations.

The paradox of the absence of regulations occurs in the frame of positive regulations. As the regulations define “what are allowed,” it is not easy to commercialize new ideas. So developed countries such as the United States and United Kingdom have negative regulations, allowing everything except what is explicitly banned. China also changed its framework last year. In other words, Korea is already falling behind from the beginning in the race to preoccupy new markets.

Fortunately, a meaningful presentation was made at the meeting on trade and investment promotion presided by President Park Geun-hye on Feb. 17. The Ministry of Trade, Industry and Energy said all regulations that involve challenges in investing in new industries would be improved through a negative regulation screening. It would also establish a fast track for market entry to help new models be marketed fast.

The revision of the basic law on administrative regulations was proposed in 2014 and includes switching positive regulations to negative ones and exemption of all inspections on civil servants who remove regulations. However, the bill has been delayed extensively. Since the ruling and opposition parties have little disagreement, it should be passed in the special session in February.

by Lee Dong-geun, Executive Vice Chairman of the Korea Chamber of Commerce & Industry