Regulatory Coherence and the Multilateral Trade System: Lessons from RTAs and Options to Promote Convergence

On 28 March, ICTSD and the Inter-American Development Bank (IDB) organised a dialogue on “Regulatory Coherence and the Multilateral Trade System: Lessons from RTAs and Options to Promote Convergence” as part of the RTA Exchange dialogue series aimed at systematically exploring possibilities for convergence and coherence-building between regional trade agreements (RTAs) and the multilateral trade system.

With the importance of tariffs declining as a result of autonomous liberalisation or RTA commitments, the policies that inhibit international trade flows are increasingly of a regulatory nature. Differences in objectives, implementation and enforcement in regulatory regimes may imply additional costs for foreign firms, particularly those from developing countries, desiring to enter global markets as they will need to satisfy regulatory norms in each country they operate in.

While the WTO includes some disciplines regarding regulatory policies, most notably in the area of mandatory product standards (SPS/TBT), most of the rules and mechanisms that determine how to collaborate on regulatory policies takes place outside the ambit of trade frameworks. In recent years however, innovative provisions and mechanisms to cooperate are increasingly integrated into modern deep integration agreements. While such cooperation might foster common standards or conformity assessment procedures that reduce transaction costs, some fear that the development of new standards in the context of such cooperation schemes might discriminate against third countries and non-parties and set the bar too high for poorer countries.

Taking into consideration this context, the objective of this dialogue is to analyse the role of trade agreements (particularly modern RTAs) in facilitating the various approaches to international regulatory cooperation and examine the tensions arising between RTAs and the multilateral trade system, and potentially amongst RTAs themselves.

The dialogue opened by mapping the different approaches through which regulatory cooperation is happening at the international level, assessing the role of trade agreements in these various approaches, and identifying some of the resultant cross-border externalities faced by key stakeholders, particularly in developing countries. The afternoon sessions then reviewed the development of innovative provisions and mechanisms for regulatory cooperation that are emerging from recent modern deep integration initiatives and considered what can be learned in order to promote new approaches at the multilateral level. Through this analysis, we aim to develop concrete policy recommendations of best practices which could be replicated and put forth specific ideas to be harvested for the multilateral trade system.