Think Piece

A Role for the World Trade Organization on Regulatory Coherence

September 2015
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The way the world trades has changed since the World Trade Organization (WTO) was established. Fewer goods and services originate from any one supplier or country. Components and intermediate services are increasingly sourced and assembled from specialist suppliers around the world. Regulation also plays a more significant role in this era of international trade. The adequacy of regulatory oversight has become more important as complex, unbundled global supply chains have become harder for businesses and customers to monitor. To date, the WTO has had a limited role in promoting regulatory coherence. Businesses and some governments are turning elsewhere for relief. Many multinational corporations rely on private standards, third-party certifications, and their own quality management systems to oversee their global supply chains. Since negotiating agreements that require approval of the full WTO membership is difficult, this paper focuses on the prospects of concluding commitments on regulatory coherence that involve only a subset of WTO Member countries. It summarises the key features of the types of agreements by which a subset of WTO Members may undertake additional commitments and trade liberalisation—critical mass agreements (CMAs) and plurilateral agreements (PAs). It assesses the potential utility of CMAs and PAs over preferential trade agreements (PTAs) for improving regulatory coherence. It also suggests the regulatory matters on which CMAs and PAs should focus, and the design elements these agreements should incorporate to be most successful.

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