International Regulatory Co-operation: The Menu of Approaches

The world has never been more interconnected, but different country-specific norms and rules apply in different parts of the world. Sometimes, it is for good reasons—specific rules and norms cater for specific preferences or have historical roots and would bring little benefits to change. But sometimes divergences threaten coordinated policy action, hamper interoperability, and raise unnecessary costs for businesses and citizens. The Organisation for Economic Co-operation and Development (OECD) (2013) notes the increased internationalisation of regulation through a wide variety of international regulatory cooperation (IRC) mechanisms. Governments use and combine a broad range of formal and informal, broad and specific mechanisms to achieve their co-operation objectives. As a result, countries are embedded in webs of regulatory cooperation that go beyond the traditional treaty-based model of international relations. This note discusses the different forms of IRC, and current knowledge about their respective benefits and challenges based on the OECD (2013).

The OECD (2013) identifies 11 different categories of mechanisms in support of IRC. These categories can be organised from the most formal and comprehensive to the least formal. The evidence suggests that countries combine several instruments in a given area to achieve their IRC objectives, and that these mechanisms may overlap in their features or form continuums. However, it is useful to define them as clearly as possible to understand the range of possibilities for countries wishing to implement IRC and to start gathering evidence on their respective benefits and costs to inform decision-making.

There is a paucity of evidence on which IRC approaches work best in different country and sector contexts. Decision-making in this area remains largely driven by political considerations and path dependency. In particular, there is no clear understanding of the benefits, costs, and success factors of diverse IRC options. Having said this, the anecdotal evidence shows that the benefits from IRC can be high. They include increased trade and investment flows and additional gross domestic product (GDP) points; administrative efficiency gains and cost savings for government, business, and citizens; and important societal benefits such as improved safety and strengthened environmental sustainability. To summarise knowledge to date, the OECD (2013) proposes a classification of the benefits, costs, and challenges of IRC, and a list of factors of success. Based on this classification, it identifies a number of advantages and disadvantages of various IRC mechanisms. More work is under way at the OECD to analyse more systematically and with a greater level of details when and under which conditions mechanisms such as various provisions in trade agreements, mutual recognition agreements (MRAs), international organisations, and good regulatory practices may help achieve regulatory cooperation objectives. Building on knowledge to date and the evidence gathered around the typology of 11 mechanisms, the OECD (2013) highlights a number of critical elements or considerations for government to ensure the success of IRC.

Tag: Commercial Frictions & Uncertainties, Compliance and Transparency, Monitoring, Regional Trade Agreements, Regulation, Regulatory Systems Coherence, Standards