Former Co-Chair Talks RCC

The former co-chairmen of the Regulatory Cooperation Council offers a concise Bloomberg editorial extolling the virtues of regulatory alignment:

Over the last decade, businesses have been emphasising the need to increase international regulatory cooperation, thus harmonising requirements and eliminating "nontariff trade barriers". At its best, such cooperation opens markets and promotes exports. As a result, it contributes to economic growth and job creation, and it can save consumers a lot of money.

TALK TRADE

It is for this reason that a brief passage in US President Barack Obama's State of the Union address last month got so much attention from business. Obama announced new talks on "a comprehensive Trans-Atlantic Trade and Investment Partnership with the European Union". He also said that to "boost American exports, support American jobs and level the playing field in the growing markets of Asia, we intend to complete negotiations on a Trans-Pacific Partnership".

The two announcements have a number of smaller precedents, which are quietly delivering real results. Last year, US's Occupational Safety and Health Administration harmonised its hazard communication standard for workplace safety with the requirements of many nations around the world - a pro-trade reform that is expected to save American businesses more than $475 million annually. The US and the EU have also entered into an agreement under which organic products may be sold as "organic" in both jurisdictions, so long as they have been so certified by either one of them.

More ambitiously, the US and Canada have created a joint Regulatory Cooperation Council, which is carrying out a public plan to ramp up regulatory cooperation, and thus to allow companies to sell goods across the North American border without facing independent requirements. (Disclosure: While serving in the Obama administration, I was cochairman of the council from February 2011 to August 2012.)

The plan contains almost 30 initiatives, designed to harmonise regulatory approaches in the near future. Among these initiatives are common approaches to food safety (including streamlined certification requirements for meat and poultry), increased alignment of motor-vehicle safety standards, coordinated emissions regulations for light-duty vehicles, and development of joint approaches to regulation of nanomaterials. With respect to fuel economy, the US and Canada have already converged on a shared approach, saving money for producers and consumers on both sides. 

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Alignment should not mean convergence on the weakest standards for protecting safety, health and the environment. One of the great promises of regulatory cooperation is that it can promote information-sharing and combat a destructive international race to the bottom, in the process protecting people against genuine risks.
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For too long, such divergences have been the product of a simple failure of consultation and coordination. For businesses and consumers, efforts to harmonise regulatory requirements could rank among the most significant international initiatives of the coming years.