International Regulatory Cooperation

Much regulatory law and practice focusses on protecting domestic consumers.  But ever-increasing globalisation, Brexit, climate change, and Covid-19 are amongst many reasons why it is now essential for regulators to actively cooperate with their overseas counterparts,  Internationally, this cooperation is being driven by the OECD.  Within the UK, it is being led by the Better Regulation Executive. 

The following documents contain further information.

The OECD's Policy Brief, published in 2020, is here

The OECD's Review of International Regulatory Co-operation of the United Kingdom, also published in 2020, is here.  Its principal conclusions were as follows:

The overwhelming pace of technological change and the unprecedented interconnectedness of economies present governments with uncertainty and complexity in terms of what and how to regulate. In such a context, international regulatory co-operation (IRC) has become a critical dimension of regulatory quality and effectiveness. This reality, as well as the withdrawal of the United Kingdom from the European Union (EU), have a significant effect on the United Kingdom’s rulemaking landscape. Developing a strong IRC strategy has become particularly critical to help the United Kingdom ensure that rulemaking remains adapted to the global context in which the country operates.

The United Kingdom has been a leader in regulatory policy among OECD countries for years. It has well-established regulatory disciplines, cross-government policies providing incentives for a range of regulators to pursue common objectives and various actors supporting and overseeing the conduct of regulatory policy. However, IRC is still implicitly rather than overtly embedded in the United Kingdom’s existing institutional and policy framework for regulatory policy. A multiplicity of actors are involved in the conduct of IRC, but none is clearly tasked with its oversight, and there is no common narrative or policy to catalyse these various actors’ energy. This results in an ad hoc approach to IRC, both in the unilateral regulatory process and the UK’s bilateral, regional and multilateral co-operative efforts.

There are various “entry points” for IRC in the United Kingdom’s regulatory process, offering regulators “unilateral” opportunities to embed international considerations in their rulemaking. In particular, the country’s former membership in the European Union entailed a strong anchoring in EU legislation, the embedding of international standards in UK British standards (in particular via European standards) and mechanisms to prevent undue trade impacts of UK regulations for other EU countries (e.g. through the notifications of draft regulations to the EU Commission and a common conformity assessment and accreditation system). In addition, the United Kingdom better regulation agenda also has several entry points for taking into account the international context more broadly. International instruments and overseas practices are sometimes considered in the context of identifying various alternatives to address a specific policy challenge. A new RIA template, with an international trade and investment-related question, is also under trial. Post-implementation reviews may be used to identify how a domestic measure’s impact compares to different approaches followed abroad.

The United Kingdom’s withdrawal from the EU places a new responsibility on the United Kingdom for repatriating a number of regulatory functions, establishing the cooperation needed to fill the potential losses of privileges and designing a trade policy to address the trade costs of regulatory divergences with both EU members and other trading partners. The EU remains the UK’s first partner in many regulatory areas, and thus close co-operation will likely continue between the EU and the UK. However, the withdrawal from the EU will likely influence the terms of this co-operation and lead regulators to seek or strengthen complementary co-operation initiatives beyond the EU.

The UK’s request for the OECD to conduct an IRC Review is testament to the country’s ambition of ensuring that its IRC processes follow international best practices. It is a unique opportunity for the UK to continue showing leadership on the regulatory policy agenda, in an emerging policy area where most countries are still struggling to establish the basis of the approach. To support the United Kingdom in this endeavour, the OECD provides recommendations and aspirational directions in three areas:

  • building a holistic IRC vision, a strategy and political leadership for IRC in the United Kingdom, with clearly defined roles and responsibilities for key players, to develop quality regulation in a globalised context.
  • better embedding IRC considerations in policy tools throughout the rulemaking cycle in order to guarantee that they are genuinely and systematically considered by UK departments and regulators;
  • increasing awareness and understanding about IRC across departments and regulators, including on the variety of existing IRC practices, and engage stakeholders to inform the development of IRC initiatives.

The BRE are currently consulting regulators and others on how to respond to the OECD's review.

Here are links to some more very useful OECD/IRC material:-

 

Martin Stanley

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