Axioms for regulatory co-operation

By Alex Dahm14 January 2009

SC&RA has become increasingly aware of the importance of regulatory co-operation among nations in today's global economy. Our association has been very involved with efforts to resolve differences between the United States and Europe concerning changes to EN 13000, the European standard for the design of mobile cranes. In addition, SC&RA is paying close attention to how national variations in safety and environmental regulations affect the U.S.-Mexico Cross-Border Trucking Demonstration Project.

Other industries have similar concerns so Businesseurope and the U.S. Chamber of Commerce have been jointly considering regulatory co-operation as part of an ongoing commitment to the Transatlantic Economic Council (TEC). Since the 2007 US-EU summit put regulatory co-operation at the forefront of the transatlantic agenda by creating the TEC, a number of axioms regarding regulatory co-operation have become evident, according to the two business organizations:

  • Regulatory co-operation is neither about more regulation nor less regulation. It simply seeks the smartest regulation that causes the least disruption to trade and the marketplace, while achieving the desired results.
  • Regulatory co-operation is about competitiveness. An optimal regulatory environment allows the market to be more competitive and innovative.

The world has seen a proliferation in the number of regulators and regulations. To ensure their continued leadership in the world economy, the US and EU should work together and be open to working with other nations to create a global regulatory structure that facilitates trade and investment, while inspiring confidence for consumers, investors, and workers and protecting the environment.

Regulatory co-operation is not trade negotiation. The political trade-offs that plague trade negotiations should not exist in regulatory cooperation.

Being the first to regulate is not the same as having the best regulation. Neither the US nor the EU should race ahead of the other to leave their regulatory mark. Regulations should be created in response to market failures. Co-ordination, not competition, matters when market failures arise.

Regulatory co-operation is an exercise in trust. The US and EU have common values and similar beliefs so the desirable regulatory outcomes on either side of the Atlantic are also similar.

Harmonising existing regulations is harder to achieve than preventing market-distorting divergence created by new regulations. Regulators and companies are often too vested in existing regulations. By the time existing regulatory divergences have been eliminated, regulators may have drafted hundreds of new regulations.

We must agree on objectives if we aim for equivalence. Identical regulation is not always necessary for a competitive transatlantic market, as long as the US and EU recognize each other's different but equally effective systems as valid. When fundamental objectives of a regulation are aligned from the outset, companies should only have to comply with one set of rules.

It is about the fundamentals. Horizontal co-operation is the crucial process through which regulations are created that holds the key to limiting regulatory divergence.

Transparency is very important. Many problems in the transatlantic market arise from a lack of understanding and visibility of the regulatory processes on either side of the ocean. Greater transparency and communication between regulators themselves and between regulators and stakeholders would prevent unintended consequences in the transatlantic relationship.

Risk is a part of life. Eliminating all risk through regulation is rarely, if ever, desirable or achievable.

Regulation should be based on sound science and quality data.

Legislators matter. Success hinges on the U.S. Congress and the European Parliament being engaged and supportive at the highest levels. Legislators provide necessary resources and oversight.

Just do it. There are always reasons not to change regulatory approaches. Without the political will, change is impossible.

As an international association with members in 43 nations, SC&RA will continue to work with other leading organizations representing our industry around the world to bring about fair and effective regulations everywhere. These endeavours help ensure that our members' interests are clearly stated and well represented in the process.

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