International Regulatory Co-operation and Trade

International Regulatory Co-operation and Trade

Understanding the Trade Costs of Regulatory Divergence and the Remedies You do not have access to this content

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Author(s):
OECD
24 May 2017
Pages:
70
ISBN:
9789264275942 (PDF) ;9789264275935(print)
http://dx.doi.org/10.1787/9789264275942-en

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Regulatory differences across jurisdictions can be costly for traders. While these costs may reflect variations in domestic conditions and preferences, they may also be the result of rule-making processes working in isolation and of a lack of consideration for the international environment. Thus, some of the trade costs of regulatory divergence may be avoided without compromising the quality of regulatory protection. Building on lessons learnt from OECD analytical work and the experiences of OECD countries in regulatory policy and trade, this report proposes a definition of trade costs of regulatory divergence and analyses various approaches to addressing them, including unilateral, bilateral and multilateral approaches. It focuses on the contribution of good regulatory practices, the adoption of international standards, and the use of cross-border recognition frameworks and trade agreements. Based on this, the report provides indications for policy makers on how to reduce trade costs through international regulatory co-operation.
 

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  • Foreword

    Through decades of multilateral, regional and unilateral efforts, traditional trade barriers such as tariffs have declined significantly. Regulatory heterogeneity is increasingly perceived as a non-negligible source of trade costs. Recent international trade negotiations therefore put an emphasis on promoting greater interoperability for businesses operating in countries with varying regulatory requirements.

  • Acronyms and abbreviations
  • Executive summary

    Regulatory differences across jurisdictions can be costly for traders. They may involve the costs of: i) gathering information on regulatory requirements in target markets, ii) adjusting the specification of goods and services to comply with different regulatory requirements; and iii) undertaking various conformity assessment procedures to demonstrate compliance. While these costs may reflect variations in domestic conditions and preferences, they may also be the result of rule-making processes working in isolation without consideration for the international environment. In this context, it is likely that some of the trade costs of regulatory divergence are avoidable without compromising the quality of regulatory protection.

  • Identifying and evaluating the trade costs of regulatory heterogeneity

    This chapter provides an analytical framework to understand the trade costs of regulatory heterogeneity. It reviews the existing evidence on these costs and discusses how this evidence may inform the development and revision of regulations.

  • The merits and challenges of various IRC approaches to address trade costs

    This chapter reviews the range of IRC mechanisms and their potential to address trade costs. It analyses the contribution of regulatory policy (good regulatory practices) to regulatory quality and coherence, the potential of international standards to support greater regulatory alignment, and the scope for bilateral and regional approaches, notably through mutual recognition and trade agreements, to streamline market procedures and facilitate market entry.

  • Conclusion: Considerations to reduce trade costs through IRC

    In conclusion, this chapter builds on the lessons learnt from the large range of OECD and other work underpinning this report to draw a list of considerations to reduce trade costs through IRC. It identifies the generic measures that countries can take that promote regulatory quality and trade and highlights the considerations that can drive the selection of specific IRC approaches.

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