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International Regulatory Co-operation

Addressing Global Challenges

image of International Regulatory Co-operation

The world is becoming increasingly global. This raises important challenges for regulatory processes which still largely emanate from domestic jurisdictions.   In order to eliminate unnecessary regulatory divergences and to address global challenges pertaining to systemic risks, the environment, and human health and safety, governments increasingly seek to better articulate regulations across borders and to ensure greater enforcement of rules and their application across jurisdictions.

This report gathers in a synthetic manner the knowledge and evidence available to date on the various mechanisms available to governments to promote regulatory co-operation, and their benefits and challenges. The review of evidence confirms the increased internationalisation of regulation, which takes place through a wide variety of mechanisms and multiple actors, and highlights a shift in the nature of IRC from complete 'harmonisation' of regulation to more flexible options - such as mutual recognition agreements. Despite growing regulatory co-operation, however, decision making on IRC is not informed by a clear understanding of benefits costs and success factors of the diverse IRC options.

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Executive summary

With the progressive emergence of an open, dynamic and globalised economy, the internationalisation of rules has become a critical issue. Governments increasingly seek to maximise the benefits of globalisation for national populations by eliminating unnecessary regulatory divergences and barriers, and ensuring greater co-ordination of regulatory objectives. At the same time, intensification of global challenges, such as those pertaining to systemic risks (financial markets), the environment (air or water pollution), and human health and safety, is leading to growing regulatory co-operation efforts as a key component of risk management strategies across borders. Regulatory co-operation is not a new topic (OECD, 1994). However, renewed attention has been paid to its importance since the economic crisis began in 2008. Perceived regulatory failures related to poor articulation of regulation across borders, limited enforcement of rules and regulatory capture have raised questions regarding the role of the state as a regulator and, specifically, how and where it should intervene to achieve key policy objectives in an increasingly globalised world????

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