4. Rethinking rulemaking through international regulatory co-operation

The COVID-19 pandemic has stressed the need to embed IRC in regulatory frameworks ex ante, to be relied on during transboundary emergencies. IRC is essential for policy makers and regulators to rapidly address together common threats and, in the case of COVID-19, to eradicate the virus across countries. IRC can ensure mutual learning on issues such as vaccine development, support resilience of supply chains and enable the availability of essential goods including key medical products, and facilitate the interoperability of services and cross-border activities such as telecommunications or transportation. Yet the crisis reveals a disconnect between the growing cross-border nature of policy challenges and the traditional national scope of laws and regulations – the key tools of policy making along with taxation and spending. Acting under pressure and facing time constraints, the immediate country reactions have often been unilateral, seeking national and sub-national solutions and even isolationism to protect populations from a threat perceived as largely coming from outside (OECD, 2020[1]).

IRC is anchored in the 2012 OECD Recommendation on Regulatory Policy and Governance, illustrating its importance for regulatory quality and effectiveness (OECD, 2012[12]). OECD work has identified several ways that countries can implement this principle, including the systematic consideration of international instruments in the development of regulation, opening consultation processes to foreign parties, embedding consistency with international standards in ex post evaluation, and establishing a co-ordination mechanism in government to centralise relevant information on IRC. These practices were already monitored in the OECD Regulatory Policy Outlook 2018. This showed that, while increasingly recognised by countries as relevant for regulatory quality, only a few have a cross-governmental vision of IRC and its governance remains highly fragmented. This edition of the Regulatory Policy Outlook examines how these practices have advanced and captures new IRC developments across OECD countries. It also highlights a number of IRC efforts that were instrumental for countries to address policy challenges linked to the COVID-19 pandemic (OECD, 2020[1]).

The OECD Regulatory Policy Committee has recently developed a set of Best Practice Principles on International Regulatory Co-operation to provide guidance for regulators on how to better implement Principle 12 of the Recommendation in support of regulatory quality. The Best Practice Principles are organised around three pillars: i) Establishing an IRC strategy and its governance; ii) Embedding greater IRC considerations in domestic rulemaking; and iii) Engaging in international co-operation at the bilateral, regional and multilateral levels (OECD, 2021[4]). This chapter draws upon new data from iREG to map regulatory requirements and practices against these pillars. Building on the work of the IO Partnership, it also identifies recent efforts to improve the quality and effectiveness of international rule-making activities.

International regulatory co-operation (IRC) is multifaceted, implemented via a variety of processes and actors, both nationally and internationally. A whole-of-government strategy to ensure international considerations are systematically embedded within domestic rulemaking procedures by all relevant actors responsible for developing, overseeing or implementing domestic regulations can thus strongly benefit IRC efforts (OECD, 2021[4]).

A well-functioning IRC policy can be defined as a systematic, national-level, whole-of-government policy/strategy promoting international regulatory co-operation, whether reflected in a broad strategic document or other instrument (OECD, 2021[4]). Only six respondents have a comprehensive whole-of-government policy and related guidance, despite the recognised importance of such a policy for effective IRC practices. The examples of different IRC policies confirm that these may have a varying scope and legal underpinnings, ranging from statutory obligations to softer approaches (Box 4.1).

In addition, while few countries have a systematic whole of government IRC policy, a significant share of respondents have a “partial” IRC policy, only applying to certain sectors, limited geographically to neighbours or a specific region, or even a specific type of co-operation. The European Union Member countries, in particular, rarely have a whole-of-government policy related to IRC, even though their regional regulatory co-operation is strongly reflected in their national regulatory processes due to their membership of the bloc. The European Union remains the most ambitious regional regulatory co-operation framework involving supra-national regulatory powers. Member countries of the European Union therefore intrinsically have an active regulatory co-operation mechanism built into their regulatory processes by virtue of their membership obligations and of the Treaty on the Functioning of the European Union (OECD, 2018[13]). These policies can be considered as “partial” IRC policies, given their geographical limitation to regional partners (Figure 4.1). The European Commission itself, however, does reference IRC within its “Better Regulation Agenda”. This ensures that IRC is considered when new initiatives and proposals are prepared and when existing legislation is managed and evaluated at the European level.

A few countries have “partial” IRC policies, in that they are only limited to one form of international instrument – typically binding international law or international standards. However, it is important to note that the “partial” scope of such an IRC policy can still be a useful basis to integrate national and international frameworks. For example, in Germany, Article 25 of the German Constitution represents a “partial” legal basis on IRC to the extent that it incorporates certain international instruments, i.e. “the general rules of public international law”, as an integral part of federal law. In addition, the German Constitutional Court has developed a principle of Völkerrechtsfreundlichkeit (friendliness to international law) according to which the German Basic Law “presumes the integration of the state it creates into the international legal order of the community of States”.1 As a result, German Law is to be interpreted as consistently as possible with international law. This illustrates that jurisprudence and legal principles developed by domestic courts can promote IRC in domestic legislation and regulation.

Few countries have developed a new IRC policy in recent years. A notable example of an OECD country undertaking an ambitious process to design and develop such a policy is the United Kingdom, which, as a follow-up to its OECD Review of International Regulatory Co-operation, presented to the UK Parliament a call for evidence to develop a whole-of-government strategy on IRC (BEIS, 2020[14]).

Overall, the institutional arrangement for oversight of IRC remains fragmented across government authorities (Figure 4.2). Only four countries report their IRC agenda to be attributed to a single authority, generally the body with broader regulatory oversight functions (Figure 4.2 and Box 4.2). This limited involvement of regulatory oversight bodies in the oversight of IRC suggests a disconnect between IRC and better regulation, highlighting that international considerations are still only rarely perceived as an integral part of the domestic rulemaking process.

The most common governance structure for IRC remains the sharing of responsibility among relevant central government bodies. This can be easily understood, as the successful implementation of IRC is indeed a whole-of-government endeavour involving necessarily different actors (OECD, 2021[4]). Analysing country practices through the lens of the specific mechanisms of IRC provides some clarity in regard to the allocation of IRC-related responsibilities within governments. For example, specific authorities have increasingly are often made responsible for considering international instruments. While this is still most often the role of Ministries in charge of developing regulation, a notable increase of countries do give this role to regulatory oversight bodies, suggesting an increasing consideration of IRC in the better regulation agenda (Figure 4.3).

However, over a third of respondents continue to lack specific governance structures for overseeing IRC activities (Figure 4.2), making difficult the co-ordination among authorities with IRC functions and knowledge.

International practices, in the form of evidence and expertise, are an essential source to inform domestic policy development and implementation (OECD, 2021[4]). Traditional regulatory management tools, such as RIA and stakeholder engagement, provide a pathway for countries to ensure consideration of international experiences. Results from the iREG survey and country-level analysis confirm a general upward trend in integrating international considerations into domestic rulemaking (OECD, 2018[2]) (OECD, 2020[3]).

Policy makers around the world gather and use evidence in developing their regulations, as do international organisations in developing international instruments. Such evidence can clearly also benefit regulators facing similar challenges in other jurisdictions. Taking stock of international evidence may prove valuable in building the body of evidence for a particular regulation, informing a greater range of options for policy action, and helping to develop an evidence-based narrative around the chosen measure (OECD, 2021[4]).

Formal requirements to incorporate international instruments are a common way to ensure international experiences and expertise are considered in domestic rulemaking. A majority of countries have such requirements, particularly for binding international instruments or international standards (Figure 4.4). Several countries also have specific requirements to account for “other” types of instruments, typically for EU Directives or non-binding international instruments. For example, Australia prompts regulators to align legislation with relevant international instruments, while New Zealand encourages the consideration of non-binding resolutions, declarations and guidance in addition to binding instruments such as treaties and conventions. As illustrated in Figure 4.4, the consideration of all types of international instruments has accelerated dramatically in recent years.

As mentioned above, oversight responsibilities are increasingly being clarified so that authorities – whether a single authority, or several under shared responsibility – oversee the consideration of international instruments. And finally, a slight upward trend since 2017 shows that different forms of guidance or supporting information sources are increasingly made available to incentivise the use of international instruments. This enhanced support suggests a tendency towards systematising the use of international instruments in domestic regulatory activities.

Transparency of domestic regulatory processes can strengthen the predictability of the domestic regulatory framework for interested foreign parties. With active engagement, it can also open the possibility for valuable inputs from foreign stakeholders. Engaging these stakeholders in the regulatory process may offer valuable evidence on unintended transboundary impacts of regulatory drafts and help raise awareness of regulatory approaches in other jurisdictions (Basedow and Kauffmann, 2016[15]). OECD studies have shown that regulators rarely pursue specific efforts to engage foreign stakeholders when developing laws and regulations, despite general openness of consultation procedures to any stakeholders – including those from foreign jurisdictions (OECD, 2018[16]). Compulsory notification of draft regulations to international fora provides an important means by which to alert and draw inputs from foreign stakeholders (OECD, 2021[4]). In practice, such notifications of draft measures are most frequently used to assess trade impacts of regulations. Notifications of draft measures to trading partners is indeed required by certain trade agreements and WTO commitments under the SPS and TBT Agreements. However, some countries report also notifying to other international fora. Germany, for example, has notification obligations to the Central Commission for the Navigation of the Rhine (CCNR), a transboundary water management body which also includes France, the Netherlands, Switzerland, and Belgium. In the same vein, the Netherlands informs the International Labour Organization (ILO), Council of Europe, and Benelux Economic Union – which also comprises Belgium and Luxembourg – of new regulations where relevant.

Despite the invaluable information that can be gathered through notification of draft measures to international fora or foreign partners, a disconnect has traditionally persisted between these processes and the regulatory policy agenda, therefore failing to leverage useful information sources gathered in other parts of government (OECD, 2018[16]). Consistent with previous trends, many countries still do not conduct specific efforts to engage with foreign stakeholders in their rulemaking processes (22 respondents indicate never doing so for primary laws, and 21 for subordinate regulations) (Figure 4.6).

Nevertheless, the countries that do reach out to foreign stakeholders confirm multiple means of doing so (Box 4.6). Targeted invitations to comment remains the most frequently used means to reach foreign stakeholders (Figure 4.6).

In addition to engaging with foreign stakeholders in regulatory process, countries may also promote IRC by integrating an analysis of possible international impacts systematically into their RIA processes. RIAs offer an effective avenue to promote IRC by enabling countries to consider the impact of their activities beyond their borders. As observed in both 2014 and 2017, countries report a range of IRC-related impacts in their RIA processes, in particular by charting specific effects on trade, market openness, and impacts on foreign jurisdictions (Figure 4.7). Consideration of the trade and market openness impacts of regulatory drafts remain the most frequent, with almost 75% of respondents examining trade implications and around 80% accounting for market openness effects. This illustrates an increasing trend since 2017. Consideration of domestic effects of regulation on foreign jurisdictions is less systematic, with only a handful of countries doing so for all subordinate regulations (Figure 4.7).

Given the specific methodology involved in considering international impacts, embedding such considerations can require more time and human resources to reach out to different colleagues across government with the right expertise. Some countries have therefore chosen to use an initial RIA “calculator” phase to determine the types of international impacts to assess. For example, to apply a more thorough calculation of trade impacts only when relevant, Mexico has included a “trade filter” in its RIA calculator. This integrates international trade impacts into the RIA process from the outset of the process. The questions aim to guide regulators in determining whether their draft may affect international trade. If the initial filter points towards a prima facie impact on trade, regulators then undergo a RIA process with more detailed questions related to the impacts of their draft on foreign trade (OECD, 2018[2]).

Of the 19 countries that consider the impacts of their regulations on foreign jurisdictions, neighbouring countries and major trading parties increasingly continue to be the most common jurisdictions taken into account. Countries steadily report using a mix of approaches to assessing impacts, including communication with the other jurisdictions’ regulators, use of perception surveys to business and other stakeholders and modelling exercises (Figure 4.8).

The full impact of a regulatory measure is only known after its implementation. Ex post evaluation thus provides a critical opportunity to identify the impacts of potential divergences with international frameworks as well as trade and other IRC impacts of laws and regulations (Kauffmann and Basedow, 2016[17]). It also allows regulators to map the state of international knowledge on the regulated area, take stock of new approaches adopted by other jurisdictions that may have proved successful, and benchmark against regulations implemented in other jurisdictions which pursue similar objectives using alternative approaches (OECD, 2020[18]). Overall, this can help to build the evidence on IRC throughout the rule-making cycle and apply an IRC lens to the stock of regulation.

Traditionally, the use of ex post evaluation related to IRC is rarely observed. While little variation can be observed for IRC ex post cost assessments in secondary legislation, there has been a slight upward trend in the number of countries that account for IRC-related costs in their ex post evaluations of primary laws (Figure 4.9). Some OECD countries provide guidance to ensure that IRC is part of their regulatory management tools, including ex post evaluation (Box 4.8). Evidence from standalone chapters on good regulatory practices and IRC in trade agreements indicates that countries increasingly regard ex post reviews as a mechanism of regulatory co-operation among parties. This includes promoting the exchange of methodologies and outcomes of these evaluations (Box 4.9).

Domestic policy makers have access to a wealth of bilateral, regional and multilateral platforms to co-operate and inform their approaches to national policy challenges (OECD, 2013[11]) (OECD, 2014[19]). Bilateral, regional and multilateral forms of co-operation are an important complement to purely unilateral domestic actions. Such international co-operation lays the foundation for institutionalised and continuous collaboration and greater coherence in regulatory matters. The modalities of international co-operation will depend on the legal and administrative system and geographic location of the country, as well as on the sector or policy area under consideration (OECD, 2021[4]).

These platforms increasingly take different forms, with multiple actors populating the global landscape today ranging from inter-governmental organisations (IGOs), trans-governmental networks (TGNs) and private standard-setters. These organisations develop a fast-growing body of norms and standards (OECD, 2019[20]), which support national regulatory efforts in addressing the increasingly internationalised policy challenges of today. During the COVID-19 crisis, a number of bilateral and regional collaboration efforts emerged to address urgent needs with likeminded and neighbouring countries. Given the global scope of the pandemic, the role of multilateral organisations was particularly apparent. This highlights their relevance as hubs for information and developing international instruments, both crucial support elements for domestic policy makers (OECD, 2020[1]) (OECD, 2020[21]). Beyond the pandemic, other recent initiatives for international co-operation also continue emerging to address new and evolving policy priorities, such as for example to foster global co-operation in response to innovation (Box 4.12).

Despite IOs’ importance in supporting domestic rulemaking, the previous Regulatory Policy Outlook highlighted a pressing need for IOs to increase the transparency, effectiveness and impact of their instruments – notably through the adoption of good regulatory practices (GRPs), such as those promoted in the 2012 Recommendation for domestic rulemaking (OECD, 2018[13]). Although more efforts are needed, recent initiatives by individual IOs, in addition to the Compendium of International Organisations’ Practices: Working Towards More Effective International Rulemaking (IO Compendium) developed collaboratively by the Partnership of IOs for Effective International Rulemaking, show measures and initiatives used by IOs to strengthen their rulemaking processes with a view to making their international instruments more effective.

This section presents the role of international instruments in feeding into domestic rulemaking, both through results from the iREG survey and of recent OECD analytical work. It also highlights the specific role that IOs had in this regard during the COVID-19 crisis. Finally, it outlines the specific efforts made by IOs to improve the quality of international rulemaking. The primary information sources for this section include the results of the 2018 Survey of International Organisations, the recent studies of the World Organisation for Animal Health (OIE) (OECD, 2020[22]), the International Bureau of Weights and Measures (BIPM) (OECD, 2020[23]) and the World Trade Organisation (WTO) (OECD/WTO, 2019[7]), and preliminary results from the IO Compendium.

International expertise and evidence is vital to support domestic policy makers in developing effective, evidence-based policies in a highly interconnected world. IOs serve, first and foremost, as institutional fora for actors to engage in IRC. They possess a large amount of information and experience from which governments and agencies can draw (OECD, 2014[19]). In other words, they provide a framework to “orchestrate” the sharing of evidence among their constituencies in their respective policy areas in various forms (raw, compiled in databases, analysed in thematic or country reports).

This regular and permanent exchange of information function allows IO Members to share views on emerging policy challenges they are facing and envisage various policy options available for addressing them. This is the case, for example, for the WTO Technical Barriers to Trade and Sanitary and Phytosanitary Committees, which have such an “incubator” role, via thematic sessions or workshops in which Members exchange for instance on sector-specific ongoing, new or emerging regulatory issues (e.g. energy efficiency, or nutrition labelling) (OECD/WTO, 2019[7]).

This function of IOs as “data hubs” is instrumental in the COVID-19 crisis. Practically all IOs that host normative instruments, including the OECD, established a COVID-19 dedicated website to serve as a platform for information exchange in their respective mandates (OECD, 2020[1]). Beyond these public websites, they also provide a platform for members to exchange on their respective measures and find common positions (Box 4.10).

Beyond information exchange, IOs allow for the aligning of approaches across countries facing similar policy issues, such as through the development of international terminologies or instruments. Indeed, when national delegates or regulators reach agreements on IRC, or when they adopt rules through institutionalised procedures, the results can be embodied in various forms of normative instruments (OECD, 2014[19]). These international instruments, which can be used in national legislation, can increase coherence in regulatory approaches across countries.

In the context of the COVID-19 pandemic, IOs were under great pressure to deliver for their constituencies in coping with the crisis (OECD, 2020[1]). Making use of their normative functions and respective areas of expertise, a number of IOs developed guidance adapting their traditional tools to the context of the pandemic – either advising their constituencies on how to deal with its impacts in their area or the related global social and economic crisis (Box 4.11).

The OECD finds that international instruments have become a significant channel of domestic regulators’ implementation of IRC (OECD, 2018[13]). Nevertheless, for regulators to more systematically consider international instruments when developing and applying domestic regulatory frameworks, these instruments need to be of high quality, widely and easily accessible, and fit to achieve the public interest in their own jurisdiction.

The OECD identifies five core priorities to make international instruments more effective: clarifying the landscape of international instruments to describe existing terminologies and related legal effects; strengthening the implementation of international instruments at the domestic level; developing a culture of evaluation of international instruments; ensuring efficient stakeholder engagement and maximising opportunities for co-ordination across IOs (OECD, 2016[25]). Under the framework of the OECD Regulatory Policy Committee, the Partnership for Effective International Rulemaking (“IO Partnership”) has worked on these five challenges, gathering lessons from domestic regulatory policy for international rulemaking. The Compendium of International Organisations’ Practices: Working Towards More Effective International Instruments (“IO Compendium”) showcases an increasing number of trends and individual examples of IO practices that seek to ensure the quality of international instruments (Box 4.13), and lays down key principles to improve the effectiveness of international rulemaking. As a practical tool for IO Secretariats in their rulemaking activities, the IO Compendium also provides clarity for domestic regulators to navigate the landscape of international instruments and to identify the most relevant instruments for them. It also represents an extensive information source on the tools of regulatory quality used at the international level (OECD, 2021[26]).


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← 1. Cf. Mutual Legal Assistance Agreement between the Federal Republic of Germany and the Republic of Austria on Legal and Administrative Assistance in Customs, Excise and Monopoly Matters, Order of the German Constitutional Court from 22 March 1983 (BVerfGE 63, 343-380 (370).

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