International Trade and Good Regulatory Practices

Good Regulatory Practices encompassing the use of regulatory impact assessments, stakeholder engagement and ex post evaluation are a critical tool in the hands of governments to ensure that regulation achieves its objectives. Over the past several years, attention has grown for the trade costs of regulatory divergence. Diverging regulation may increase the costs to trade goods and services across borders. While regulatory divergence is often the result of diverging national public policy objectives, it may be the undesired result of rule-making ignoring the international regulatory environment and interconnectedness of our societies and economies. Good Regulatory Practices provide governments with tools, processes and strategic approaches that can help them identify and evaluate the trade impacts of their regulatory action. The paper reviews the theoretical and practical contribution of GRP to mainstreaming international trade considerations in regulatory decision-making and to addressing regulatory divergence. It does so by reviewing the relevant academic literature, GRP guidelines of a number of OECD members and examples of how GRP and in particular regulatory impact assessments are used to consider the trade impacts of regulation. Building on the available evidence, the paper discusses how decision-makers may enhance the use of GRP to address international trade considerations in regulatory policy-making.