Transcript TPP Regulatory Coherence

TPP Regulatory
Coherence
Auckland, New Zealand
December 6, 2010
Sean Heather
Executive Director
Global Regulatory Cooperation Project
U.S. Chamber of Commerce
[email protected]
Why Regulatory Coherence
Trade Liberalization and Regulation
In 1947 the average tariff on industrial products between
industrialized nations was more than 40%. Today the average
is less than 1%.*
Tariffs matter but the emerging and future challenge is for
trade agreements to better address the vast array of behindthe-border (regulatory) measures that impeded trade flows
and investment.
*Source WTO
Why Regulatory Coherence
Regulation & Compliance
#1 GLOBAL BUSINESS RISK
Source: 2010 Ernst & Young Survey of the Top Ten Business Risks Companies Face Globally
Why Regulatory Coherence
WEF – DAVOS Survey Approx 1,200 CEOs
1) Global Recovery
2) Regulation
“Over two-thirds of CEOs prioritized cooperation
with regulators as they seek to rebuild trust in
their industries. Nearly 60% believe that smarter
regulation will stem from working more closely
together...”
Source: PriceWaterhouseCoopers – 2010 Annual Global CEO Survey
Why Regulatory Coherence
WEF – DAVOS Survey Cont’d
Regulatory Priority Areas –
59% Work together to maintain competitiveness
57% Regulation stable & clear
45% Work to harmonize regulation across nations
39% Emphasis on fair enforcement of existing regulation
32% Focus on outcomes, not Process
Lowest Ranked –
15% Empower multilateral organization to become global regulators
Source: PriceWaterhouseCoopers – 2010 Annual Global CEO Survey
Why Regulatory Coherence
Ex. Toothpaste
•
•
•
•
•
•
Food, Drug, or Cosmetic Regulations
Safety and Effectiveness Regulations
Ingredients Regulation
Packaging, Labeling, Marketing Regulations Government
and Industry Standards
Testing and Conformity Requirements
Application and Approval Process
Measuring the Impact
Tariffs easily quantifiable….
Regulatory Coherence….Much, More Difficult
–
–
–
–
–
Trade Perspective
Compliance Perspective
Competitiveness Perspective
Government Perspective
Regulatory Beneficiary Perspective
Measuring the Impact
Trade Perspective
Example: U.S.-EU
Reducing Transatlantic Regulatory Divergence
• 122 Billion Euros per year in GDP growth & 2.1% growth in exports per
year for Europe.
• 41 Billion Euro per year in GDP, 6.1% growth in exports per year for the
U.S.
This study only measured the impact on the direct trade relationship,
it didn’t capture spill over impacts domestically by having better
regulation in place whereby increasing competitiveness.
Source: ECORYS - Non-Tariff Measures in EU-US Trade and Investment An Economic Analysis
Measuring the Impact
Regulatory Compliance Perspective
Example: REACH – EU Chemical Directive
Compliance is expensive – estimated to represent a 4% to 20%
surcharge on production costs.*
Source: PriceWaterhouseCoopers
Measuring the Impact
Competitiveness Perspective
U.S. Federal Regulatory Burden -$1.75 trillion
• $15,586 Per U.S. Household
• $8,086 per employee
• $10,585 per employee, (<20 Employees)
Source: Study done for U.S. Government Small Business Administration Office of
Advocacy in September 2010
Measuring the Impact
Government Perspective
Report: Susan Dudley and Melinda Warren George Washington University and Washington University in St. Louis
Measuring the Impact
Regulatory Beneficiary Perspective
No Adverse Impact
Goal – Not to reduce the effectiveness of the
regulation, but to maintain/increase quality
outcomes but at a reduced cost.
AXIOMS of Regulatory Coherence
•Regulatory coherence is not about less regulation (anti-regulation), nor is
it about more regulation (pro-regulation).
•It simply seeks better regulation that is effective, but also not marketdistorting.
•Regulatory coherence is about competitiveness. An optimal regulatory
environment allows the market to be more competitive and innovative.
AXIOMS of Regulatory Coherence
•Regulatory Coherence is not harmonization.
•Regulatory Coherence is about process. Better process, better outcome.
•Regulatory coherence is not a trade negotiation. The political trade-offs that can
plague trade negotiations should not exist in regulatory coherence. It is about
doing something better together.
Why Regulatory Coherence &TPP?
World Bank: Ease of Doing Business Report 2011
•
•
•
•
•
Singapore #1
New Zealand #3
U.S. #5
Australia #10
Malaysia #21
Top 10 Reformers in 2010
•
•
•
Peru #3
Vietnam #4
Brunei #10
Peru #36
Chile #43
Vietnam #78
Brunei #114