I am also pleased to contribute to this symposium on the Section of Administrative Law and Regulatory Practice’s 2016 Report to the President-Elect. My assignment? Regulatory cooperation between the United States and other countries. I strongly support such cooperation — well, at least most of the time.
To begin, this is what the Report has to say:
[W]e urge you to continue and, where appropriate, expand upon existing bilateral and multilateral regulatory cooperation and coherence efforts between the United States and other countries, and we urge you to identify new opportunities for regulatory cooperation. Properly designed and implemented, cooperation between U.S. and foreign regulators to better align regulations—without reducing health, safety and environmental protections—can yield significant benefits for consumers and manufacturers, while promoting U.S. economic growth. These efforts should be focused on achieving greater coherence and alignment between essentially equivalent standards of protection that meet at least the U.S. standard. For these reasons, regulatory cooperation has been endorsed and pursued by Presidents of both parties, with increased emphasis and activity over the past two Administrations.
In addition to delivering benefits by eliminating unnecessary nontariff trade barriers (NTBs), regulatory cooperation can take the form of mutual recognition of standards, the sharing of test data, technical and scientific information, and risk assessments, the elimination of duplicative testing, certification, and inspection requirements, and ensuring effective use of regulatory analysis and centralized regulatory review. This cooperation can reduce operational costs for regulatory agencies that are under increasing budgetary pressure, allowing them to focus limited resources on the highest risk activities, where regulation can have the greatest benefit.
I agree with the Report. Cooperation can and often does increase efficiency (really, who is in favor of deadweight losses?). But it also must be “[p]roperly designed and implemented.”
Let me explain. I began my legal career an antitrust lawyer.* This was a deliberate choice. I spent my 1L summer at the Federal Trade Commission. When I interviewed for firms during my 2L year, I was clear that I wanted to be an antitrust lawyer. Before graduating from law school, I moved to England for a year to study EU competition law. And then I started as an antitrust associate. So my background on the question of regulatory cooperation comes from the perspective of antitrust.
And when it comes to antitrust, there is much to be said for cooperation and harmonization. After all, it often is the case that a single merger will have effects in many different nations. Without cooperation and harmonization, the regulatory process could become so expensive that even a pro-competitive deal would not make sense. (More than 100 countries have antitrust regimes, many of which involve merger review.) To the extent that different countries are trying to obtain the same basic information in order to conduct the same basic analysis, it makes sense — if possible — to standardize the process.
But there are limits. Sometimes different regulatory schemes are not just trying to do the same basic thing. The United States should not surrender important sovereign values in the name of cooperation. Moreover, there is reason to fear that harmonization may be achieved, not by actually agreeing on what the standard ought to be, but rather by simply raising the level of abstraction such that everyone can concur without really converging. The result of that sort of harmonization is not greater efficiency. Even worse, there is some reason to fear that vague standards create discretion for regulators, which may be used for protectionism.
Thus, I embrace the Report’s conclusion: cooperation and harmonization are forces for good, so long as we are careful.
* Eventually my practice split and I began dividing my time between antitrust and general litigation. Such is life.
This is post is part of the Symposium on the ABA AdLaw Section’s 2016 Report to the President-Elect. An introduction to the symposium is here, and all of the posts are collected here. The views in this post, which expand upon the recommendations set forth in the Report, are the author’s own and do not necessarily reflect the views of the ABA AdLaw Section. The full Report is available here.