New Presidential Order Aims to Help Bridge International Regulatory Discrepancies

On May 1, President Obama signed an Executive Order (E.O.) aimed at enhancing coordination of international regulatory cooperation activities among U.S. regulatory and policy agencies.

The new E.O. – titled "Promoting International Regulatory Cooperation" – essentially grafts a broad international dimension onto E.O. 13563 (January 18, 2011), which focused on improving the quality of U.S. regulations, imposed new regulatory review requirements, and encouraged international cooperation. The new order appears aimed at the following key objectives:

• Improved coordination among U.S. agencies: The new order asserts additional control by the Office of Information and Regulatory Affairs (OIRA) of the Office of Management and Budget (OMB) over the international regulatory cooperation activities of individual agencies – an apparent response to perceived lack of coordination in the past.
• Greater consideration of regulatory approaches of major U.S. trading partners: The E.O. provides a more direct mandate to U.S. regulators to make international cooperation part of their ongoing work, to consider the international impact of U.S. regulations, and, where possible, to consider adapting to the regulatory approaches of major trading partners in order to reduce unnecessary discrepancies in approach. 
• Maintaining U.S. competitiveness: The new order responds to growing business community sentiment that reducing discrepancies in regulatory approaches among major U.S. trading partners (e.g., EU, Mexico, Canada) is a critical element in maintaining U.S. competitiveness in a globalized economy, and building a stronger basis for future regulatory cooperation with China.

Experience has demonstrated that international regulatory cooperation is a difficult, painstaking process of fits and starts. Many national-level regulators bristle at the notion that considering the trade-related implications of their work is a legitimate focus. Trade negotiators bristle equally against the idea of regulators touching their turf. With import tariffs low in many economic sectors, non-tariff regulatory barriers represent a key vehicle of trade protectionism; reducing those barriers through cross-border cooperation and convergence will take a lot more than an Executive Order. Ultimately, a more comprehensive and legally binding reciprocal negotiating framework will be necessary to overcome those obstacles.

Nonetheless, this is a start and  the Administration's effort to emphasize the importance of international regulatory cooperation presents opportunities for companies to engage with U.S. regulators, trade policy officials, and OIRA to draw attention to unnecessary, costly regulatory discrepancies, and to encourage both regulator-to-regulator and policy-level engagement to discuss, if not to reduce, those gaps. Existing high-level regulatory cooperation efforts of the U.S. with the EU, Mexico, Canada, and in the Asia Pacific Economic Cooperation (APEC) forum will see their profiles – and perhaps even their effectiveness – enhanced as a result of this White House-driven push. Enhanced coordination and prioritization of international regulatory cooperation should assist companies with cross-border planning and increased operational efficiencies.