2. Embedding the international environment in the rule-making machinery

This chapter presents the various entry points for departments and regulators to embed international considerations in their domestic rulemaking. It finds that IRC is implicit rather than explicit in the UK Better Regulation Framework and related regulatory policy tools and disciplines, resulting in case by case IRC practices by departments and regulators. To a certain extent, IRC is promoted from a trade facilitation perspective: through the consideration of international standards and the introduction of a trade question in a new regulatory impact assessment template. In addition, the experience with the EU framework may prove useful to embed international considerations more widely and the well-established system of regulatory oversight can be used to introduce cross-cutting IRC considerations.

    

The UK regulatory process offers several entry points for departments and regulators to embed international considerations in their domestic rulemaking. Prior to the EU withdrawal there was strong anchorage to EU legislation since accession in 1973 (strong UK presence and role in EU institutions). In addition, references to the international context exist throughout the UK better regulation disciplines:

• international instruments and overseas practices may be considered in the context of identifying different alternatives to address a specific policy challenge;

• a new RIA template is being trialled, with a trade and investment-related question, introducing a new entry point for consideration of international impacts of regulation;

• post-implementation reviews may be used to identify how a domestic measure’s impact compares to different approaches followed abroad.

There is ample room to strengthen the consideration of international and foreign expertise and rules in the United Kingdom’s Better Regulation Framework. Beyond the EU framework, these existing avenues for unilateral IRC remain mostly case-by-case, depending on the subject matter and departments and regulators’ willingness. The inclusion of trade and investment questions in the impact assessment template is still at its beginning. It is therefore too early to assess its effectiveness. The United Kingdom is still considering the methodology and guidance for measuring the trade impact at the time of writing.

The well-established system of regulatory oversight enables the streamlining of broad governmental objectives throughout regulatory processes in the United Kingdom. However, the Better Regulation Framework and RPC scrutiny and guidance currently incentivise departments to focus primarily on the Business Impact Target. Going forward, this solid infrastructure could be used to introduce cross-cutting IRC considerations.

Scope of better regulation in the United Kingdom: domestic focus, with European considerations

Better Regulation Framework

The Better Regulation Framework Guidance (latest update, August 2018), produced by the Better Regulation Executive, sets out the scope of application and the processes that Government officials should follow when developing new regulatory measures. In terms of scope, it frames both a broad range of regulatory measures included and a strong focus on business or voluntary and community bodies. The Better Regulation Framework Guidance applies to all regulatory measures, defined as measures that regulate business activity (the full definition of what constitutes “regulatory provision” is set out in Section 22 of the SBEE Act). This encompasses both primary legislation as well as statutory instruments (i.e. secondary legislation)1 and even non-legislative measures that regulate business activity.

In terms of bodies (Box ‎2.1), the Framework mainly applies to government departments (regulatory agencies may follow their own processes and may be incentivised/ given a specific set of expectations via other instruments, such as the Regulators’ Code as outlined below). More precisely, the Framework includes both legal and administrative requirements:

• The legal requirements apply to both government departments and specified regulatory bodies under the provisions of the SBEE Act 2015 and Enterprise Act 2016.2 These include the requirement for departments and regulators to submit assessments of the economic impact of new regulatory provisions (that fall within the scope of the Business Impact Target) to the RPC for independent verification.

• The administrative requirements apply to government departments (the other independent regulatory bodies are responsible for organising their own internal analytical processes). These are rules that have been collectively agreed within government which stipulate the need for officials to develop RIAs to support effective policy making and to meet the needs of collective decision making and stakeholder engagement, including Parliamentary scrutiny. These administrative requirements include the HM Treasury Green Book guidance3 on how to appraise and evaluate policies, projects and programmes, and the Cabinet Office Guide for Making Legislation.4

Box ‎2.1. Types of regulatory bodies in the United Kingdom

National regulatory bodies in the United Kingdom vary in their legal status, structure, powers and lines of accountability. They are responsible for putting government policy in practice. They can be broadly broken down into 4 categories: Government departments; non-ministerial departments; executive agencies and non-departmental public bodies:

• Core departmental functions are an integral part of a department, headed by a Minister and staffed by civil servants.

• Non-Ministerial Departments (NMDs) are headed by senior civil servants and not ministers. Their staff are civil servants. They usually have a regulatory or inspection function. The Food Standards Agency is an example. Some of the economic regulators (Ofgem which regulates the gas and electricity sectors, and Ofwat, which regulates water services) are NMDs.

• Executive Agencies are part of government departments and usually provide government services rather than decide policy – which is done by the department that oversees the agency. The parent department minister is ultimately responsible for their work. The department is responsible for funding and ensuring good governance. Unless explicitly created by statute, they can be reformed without primary legislation. An example is the Driver and Vehicle Licensing Agency (overseen by the Department for Transport).

• Non-Departmental Public Bodies (NDPBs) are not part of a department, and carry out their functions at arms-length from government. They have varying degrees of independence but are directly accountable to ministers. NDPBs tend to be set up through statute, and most need primary legislation to alter their institutional framework. There are four types of NDPBs, two of which may have regulatory functions: 1) Executive NDPBs work for the government in specific areas, for example, the Environment Agency; 2) Advisory NDPBs provide independent, expert advice to ministers – for example, the Committee on Standards in Public Life.

Regulatory bodies range from large bodies with a wide range of powers, like the Environment Agency, to smaller, highly specialised regulators, like the Adventure Activities Licensing Authority. Some national regulators have direct rule-making powers, whereas others do not. They may have joint enforcement responsibilities with local authorities in some of their regulatory responsibilities. Five major national regulatory bodies – the Health and Safety Executive (HSE), Environment Agency, Food Standards Agency, Competition and Markets Authority and Financial Conduct Authority – are responsible for regulating areas such as health and safety at work, financial services, environment regulation, competition and consumer protection, food hygiene and safety.

Source: Based on (OECD, 2010[1]), Better Regulation in Europe: United Kingdom, Paris, https://dx.doi.org/10.1787/9789264084490-en and www.gov.uk/government/how-government-works.

Based on the SBEE Act, Figure ‎2.1 gives a general flowchart on the regulatory provisions that fall under the scope of UK Better Regulation Framework Guidance, and as such under the scrutiny of the UK Regulatory Policy Committee.

Figure ‎2.2 gives an overview of the successive phases of Better Regulation in the United Kingdom. IRC considerations may intervene at three moments of this better regulation framework:

• in Stage 1, when departments develop policy options and conduct an impact assessment;

• in Stage 2, when departments conduct public consultations, and, in parallel to the UK Better Regulation framework, when they notify drafts to the EU and the WTO; and

• in Stage 3, in the context of post-implementation reviews.

Figure ‎2.1. Regulatory measures under the scope of UK Better Regulation

Note: The terms in bold have specific meanings set out the SBEE Act 2015, http://www.legislation.gov.uk/ukpga/2015/26/contents/enacted.

Source: (OECD, 2018[2]), Figure 8.1.

Figure ‎2.2. Better regulation phases in the United Kingdom

* At this stage a full RIA and RPC scrutiny is optional only for measures below the threshold of ± GBP 5m EANDCB and those measures that are certified as being within the administrative exclusions categories.

Source: Better Regulation Framework, Department for Business, Energy and Industrial Strategy, August 2018.

To ensure greater proportionality in the Better Regulation Framework, a new “de minimis rule” has been introduced to the Framework. It gives Departments greater flexibility to determine the appropriate level of analysis to demonstrate the rationale for a regulation, along with its impacts and benefits that meets the needs of Parliament and stakeholders. The BRE and the RPC have jointly produced guidance (Regulatory Policy Committee, 2019[3]) for departments and regulators on estimating the proportionality of regulatory proposals.

The rule stipulates that at the pre-implementation and review stages (Figure ‎2.2) only measures with significant regulatory impacts (greater than -/+ 5m GBP threshold)5 are expected to have full RIAs and be submitted to the RPC for scrutiny. However, some measures that fall below the de minimis threshold may still be expected to produce a full RIA if they are estimated to have significant distributional impacts; disproportionate burdens on small businesses; significant wider social, environmental, financial or economic impacts; or significant novel or contentious elements.

All other regulatory measures are still expected to produce a proportionate level of analysis to support stakeholder and parliamentary scrutiny of the proposal. In addition, the framework guidance states that departmental Chief Analysts are responsible for ensuring that the analysis used for a measure which is under the -/+ 5 m GBP threshold is sufficiently robust. Other scrutiny opportunities in the policy making process involve the interdepartmental collective agreement process and parliamentary scrutiny.

The Better Regulation Framework Guidance states that measures that do not fall under the definition of a “regulatory provision” under the SBEE Act are excluded from the scope of the BIT (e.g. fees or charges, measures with no impact on business). It also lists a number of additional “administrative exclusions”. These are rules that the Government has collectively agreed to remove from the scope of the BIT e.g. regulatory provisions related to incorporation of EU law and other international commitments and obligations (except where such measures go beyond what is required by EU/international rules, i.e. “gold plating”) or implementation of the EU Withdrawal Agreement.

In addition to the Better Regulation Framework Guidance, supplementary guidance documents assist departments and regulators in applying Better Regulation disciplines to their rulemaking processes, including Statutory Guidance for Regulators on implementing the Business Impact Target (Department for Business, Energy & Industrial Strategy, 2019[4]) and Best Practice Principles for Post-implementation reviews (Department for Business, Energy & Industrial Strategy, 2018[5]).

Regulators’ Code

The Regulators’ Code (Better Regulation Delivery Office, 2014[6]) is the basic statutory text setting a principle-based framework for regulators on how they should engage with those they regulate. It aims to ensure that whichever specific objectives regulators pursue, they all “…promote proportionate, consistent and targeted regulatory activity through the development of transparent and effective dialogue and understanding between regulators and those they regulate.”6 The Enterprise Act 2016 introduced a requirement for regulators in scope to publish annual performance reports on the effect of the Regulators Code on the way they exercised their functions. However, this requirement needs to be brought into effect by secondary legislation, which has not taken place at the time of writing. In any case, this Code remains a purely domestic tool, without references to cross-border impacts of regulation or international co-operation as means to contribute to more effective regulation.

International considerations within regulatory impact assessments (RIA)

The RIA framework provides an iterative process whereby departments are obliged to reflect on alternative options, to consider how other jurisdictions are addressing similar challenges (particularly relevant for new areas of regulation), to map the existence of international legal instruments and policy standards in the same field (OECD, 2017[7]) and to consider the cross-border implications of new regulations. It should also be an iterative process, where individual steps can be reassessed as new information comes to light. RIAs may also increase the attention of policy makers for the trade impacts of new regulatory measures and thus ensure a conscious balancing of trade and other public policy considerations.

Although the HM Treasury Green Book points to the importance of gathering evidence from international best practice, the UK RIA process is in practice largely focused on domestic evidence and considerations. Nevertheless, a number of entry points in the different steps of the RIA process do allow for the consideration of the international environment, namely in the rationale and policy options for proposed regulations, and in the actual assessment of impacts of regulatory drafts.

International considerations as part of rationale and policy options for proposed regulations

UK departments and regulators initiating action to address a specific policy challenge should launch a ROAMEF (Rationale, Objectives, Appraisal, Monitoring, Evaluation and Feedback) cycle, described in the Green Book: Central Government Guidance on Appraisal and Evaluation. The first step of this cycle is to describe a rationale for government intervention, to generate a long list of possible options to achieve the objectives, and to narrow the list down to a short list suitable for a detailed cost benefit analysis. This list of options is included within the RIA template.

There are very few formal requirements to consider the international environment at this stage (although the HM Treasury Green Book does point to the importance of gathering evidence from international best practice).7 However, international normative instruments or best practices can contribute to the rationale of the measure, and are indeed used on a case-by-case basis to justify regulations. For example, the Department for Environment, Food, and Rural Affairs (Defra) introduced a law prohibiting the purchase and sale of ivory. To justify this regulation, Defra referred to existing international conventions and rules, and responses in other countries (to the problem under consideration). Defra also mentioned externalities impacting upon Africa from the United Kingdom’s trade in ivory in the rationale for intervention and the United Kingdom’s global leadership in the global movement to end trade of ivory (in the policy objectives and intended effects).8

As part of its scrutiny of RIAs, when the RPC is aware of evidence that has not been taken into account, it can question and make reference to it. This is therefore an opportunity to introduce evidence from foreign or international sources (although the RPC does not always have knowledge of such evidence itself) and to consider the impacts of regulatory divergence. In practice, the RPC mostly prompts departments to introduce international considerations by asking whether such evidence exists.

Trial trade and investment questions in impact assessment procedures

A new RIA template was issued in 2018, including a new question related to the impacts of UK regulations on international trade and investment (i.e. Is this measure likely to impact on trade and investment? Yes/No). In the previous template, the only related question with a clear international focus, aimed to identify regulatory proposals going beyond EU requirements. Through the new question, departments are required to consider more generally the international impacts of the policies they are developing. As part of the overall approach, it helps to ensure that the UK policy-making processes remain compliant with the country’s WTO Agreements. When fully implemented, the new question will place the United Kingdom among the OECD countries using their RIA process to consider regulatory impacts on trade (OECD, 2018[8]) and, potentially, linking the notification and the impact assessment processes (OECD, 2018[9]).

DIT and BRE have produced guidance to help policymakers answer the trade question. The guidance aims to support policymakers in estimating the impact of the regulatory policy they are drafting may have on international trade or investment into, and out of, the United Kingdom. The guidance complements the RIA template with additional questions for departments’ consideration, namely to help them identify the impacts their draft will have on export, import, value of trade and investment, discrimination. These questions remain broad, calling for yes / no answers, without requiring an estimate of the quantified impact. Where policy makers answer “yes”, they are asked to provide “a couple of lines outlining the rationale and a qualitative assessment of the rationale”. DIT, BRE and the RPC are currently considering how to refine the methodologies to support departments in measuring the trade impacts of their draft measures.

Given the recent introduction of the questions, the RPC has had very little opportunity to scrutinise departments’ assessment of trade or investment impacts. . Of the 69 impact assessments submitted by UK Departments to the RPC during the pilot phase of the new template (January – November 2019), 30 used the template which included the new trade question. Of those, 8 answered ‘yes’, suggesting an impact on trade and investment, 14 answered no, 2 answered n/a, and 6 left the question uncompleted.

The new trade and investment RIA has allowed to identify draft regulations that created directly or indirectly impacts on trade and/or investment due to new product safety standards, alterations to product design, new labelling requirements and increased bureaucratic procedures (not present in other countries). The RPC scrutiny revealed that the departments estimating that there was no trade or investment impact or that such impact was minimal were correct in their estimations. Among the departments that did not answer the trade and investment question, the RPC identified some that had missed trade and investment impacts. In such cases, the RPC co-ordinated with the DIT to conduct extra analysis and advise the departments in revising their assessment. Overall, following the pilot phase the RPC identified a need for more and better quality guidance and training to departments to assist them in considering trade and investment impact, as well as engagement of BRE and DIT senior management across government to ensure top-down support for a more systematic consideration of trade and investment impacts in departments’ conduct of RIAs. Overall, the pilot phase was useful to engage with departments on trade and investment and highlight priorities for a better implementation of the new template.

Consideration of international instruments

Beyond the WTO requirements to align national regulation with international standards9 and the spontaneous practices of a number of departments and regulators, there is no specific UK statutory obligation to consider, or broader incentives to be consistent with, international instruments in rulemaking. The Better Regulation Framework nevertheless encourages the use of standards as a basis for regulation, insofar as the use of standards via non-regulatory means is exempted from the scope of the Business Impact Target.10 Given the strong alignment of British standards to international and European standards, this provides for an important (although indirect) channel to promote the embedding of international standards in domestic rulemaking.

The standards system in the United Kingdom is a single national standard model, where a single standard is sought for any given issue. It is the role of BSI, as the National Standards Body of the United Kingdom, to develop British Standards with consideration to European and international standards. While the United Kingdom was a member of the EU, there was an obligation for BSI to adopt all European standards (ENs) developed by CEN, CENELEC and ETSI, as well as to withdraw existing British standards that conflict with such European standards (BSI, 2019[10]). All international standards from ISO and IEC are adopted as British Standards unless the national committee considers that they are of little or no value to the UK economy. Consequently, of the current 37 000 British standards, 82% have been developed through European or international processes with UK expert participation. There are increasingly fewer standards that are developed “British only” Figure ‎2.3.

Figure ‎2.3. International references in BSI standards

Source: Information provided by BSI, December 2018.

Beyond the incentives provided by the WTO requirements for the harmonisation of technical regulation through the adoption of international standards, different departments and regulators have also seen the intrinsic value of adopting international instruments more broadly in their respective area (although this is done with limited sharing of experience and practices across sectors). This is the case for instance of the UK Office for Nuclear Regulation (ONR), which relies strongly on the International Atomic Energy Agency (IAEA) to underpin its approach to safety, in particular the IAEA safety standards programme involving some 200 safety standards developed over 50 years. The ONR considers these standards based on international consensus as the cornerstone of the global nuclear safety regime (see the related case study in Chapter 4). They are seen as a robust framework of fundamental principles, requirements and guidance to ensure safety, applicable, as relevant, throughout the entire lifetime of facilities and activities.

Stakeholder engagement

The United Kingdom has a well-established domestic framework to engage with stakeholders, deeply rooted in a tradition of general public consultations. Anyone can respond to the consultations, including foreign stakeholders. However, there is no specific procedure to target and engage with foreign stakeholders.

In addition, the United Kingdom has notification obligations that open a period of comment before the draft is adopted in which foreign governments and stakeholders may comment. In particular, the UK had notification obligations to the EC while it was still a member of the EU. In addition, it has notification obligations to the WTO.

General framework for stakeholder engagement

The UK public consultation framework is based on flexible guidance, rather than statutory obligations, currently embodied by Consultation Principles updated in 2018 to provide for a proportionate and targeted approach (Box ‎2.2) (UK Cabinet Office, 2018[11]). Overall, consultations tend to be conducted for all primary laws and subordinate regulations in the United Kingdom.

The UK consultation policies and practices are largely focused on domestic stakeholders. Principle F of the UK Consultation Principles, requiring consultations to be targeted to specific groups, allows for an avenue for regulators to target specific foreign stakeholder groups that may be affected. Still, while not banning their contribution, the Consultation Principles do not promote explicitly the participation of foreign stakeholders or the specific needs for adapted consultation processes when appropriate.

Box ‎2.2. United Kingdom Consultation Principles 2018

The UK Cabinet Office adopted a set of principles in 2012 (updated in 2018) to guide government officials across Whitehall in their efforts to conduct public consultations. These Principles cover the following:

1. A. Consultations should be clear and concise

2. B. Consultations should have a purpose

3. C. Consultations should be informative

4. D. Consultations are only part of a process of engagement

5. E. Consultations should last for a proportionate amount of time

6. F. Consultations should be targeted

7. G. Consultations should take account of the groups being consulted

8. H. Consultations should be agreed before publication

9. I. Consultations should facilitate scrutiny

10. J. Government responses to consultations should be published in a timely fashion

11. K. Consultation exercises should not generally be launched during local or national election periods.

Source: (UK Cabinet Office, 2018[11]), Consultation Principles, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/691383/Consultation_Principles__1_.pdf.

Notifications of domestic regulatory drafts

Notification procedures to international fora can be an opportunity to gather evidence on cross-border impacts of regulations, as well as to gain additional evidence from foreign peers or stakeholders. In particular, notifications of technical barriers to trade (TBT) and of sanitary and phytosanitary (SPS) measures are a well-established discipline that span both the EU and international level. The United Kingdom submits notifications of draft regulations to the World Trade Organization (WTO) and as an EU member did so also to the European Commission (EC). As of March 2020, the authorities responsible for WTO notifications are the Department for International Trade (DIT) for TBT and the Department for Environment Food and Rural Affairs (Defra), via the EC, for SPS measures.

Notifications of measures to the European Commission

EU members notify to the EU Commission draft technical regulations on goods and on information society services that have a significant impact on trade, allowing them to gain feedback on these measures from other EU members (Box ‎2.3). While still a member of the EU, the United Kingdom was an active user of the EC notification mechanism. In 2018, the United Kingdom submitted 33 notifications to the EC, situating it in the higher average of EU notifying countries well above the EU average of 24 notifications. To these notifications, the United Kingdom received only one comment from the EC, out of a total of 96 comments issued over the year to all EU members, and another one from a member state.11

The UK Government prepared guidelines to assist regulators in submitting notifications to the EC (Department for Business Innovation and Skills, 2016[12]). A decision tree developed by the UK Government was provided to help policymakers determine whether a measure needed to be notified (Department for Business Innovation and Skills, 2016[13]). There was no additional criterion of the expected impact of the measure on the Single Market, but notifying bodies were required to annex the impact assessment to the notification.

This EC notification process was also the opportunity for the United Kingdom to identify proposals of other EU member states that may affect UK interests and/or the effectiveness of the Single Market. Each relevant lead department was required to review notifications available on the Technical Regulation Information System. To provide meaningful comments, the notification guidelines required them to consult with key stakeholders from government, business associations or trade associations, as appropriate (Department for Business Innovation and Skills, 2016[12]).

Box ‎2.3. Notification of technical regulations to the European Commission by EU member States

All EU member States notify the EC, and through it all other EU and EFTA member states, about draft technical regulations on goods and on information society services that have a significant impact on trade. After notifying a draft regulation member states are required to leave a “standstill period” of at least 3 months before adopting the said regulation.¹ During this standstill period, the EC and other member states may raise concerns about potential barriers to trade created by the notified draft regulation. In particular, they may raise “comments”, which are not binding but must be considered by member states, or a “detailed opinion” if they consider that the measure may represent an obstacle to the free movement of goods or the freedom to provide information society services. In the case of a detailed opinion, member states must take it into account and reply to it, explaining the actions it intends to take in response.

Notifications by all EU member states are made via the EC’s Technical Regulations Information System, and all member states have designated a contact point within their government to ensure that notifications and comments are centralised by this authority. Lack of notification to the EU renders the measure unenforceable. In other words, national courts or other enforcement authorities will not have the right to enforce the regulation despite its entry into force (Department for Business Innovation and Skills, 2016[13]).

1 These obligations result from Directive (EU) 2015/1535 of the European Parliament and of the Council of 9 September 2015 laying down a procedure for the provision of information in the field of technical regulations and of rules on Information Society services (Text with EEA relevance) https://eur-lex.europa.eu/legal-content/en/txt/?uri=celex%3a32015l1535.

Notification of measures to the WTO

The scope of the WTO obligation goes beyond the EU and results in information on draft UK regulations shared with all 164 members of the WTO. It includes notification obligations in a range of Agreements concerning trade in goods as well as trade in services, namely under the WTO Agreements on the Application of Sanitary and Phytosanitary Measures (SPS Agreement), and of Technical Barriers to Trade (TBT Agreement), as well as the General Agreement on Trade in Services (GATS). The scope of measures to be notified under the SPS and TBT Agreements is similar to those of the EC notifications: technical regulations, conformity assessment procedures as well as sanitary and phytosanitary measures, regardless of their legal nature.

However, the WTO agreements set additional requirements not included in the EC notification process that relate to the potential impacts of draft measures. They require for instance that WTO members notify to other members the draft mandatory regulations that may have a significant effect on trade and are not based on international standards. In addition, both the SPS and TBT Committees encourage WTO members to notify measures even when they are based on international standards (WTO, 2009[14]) (WTO, 2008[15]). This notification should be done at an early appropriate stage, when amendments can still be introduced and comments taken into account.12 Given the notification is a legal obligation for WTO members, lack of notifications to the WTO may result in a formal dispute in front of the WTO dispute settlement body.

Once draft measures are notified to the WTO, the WTO Secretariat makes these drafts publically accessible on its website, and provides the contact details of the enquiry points of all WTO members.13 As a result, the United Kingdom may receive comments not only from other WTO members but also any interested stakeholders, whether public or private.

Under the EU Common Commercial Policy, the EC submits notifications to the WTO in respect of draft EU legislation on behalf of all member states. As an EU member, the United Kingdom used to submit notifications of draft national legislation (except for SPS14), which fell outside of the scope of EU responsibility, if it considered that these had a significant effect on trade and deviated from international standards. In effect, in line with most EU member states, the United Kingdom submitted very few notifications to the WTO in comparison to other non-EU developed countries. In 2018, the United Kingdom submitted four TBT notifications to the WTO and no SPS notifications to the WTO. They included measures adopted by devolved administrations (Northern Ireland, Scotland, Wales), and transition measures after withdrawal from the EU.15 Looking ahead, after the withdrawal from the EU the UK will no longer have measures falling under EU responsibility. It will be directly responsible for notifying to the WTO in all fields and its volume of notifications may therefore grow closer to the level of other non-EU developed countries.

Post-implementation reviews

Ex post reviews can provide a critical opportunity to identify the potential divergence with international frameworks as well as the trade and other IRC impacts of laws and regulations (Basedow and Kauffmann, 2016[16]). These tools complete the RIA process by allowing deeper insights into the impacts of a regulatory measure (via feedback from affected parties and de facto implementation) and can help build the evidence on IRC throughout the rule-making cycle.

In the United Kingdom, under the provisions of the SBEE Act, Government departments are required to include a statutory review clause in new secondary legislation that is estimated to have significant impacts on business. The inclusion of a review clause (or an equivalent administrative commitment to carry out a review) then requires policy officials to undertake a Post-Implementation Review (PIR).16 In addition, HMT have produced a Magenta Book (HM Treasury, 2011[17]) (to be considered alongside the HMT Green Book), which provides departments with methodological guidance on how policies and projects should be assessed and reviewed.

A PIR seeks to establish whether and to what extent, the regulation has achieved its original objectives; has objectives that remain appropriate; is still required and remains the best option for achieving those objectives; and could be achieved in another way, which involves less onerous regulatory provisions. The BRE provides a template to help regulators in the conduct of PIRs. It is non-mandatory but provides a useful guide as to the sorts of questions departments should be attempting to address (Box ‎2.4). Whilst this template does not include a requirement to measure unintended impacts of the regulation for foreign stakeholders or deviation from international instruments, it directs departments to identify how the United Kingdom’s implementation of EU measures compares with other EU member states (see point G in Box 2.3).

In light of the findings from the PIR, officials are expected to advise their respective minister with information on whether the measure should be retained without changes, amended, repealed or replaced. PIRs for measures with a review clause must be published alongside the relevant regulations.17 Normally PIRs are completed within five years of the regulatory measure coming into force and on a repeated five-year cycle thereafter. However, the RPC has noted a shortfall in the numbers of PIRs carried out by departments in the last 2015-17 Parliament: “of the 80 expected during the 2015-17 parliament, the RPC has received 43”.18

Reviews for UK measures implementing international instruments may be conducted but are not carried out systematically (although the RPC has recommended that their undertaking would depend on the nature of the instrument and on the legislation implementing it). The OECD Regulatory Policy Outlook 2018 (OECD, 2018[8]) finds that ex post evaluation related to IRC is relatively nascent for most OECD countries, although data shows some progress since 2014. For example, almost three times as many countries indicate having completed an assessment of consistency with comparable international instruments as part of ex post reviews in the last 12 years than were reported in 2014 (from 3 to 8). However, this represents only a subset of OECD countries – around one in five.

Box ‎2.4. Post Implementation Review Template

The BRE have provided a template to guide departments on how to set out the findings of a PIR. Its use is not mandatory but recommended. The questions are as follows:

1. A. What were the policy objectives of the measure?

2. B. What evidence has informed the PIR?

3. C. To what extent have the policy objectives been achieved?

4. D. What were the original assumptions?

5. E. Were there any unintended consequences?

6. F. Has the evidence identified any opportunities for reducing the burden on business?

7. G. For EU measures, how does the UK’s implementation compare with that in other EU member states in terms of costs to business?

Source: (Department for Business, Energy & Industrial Strategy, 2018[5]), Producing post-implementation reviews: principles of best practice, www.gov.uk/government/publications/business-regulation-producing-post-implementation-reviews.

Regulatory delivery

The delivery phase of laws and regulations is a critical and often overlooked area of regulatory policy. The best designed laws and regulations will fail if the infrastructure for their proper implementation is weak, notably the compliance and enforcement mechanisms. It is also an area where co-operation and consideration for the international environment may help significantly reduce costs and burdens for the regulated entities and improve the effectiveness of the regulatory measures. For example, co-ordination with foreign authorities may be essential to avoid regulatory arbitrage or to effectively manage regulated activities with strong cross-border spillovers.

Conformity assessment procedures allow companies to demonstrate compliance with regulatory requirements. They are a key component to facilitate international trade and avoid unnecessary costs both for exporting and importing goods and services. As an EU member, the United Kingdom benefitted from a robust framework for recognition of UK conformity assessment results both by other EU members and beyond (via mutual recognition agreements concluded by the EU).

Enforcement policies present important opportunities for embedding considerations for the international environment and co-operation with peers from other jurisdictions. As an EU member, the United Kingdom relied strongly on domestic enforcement and on the relevant networks and mechanisms provided by the EU (for example the EU rapid alert system for dangerous non-food products – see the case study on product safety in Chapter 4). These networks of regulators are explored in Chapter 4. This section investigates some existing sectoral enforcement policies and their consideration of IRC.

Conformity assessment, accreditation

What is conformity assessment and accreditation and what are they used for?

Conformity assessment is the demonstration that a product, process, service, system, person or body meets specified requirements (e.g. testing, calibration, inspection and certification).19 These requirements may be found in a regulation (most often within technical regulations), a national or an international standard. Prior to importing a product or service, conformity assessment procedures (CAPs) allow a business or manufacturer to demonstrate that they comply with any regulatory requirements and /or have addressed any legitimate end-user concerns so that their product is therefore safe to import to the market of destination (OECD, 2017[7]). Dependent on risk, conformity assessment may range from ‘internal production control’ (self-assessment) to third party conformity assessment by accredited bodies.

The bodies or organisations performing these activities are collectively known as conformity assessment bodies (CABs). Accreditation is the process whereby the technical competence, impartiality and integrity of CABs is assessed and evaluated, usually against the requirements of international standards, e.g. ISO17065.20 Therefore an assessment performed by accredited CABs provides the public and government confidence that standards are being met.

Accredited third party conformity assessment necessarily entails costs for businesses. To comply with various regulatory regimes, exporting UK businesses may need to undergo different or duplicative CAPs in their home market and in the market of destination. These can be costly and burdensome to businesses, hindering access to markets and export opportunities. Discussions in the WTO show that divergent conformity assessment procedures are perceived as an even higher impediment to trade than divergent regulations (Karttunen and McDaniels, 2016[18]). Acknowledging this, the World Trade Organization (WTO) Agreement on Technical Barriers to Trade strongly encourages countries to recognise the results of other countries’ conformity assessments. Common regulatory framework (such as provided by the EU) and international standards (through the International Laboratory Accreditation Cooperation – ILAC – and the International Accreditation Forum – IAF) provide bases for alignment in conformity assessment and accreditation.

As a member of the EU, the United Kingdom followed the European legislative framework on conformity assessment and accreditation.21 The EA MLA provides the European market with a network of CABs that are competent within their scope of accreditation to issue reliable and credible statements of conformity for products and services, thereby reducing costs and adding value to business and consumers. The UK Government supports this conformity assessment framework through its Conformity Assessment and Accreditation policy which sets out the high level principles and guidance on conformity assessment and accreditation in the United Kingdom including the importance of considering accreditation against existing European and international regulatory approaches and standards (BEIS, 2017[19]).

EU legal and institutional framework for conformity assessment procedures (CAPs)

The EU legislation provides a comprehensive framework for conformity assessment that applies throughout EU member states.22 As an EU member, UK businesses benefitted from the equivalent arrangements in all other EU countries and from the mutual recognition of their own CA results at the EU level. The framework includes in particular:

• A range and level of CAPs for the EC, Council, and the European Parliament to use depending on different circumstances. These include product type and complexity and the level of risk from non-conformity (art. 4, Decision 768/2008). To ensure a common approach to each different CAPs, the EU Decision 768/2008 provides standard texts of CAPs including definitions and general obligations for economic operators that can be adopted as such by member states.

• An obligation for all CABs carrying out procedures set out in EU legislation to be notified to the EC, which holds a database of all CABs operating in EU member countries. This same obligation applies to EU member states, EFTA countries (EEA members) and other countries with which the EC has concluded Mutual Recognition Agreements (MRAs) and Protocols to the Europe Agreements on Conformity Assessment and Acceptance of Industrial Products (PECAs).

• A single National Accreditation Body per country, undertaking accreditation in their respective territories. This body operates in the public interest and run as a non-profit organisation.23

UK Framework on conformity assessment procedures and accreditation

Through the conformity assessment and accreditation policy principles, the United Kingdom encourages UK CAPs to be consistent with European and international standards. CABs are also required to use the CIPM MRA as the reference point for measurement standards.

Member states notify the Commission and the other member states the bodies, fulfilling the relevant requirements, designated to carry out conformity assessment according to specific EU legislation. Both the notification of Notified Bodies and their withdrawal are the responsibility of the notifying member state. While it was a member of the EU, the United Kingdom notified 177 conformity assessment bodies to the EC, that were listed in the NANDO (New Approach Notified and Designated Organisations) Information System, the EU database.24 As of the withdrawal date, “UK notified bodies will be removed from the Commission’s information system on notified organisations (NANDO database). As such, UK bodies will not be in a position to perform conformity assessment tasks pursuant to Union product legislation as from the withdrawal date.”25

The UK Government is currently establishing a domestic legal framework to enable UK CABs to continue operating for most products placed on the UK market after the UK withdrawal from the EU. Under this framework, UK CABs recognised by the EU will be converted into UK Approved Bodies (or UK-recognised RTPO, UI or TAB respectively) so that they can continue to carry out compliance processes for the UK market.26 It is expected that the UK product safety framework mirrors the existing EU framework as far as possible and the technical requirements for becoming a UK Approved or recognised Body will be broadly the same as the current EU requirements.

In line with the EU Regulation, the United Kingdom has designated UKAS as the sole accreditation body. Accreditation remains voluntary, but is strongly encouraged. Like for conformity assessment, BEIS has developed additional guidance principles in complement to the EU framework on accreditation. UKAS has recognition at the European level, from the European co-operation for Accreditation (EA),27 and at the international level, from the ILAC and the IAF. UKAS’ participation in EA allows to ensure accreditation Europe-wide, and its accreditation by ILAC-IAF provides it additional recognition beyond the EU. Prior to withdrawal, as part of a EU member country, UKAS participated in ILAC-IAF through the intermediary of EA who acts on behalf of all member states.

Outside of relevant EU regulatory requirements UKAS accreditation will still be recognised and accreditation certificates will continue to be valid. The UK Government has confirmed that UKAS’ role as the sole national accreditation body including for most UK conformity assessment bodies will continue.

Enforcement

The Regulators’ Code directs all regulators to have an enforcement policy available. A number of regulators have made their enforcement policy statement available on line. This is the case for example of the Health and Safety Executive28 and of the Office for Nuclear Regulation (ONR, 2019[20]). While most enforcement policies focus purely on the domestic level, they offer an opportunity for greater consideration of the international environment.

As an illustration, the Enforcement Policy developed by OPSS in Spring 2017 (Department for Business, Energy & Industrial Strategy, 2018[21]) and updated in 2018, sets out the principles for dealing with non-compliance with product regulation. While mostly focusing on enforcement of regulations within the domestic borders, the Enforcement Policy applies in an international context so far as non-compliance presents risks beyond the border. In cases where non-compliance presents a risk beyond the United Kingdom, namely in EU member states, OPSS is meant to co-ordinate with foreign counterparts. Art 5.6 of the Enforcement Policy, applicable in the transition period, provides that:

“Where we identify non-compliances which result in products being seized, recalled, withdrawn from sale, or removed from the market, and we consider that the non-compliances present a risk beyond the United Kingdom, we will make a referral under the European Union (EU) “safeguarding provisions” to our counterparts in other EU Member States and to the European Commission.”

The FCA’s Approach to Enforcement (FCA, 2019[22]) paper sets out how international co-operation and collaboration forms part of the FCA's enforcement work. It explains how they work with international regulators and law enforcement agencies, to share information and intelligence, and to detect and take action to tackle cross-border misconduct. It further sets out how international co-operation is important in helping to identify how criminal proceeds might be laundered through the United Kingdom’s financial markets.

The withdrawal from the EU heightens the risk of weakening the market surveillance and enforcement capacities of UK departments and regulators in a number of sectors – this is well illustrated by both the case study on product safety and that on medical products in Chapter 4. This is an area where significant co-operation efforts are needed to maintain the effectiveness of regulation, all the more that digitalisation and new technologies raise new enforcement threats with the dematerialisation of transactions. In this context, it is not surprising that OPSS’s 2018-2020 Strategy highlights the importance of IRC to address global safety risks, build a trustworthy system for consumers, and reduce costs to business (see the case study on product safety in Chapter 4).

References

[16] Basedow, R. and C. Kauffmann (2016), “International Trade and Good Regulatory Practices: Assessing The Trade Impacts of Regulation”, OECD Regulatory Policy Working Papers, No. 4, OECD Publishing, Paris, https://dx.doi.org/10.1787/5jlv59hdgtf5-en.

[19] BEIS (2017), Conformity assessment and accreditation policy, https://www.gov.uk/government/publications/conformity-assessment-and-accreditation-policy-the-uks-quality-infrastructure (accessed on 5 March 2019).

[6] Better Regulation Delivery Office (2014), Regulators’ Code, http://www.legislation.gov.uk/ukpga/2006/51/pdfs/ukpga_20060051_en.pdf.

[10] BSI (2019), How are standards made?, https://www.bsigroup.com/en-GB/standards/Information-about-standards/how-are-standards-made/.

[13] Department for Business Innovation and Skills (2016), Decision Tree to determine whether a measure requires notification, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/510161/BIS-16-151-Directive-2015-1535-EU-decision-tree-to-determine-whether-a-measure-requires-a-notification.pdf.

[12] Department for Business Innovation and Skills (2016), Directive 2015/1535/EU Guidance for Officials, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/490271/BIS-16-15-directive-2015-1535-guidance.pdf.

[4] Department for Business, Energy & Industrial Strategy (2019), Business Impact Target Statutory Guidance, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/776507/Busines__Impact_Target_Statutory__Guidance_January_2019.pdf.

[5] Department for Business, Energy & Industrial Strategy (2018), Producing Post-Implementation Reviews (PIR): Principles of best practice, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/726992/producing-post-implementation-reviews-pir.pdf.

[21] Department for Business, Energy & Industrial Strategy (2018), Safety and Standards Enforcement: Enforcement Policy, https://www.gov.uk/guidance/national-regulation-enforcement-services.

[25] Department for Business, E. (2017), Small Business, Enterprise and Employment Act 2015, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/674755/small-business-act-s31-statutory-review-requirements.pdf (accessed on 23 October 2019).

[22] FCA (2019), FCA Mission: Approach to Enforcement, https://www.fca.org.uk/publication/corporate/our-approach-enforcement-final-report-feedback-statement.pdf.

[17] HM Treasury (2011), The Magenta Book: Guidance for evaluation, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/220542/magenta_book_combined.pdf.

[18] Karttunen, M. and D. McDaniels (2016), “Trade, Testing and Toasters: Conformity Assessment Procedures and the TBT Committee”, Journal of World Trade, Vol. 50/3.

[2] OECD (2018), Case Studies of RegWatchEurope Regulatory Oversight bodies and the European Union Regulatory Scrutiny Board, OECD, Paris, http://www.oecd.org/gov/regulatory-policy/regulatory-oversight-bodies-2018.htm (accessed on 3 March 2019).

[8] OECD (2018), OECD Regulatory Policy Outlook 2018, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264303072-en.

[9] OECD (2018), Review of International Regulatory Co-operation of Mexico, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264305748-en.

[7] OECD (2017), International Regulatory Co-operation and Trade: Understanding the Trade Costs of Regulatory Divergence and the Remedies, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264275942-en.

[1] OECD (2010), Better Regulation in Europe: United Kingdom 2010, Better Regulation in Europe, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264084490-en.

[23] OECD/WTO (2019), Facilitating Trade through Regulatory Cooperation: The Case of the WTO’s TBT/SPS Agreements and Committees, OECD Publishing, Paris/World Trade Organization, Geneva, https://dx.doi.org/10.1787/ad3c655f-en.

[20] ONR (2019), ONR Enforcement Policy Statement, http://www.onr.org.uk/documents/enforcement-policy-statement.pdf.

[3] Regulatory Policy Committee (2019), Proportionality guidance for departments and regulators, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/800603/Final_proportionality_.pdf.

[11] UK Cabinet Office (2018), Consultation Principles, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/691383/Consultation_Principles__1_.pdf.

[14] WTO (2009), Fifth Triennial Review of the Operation and Implementation of the Agreement on Technical Barriers to Trade Under Article 15.4. G/TBT/26..

[15] WTO (2008), Recommended Procedures for Implementing the Transparency Obligations of the SPS Agreement (Article 7), G/SPS/7/Rev.2..

[24] WTO (2003), The EC Notification Authority and Enquiry Point for the WTO Agreement on the Application of Sanitary and Phytosanitary Measures: Operational Procedures and Recent Experience.

Notes

← 1. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/735587/better-regulation-framework-guidance-2018.pdf.

← 2. The list of 52 relevant regulators that fall within scope of the Business Impact Target, is set out in the Business Impact Target (Relevant Regulators) Regulations 2017. This list includes regulators that are “legally separate entities to UK Ministers and carry out functions that regulate business and/or the voluntary and community sector”. In the vast majority of cases these will be bodies that are established under statute. However, given the wide array of regulatory bodies, this category also includes a small number of bodies that have been established either as a company or by Royal Charter rather than by statute. 

← 3. www.gov.uk/government/publications/the-green-book-appraisal-and-evaluation-in-central-governent.

← 4. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/645652/guide_to_making_legislation_jul_2017.pdf.

← 5. The government’s primary metric to assess progress against the Business Impact Target is the Equivalent Annual Net Direct Cost to Business (EANDCB). This is a measure of the direct impact of a regulatory decision on business, where a direct impact is defined as an impact that can be identified as resulting directly from the implementation or removal/simplification of the regulation.

← 6. See Foreword of Regulators’ Code (Better Regulation Delivery Office, 2014[6]).

← 7. References in the Green Book to international evidence:

Para 2.7 “Generating a long-list of options at the start of the appraisal process ensures that a full range of possibilities are considered. This should be informed by stakeholder consultation or engagement, lessons learned from previous interventions, international best practice and the wider evidence base. Starting out with a narrow set of options or a pre-determined solution may miss the opportunity to explore more novel, innovative solutions that might offer better social value.” (emphasis added)

Para 3.7 “Analysis and assumptions should have an objective basis in research. Relevant evidence can be drawn from evaluations of past interventions, evidence of “what works”, international comparisons, academic and other literature and relevant experience. The strategic dimension should also identify where there are gaps in the evidence base.” (emphasis added)

Para 4.16 “Where appropriate evaluations of previous or similar interventions, international and wellbeing evidence, should be used to design options that build on what works, to avoid repeating past mistakes. Box 6 provides an example of the use of evaluation evidence and piloting. This is particularly important when considering the scope of a proposal and the service solution (the technical means of delivering the intervention). When assessing the relevance of previous evaluation, allowance should be made for differences in context, circumstances and culture.” (emphasis added)

A3.14 “A review of international evidence provides an estimate of the marginal utility of income at 1.3.36 This is used by DWP in distributional analysis. The estimate of the marginal utility of income can be used to calculate welfare weights to adjust costs and benefits.”

← 8. See https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file /710369/ivory-bill-ia.pdf, Decision 17.70 et seq. of Decisions of the Conference of the Parties to CITES in effect after the 17th meeting, http://www.cites.org/eng/dec/index.php.

← 9. In particular, the World Trade Organization's (WTO) Agreements on Technical Barriers to Trade (TBT) and on the Application of Sanitary and Phytosanitary Measures (SPS): i) require the use of international standards as a basis for national regulations in certain situations, ii) require justification if international standards are not used (including through science-based risk assessments in the SPS area), iii) incentivise members to fully harmonise measures with international standards, and iv) strongly encourage members to participate in the development of international standards. See (OECD/WTO, 2019[23]).

← 10. See Better Regulation Framework, Annex 1.

← 11. http://ec.europa.eu/internal_market/scoreboard/performance_by_governance_tool/tris/index_en.htm.

← 12. See Art. 2.9 TBT Agreement; Annex B para. 5 SPS Agreement.

← 13. See TBT Information Management System http://tbtims.wto.org/; and SPS Information Management system http://spsims.wto.org/.

← 14. See further clarification on the EU notification procedure for the SPS Agreement in (WTO, 2003[24]) and for the TBT Agreement at https://www.wto.org/english/tratop_e/tbt_e/8_EU_EP_e.pdf.

← 15. G/TBT/N/GBR/31.

← 16. Guidance is available for regulators to decide whether or not to include a review provision (Department for Business, 2017[25]).

← 17. www.legislation.gov.uk.

← 18. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/720816/regulatory_overview_2015-17_parliament_final_pdf.pdf.

← 19. See article 2, Regulation (EC) No 765/2008, https://eur-lex.europa.eu/lexuriserv/lexuriserv.do?uri=oj:l:2008:218:0030:0047:en:pdf. See also in this regard ISO/IEC 17000:2004, Conformity assessment — Vocabulary and general principles, which defines conformity assessment as: “demonstration that specified requirements relating to a product, process, system, person or body are fulfilled” (art. 2.1). An explanatory note elaborates: ‘Note 1 The subject field of conformity assessment includes activities defined elsewhere in this International Standard, such as testing (4.2), inspection and certification, as well as the accreditation of conformity assessment bodies”, https://www.iso.org/obp/ui/#iso:std:iso-iec:17000:ed-1:v1:en.

← 20. E.g. ISO/IEC 17065, 17020, 17021, 17024, 17025 or according to Regulation (EC) No 765/2008.

← 21. Regulation (EC) No 765/2008 of the European Parliament and of the Council of 9 July 2008 setting out the requirements for accreditation and market surveillance relating to the marketing of products, https://eur-lex.europa.eu/lexuriserv/lexuriserv.do?uri=oj:l:2008:218:0030:0047:en:pdflex.europa.eu/lexuriserv/lexuriserv.do?uri=oj:l:2008:218:0030:0047:en:pdf.

← 22. http://ec.europa.eu/DocsRoom/documents/18027/attachments/1/translations.

← 23. Regulation (EC) No 765/2008, https://eur-lex.europa.eu/lexuriserv/lexuriserv.do?uri=oj:l:2008:218:0030:0047:en:pdf.

← 24. http://ec.europa.eu/growth/tools-databases/nando/index.cfm?fuseaction=country.notifiedbody&cou_id=826.

← 25. https://ec.europa.eu/info/sites/info/files/file_import/industrial_products_en_1.pdf.

← 26. https://www.gov.uk/guidance/status-of-conformity-assessment-bodies-after-brexit#the-new-uk-legal-framework

← 27. UKAS will maintain its membership in EA for 2 years as of 31 January 2020.

← 28. HSE, Enforcement Policy Statement, www.hse.gov.uk/enforce/enforcepolicy.htm (accessed 23 October 2019).