Executive summary

The overwhelming pace of technological change and the unprecedented interconnectedness of economies present governments with uncertainty and complexity in terms of what and how to regulate. In such a context, international regulatory co-operation (IRC) has become a critical dimension of regulatory quality and effectiveness. This reality, as well as the withdrawal of the United Kingdom from the European Union (EU), have a significant effect on the United Kingdom’s rulemaking landscape. Developing a strong IRC strategy has become particularly critical to help the United Kingdom ensure that rulemaking remains adapted to the global context in which the country operates.

This Review on International Regulatory Co-operation analyses and builds on the strong regulatory policy framework established by the United Kingdom to identify where and how international considerations and co-operation can be further embedded in rulemaking to avoid undue inconsistencies and support regulatory effectiveness. This review takes a medium- to longer-term view of the reforms that the United Kingdom could bring to its rulemaking systems to encompass greater international considerations and does not focus strictly on the short-term discussions on the EU withdrawal. These pivotal times for the United Kingdom come with a strong opportunity to revisit traditional better regulation disciplines, including more systematically considering the broader regulatory environment beyond the EU and the single market. With the United Kingdom already playing a leading role in regulatory policy and international co-operation, it is only natural for it to engage more actively in IRC.

The study starts by setting the scene with an overview of the context of IRC policies and practices (Chapter 1). It then reviews the rulemaking machinery to identify the entry points for IRC (Chapter 2). Chapter 3 presents the co-operation practices and tools used by departments and regulators. In Chapter 4, four specific sector case studies (financial services, nuclear energy, medical and health products, and product safety) illustrate various IRC practices and challenges. Finally, building on the in-depth understanding of the United Kingdom rulemaking activities provided by previous chapters, the report offers recommendations to strengthen IRC.

The United Kingdom has been a leader in regulatory policy among OECD countries for years. It has well-established regulatory disciplines, cross-government policies providing incentives for a range of regulators to pursue common objectives and various actors supporting and overseeing the conduct of regulatory policy. However, IRC is still implicitly rather than overtly embedded in the United Kingdom’s existing institutional and policy framework for regulatory policy. A multiplicity of actors are involved in the conduct of IRC, but none is clearly tasked with its oversight, and there is no common narrative or policy to catalyse these various actors’ energy. This results in an ad hoc approach to IRC, both in the unilateral regulatory process and the UK’s bilateral, regional and multilateral co-operative efforts.

There are various “entry points” for IRC in the United Kingdom’s regulatory process, offering regulators “unilateral” opportunities to embed international considerations in their rulemaking. In particular, the country’s former membership in the European Union entailed a strong anchoring in EU legislation, the embedding of international standards in UK British standards (in particular via European standards) and mechanisms to prevent undue trade impacts of UK regulations for other EU countries (e.g. through the notifications of draft regulations to the EU Commission and a common conformity assessment and accreditation system). In addition, the United Kingdom better regulation agenda also has several entry points for taking into account the international context more broadly. International instruments and overseas practices are sometimes considered in the context of identifying various alternatives to address a specific policy challenge. A new RIA template, with an international trade and investment-related question, is also under trial. Post-implementation reviews may be used to identify how a domestic measure’s impact compares to different approaches followed abroad.

Historically, the United Kingdom has actively co-operated internationally on laws and regulations as well as on regulatory policy. It does so through bilateral engagement with foreign peers through traditional co-operation tools (Treaties, Memoranda of Understanding) and through participation in numerous international organisations and initiatives, at many levels of government. A large portion of the country’s international co-operation efforts, such as those related to trade, were under the auspices of the EU, leaving UK bodies with less initiative in this respect. Beyond this, and even when the rulemaking competence did remain largely at the member state level, UK regulators were integrated in a number of EU initiatives, networks and agencies.

The United Kingdom’s withdrawal from the EU places a new responsibility on the United Kingdom for repatriating a number of regulatory functions, establishing the cooperation needed to fill the potential losses of privileges and designing a trade policy to address the trade costs of regulatory divergences with both EU members and other trading partners. The EU remains the UK’s first partner in many regulatory areas, and thus close co-operation will likely continue between the EU and the UK. However, the withdrawal from the EU will likely influence the terms of this co-operation and lead regulators to seek or strengthen complementary co-operation initiatives beyond the EU.

The UK’s request for the OECD to conduct an IRC Review is testament to the country’s ambition of ensuring that its IRC processes follow international best practices. It is a unique opportunity for the UK to continue showing leadership on the regulatory policy agenda, in an emerging policy area where most countries are still struggling to establish the basis of the approach. To support the United Kingdom in this endeavour, the OECD provides recommendations and aspirational directions in three areas:

• building a holistic IRC vision, a strategy and political leadership for IRC in the United Kingdom, with clearly defined roles and responsibilities for key players, to develop quality regulation in a globalised context.

• better embedding IRC considerations in policy tools throughout the rulemaking cycle in order to guarantee that they are genuinely and systematically considered by UK departments and regulators;

• increasing awareness and understanding about IRC across departments and regulators, including on the variety of existing IRC practices, and engage stakeholders to inform the development of IRC initiatives.