New Executive Order on Regulatory Harmonization

Yesterday the White House released a new Executive Order on “Promoting International Regulatory Cooperation.” The stated purpose of the E.O. is to encourage the harmonization of regulatory requirements to simplify regulatory compliance, reduce costs for transational companies and facilitate international trade. As OIRA Administrator Cass Sunstein explains in a White House release:

The new Executive Order will promote American exports, economic growth, and job creation by helping to eliminate unnecessary regulatory differences between the United States and other countries and by making sure that we do not create new ones.

As I discuss in an op-ed in today’s Wall Street Journal, the order makes clear that in eliminating such differences, we will respect domestic law and will not compromise U.S. priorities and prerogatives. Even while insisting on those priorities and prerogatives, we can eliminate pointless red tape. Today’s global economy relies on supply chains that cross national borders (sometimes more than once), and different regulatory requirements in different countries can significantly increase costs for companies doing business abroad. As the President’s Jobs Council recently noted, international regulatory cooperation canreduce these costs and help American businesses access foreign markets. Such cooperation can also help U.S. regulators more effectively protect the environment and the health and safety of the American people.

Sunstein also made the case for the E.O. in the WSJ, providing an example of the sort of harmonization the Administration has in mind:

Today’s action builds on many other administration efforts to eliminate unjustified regulatory costs and to reduce burdens by promoting international regulatory cooperation.

One example: The U.S. has long required employers to use warning symbols to inform employees of potential safety hazards. Other nations require warnings, too, but in many cases they mandate the use of different symbols. The result of the disparate requirements is to impose pointless costs on those who do business in more than one nation. Why should chemical manufacturers have to create multiple labels for the same product in different countries?

To address this problem, the Department of Labor recently harmonized its labeling requirements with those of many nations around the world, a reform that is projected to save American businesses more than $475 million each year.

This E.O. seems to be a fairly standard good-government reform that could reduce regulatory burdens and facilitate compliance without altering substantive protections. SO it should be non-controversial, right? Apparently not. As RegBlog reports, Public Citizen argues the E.O. is a “smokescreen for deregulation.” It’s almost as if any measure to reduce regulatory costs is necessarily suspect, in and of itself.

The Center for Progressive Reform, a pro-regulatory group, is likewise suspicious. It attacked the Administrative Conference of the United States for co-sponsoring an event yesterday with the U.S. Chamber of Commerce on “Next Steps & Implementation of ACUS Recommendations on: Incorporation by Reference & International Regulatory Cooperation.” Even though the ACUS has urged greater attention to international coordination, teaming with the Chamber to support a discussion of the issue is apparently “over the line” because of the Chamber’s “enormously destructive crusade against regulation.” And yet this “crusade” was nowhere in evidence on the conference program. Most of the speakers at the event were federal government officials, including Sunstein who spoke about the new E.O. (The agenda is here.) Indeed, other than C. Boyden Gray, former U.S. ambassador to the E.U., and one Chamber official who moderated one panel, there was no one on the program who could be plausibly characterized as “anti-regulation,” and neither the Chamber nor Ambassador Gray is much of an anti-regulatory zealot. So the ACUS’ offense seemed to be no more than encouraging discussion of its own recommendations with those who are affected by regulatory harmonization. Sometimes it seems groups that self-identify as “pro-consumer” or “pro-environment” could be more accurately described as “pro-regulation.”