International Regulatory Cooperation: Will Harmonization Protect the Public or Prioritize Corporate Profits?

by Jessica Randall, 5/3/2012

A May 1 Executive Order on international regulatory cooperation has raised questions about how regulatory agencies set their priorities. Regulatory cooperation is neither a particularly new idea, nor an inherently bad one – but if not handled carefully, it could undercut the public protections on which Americans depend.

It shouldn't shock anyone to hear that we are living in an increasingly interdependent world. Consider only the FDA: in 2009, it was responsible for overseeing imports from more than 300,000 drug facilities, totaling $2 trillion worth of products from 150 countries. And, between 2002 and 2010, imports of food, drugs, and medical devices all more than doubled. Because of these changes, the agency says that "FDA’s success in protecting the U.S. public depends increasingly on its ability to reach beyond U.S. borders."

International regulatory cooperation sometimes makes sense: for example, the Department of Labor has recently adopted the Globally Harmonized System of Classification and Labeling of Chemicals (GHS). The GHS was the result of an international negotiation involving governments, industry, and labor unions. OSHA estimates it will save American companies $475 million each year (because they can use the same label in different countries) and keep workers safer (because the warning system will be more consistent).

But too often, international regulatory cooperation becomes a race to the bottom, elevating corporate trade concerns over public protections. On May 1, the Administration announced an Executive Order on "Promoting International Regulatory Cooperation." That afternoon, the Administrative Conference of the United States and the U.S. Chamber of Commerce co-hosted a conference on international regulatory cooperation.

Increased emphasis on international regulatory cooperation could be a good thing – if its priority is to improve and maintain regulatory protections across borders. But, too often international cooperation is an excuse to water down protections to the lowest level – a move that typically hurts American workers, consumers, and environment. Our goal should be to have American safeguards represent the “gold standard” worldwide.

Nor should international regulatory harmonization be used as an excuse to limit public participation in the regulatory process. Unfortunately, treaty negotiations controlled by the U.S. Trade Representative typically exclude most public interest groups and consumer organizations, while ensuring maximum corporate involvement and influence. In a disturbing example, "stakeholder presentations" - the only opportunity for public input - were recently eliminated from the meetings surrounding the negotiation of the Trans-Pacific Partnership (TPP), but corporations and industry representatives are still being invited to participate in the TPP talks. In fact, the U.S. Chamber of Commerce – which vigorously supports legislation to undercut public protections – boasts that its recommendations formed the basis for the U.S. negotiating positions.

Alarmingly, previous trade agreements have been interpreted to undermine a nation's ability to regulate within its own borders. For example, the U.S. had prohibited the sale of clove cigarettes on public health grounds. That regulation was recently struck down on grounds that it violated World Trade Organization agreements. Even more egregiously, the North American Free Trade Agreement allows corporations to challenge foreign regulations – and recently, a Canadian trade association raised a challenge to a rule authorized by the Dodd-Frank financial reform law.

As the American economy globalizes, the American regulatory system will have to as well. International regulatory cooperation can be a force for good, if it means that regulators from different nations are working together to enact common-sense standards that are clearer and more consistent and protect citizens no matter where they live. But if corporate special interests are being prioritized over essential public protections, no one should cooperate with that.

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