Achieving Regulatory Policy Objectives: An Overview and Comparison of U.S. and EU Procedures

March 11, 2015

Susan E. Dudley
Kai Wegrich

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This project was funded in part by the European Union.


The quality and extent of government regulation is “a major determinant of prosperity." As the World Bank observes, “a thriving private sector—with new firms entering the market, creating jobs and developing innovative products—contributes to a more prosperous society,” “promotes growth and expands opportunities for poor people.”

The United States and the European Union, along with other “OECD high-income economies continue to have the strongest legal institutions and the least complex and costly regulatory processes on average” according to the World Bank’s annual Doing Business survey.

All the top countries [in the Bank's survey] regulate, but they do so in less costly and burdensome ways. And they focus their efforts more on protecting property rights than governments in other countries.

As the U.S. Office of Management and Budget has noted, these “results are also consistent with economic theory, which predicts that economic growth is enhanced by regulatory policies that promote competitive markets, secure property rights, and intervene to correct market failures rather than to increase state influence.”

Well-reasoned regulatory policies and practices that are not excessively burdensome can not only facilitate economic growth and public welfare within countries, but they can support international trade and investment, which raises standards of living across jurisdictions. Recognizing this, the Transatlantic Trade and Investment Partnership (T-TIP) between the EU and the U.S. aims to be “an ambitious and comprehensive trade agreement that significantly expands trade and investment between the United States and the EU, increases economic growth, jobs, and international competitiveness, and addresses global issues of common concern.” While recognizing that Europe and the U.S. have an “immensely successful economic relationship,” officials on both sides of the Atlantic hope to “do more to strengthen the contribution of trade and investment to fostering jobs, growth, and competitiveness in both economies.”

The success of T-TIP depends on strengthening EU-U.S. regulatory coherence, and reducing regulatory barriers to transatlantic trade and investment. As our economies become more global, and the EU and U.S. work to reduce tariffs and explicit trade barriers, regulations are emerging as more important and significant barriers to trade. Not only can poorly designed or conflicting regulations inhibit transatlantic trade and investment, but differences in regulatory policy and procedural approaches may continue to challenge economic partnerships between the EU and U.S. While forward-looking (horizontal) regulatory cooperation efforts have been relatively successful, and may offer more opportunities than efforts to change existing regulations, they also face significant challenges. In particular, procedural differences in how regulations are analyzed, developed, and enforced must be understood if regulatory cooperation is to be achieved.

Thus, one of the goals of the T-TIP negotiations is to agree upon:

Cross-cutting disciplines on regulatory coherence and transparency for the development and implementation of efficient, cost-effective, and more compatible regulations for goods and services, including early consultations on significant regulations, use of impact assessments, periodic review of existing regulatory measures, and application of good regulatory practices.

Achieving this goal requires both policy research to identify and analyze key challenges, and public debate to develop politically-feasible solutions. This paper aims to provide a descriptive analysis of procedural differences in regulatory development to serve as a factual basis for understanding the regulatory challenges and opportunities for transatlantic trade.