Identifying Regulations Affecting International Trade and Investment

Better Classification Could Improve Regulatory Cooperation
April 27, 2016

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Although technological and political innovations have reduced many of the traditional barriers to international trade and investment flows, regulatory differences between countries persist as lingering barriers to trade. Countries agree that notifying each other of upcoming regulations that may affect international trade and investment is an important mechanism of international regulatory cooperation, which attempts to minimize the creation of unnecessary and costly regulatory divergence. Since 2008 regulatory agencies in the United States have been required to flag regulations they intend to issue that are likely to have an effect on international trade and investment. This paper quantifies how many of the thousands of rules published every year by U.S. agencies are likely to have a significant effect on international trade and investment and analyzes how well agencies are performing at flagging these rules. The results indicate that there is much room for improvement in notifying trade partners and expanding stakeholder participation to improve the outcomes of rulemaking.