The UK must urgently renew its approach to developing regulations

By on 10/05/2020
Angel Gurría. Photo courtesy OECD/Herve Cortinat

As the UK prepares to repatriate the EU’s responsibilities, an OECD review has identified the challenges facing civil servants charged with building the new regulatory frameworks required to safeguard the interests of its citizens and organisations overseas. Writing exclusively for GGF, OECD Secretary-General Angel Gurría outlines its findings

The Covid-19 pandemic is threatening the health and livelihoods of citizens worldwide. It is a stark reminder that co-ordinated government policies are sorely needed to contain epidemics and to deal with their economic and social ramifications. If anything, the Covid-19 crisis reinforces the need for the United Kingdom to prepare its economy, its society and its democracy for a new post-Brexit reality.

In the near future, the UK will have repatriated most responsibilities – essentially regulatory – that previously belonged to the European Union. After almost 50 years of rulemaking, largely geared towards access to the single market and EU-driven co-operation, the country is facing an urgent need to clarify and renew its core Better Regulation Principles, while applying an international co-operation lens to them.

The UK has been a leader in better regulation among OECD countries for years. It has well-established regulatory disciplines, cross-government policies and solid oversight institutions. However, these still largely fail to recognise the international reach of UK’s rulemaking actions. The new OECD Review of International Regulatory Co-operation illustrates the UK’s resolve to adapt to a world vulnerable to global crises such as Covid-19 and climate change ­– one that the country has decided to face outside of the EU.

Learn from overseas

In the UK, as elsewhere, laws and regulations increasingly need to account for the international environment and nations’ own footprints abroad to remain effective and not overburden businesses and citizens who have to implement them. The rulemaking process should provide an opportunity to gather this intelligence – in particular through regulatory impact assessment and stakeholder engagement.

However, beyond recent efforts to account for how regulations impact trade and investment, in the UK there is still no systematic consideration of evidence and approaches used by other countries or international organisations in similar situations. Departments and regulators tend to focus more squarely on the direct regulatory costs of laws and regulations to business and less on their coherence internationally.

Having left the remit of EU regulatory bodies, the UK must now replicate their operations across the country’s activities – at home and abroad. Photo by European Parliament

Now that it has left the EU, the UK has lost its automatic privileged access to the range of networks and bodies gathering EU regulators in different sectors. In addition, the UK no longer acts through a bigger bloc of countries in a number of international co-operation fora, also changing the UK’s place in the global scene. As a result, regulatory connections need to be rethought bilaterally, regionally and multilaterally.

Strengths to build on

Co-operation with the EU will not vanish – the EU remains the UK’s primary partner in many regulatory areas. To cite two examples explored in this review, the EU is the UK’s largest financial services export market (43% of UK exports and 34% of UK imports in 2017) and a major source of pharmaceuticals (46% of UK exports and 76% of UK imports were to and from EU countries in 2017). So the UK will need to maintain close ties with the EU regardless of the modalities of its withdrawal. Still, the withdrawal from the EU de facto imposes a rethink and a strengthening of co-operation initiatives beyond the EU to diversify its partners and compensate for previous EU co‑operation mechanisms.

The pharmaceutical trade is crucial to both the UK and EU – and new regulatory frameworks are urgently required. Photo by Asemi via Wikimedia

The UK can rely on its thriving participation in international organisations and platforms; the Covid-19 crisis has highlighted its strong participation in the WHO and other critical international organisations. Looking ahead, it would benefit from a more co-ordinated vision for coherence in UK contributions to international bodies and greater peer-to-peer learning among departments and regulators, namely on how to best bring back home the benefits of participating in international fora.

Our recommendations

To capitalise on the UK’s well-recognised leadership role in regulatory policy and on its international dynamism, the OECD provides a series of recommendations to support the country in:  

Building and disseminating a whole-of-government strategy for international regulatory co-operation. There are many examples where co-operation has benefitted government, regulators, business and citizens – the report provides case studies on medical and healthcare products, financial services, nuclear energy, and product safety. These examples and the narrative identifying the rationale and benefits of IRC more generally need to be developed and shared widely. The institutions tasked with various parts of the IRC agenda – including the Better Regulation Executive and the Regulatory Policy Committee; the Foreign and Commonwealth Office; and the Department for International Trade – should be given clearer roles and responsibilities.

Applying an international lens to UK rulemaking, to embrace the best of globalisation and strengthen its resilience to global vulnerabilities. The value of international expertise, instruments and best practices needs to be recognised and embedded within relevant legislation, policy documents and guidance. Methodological tools are needed to support departments and regulators tapping into this international knowledge to design and revise rules and to account for their international impacts.

Increasing awareness and understanding among UK departments and regulators of international regulatory co-operation. This includes communicating on the various co-operation avenues (from exchange of information to using mutual recognition approaches or developing joint rules), and facilitating access to applicable international and foreign instruments relevant to the UK. In addition, engaging stakeholders on cooperation opportunities can help to identify existing frictions and focus co-operation efforts on the most effective initiatives.

At a time when international regulatory co-operation is increasingly essential for countries to address transboundary policy challenges, the experience of the UK showcased in this review can offer valuable lessons to other countries within the OECD and beyond.

The Organisation for Economic Cooperation and Development’s Review of International Regulatory Co-operation of the United Kingdom is available on the OECD’s website.

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