U.S. WTO Submission - 'Determining the Need to Regulate' - A Document Even the 110th Congress Can Learn From

http://www.wtocenter.org.tw/SmartKMS/fileviewer?id=93847


World Trade Organization


Committee on Technical Barriers to Trade


G/TBT/W/285 (March 19, 2008)


DETERMINING THE NEED TO REGULATE

Communication from the United States


I. INTRODUCTION


1. In its successive reviews of the World Trade Organization Agreement on Technical Barriers to Trade (TBT Agreement), the TBT Committee has highlighted the importance and relevance of “good regulatory practice” as a tool for preventing the creation of unnecessary obstacles to international trade. From the U.S. perspective, an important component of good regulatory practice is the effective use of processes and analytic tools for determining the need to regulate. These processes and tools rely significantly on the commonly accepted principles for good regulatory practice originally set forth in the 1995 OECD Recommendation on Improving the Quality of Government Regulation and discussed in an earlier communication from the United States to the TBT Committee on “Good Regulatory Practice.”[1]


2. Discussions of good regulatory practice address issues that go beyond the scope of the TBT Agreement; nevertheless, the principles are relevant to the development and application of standards, technical regulations, and conformity assessment procedures. The successful application of good regulatory practices should reinforce, in a domestic context, the goal of preventing unnecessary obstacles to international trade.


3. This U.S. submission responds to the Committee’s invitation for the submission of papers and provides an overview and summary of the key elements that are part of the U.S. federal regulatory approach for determining when it is necessary to regulate.
[1] G/TBT/W/258, 26 October 2005.


A. Background

B. Identification of the Need for a Regulation

C. Consideration of Legal Requirements

D. Consideration of Alternatives

E. Risk Assessments[11]

F. Cost-Benefit Analyses[14]

G. Continual Reassessment of Need During the Regulatory Process


H. The Logic of the Decision


1. During the preparation or review of a draft regulation, there are a number of questions that should be asked to ensure that the regulatory decision is justified. This process can be somewhat like a peer review, with questions being asked about the basis for assumptions or the source of data, about legal authority or policy judgments, etc. Many of these questions reflect the disciplines and principles of the WTO agreements, particularly the TBT Agreement.


The basic, general questions that should be addressed, with some possible follow-up questions, include:


(a) Is the problem or policy goal clear? For example, for a safety regulation, why do private markets provide less than the optimal amount of safety? Have the agency officials made the objective clear enough to ensure that it will be met by the regulatory action? Are they sure that a regulation is being issued to address a problem that really exists?


(b) Will the regulatory action address the problem? If the objective is to make bathrooms in a building accessible to disabled persons, for example, will the regulation require that the bathroom be accessible, but not that the building itself be accessible? If you require that drug or food labels include information for the consumer to ensure they do not use drugs or food that may be harmful, would tests show that the average person would not understand the label? If you require seats on aircraft that will withstand greater crash forces, will the aircraft floor be strong enough to hold the seat in place when subject to those forces?


(c) Do the data and the analyses support the decision? Are the costs and market distortions minimized while the benefits are maximized? Are data sources reliable? Are the ranges of possibilities so broad that the basis of the decision is questionable?


(d) Is the action sensible? Is it possible that a mistaken decision could cause serious harm to the marketplace or adversely affect health, safety, or the environment?


(e) Are the assumptions reasonably explained and supported? Are appropriate sensitivity analyses conducted to respond to challenges to assumptions?


(f) Does the regulation comply with legal requirements, including international agreements (including the WTO agreements, bilateral and regional free trade agreements, and mutual recognition agreements) to which the United States is a party, statutes (including implementing legislation for such agreements), executive orders, and regulations?


(g) Are conflicts or other effects on achieving other objectives and requirements explained and justified? Assuming, for example, that a regulation is necessary, in assessing alternatives has there been any consideration of how other governments have chosen to regulate in this particular area? Have there been any consultations with foreign governments?


(h) Could the regulatory action have unintended consequences? Could the increase in costs for a product or service as a result of a required safety improvement cause consumers to choose alternatives even less safe than the product or service before it was improved? Because of costs, would a company have to forego one safety protection in order to provide another required protection? For example, would consumers choose a less safe way to travel, if regulations raised the cost of another mode of transportation? Would patients refuse to take a necessary drug, because a required warning about a very minor risk associated with the medication scared them?


(i) Will the action promote or hinder innovation, competition, trade, and investment? If the regulation does not reference or incorporate performance standards, specifically internationally-developed standards, if available, why not? Does the regulation require the use of U.S. certification agencies or laboratories and, if so, why? Will foreign businesses have a hard time complying because the regulation is based on U.S. industry manufacturing processes?


(j) Are there reasonable alternatives and explanations for their rejection?


(k) Is the regulation clear, practical, and easily enforced? Would a regulatory alternative that is more acceptable to the regulated community but establishes a slightly lower level of protection end up providing more protection if regulated entities were more likely to comply with it? Or if it were easier for the industry to comply?


III. CONCLUSION


33. A thoughtful, open, and transparent process for examining the need for regulation leads to better decisions. Well-done analyses are exceptionally valuable tools in this decision-making process. They have convinced advocates of one position or another to change their minds about a particular action.


34. If the process is used correctly, there will be better participation in the process by the public and other governments, and regulations are much less likely to create trade barriers or other problems.


FOOTNOTES


[1] G/TBT/W/258, 26 October 2005.


[11] See f.n. 3, supra. See also, Treasury and General Government Appropriations Act for FY 2000, Pub. L No. 106-554; § 515 (“Quality, Objectivity, Utility, and Integrity of Information” and OMB “Guidelines for Ensuring and Maximizing the Quality, Objectivity, Utility, and Integrity of Information Disseminated by Federal Agencies” (2002). {[3] See “Updated Principles for Risk Analysis” (December 19, 2007 memorandum from the Administrator, Office of Information and Regulatory Affairs (OIRA), Office of Management and Budget (OMB), and the Associate Director and Deputy Director for Science, Office of Science and Technology Policy; OMB regulatory documents are generally available at http://www.whitehouse.gov/ omb/inforeg/regpol.html).}


[14] See f.n. 4, supra. {[4] See OMB Circular No. A-4, “Regulatory Analysis” (2003).}

Democratic Party Trade Protectionism Rhetoric Reveals Promises That Cannot Be Delivered: Unions Beware!

http://167.206.188.34:2000/article/wtMostRead/idUKN0563245720080305?virtualBrandChannel=10112


NAFTA reform just the start - U.S. trade critics


By Doug Palmer


March 5, 2008

WASHINGTON (Reuters) - The next U.S. president needs to fundamentally redirect U.S. trade policy to preserve manufacturing jobs and reduce the huge trade deficit -- not just tinker with the North American Free Trade Agreement, critics of U.S. trade deals said on Wednesday.


"We need to change the whole discussion about investment, about subsidies, about enforcement of trade laws," said Leo Gerard, president of the United Steelworkers union. "How does any country continue to prosper when it's accumulating an average annual trade deficit of about $700 billion per year?"


On Tuesday, Sen. Hillary Clinton revived her chances of winning the Democratic party's presidential nomination by beating her rival Sen. Barack Obama in three of the four states that held contests that day.


In recent weeks, both Clinton and Obama have increased their criticism of NAFTA and said they could pull the United States out of the pact if Mexico and Canada did not agree to renegotiate it.


[EVERYONE KNOWS THAT THEY ARE NOT SPEAKING THE TRUTH]


The two candidates have talked mainly about adding enforceable labor and environmental provisions to the pact.


[LABOR & ENVIRONMENTAL PROVISIONS WILL DO NOTHING TO KEEP JOBS IN AMERICA, WHEN THE BASIC COSTS OF LABOR ARE SO MUCH LESS TO BEGIN WITH. CLINTON & OBAMA PROMISES OF ENFORCEMENT OF THESE TYPES OF PROVISIONS WILL ONLY ANGER OUR TRADING PARTNERS AND FURTHER ALIENATE THE U.S. FROM THE WORLD, EXCEPT, PERHAPS, FROM THE EUROPEAN UNION, WHICH FAVORS SUCH NUANCED TYPES OF TRADE PROTECTIONISM. UNIONS SHOULD BEWARE OF DEMOCRATIC PARTY PROMISES THAT CANNOT BE DELIVERED.]




But Lori Wallach, director of Public Citizen's Global Trade Watch, said it was more important in the short term to change the agreement's investment provisions because they encourage U.S. companies to move jobs to Mexico.


Similar reforms are needed in other trade agreements, including the one that set the terms of China's entry into the World Trade Organization in 2001, she said.


[MS. LORI WALLACH IS ANTI-INDUSTRY, ANTI-FREE MARKET, ANTI-PRIVATE PROPERTY, AS THE ITSSD UNFORTUNATELY FOUND OUT WHILE ATTENDING SEVERAL U.S. GOVERNMENT STAKEHOLDER MEETINGS HELD IN WASHINGTON, DC IN THE PAST. SHE IS 'SHORT' ON BUSINESS & ECONOMICS KNOWLEDGE, BUT 'LONG' ON EMOTION AND RHETORIC.]


Wallach blamed NAFTA, China's WTO accession and other trade agreements for many of the roughly 3 million manufacturing jobs the United States has lost since 2000.


[UNFORTUNATELY, MS. WALLACH IS OUT OF TOUCH WITH REALITY. U.S. MANUFACTURERS FROM NUMEROUS INDUSTRY SECTORS HAVE BEEN FALLING OVER EACH OTHER TO MOVE MANUFACTURING JOBS & INVESTMENTS OVERSEAS, ESPECIALLY TO CHINA, SINCE THE MID-1990'S WHEN THE WORLD TRADE ORGANIZATION WAS CREATED. THE WTO PROVIDED FOR THE EVENTUAL PHASE-OUT (OVER A TEN YEAR PERIOD SPANNING 1995-2004) OF IMPORT QUOTAS, INCLUDING U.S. IMPORT QUOTAS IMPOSED ON CHINESE TEXTILES, WHICH FINALLY FELL TO ZERO, PURSUANT TO THE WTO AGREEMENT ON TEXTILES AND CLOTHING (ATC), ON DECEMBER 31, 2004. THE U.S. IS STILL PERMITTED, BY A BILATERAL AGREEMENT REACHED WITH CHINA DURING NOVEMBER 2005, TO IMPOSE QUOTA RESTRICTIONS ON CERTAIN CHINESE TEXTILE EXPORTS UNTIL DECEMBER 31, 2008. SEE: http://www.ustr.gov/assets/Document_Library/Fact_Sheets/2005/asset_upload_file813_8339.pdf CHINA'S VIRTUAL MONOPOLIZATION OF THE WORLD TEXTILE MARKET HAS EVEN PLACED TURKEY'S FORMIDABLE TEXTILE INDUSTRY IN A NONCOMPETITIVE POSITION. PERHAPS INDIA POSES THE ONLY REAL CHALLENGE. WHILE RICARDIAN SPECIALIZATION PROVIDES THE WORLD WITH AN OVERALL BENEFIT - AFFORDABLE TEXTILES, THERE WILL BE LOSERS, NAMELY LABOR, IN MOST OTHER COUNTRIES.


CHINA'S ACCESSION TO THE WTO DURING DECEMBER 2001 SOLIDIFIED CHINA'S PLACE AMONG THE WORLD'S MAJOR TRADING NATIONS, AND THUS BEGAN THE PROCESS OF SLOWLY OPENING UP CHINA'S MARKETS TO FOREIGN INVESTMENT. IF ANYTHING, CHINA MUST BE PREVENTED FROM MANIPULATING ITS FOREIGN INVESTMENT RULES AS DISGUISED MARKET ACCESS BARRIERS. IN ADDITION, CHINA MUST BE HELD TO STRICT WTO STANDARDS AS CONCERNS ITS INSUFFICIENT PROTECTION OF U.S. INTELLECTUAL PROPERTY RIGHTS. SO, YES, MS. WALLACH, THERE IS A NEED FOR ENFORCEMENT OF WTO RULES TO SAVE U.S. JOBS & KNOW-HOW. HOWEVER, ENFORCING WTO LABOR OR ENVIRONMENTAL RULES WILL NOT BRING BACK U.S. JOBS.]


The Bush administration -- noting that U.S. manufacturing output and exports set records last year -- argues that increased worker productivity and advances in manufacturing technology account for many of the lost jobs.


Also, total U.S. employment has grown 24 percent since Congress approved NAFTA in 1993, and U.S. unemployment has averaged 5.1 percent since the pact went into force compared to 7.1 percent in 1980 to 1993, the U.S. Trade Representative's office said in a NAFTA fact sheet.


The Steelworkers' Gerard called USTR's statistics "bullshit" because they gloss over real job losses in key industrial sectors such as steel and autos.


[U.S. AUTO MANUFACTURERS UNFORTUNATELY DO NOT MAKE QUALITY PRODUCTS THAT CAN EFFECTIVELY COMPETE WITH THE LIKES OF TOYOTA, NISSAN & HONDA, LET ALONE, KIA & HUNDAI. THERE ARE NO CHINESE MANUFACTURED CARS EXPORTED TO THE U.S. DUE TO MUCH LOWER BASIC LABOR COSTS IN INDIA & CHINA, THE U.S. STEEL INDUSTRY BEGAN MIGRATING THERE YEARS AGO. THE DEMOCRATS ONLY NEED LOOK AT FORMER U.S. STEEL TOWNS SUCH AS PITTSBURGH TO SEE HOW JOBS CAN BE CREATED WITHOUT TRADE PROTECTIONISM. PITTSBURG HAS SINCE RECREATED ITSELF AS A HI-TECHNOLOGY RESEARCH & START-UP MECCA. THE PROBLEM IS NOT ONLY A CHINESE PROBLEM. IT IS ALSO AMERICAN RELUCTANCE TO ADAPT TO CHANGE.]


NAFTA ALSO MEANS CHINA


The next president also needs to take a tougher stance on trade with China, which is responsible for a large portion of U.S. trade gap, said, Sen. Sherrod Brown, Ohio Democrat.


"In my state and in much of middle class America, NAFTA stands for trade policy generally," Brown said.


Many lawmakers believe Beijing deliberately undervalues its currency to give its companies a trade advantage.


Brown said he and other freshmen Democratic senators would continue pushing this year for legislation aimed at forcing China to revalue its currency, and have drawn a line in the sand against approving a free trade pact with Colombia.


[BROWN & OTHER DEMOCRATS ARE PLAYING POLITICAL ROULETTE HERE. THIS IS A FOOLISH GAME OF LOSE-LOSE. CONGRESSIONAL DEMOCRATS SIMPLY WILL NOT ADMIT TO THEIR LIBERAL CONSTITUENCIES THAT THEY CANNOT BRING AMERICAN JOBS BACK. THIS IS NOTHING MORE THAN VOTE PANDERING.]


In a separate speech, U.S. Trade Representative Susan Schwab said NAFTA had been good for all three countries and warned reopening it could backfire on the United States.


"The notion that you can reopen an agreement like NAFTA and not expect Canada or Mexico to ask for things from us that they didn't get last time" is unrealistic, she said.


Instead of preserving U.S. jobs, changing the pact could put at least some jobs at risk, Schwab said.


She described Clinton and Obama's sparring over who was toughest on NAFTA as a "rhetorical race to the bottom."