October 18, 2013

Office of Information and Regulatory Affairs Office of Management and Budget 725 17th Street, NW Washington, DC 20503 Privy Council Office 85 Sparks Street Ottawa, Ontario Canada K1A 0A3 Dear Sir/Madam: The U.S. Chamber of Commerce the worlds largest business federation representing the interests of more than three million business of all sizes, sectors, and regions is a strong supporter of the U.S.-Canada Regulatory Cooperation Council (RCC). The Chamber appreciates the opportunity to provide comments on how best to move the RCC forward and is particularly pleased to provide input on institutionalizing regulatory cooperation between the United States and Canada. The Chamber has been pleased at the commitment of the U.S. and Canadian governments to find creative methods to grow our important economic relationship. The United States and Canada are two deeply integrated economies that enjoy the worlds largest bilateral trading relationship. Goods and services often cross the border several times before turning into a final product and arriving at an end user. Therefore, as two high-income democracies with advanced regulatory systems and similar expectations of protection, it is only natural that we search for ways to deepen our level of regulatory cooperation to increase efficiency and more effectively face thirdcountry risk. The RCC has served as an impetus to meet these shared goals, while also spurring jobs and growth. It should represent a long-term commitment towards improving North American regulatory processes and leveraging resources to ensure our regulators incorporate the best solutions to issues in an increasingly integrated global society. In response to the 2012 RCC Progress Report to Leaders issued by the Office of Information and Regulatory Affairs (OIRA) and the Privy Council Office (PCO), the Chamber offered suggestions for deliverables for the RCC to achieve real success over the next five years and beyond.1 We are pleased that the RCC leadership has adopted some of the suggestions related to stakeholder engagement and notes there has been an increase in communication. We strongly urge both the U.S. and Canadian governments to continue striving to increase the amount and quality of stakeholder engagement activities and also incorporate new initiatives that touch upon an increased number of sectors. The Chamber sees an engaged stakeholder community as a foundational element needed for the RCC to be truly successful. Therefore, the Chamber and a diverse group of stakeholders are
Available at: http://www.uschamber.com/sites/default/files/grc/US%20Chamber%20Response%20to%20RCC%20Progress%20R eport%20Dec%202012.pdf.
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serving as signatories on a parallel submission, which provides suggestions on strengthening stakeholder engagement, increasing transparency, growing the work program of the RCC, and allowing for new initiatives to be chosen or existing initiatives enhanced or restructured on a rolling continuous basis. The RCC has shown great potential and demonstrated some early success, but it is still a work in progress and more needs to be done to ensure it is self-sustaining. These comments will focus largely on the specifics of the institutional mechanisms needed to make U.S.-Canada regulatory cooperation a part of routine regulator activities and to deepen the level of overall cooperation, unlocking the potential for much greater gains. Structural Improvements and RCC Oversight Both U.S. and Canadian regulators have been willing partners in the RCC, but in order to further the RCCs goals more should done to empower regulators to proactively engage in regulatory cooperation as part of their everyday activities. A clear goal should be established for regulators to work together towards eliminating and preventing unnecessary regulatory differences. This may in turn require regulators on both sides of the border to be charged with identifying any areas where there are administrative or regulatory process related barriers preventing enhanced cooperation, such as statutory restrictions on fund sharing or ex parte communications. These potential barriers should be made public by the RCC co-chairs, and the U.S. and Canadian governments should work with stakeholders, and in some cases Congress and Parliament, to develop solutions. The RCC should also establish a formal review process including both governments and stakeholders. This review process should occur twice a year and be used to generate new ideas as well as examine the work to date. Having a process in place will be especially important if the RCC co-chairs empower regulators, in conjunction with stakeholder advisement and sound data, to begin adding new cooperative initiatives on their own. It will be important for OIRA and the PCO to continue to retain chair roles and serve as arbiters of any problems that arise, but progress can be accelerated if they establish a set of guidelines for regulators to follow to add initiatives to the RCC themselves. The RCC co-chairs should establish broad horizontal best practices on stakeholder engagement and transparency and task individual regulators to lay out a credible plan for future engagement with their counterparts and stakeholders. The engagement best practice should be applied to all their activities, not just those officially under the RCC banner. This in turn allows the regulators to use the RCCs resources and time more effectively and allows them to use their expertise in an efficient manner, crafting plans that best fit their sectors. Canada has already developed much of the process needed for regulators to maximize the benefits from regulatory cooperation in its comprehensive Guidelines on International Regulatory Obligations and Cooperation (Guidelines).2 The United States has begun to take similar steps to develop best practices for promoting regulatory cooperation in Executive Order 13609.3 The RCC co-chairs should seek to enshrine and build upon the goals set out in the EO and in particular in the Guidelines to empower regulators moving forward. We have included the key Guidelines recommendations in an Annex at the end of this submission and encourage the United States to also consider adopting many of the steps as part of any guidance stemming from EO 13609. The
See http://www.tbs-sct.gc.ca/rtrap-parfa/iroc-cori/iroc-cori01-eng.asp#Toc175098386. Available at http://www.whitehouse.gov/the-press-office/2012/05/01/executive-order-promoting-internationalregulatory-cooperation.
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Chamber notes EO 13609 was signed over fifteen months ago and called for implementing guidance so the Guidelines can certainly be incorporated as a means to accelerate the implementation of an important administrative priority. Ultimately, the United States and Canada should look towards Australia and New Zealand for a model of what long term regulatory cooperation success might look like.4 Australia and New Zealand reached a major milestone in their cooperative relationship with the Trans-Tasman Mutual Recognition Agreement (TTMRA), signed in 1996 and coming into force in 1998, which provides a framework so that goods produced or imported into one territory may be made available in the other without additional approvals or requirements.5 Australia and New Zealand have continued to expand the scope of the TTMRA in the years since its implementation6 and have engaged subfederal entities in the review process and tapped all levels of business and government for additional elements of cooperation.7 Australia and New Zealand also have found greater success through a dedicated business-led initiative, the Australia New Zealand Leadership Forum (ANZLF), designed to further develop their bilateral relationship.8 The Chamber strongly urges the United States and Canada to develop similar groups and offers our support any such effort. Tools for Addressing Existing Regulations The RCC should build upon the emphasis placed on regulatory lookbacks9 in both the United States and Canada to establish a process that encourages regulators to evaluate their work and determine to what degree each regulatory framework delivers compatible outcomes. Once this is done, regulators should be empowered to implement a sliding scale of regulatory cooperation to maximize the desired level of cooperation, which may include full mutual recognition, using common data sets, and sharing enforcement duties. Where compatibility of regulatory outcome is acknowledged, regulators would grant recognition of products and services found to be in compliance with either regulatory regime. All decisions would need to be evidence-based and reflect private sector views. The RCC should establish a process that allows stakeholders as well as regulators to identify entire sectors and regulations within sectors that are ripe for a compatibility evaluation. The process should empower regulators to seek full sectoral recognition, and it should require them to respond to stakeholder-identified opportunities to examine compatibility. This process can yield benefits even if regulators are unable to agree on full recognition. For example, regulators can increase efficiency by enhancing mutual reliance through information and resource sharing or removal of duplicative testing and reporting requirements.

http://dfat.gov.au/geo/new_zealand/ ; http://dfat.gov.au/fta/anzcerta/. The key focus is on reducing transaction costs, lessening compliance costs and uncertainty, and increasing competition. In this context, the need to comply with international standards and evolving international regulatory standards and regimes is recognised.
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See http://www.coag.gov.au/the_trans-tasman_mutual_recognition_arrangement. See e.g. http://dfat.gov.au/geo/new_zealand/selected_docs.html. 7 A Trans-Tasman Outcomes Implementation Group (TTOIG) led by the Australian Treasury and the NZ Ministry of Business, Innovation and Employment meets each quarter to oversee and report on work to accelerate regulatory and business law harmonisation under the SEM. 8 See http://dfat.gov.au/geo/new_zealand/anzlf.html 9 See e.g. http://exchange.regulations.gov/exchange/sites/default/files/doc_files/Presidents%20Executive%20Order%2013563 _0.pdf and http://www.tbs-sct.gc.ca/rtrap-parfa/index-eng.asp.
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Tools for New Regulations To date the RCC has focused primarily on existing regulatory barriers since it is often easier to identify problems already in existence rather than speculate on future barriers. Moving forward, however, the U.S. and Canadian regulatory processes should be streamlined to address problems before they arise. This would include automatically flagging new regulations or regulatory changes that will have an impact on U.S.-Canada trade at the earliest stage possible. These significant regulations can be defined to cover issues of key importance to conducting business on either side of the border or have a substantial monetary impact on U.S.-Canada trade or affect a sector that may be a part of major RCC initiatives, such as the automotive sector. While regulators should independently proactively highlight the regulations that may be significant, stakeholders should also be given an opportunity to provide evidence that certain proposed regulations meet the threshold criteria. When an expected regulatory action is flagged as significant, U.S. and Canadian regulators should then engage in a preliminary discussion with each other and stakeholders to determine the best path forward to avoid unnecessary divergences while still meeting the appropriate level of protection. Both sides should also be encouraged to consider whether issues can be solved without creating new regulations. The regulations deemed significant will likely be a small percentage of proposed regulations, although nothing would prevent regulators from utilizing new tools for regulations outside the scope of the definition. Both the United States and Canada already have guidance suggesting they consider the international impact of regulations. Canada specifically calls for consideration [to] be given, however, to how great an impact the regulation will have nationally and internationally.10 EO 13609 further encourages finding common approaches for significant regulations that the agency identifies as having significant international impacts, consider, to the extent feasible, appropriate, and consistent with law, any regulatory approaches by a foreign government that the United States has agreed to consider under a regulatory cooperation council work plan.11 However, no clear methodology exists on how to calculate international impacts. Therefore, the RCC co-chairs, in consultation with stakeholders, should seek to develop a clear methodology. Some additional factors that could be considered as part of the U.S.-Canada impact analysis could include:12 a. costs/savings to the private sector (if any) of complying with a single set of regulations compared to the costs of complying with two or more sets of divergent regulations; b. budgetary savings and increased regulatory efficiency as a result of shared regulatory responsibility in developing, inspecting, and/or enforcing one instead of two sets of regulations; c. increased levels of regulatory protection as a result of added regulator efficiency and cost savings;
Canadian Cost-Benefit Analysis Guide: Regulatory Proposals, available at http://www.tbs-sct.gc.ca/rtrapparfa/analys/analys07-eng.asp#Toc178397868. 11 See note 4. 12 These questions are taken from a comprehensive study called Determining Compatible Regulatory Regimes, by John Morrall, a longtime OIRA employee. Available at http://www.uschamber.com/sites/default/files/reports/Determining%20Compatible%20Regulatory%20Regimes.pdf.
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d. whether trade or investment is likely to increase as a result of the lower transaction costs from the elimination of divergent rules; e. the quantitative and qualitative benefits to a more compatible or common regulatory alternative compared to the domestically-oriented regulation; f. whether the desired regulatory outcome can be achieved more effectively through cooperation; g. the degree to which the legal regimes in each Party are similar and what if any issues stem from variances in enforcement and compliance that need to be addressed; and h. the adverse extraterritorial impact of the proposed regulation and what might be done to limit that impact. Initially both the U.S. and Canadian regulators could provide the additional analysis independently and then compare answers to reach a decision. However, over time, as the two sides grow increasingly comfortable with the level of analysis and methodology of the other, this additional assessment should be conducted jointly to save resources. The Chamber thanks you in advance for consideration of our comments. We stand ready to assist in the implementation of our ideas and answer any questions you may have. Sincerely, Adam Schlosser Director, Center for Global Regulatory Cooperation U.S. Chamber of Commerce

Annex This guidance on regulatory cooperation comes from Canadas Guidelines on International Regulatory Obligations and Cooperation13 and should be used by any regulator as a guide on their daily activities and completing their core missions. By taking a strategic, proactive approach to achieving greater regulatory compatibility with key international counterparts, departments and agencies can reach policy goals more readily, with lower costs to the government and to Canadians. Furthermore, IRC is necessary to facilitate compliance with applicable international treaty law and its implementation in Canada. It can result in better-informed decision making through access to regulatory resources of international bodies and other countries (e.g. assessment results, analysis, people). It can lead to greater transparency and predictability of regulatory practices and allow Canada to contribute its expertise and promote its best regulatory practices internationally, thus influencing standards elsewhere. By reducing obstacles to trade, IRC can also enhance the competitiveness of Canadian goods and services. Improved government efficiency and more effective resource allocation in the development, implementation, and enforcement of regulations can follow. The CDSR and these Guidelines also set out expectations regarding the way IRC is to be achieved. They encourage departments and agencies to: take IRC into account throughout the entire life cycle of regulating-development, implementation, evaluation, and review; think strategically about how IRC can assist in achieving regulatory outcomes; establish regulatory compatibility as a goal for regulators to achieve through the design of regulations and through ongoing regulatory cooperation activities with key international counterparts; actively consider IRC in the ongoing management of regulatory programs, e.g. when developing or renewing compliance and enforcement policies, technical guidelines, and procedures that are put in place to implement regulations; and regularly assess the effectiveness of their IRC activities, determine which have yielded positive outcomes, and make adjustments as needed.

In striving for greater regulatory compatibility with our key international counterparts, it is recognized that there are cases where the pursuit of sound policy objectives may require unique Canadian standards or regulations. In these cases, a clear rationale for this unique approach must be evident in the regulatory analysis. To meet this requirement, departments and agencies are expected to do the following:

The annex represents the most relevant sections for the purposes of these comments. The entire Guidelines are available at http://www.tbs-sct.gc.ca/rtrap-parfa/iroc-cori/iroc-cori01-eng.asp#Toc175098386.
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Consider opportunities for IRC at every stage in the life cycle of regulation-development, implementation, evaluation, and review. This includes consulting, selecting, designing, and assessing regulatory responses, the implementation of regulatory programs, performance measurement, evaluation, and review of regulatory frameworks. Demonstrate how regulations contribute to both high standards of environmental, health, and citizen protection and building a strong and competitive economy, while minimizing adverse impacts on trade. Identify regulations, standards, and decision-making processes that produce similar results, with a view to moving towards joint conformity assessment and review processes, especially with countries that are major markets for related goods and services. Engage stakeholders when developing IRC approaches and explain to interested and affected parties why cooperating with other governments or adopting international standards can benefit Canadians. The Guidelines for Effective Regulatory Consultations provides further guidance in this regard. Systematically discuss proposed regulatory approaches with key international counterparts at an early stage in the regulatory life cycle to prevent unnecessary differences and promote compatibility with approaches that will meet Canadas policy objectives. Maintain Canadas long-standing involvement and influence in, and commitment to, international standard-setting bodies. Consider recognizing equivalency where the regulations, standards or tests, inspections, and certifications of other countries provide the same level of protection as Canadian health and safety standards. Be proactive in monitoring regulatory developments in the national systems of our key trading partners (e.g. NAFTA countries, the European Union, and emerging markets) involved in regulation or standard setting to assess how other jurisdictions are using regulatory instruments to address a similar issue. Select the appropriate form of IRC prior to selecting a course of action (e.g. joint technical or working groups, joint research, common procedures, and enforcement policies; see the Tools for more examples). Consider what new institutional objectives, roles, duties, and mechanisms may be required to implement and maintain regulatory cooperation, and what short-, medium-, and long-term benefits are expected. Assess the risks and benefits of setting a precedent if Canada were the first country to establish a regulatory standard or framework. Actively consider IRC in the ongoing management of regulatory programs, e.g. when developing or renewing compliance and enforcement policies, technical guidelines, and procedures that are put in place to implement regulations. In demonstrating compliance with the CDSR, departments and agencies are expected to track their IRC activities, explain how these demonstrate proactive engagement as described in this section, and explain the relationship of the activities to either proposed or existing regulatory requirements.