Is There a Role for Cost-Benefit Analysis Beyond the Nation-State?: Lessons from International Regulatory Co-Operation

In recent decades, governments across the world actively cooperated to harmonize and coordinate policies “behind the borders” through a variety of harmonization efforts at multilateral, as well as regional and bilateral, levels. These efforts have been dictated by the trade liberalization agenda, which perceives domestic regulatory action as a factor impeding international trade. While the WTO has been successful in removing barriers to trade at the border, it is proving less effective in the fight against non-tariff barriers (NTBs), today’s most prominent obstacles to trade exchanges. Given the current inability of the WTO to effectively address such concerns, some countries seem willing to go beyond traditional international treaty making and to explore new avenues of cooperation. The emerging phenomenon of “horizontal regulatory cooperation,” i.e., cooperation on crosscutting issues such as risk assessment, impact assessment, and cost-benefit analysis, seems to offer a promising venue for overcoming regulatory divergence. It relies on the assumption that substantive regulatory convergence can be facilitated by convergence of the general way in which regulators approach standard setting. At a time of growing international interest and policy diffusion of cost-benefit analysis, this chapter explores whether cost-benefit analysis could be used to promote rationality in regulatory decisionmaking beyond the nation-state. In so doing, it draws on the recent experience of international regulatory cooperation of some industrialized countries and examines the extent to which developing nations may be willing and able to participate in this cooperation exercise.