Regulatory Cooperation: From Sweet Simplicity to Fiendish Complexity

 

Easier, better, faster, and less expensive: US-Canada regulatory cooperation promises to be a boon to supply chain management.  Since early 2011, the two countries have been putting together a cooperative framework to reduce regulatory inefficiencies and streamline certification and testing procedures.

Canada released a summary of stakeholder suggestions in late August.  The report classifies input received through public consultations.  It says little about the governments’ intentions but, judging from the scope of the suggestions, the phase one work plan – due sometime this fall – is sure to be a letdown. Canada alone has received hundreds of suggestions in the areas of Agriculture and Food, Transportation, Energy and the Environment, and Health and Consumer Products. How will the regulatory cooperation council winnow these down to four or five priorities without seeming to focus on trifles?

Even seemingly easy fixes are devilishly difficult to change.  Canada’s mandatory sizing for baby food jars has been a trade irritant for so long that some of the babies affected by the rule are now collecting pensions.

Canada is not alone in claiming a sovereign right to difference. Every spring US customs officials gear up for their annual Easter egg hunt, involving the seizure at the border of Kinder Surprise chocolate eggs that are legal to sell in Canada but not the United States because of the (non-food) toy inside.

Regulatory issues are complicated.  Some exist for legitimate public policy reasons and others because it’s the way we have always done things.  Overlay this with strong incentives by those who benefit from market differences to lobby for their preservation.

A recent example of sound and fury over regulatory alignment involves Canada’s decision to finally allow caffeine in soft drinks that come in colours other than brown, i.e. cola drinks.  Let me repeat: until 2010, it was illegal in Canada to caffeinate red, green or yellow beverages.

The change provoked an outcry from citizens worried that moms would not be able to keep tots off the caffeine without colour-coding the beverage.  Never mind that the presence of caffeine is still clearly indicated on the product label.

Consumers benefit from the change because they have more choice and (theoretically) lower prices.  Manufacturers benefit because it means they don’t have to run costly separate lines for their Canadian production.  Yellow-hued Mountain Dew has always been caffeinated in the United States but has disappointed many a U.S. exchange student who discovers during an all-night study sessions that the northern brew is not an eye-opener.  (By the way, the pressure on Canada to change came not from U.S. manufacturers but from Scotland’s favourite orange bevvie, Irn-Bru.)

Still, we hear howls from nanny-statists who want government to shield us from personal responsibility.  As the regulatory cooperation process continues their voices will grow even louder, strengthened by the sovereigntists who want difference for the sake of difference. Sure, maybe a can of pop or a piece of cheese, is not worth fighting over, but there are larger principles involved.  North American competitiveness in the world demands that we get rid of the inconsistencies in our own markets first.

The silent consumer majority will have to find a voice if the integrated economies of North America will succeed in balancing choice and competitiveness with product safety and security.  Moreover, we must encourage small victories so that we can sustain the political momentum for long-term bilateral cooperation.

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2 Responses to “Regulatory Cooperation: From Sweet Simplicity to Fiendish Complexity”

  1. You have pinned it correctly. As abhorrent as these quick anecdotes of difference seem to be to common sense, they represent a complicated stew of domestic sovereignty concerns and entrenched interests–many regulations are there to protect some domestic industry or company, while other companies adversely affected raise the hue and cry. For your run-of-the-mill civil servant regulators, trying to make changes without running afoul of the political landmines usually means the path of least resistance is status-quo. If the President and Prime Minister were serious about change as they announced in February, they and their administrations will have to address the political issues to allow the civil servants the latitude to do the common sense thing, even if some corners of the body politic are not pleased.

    October 6, 2011 at 10:49 am
    • ldawson #

      Well said!

      October 6, 2011 at 10:54 am