No. 2 OECD Regulatory Policy Working Papers

1 Please cite this paper as:Correia de Brito, A., C. Kauffmann and J. Pelkmans (2016), The contribution of mutual recognition to internationalregulatory co-operation , OECD Regulatory Policy WorkingPapers, No. 2, OECD Publishing, Regulatory Policy Working PapersNo. 2 The contribution of mutualrecognition to internationalregulatory co-operationAnabela Correia de Brito,C line Kauffmann, Jacques PelkmansJEL Classification: F1, F5, H7, K2 1 OECD Regulatory Policy Working Papers THE CONTRIBUTION OF MUTUAL RECOGNITION TO INTERNATIONAL Regulatory CO-OPERATION Anabela Correia de Brito*, C line Kauffmann+ and Jacques Pelkmans* JEL Classification: K2, F1, F5, H7 * Centre for European Policy Studies (CEPS), Belgium + OECD, France 2 OECD Regulatory Policy Working Papers This series gathers together OECD Working Papers on the tools, governance and institutions of better regulation and their impact on Policy outcomes.

2 It includes both technical and analytical material, prepared by staff and experts in the field. Together, the Papers provide valuable context and background for OECD publications on Regulatory Policy and governance. OECD Working Papers should not be reported as representing the official views of the OECD or of its member countries. The opinions expressed and arguments employed are those of the authors. Working Papers describe preliminary results or research in progress by the authors and are published to stimulate discussion on a broad range of issues on which the OECD works. Comments on Working Papers are welcomed, and may be sent to either or the Public Governance and Territorial Development Directorate, OECD, 2 rue Andr -Pascal, 75775 Paris Cedex 16, France. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities.

3 The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. Authorised for publication by Rolf Alter, Director, Public Governance and Territorial Development Directorate. ---------------------------------------- ------------------------------------- OECD Regulatory Policy Working Papers are published on ---------------------------------------- ------------------------------------- Applications for permission to reproduce or translate all or part of this material should be made to: OECD Publishing, or by fax 33 1 45 24 99 30. OECD 2016 3 THE CONTRIBUTION OF MUTUAL RECOGNITION TO INTERNATIONAL Regulatory CO-OPERATION By Anabela Correia de Brito*, C line Kauffmann+ and Jacques Pelkmans* ABSTRACT This study takes stock of the institutional setting, operational modalities, strengths and weaknesses of various forms of mutual recognition when used in different sector and country contexts.

4 It aims to build a greater understanding of the benefits and pitfalls of one of the 11 mechanisms of international Regulatory co-operation identified by the OECD Regulatory Policy Committee in OECD (2013), International Regulatory Co-operation: Addressing Global Challenges. The paper relies on an empirical stocktaking of mutual recognition agreements (MRAs) among selected OECD countries, the systematic review of mutual recognition clauses in trade agreements, case studies of the specific experience of the EU internal market, the Trans-Tasman arrangement, and the MRA between the US and the EU of 1998, and an extensive review of the literature. JEL Classification: K2, F1, F5, H7 Key words: international Regulatory co-operation, Regulatory Policy , mutual recognition, trade agreements * Centre for European Policy Studies (CEPS), Belgium + OECD, France 4 NOTE BY THE SECRETARIAT The authors are grateful to Nick Malyshev for his guidance and to V ronique Bastien and Barbara Fliess for helpful advice and comments on various drafts of the paper.

5 The OECD Secretariat would like to thank the delegates of the OECD Regulatory Policy Committee and representatives from New Zealand, Japan, Mexico and the US and the European Commission for the inputs provided throughout the development of this paper. 5 TABLE OF CONTENTS ACRONYMS .. 7 HIGHLIGHTS .. 10 INTRODUCTION: BACKGROUND, OBJECTIVES, STRUCTURE AND METHODOLOGY .. 13 Background .. 13 Objectives of the 14 Structure and methodology of the study .. 15 MUTUAL RECOGNITION AND MRAS: THE SPECTRUM OF MODALITIES .. 16 Introduction .. 16 The wider mutual recognition spectrum .. 16 Mutual recognition of rules: ambition and functioning .. 18 Mutual Recognition of conformity assessment .. 21 MRAS OF CONFORMITY ASSESSMENT: CLASSIFICATION AND MAPPING .. 29 Introduction .. 29 Governmental Mutual Recognition Agreements/Arrangements.

6 29 Non-governmental Mutual Recognition Arrangements .. 35 Conclusion .. 38 MUTUAL RECOGNITION AND EQUIVALENCE IN REGIONAL TRADE AGREEMENTS .. 40 Introduction .. 40 An overview of mutual recognition and equivalence provisions in a sample of RTAs .. 41 Equivalence and mutual recognition of technical regulations .. 43 Recognition of the results of conformity assessment procedures .. 43 Mutual Recognition Agreements (MRAs) .. 46 Conclusions .. 48 BENEFITS, COSTS AND CHALLENGES OF MRAS .. 49 Introduction .. 49 Trade effects of MRAs: lessons from the literature .. 49 Benefits of MRAs .. 52 Costs and challenges of MRAs .. 54 Opportunities and success factors for MRAs and their alternatives .. 56 CONCLUSION AND RECOMMENDATIONS .. 58 ANNEX 1. THE INTRA-EU SYSTEM OF REMOVING AND PRE-EMPTING TBTS .. 60 ANNEX 2. AUSTRALIAN AND TRANS-TASMAN EXPERIENCE WITH MUTUAL RECOGNITION.

7 68 ANNEX 3. CASE-STUDY: THE US/EU MRAS IN GOODS .. 73 BIBLIOGRAPHY .. 84 6 Tables Table 1. Illustrative list of co-operative non-governmental MRA in place in Japan, Mexico and New Zealand .. 35 Table 2. IRC provisions in the WTO TBT Agreement .. 40 Table 3. Overview of MRA aspects in RTAs in the sample .. 42 Table 4. Overview of the equivalence and mutual recognition provisions in RTAs per country .. 45 Table 5. Stand-alone bilateral MRAs concluded between the parties in the sampled RTAs .. 47 Table 6. Literature survey: trade impact of MRAs and 50 Table 7. Structure of the EU/US MRA .. 76 Figures Figure 1. MRA in the OECD typology of IRC mechanisms .. 13 Figure 2. Mutual Recognition: spectrum of modalities .. 18 Figure 3. Spectrum of MRAs and alternatives .. 24 Figure 4. Schematic approach to benefits, costs and challenges of IRC.

8 49 Boxes Box 1. On terminology and definitions .. 14 Box 2. Key points from the draft assessment report on Mutual Recognition Schemes .. 21 Box 3. The IECEE-CB scheme on safety of electrical and electronic products and the International Certification Network [IQNet] .. 24 Box 4. Selected examples of accreditation networks: CIPM, ILAC and IAF .. 25 7 ACRONYMS ACAA Agreements on Conformity Assessment and Acceptance of Industrial Products ACIO Australian Commerce and Industry Office APEC Asia-Pacific Economic Co-operation APEC EE MRA Asia-Pacific Economic Co-operation Mutual Recognition Arrangement for Electrical and Electronic Equipment APEC TEL MRA Asia-Pacific Economic Co-operation Mutual Recognition Arrangement for Telecommunications Equipment APLAC Asia Pacific Laboratory Accreditation Co-operation B2B Business to Business BIPM Bureau International des Poids et Mesure CA Conformity Assessment CAB Conformity Assessment Bodies CAP Conformity Assessment Procedure CEN European Committee for Standardisation CENELEC Association of the National Electrotechnical Committees of European Countries CER Closer Economic Relations CETA

9 Comprehensive Economic and Trade Agreement between Canada and the European Union CIPM Comit International des Poids et Mesures CITEL Inter-American Telecommunications Commission CJEU Court of Justice of the European Union COAG Council of Australia Governments CARIFORUM The Forum of the Caribbean Group of African, Caribbean and Pacific (ACP) States CTI Committee on Trade and Investment EA European Co-operation for Accreditation EC European Community EEA European Economic Area EFTA European Free Trade Area EMA European Medicinal Agency EMAS European Eco-Management and Audit Scheme EMC Electro-Magnetic Compatibility EP European Parliament EPA Economic Partnership Agreement ETSI European Telecommunications Standards Institute EU European Union FCC United States Federal Communications Commission FDA United States Food and Drug Administration FTA Free Trade Agreement 8 GATT General Agreement on Tariffs and Trade GDP Gross Domestic Product GLP Good Laboratory Practice GMP Good Manufacturing Practices GRP Good Regulatory Practices GST Global System of Trade Preferences among Developing Countries IAF International Accreditation Forum IANZ International

10 Accreditation New Zealand IEC International Electrical Commission IEC (standards) International Standards and Conformity Assessment for electrical, electronic and related technologies IHC International Conference on Harmonisation of Technical Requirements of Pharmaceutical for Human Use ILAC International Laboratory Accreditation and Co-operation IMO International Maritime Organisation IQNet International Certification Network IRC International Regulatory Co-operation ISO International Standards from the International Organization for Standardization IT Information Technology ITU International Telecommunications Union JAS-ANZ Joint Accreditation System of Australia and New Zealand LAIA Latin American Integration Association Agreement MLA Mutual Recognition Arrangement MR Mutual Recognition MRA Mutual Recognition Agreement MRATF Mutual Recognition Arrangement Task Force MRA-ETR Mutual Recognition Arrangement for Equivalence of Technical