Trade agreements and international regulatory cooperation in a supply chain world

Abstract

Many of the policies that affect international supply chains and associated trade flows are regulatory in nature. Governments generally do not pursue domestic regulation or design trade agreements with a view to support the “trade as production” model by reducing regulatory differences that have the effect of impeding trade. This paper proposes several mechanisms to help make policy more supportive of regulatory cooperation initiatives that are aimed at reducing excess costs that negatively affect supply chain trade and investments, and that can be incorporated into trade agreements. While the analysis and suggestions are general, specific context and examples are provided by recent trade agreements and regulatory cooperation initiatives involving Canada, the EU and the US.