SPP Institution Building: Regulatory Cooperation

UNCLAS SECTION 01 OF 02 OTTAWA 001199

SIPDIS

STATE FOR WHA/CAN:TBREESE, AHOLST; EB/PDAS Donnelly

WHITE HOUSE/NSC FOR FARYAR SHIRZAD, DEL RENIGAR

WHITE HOUSE/OMB/OIRA FOR JOHN MORRALL III

STATE PASS USTR FOR SAGE CHANDLER

USDOC FOR 4320/ITA/MAC/WH/ONIA (WBastian, ARudman, GWord)

E.O. 12958: N/A
TAGS: ETRD CA
SUBJECT: SPP Institution Building: Regulatory Cooperation
and Business Dialogue

Ref: (A) Ottawa 1104 (Scenesetter: Canada and the SPP)

(B) Ottawa 3431 (December 2004)


1. Summary: This is the second in a series of cables
discussing the background and possible future course of the
Security and Prosperity Partnership (Ref A). Summary: As
SPP working groups move through the first phase of reaching
out to stakeholders and identifying key issues, we recommend
that Washington propose institutional links that will give
continuity to the process without creating a new
bureaucracy. On the government side, SPP deliverables could
include a commitment to a permanent dialogue between the two
executive bodies charged with regulatory oversight, OMB/OIRA
in the United States and the GoC's Regulatory Affairs
(RAOIC) group in the Privy Council Office (PCO). This
linkage could yield an enduring relationship, similar to the
Canada-United States Smart Borders effort that has
effectively managed border security. Another key element,
in our view, is an independent business-driven mechanism to
identify key barriers and highlight business priorities for
officials. Some Canadian industry groups are already
seeking a cross-border approach; we should encourage key
industries and companies to take ownership of the process
and present regulators with a common set of priorities. End
summary.


2. BACKGROUND: One objective of the SPP Prosperity Agenda is
to " Strengthen regulatory cooperation, including at the
onset of the regulatory process, to minimize barriers." In
its Smart Regulations intiative (Ref B),the GoC has already
clearly expressed its willingness to address the "tyranny of
small differences" that inhibits trade and reduces consumer
choice on both sides of the border. The recent External
Advisory Committee on Smart Regulation noted that "Canada
and the United States maintain parallel processes and
structures across almost all areas of regulatory activity.
Their two sets of processes reflect a convergence in policy
objectives and regulatory procedures. However, much of this
work is duplicative, particularly given the integrated North
American market."


3. The Advisory Committee recommended that Canada-specific
regulatory requirements should differ from International or
North American models only where there are important
national priorities, unique Canadian conditions or
Constitutional issues, or existing models are inadequate to
Canadian policy objectives; and that Canada should promote
joint product reviews and move toward accepting U.S. and EU
product approvals in sectors with well-established
conformity assessment procedures (Reftel).


4. Building on the Advisory Committee report, the GoC
released its Implementation Strategy for Smart Regulation
effort on March 25, 2005, which calls for increased
cooperation with the United States to reduce regulatory
mismatches.

Smart Borders, Smart Regulations, Smart Markets?
-------------- ---

5. SPP provides the opportunity to establish a mechanism for
managing this cooperation, perhaps even within the initial
90-day window. In our view the logical first step toward
reducing regulatory barriers in the long term is to open
direct links between the two governments' bodies for
managing regulation, the OMB's Office of Information and
Regulatory Affairs (OIRA) and the Canadian PCO's office of
Regulatory Affairs and Orders in Council (RAOIC). The two
oversight bodies could work together to set timetables and
jointly review existing regulations to identify regulations
that should be harmonized, eliminated or be candidates for
mutual recognition agreements. U.S. officials could also
share experience on strengthening regulatory oversight and
interagency coordination, a process that could also include
Mexican experts.


6. A long-term bilateral dialogue among regulators could
become the regulatory counterpart to the successful Canada-
United States "Smart Borders" effort, which includes a
detailed action plan that identifies and monitors, and to a
lesser extent prioritizes, bilateral actions on border
security and trade facilitation. Like "Smart Borders", if
successful the regulatory dialogue could add momentum to the
regulatory agenda without imposing a permanent secretariat
or another layer of bureaucracy.


7. The agenda of these OMB/PCO bilaterals might include
review of existing promising models, such as the joint
Canadian (PMRA) and U.S. (EPA) pesticide review process, and
a look at sectors identified for priority action in the
Smart Regulation report such as some aspects of drug
approvals, processed food containers, and
federal/state/provincial regulatory requirements for
construction products. Annual meetings of the oversight
bodies as part of the existing SPP workplan could create
additional pressure for resolution of existing items and
build an agenda for long-term work, but could also create a
useful umbrella for highlighting our many existing cross-
border cooperative efforts between individual agencies.


8. Washington agencies are currently exploring how to
involve business and other stakeholders in this process.
Options include expanding the Canadian approach to convene
North American "SWAT teams" of government, industry and
consumer representatives that review regulatory issues by
sector and report back to governments. Another, simpler
model might be a North American equivalent of the
"Transatlantic Business Dialogue (TABD)" which effectively
articulated business priorities for US-EU regulatory
cooperation in the 1990s. Under this model, governments
would ask business on both sides of the border to work
together to come up with a consolidated list of high-
priority standards barriers and other regulatory issues,
thus eliminating the impression that addressing certain
regulatory barriers is a "win" for one side or the other
rather than broadly beneficial to both economies. Some
Canadian stakeholders, such as the Canadian Manufacturers
and Exporters Association, are already reaching out to their
U.S. counterparts (septel),but our experience suggests that
this process is uneven across industries and could benefit
from a push by the two governments.


9. Under this framework we could call on industry and
regulatory officials to reach certain objectives within set
timelines. For example in June the leaders could call on
industry associations to begin work on a joint list of
barriers to trade; in the 6-12 month timeframe industry
associations would report to PCO/OMB their priority list of
regulations to review.

Dickson