Third World Network | January 2023

Preliminary analysis of the IPEF chapter on good regulatory practice*

by Jane Kelsey

Read the full document (pdf)

The Indo-Pacific Economic Framework (IPEF) seeks to impose a structure, set of procedures and criteria to
govern the Parties’ regulatory decision making at the central government level. The IPEF chapter on “Good
Regulatory Practice” (GRP) is expected to build on recent US-led precedents, seen best in the initial draft and
final chapter on “Regulatory Coherence” in the Trans-Pacific Partnership Agreement (TPPA), the chapter on
“Good Regulatory Practices” of the United States-Mexico-Canada Agreement (USMCA), and to some extent
in the plurilateral Joint Statement Initiatives (JSI) on services domestic regulation and investment facilitation
negotiated on the margins of the World Trade Organization (WTO).

These chapters impose disciplines on the making of all domestic regulations, reaching much further behind
the border into the legitimate domain of national governance than “non-tariff measures” relating to trade in
goods. Because the regulations on services, investment and digital technologies are more directly concerned
with social, cultural, development, environmental and other non-commercial considerations, attempts to
impose constraints on government decisions through “free trade” rules are much more problematic.

Their inclusion in IPEF has potentially far-reaching implications for how decisions are made in participating
nations’ regulatory processes, and by whom, as well as the structure and hierarchy of government agencies,
the balance between commercial and non-commercial priorities, and the power of external influencers,
including states and corporate lobbyists. Some of the elements might well be conducive to well-informed
and consistent good decision making, but there is no need for them to be locked in through IPEF, along with
other, problematic elements, when they could be adopted unilaterally without being bound to an externally
defined template. Other obligations in the IPEF chapter would be burdensome and intrusive, especially
for developing countries, and confer undue corporate and foreign state influence over national policy and
regulatory decisions. They would also cross-fertilise with obligations in other chapters of IPEF, and other
international agreements, in ways that cannot be predicted during the course of negotiations.

This paper urges participants in the Pillar I (trade) negotiations for IPEF to reject any chapter on “Good Regulatory
Practice” that seeks to dictate how they, as sovereign states, should conduct their domestic governance. Specifically,
the paper notes that:

• Countries must reject IPEF requirements that dictate how governments should operate internally, affecting
  their institutional structure, the hierarchy of ministries and agencies, and how they interact with each other,
  including the possible establishment of a central agency to oversee the whole-of-government application of
  this regulatory model and assess compliance.

• Despite the apparent focus on procedures, an IPEF approach that replicates the TPPA and USMCA will
  be biased towards light-handed regulation that subordinates competing non-commercial priorities and
  international obligations outside of trade and investment agreements, and that has led to serious policy and
  regulatory failures in areas from financial regulation to health and safety law to the regulation of Big Tech.

• The TPPA and USMCA chapters are modelled on a neoliberal framework that was designed by developed
  countries in the Organisation for Economic Cooperation and Development (OECD) and promoted by them
  within the Asia-Pacific Economic Cooperation (APEC) forum. Well-resourced developed countries like the
  US, Australia and New Zealand that have been implementing this for many years still struggle to comply with
  its core requirements and adequately resource them.

• Implementing even a diluted version of these obligations would impose excessive compliance burdens on
  low-income developing countries, while largely affirming arrangements that already exist in richer countries. There is no precedent in existing agreements for development flexibilities or long-term resourcing of these
  complex requirements.

• The opaque nature of IPEF’s structure, obligations, dispute processes and penalties creates significant risks
  for negotiators to assess the implications of adopting such a regime.

Read the full document (pdf)

*This is a preliminary analysis for discussion and supplementation.