The (Limited) Role of Regulatory Harmonization in International Goods and Services Markets

Alan O. Sykes

Abstract

With the conclusion of the Uruguay Round and its agreements relating to technical barriers, much attention has been devoted to the possibility of harmonizing international regulatory policies to reduce the impediments to commerce that result from regulatory heterogeneity. This paper argues that, as a normative matter, harmonization is inferior to a legal system that tolerates regulatory differences subject to legal constraints, and that relies on mutual recognition where appropriate (the exception to this claim being matters of technical compatibility between products). Related, as a positive matter, harmonization will often lack any political constituency and thus instances of true harmonization will be rare. To develop these claims, the paper carefully elucidates the unnecessary trade impediments that may result from regulatory heterogeneity, and shows how measures short of harmonization can usually address them adequately.