13 Trade policy and domestic health and safety regulation
With the progressive liberalization of border barriers to trade over the post-war period, internal or “beyond the border” regulatory divergences from one country to another, including domestic regulation of health and safety standards, have become an increasing source of tension in international trading relations. Exporting countries often complain that these regulations constitute a non-tariff barrier to trade, and even where they are not intended as a disguised form of protectionism, impose disproportionate burdens on small exporting countries, particularly developing countries, in facing multiple compliance costs in many of their export markets. Importing countries, in turn, complain of lax standards in exporting countries that create health and safety risks for their citizens, as well as constituting a form of unfair trade to the extent that firms in exporting countries face lower compliance costs than competing firms in importing countries.1
Free traders often propose international constraints on the use of domestic regulations as barriers to trade, while consumer and citizens groups favour constraints on the use of international trade agreements as barriers to regulation. These divergences in perspective have led to divisions between business interests and civil society groups, on the one hand, and between developed and developing countries on the other. Those favouring international constraints on domestic health and safety regulation to address concerns of regulatory discrimination or disguised protectionism often assign pre-eminence to compliance with international standards or scientific justifications, arguing that regulatory protectionism typically entails higher welfare losses than other forms of protectionism...
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