UK must stop duplicating regulators

Originally published by Conservative Home.

One of the key goals of Brexit was to reclaim control of our laws. We argued that the ultimate authority over the rules and regulations that govern our lives should be made here to ensure accountability, and that through it we can demand that our own laws serve our own interests.

We now can (with a few caveats we’ve committed to in bilateral and multilateral agreements) change any regulation as we see fit. Yet just because we can change a rule, doesn’t mean we need to.

Unfortunately, the civil service seems to have missed that memo. They have crossed the is-ought gap so unthinkingly that we now risk duplicating regulators and bureaucracies just for the sake of it.

Take sustainable forestry, for instance. Without any areas where the current regulation is not serving the UK interests, money spent setting up and maintaining a separate UK regulator for sustainable forestry imports would be wasteful. At the very least, we must have some idea of what we want to do differently before we decide to spend millions of pounds on a regulator.

Let’s take an example. The EU Timber Regulation (EUTR) came into force on 3 March 2013, making it illegal to place illegally harvested timber and timber products on the EU market (including those from protected forests or conflict timber). On 1 January 2021, EUTR became UK domestic legislation as the UK Timber Regulations (UKTR), which have the same requirements as current EU systems.

These regulations affect all those that first place timber on the EU or UK markets as well as traders further down the supply chain. The EU rules, rightly or wrongly, are considered by many NGOs and bureaucracies, including in the US, to be the gold standard. There are some differences, for sure, for example the proposed US Forest Act approach will not treat “legal” logging even if the forests in question would afford the highest levels of protection in the West, and wouldn’t introduce sanctions for degrading forests. On the whole, though, the two sets of rules do exactly the same thing and both do it well.

In the context of border checks, independent rules would result in additional delays both for goods coming via the EU and for goods coming from a third country, even if we kept the substance of the rules the same.

Unless the UK seriously wishes to take an independent path, and does so making an argument for why making our own rules is in the interests of British consumers or producers, or would be better for sustainability in some way, then we should simply recognise the standards accepted in other major western democracies, as we are doing with the EU today. If a product is good enough for the EU, or the US, or Canada or Japan, it’s good enough for us, too.

Now sustainable forestry is one of the more unglamorous areas of regulation. The goal is noble: to make sure that the goods and services we buy in from abroad have not come at the expense of terrible deforestation of primeval rainforests. Yet as is often the case, the detail tells a different story about perverse incentives and regulatory capture by interest groups.

Who knew that, while palm oil previously had a reputation, for countries like Malaysia have simply innovated the industry into a sustainable one. Malaysians have themselves developed the forestry strategies and rules to achieve more than a 70 per cent reduction in deforestation since 2014. Independent assessors like the World Resources Institute (WRI) say that “palm oil is no longer a driver of deforestation” in Malaysia – the official report of the UN’s Food and Agriculture Organisation official assesses that the deforestation rate has now completely flatlined.

A serious case probably could be made that rules on exports of goods like palm oil, soya, cocoa and wood punish sustainable producers as an unintended consequence of trying to block out the illegal deforestation that still happens in some countries where less progress has been made. Indeed, better regulation would recognise that the countries that are clearly improving have built knowledge about sustainability of their specialised industries that exceeds even our own. Another case could be made for structuring payments for preservation in an more incentive-compatible way.

Of course, what goes for forestry could go for all sorts of other things, such as veterinary products or pharmaceuticals. New Zealand’s new government have vowed to scrap their drugs regulator and accept pharmaceutical products approved by any two serious foreign regulators (America’s Food and Drug Administration, the European Union’s Medicines Agency, our own Medicine and Healthcare Products Regulatory Agency, etc.). This doesn’t completely get rid of border friction at a stroke, but it does make the UK a fair bit more accessible to foreign goods and can help us drive down import costs, while saving a good deal of money and bandwidth in the process.

But the Government have not made any noises to suggest that this is what they plan to do. On the contrary, it seems to be suggesting that it will not “undercut” high standards that exist elsewhere, as if smarter regulation is somehow less effective than heavy-handed regulation.

So let’s not waste money on a duplicate of already existing regulatory infrastructure. Let’s either recognise international standards on these regulations, or replace them with better regulation.