WORLD TRADE  
ORGANIZATION  G/TBT/W/258 
26 October 2005 
 
 (05-4960) 
Committee on Technical Barriers to Trade Original:   English 
  
 
GOOD REGULATORY PRACTICE 
 
Communication from the United States
  
 
 
 The following communication, dated 25 October 2005, is being circulated at the request of the Delegation of the United States
. 
 
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I. INTRODUCTION 
1. In its successive reviews of the Agreement on Technical Barriers to Trade (TBT), the TBT 
Committee has highlighted the importance and releva nce of “good regulatory practice” as a tool for 
preventing the creation of unnecessary trade barriers.  From the U.S. perspective, good regulatory practice will inevitably take on features reflective of the domestic context and infrastructure.  However, as work in the OECD and APEC has demonstrated, there is a convergence of views on 
common principles for good regulatory practice.  As originally articulated in the 1995 OECD 
Recommendation on Improving the Quality of Gove rnment Regulation, good regulation should: 
(a) serve clearly identified policy goals, and be effective in achieving those goals; 
(b) have a sound legal and empirical basis; 
(c) produce benefits that justify costs, cons idering the distribution of effects across 
society and taking economic, environmental and social effects into account; 
(d) minimize costs and market distortions; 
(e) promote innovation through market incentives and goal-based approaches; 
(f) be clear, simple, and practical for users; 
(g) be consistent with other re gulations and policies; and 
(h) be compatible as far as possible with competition, trade and investment-facilitating 
principles at domestic and international levels. 
2. These principles have stood the test of time and are incorporated in the updated OECD 
Guiding Principles for Regulatory Quality and Performance.
1  Discussions of good regulatory practice 
address issues which go beyond the scope of the TBT Agreement, nevertheless the principles are 
relevant to the development and application of standards, techni cal regulations and conformity 
                                                      
1 http://www.oecd.org/dat aoecd/24/6/34976533.pdf. G/TBT/W/258 
Page 2  
 
 assessment procedures.  Their successful application should reinforce, in a domestic context, the goal 
of preventing unnecessary barriers to trade.   
3. As a result of its Third Triennial Review, th e TBT Committee invited Members to exchange 
experiences related to the identification of elements  of good regulatory practice at the domestic level 
and aspects of good regulatory practice (e.g., choice of policy instruments, mandatory versus 
voluntary measures, and the use of regulatory impact assessments).
2  An earlier U.S. submission 
discussed the need for domestic mech anisms to provide practical guidance to ensure all agencies 
“internalize” TBT obligations when designing, re vising, or applying technical regulations and 
associated conformance requirements.3  This U.S. submission respo nds to the Committee’s invitation 
and provides an overview and summary of the key legislative and policy underpinnings of the U.S. 
regulatory approach. 
II. KEY FEATURES OF THE U.S. REGULATORY PROCESS 
A. REGULATORY TRANSPARENCY AND ACCOUNTABILITY  
4. There are various requirements that govern the development and issuance by Federal agencies 
of rules regulating products.  This includes la ws and Presidential Executive Orders that impose 
procedural requirements which are intended to ensure reasoned and fair decision making.  
Opportunities for review of regulations by the Executive Branch (OMB), Congress and Judiciary 
reinforce the accountability of regulatory actions.  
5. The process of public comment was manda ted by the U.S. Congress in the 1946 
Administrative Procedures Act (APA).4  The APA establishes standard ized minimum procedures for 
administrative decision making.  It ensures that agencies: 
(a) issue notice in the Federal Register of a proposed regulation; 
(b) allow the public to submit written comments; 
(c) consider and analyze those comments; and, 
(d) respond to significant points and explain revi sions when adopting the final regulation. 
6. There are no restrictions on who may provide co mment or participate.  Persons wishing to 
comment are not subject to any governmentally cont rolled or sponsored accreditation or other type of 
selection process.  Businesses and consumers decide for themselves whether to participate and may 
participate directly (i.e., individually), indirectly  through associations, or both.  Any member of the 
public, regardless of geographic lo cation or nationality, may submit comments.  This includes, for 
example, individuals, businesses and governmen t agencies of other countries and regions.5 
7. The APA applies to virtually all products, programs and agencies which makes the basic 
elements of the process very predictable for the pu blic.  As detailed below, in almost all cases, a 
proposed regulation is issued for public comment af ter an agency has gathered data, defined the 
                                                      
2 G/TBT/13, 11 November 2003.  
3 G/TBT/W/220, 30 June 2003.  
4 Information on U.S. regulations is  available at www.reginfo.gov, incl uding a link to the APA under “other 
resources”.  A more detailed paper, “United States Govern ment Rulemaking,” developed as  part of our Transatlantic 
Economic Partnership with Europe, is  available at www.ustr.gov (see Europe  and the Mediterranean, Regulatory 
Cooperation).  
5 In addition to publication in the Federal Register , proposals by many agencies are available for review and 
electronic submission of co mments at www.regulation.gov.   G/TBT/W/258 
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 problem, identified alternatives and selected the best option.  Sometimes an “advance notice” is issued 
before an actual draft of a regulati on is developed.  This allows agencies to seek general comments on 
issues prior to developing the specific regulatory proposal. 
8. In the interest of promoting transparency and improving public understanding of their 
rulemaking proceedings, U.S. agencies make comments received publicly available.  Their 
availability also aids people in making sugges tions for changes to a proposal or challenging a 
regulation in the courts.  When publishing the fina l regulation, agencies are required to disclose the 
rationale for accepting or rejecting the key points  raised, and explain the changes made to the 
regulation in response to the points accepted.  This provides an internal check on arbitrary action by 
ensuring that before taking action an agency can cl early articulate the reasons for its decisions.  The 
APA also subjects all final regulations to judicial re view.  A court may set aside a regulation if it finds 
that the agency’s actions were “arbitrary, capricious , an abuse of discretion or otherwise not in the 
law”.  Final regulations must be rational, based on consideration of relevant factors, and within the 
scope of authority of the agency’s enabling legislation.  In addition, the agency’s explanations of their 
final regulations must include reasoned responses to all significant issues raised in the public 
comments. 
B. CENTRALIZED MANAGEMENT AND LEADERSHIP  
9. Presidential Executive Order 12866, “Regulatory Planning and Review”, sets out an 
overarching regulatory philosophy and principles to  guide agencies in developing effective and 
efficient rules.6  It states that “Federal agencies shoul d promulgate only such regulations as are 
required by law, are necessary to in terpret the law, or are made ne cessary by compelling need, such as 
material failures of private markets to protect or improve the health and safety of the public, the 
environment, or the well being of the American people... ”. 
10. Before recommending Federal regulatory action, an agency must demonstrate that the 
proposed action is necessary.  The Executive Order re quires each agency to identify the problem that 
it intends to address (including, where applicable, the failures of private markets or public institutions 
that warrant new agency action) as well as assess the si gnificance of that problem.    It requires that 
agencies assess both costs and benefits (quantitativ e and qualitative) of an intended regulation and 
propose or adopt a regulation only upon making a r easoned determination that the benefits of the 
intended rule justify its costs.  The Order stat es that, in choosing among alternative regulatory 
approaches, agencies should select those a pproaches that maximize net benefits.  
11. The President relies on the Office of Manage ment and Budget (OMB), an agency of the 
Executive Office of the President, to oversee and c oordinate Federal regulatory policy, including 
implementation of this Executive Order.   OMB h as developed guidance to assist regulatory analysts7 
in addressing what it has identified as three key elements for good regulatory analysis: 
(a) a statement of the need for the proposed action; 
(b) an examination of alternative approaches; and  
(c) an evaluation of the benefits and costs –quantitative and qualitative–of the proposed 
action and the main alternatives identified by the analysis. 
                                                      
6 Text available at  www.reginfo.gov.  
7 7OMB Circular A-4 (September 17, 2003), Guidelines for the Conduct of Regulatory Analysis.   OMB’s initial 
draft was subject to public comment, interagency review and pe er review.  It sta ndardizes the way benefits and costs of 
Federal regulatory actions are measured and repo rted.  The full text is  available at www.omb.gov.  G/TBT/W/258 
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 12. Regulatory analysts are encouraged to seek out the opinions of those who will be affected by 
the regulation as well as the views of those individual s and organizations who may not be affected but 
have special knowledge or insight into the regulatory issues.  Analysts are required to assess whether regulation at the Federal level is the best way to solve the problem, or whether other alternatives 
should be used (e.g., antitrust enforcement, c onsumer-initiated litigation in the product liability 
system, regulation by State or local governments, voluntary partnership programs).  OMB’s guidance 
calls upon analysts to consider harmonization w ith international rules and whether new U.S. 
regulations could act as non-tariff barriers to impor ted goods.  In terms of alternatives, the United 
States has garnered considerable experience and su ccessful results in the application of partnership 
programs.
8  
13. Once it is determined that Federal regulatory ac tion is appropriate, analysts are required to 
consider alternative regulatory approaches (e.g ., reliance on performance standards which express 
requirements in terms of outcomes with criteria fo r verifying compliance rath er than specifying the 
means to those ends, market-oriented approaches rath er than direct controls, informational measures 
rather than regulation, alternative methods for ensu ring compliance) and to evaluate these approaches 
against the defined regulatory principles. 
14. OMB targets its resources for reviewing agency proposals on “significant” regulatory actions.  
Agencies are required to submit draft significant regul ations (both proposed and final) to OMB for an 
up-to-90-day review before publishing them in the Fe deral Register.   The draft regulation must be 
accompanied by the regulatory impact analysis (RIA).  That analysis is made available to the public to 
facilitate comment.9  (This applies as well to the periodic review of existing regulations.)  OMB 
examines the RIA and the regulation to ensure th ey comport with the Executive Order’s principles 
and the President’s priorities, and makes suggesti ons to improve both the RIA and the regulation’s 
cost-effectiveness.  If OMB’s concerns cannot be re solved and the necessary ch anges made within the 
review period, OMB returns the regulati on to the agency for reconsideration. 
C. SUBFEDERAL REGULATIONS  
15. The due process requirements of the U.S. Constituti on ensure that State regulatory activity is 
open and transparent.  Most States have enacted administrative procedure acts whose procedures are 
similar to those of the APA, as well as statutes c ontaining transparency procedures.  A majority of 
States have also enacted statutes that provide for public access to information and judicial review. 
D. FUTURE DIRECTIONS  
16. In recent years, the U.S. focus has been on developing smarter a nd more open regulatory 
processes.  Regulations should be sensible and b ased on sound science and economics.  Under its 
smarter regulation initiative, the United States is adop ting new regulations whose benefits justify their 
costs, modernizing existing regulations to improve  effectiveness and/or reduce cost, and rescinding 
regulations that are outmoded or that should neve r have been adopted in the first place.  The 
President, through OMB, requested and received pub lic nominations of existing regulations that 
should be reformed to reduce costs or increase e ffectiveness.  OMB has revi ewed those nominations 
and selected those on which further action is justified.   Further steps have been taken to enhance the 
quality of the science and analysis supporting regu latory proposals.  OMB has developed general 
                                                      
8 For example, see www.epa.gov/partners for furt her information on EPA Partnership programs.  
9 The public can consult OMB’s website (www.omb.gov) to  learn each day which regulations are under formal 
review by them and which have been cleared.  OMB’s we bsite and public docket also c ontains all written information 
provided to it while a regulation is under review and information on contacts it has had with outside groups.  It also includes  
information sent to agencies on its technical and polic y concerns with regulations it has returned to them.   G/TBT/W/258 
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 criteria for competent and credible peer review10 and government-wide guidelines to enhance the 
quality of data that agencies use in decision maki ng and disseminate to the public.  The guidelines 
require, with limited exceptions, that technical info rmation used to support major policy decisions be 
reproducible, preferably through public access to research design, data, assumptions and statistical 
methods. 
III. CONCLUSION 
17. Openness, transparency and accountability in the design and application of regulations are 
fundamental to ensuring public confidence in the a pproach taken to addres s a particular problem 
identified.  These elements of the U.S. regulator y process enhance the qualit y and legitimacy of the 
process and the resulting regulations.  More specifically, their benefits include: 
(a) better regulations, i.e., ones that provide highe r levels of consumer protection and, at 
the same time, are more cost-effective, more targeted and less intrusive; 
(b) greater public understanding of the purposes and effects of, and justifications for 
regulations; 
(c) greater public confidence and trust that pa rticipants in the process will have their 
concerns not only heard, but also fairly r esolved, and that the agencies will make their 
decisions in accordance with law and on an openly stated, well reasoned, and  
well-supported basis; 
(d) greater predictability in the final decisions made; and 
(e) greater public acceptance of the regulations adopted. 
 
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10 OMB “Final Information Quality Bulletin for Peer Review” (December 15, 2004) available at 
http://www.whitehouse.gov/om b/fedreg/2005/011405_peer.pdf.