Alberto Alemanno, Is There a Role for Cost-Benefit Analysis Beyond the Nation-State?: Lessons from International Regulatory Co-operation, in The Globalization of Cost-Benefit Analysis in Environment Policy (Oxford University Press, 2013) available at SSRN.

When I seek reading suggestions I am especially interested in recommendations for pieces that might not normally cross my desk.  The work I am discussing here, “Is There a Role for Cost-Benefit Analysis Beyond the Nation-State?: Lessons from International Regulatory Co-operation” by Alberto Alemanno, falls into that category.  The topic – the legal analysis of international regulatory cooperation regarding non-tariff barriers to trade (e.g., labor, environmental, or health and safety regulation) — is distinctly not tax.  But this book chapter, which examines the international convergence in specifying procedures for setting regulatory standards, provided an energizing boost to my own thinking about potential harmonization in the international tax arena through cooperation on a “non-substantive” level.  Before discussing why I found this chapter engaging for a tax scholar, a quick overview of the thesis may be helpful.

The article starts from the premise that trade liberalizing goals have pushed states, through the WTO, to reduce trade barriers but that their success has been limited where the trade barriers are in non-tariff form (such as environmental regulations).  In that context, states have shifted to what is characterized as convergence with respect to “how” they determine the appropriate substantive regulation to put in place – i.e. “procedural harmonization.”  Underlying this shift are two assumptions: (1) it is easier for states to agree to procedures that they will follow in setting these kinds of regulations, and (2) that procedural harmonization can/will lead to harmonization of the ultimate substantive decisions.  The author provides examples of such harmonization – the Technical Barriers to Trade Agreement (TBT) established at the end of the Uruguay Round required members to ground their regulatory measures in “international standards, guidelines or recommendations, where they exist” and if not to then either provide a “scientific justification” or “prove the ‘necessity’ of the measures adopted.”  The author considers the harmonization via this agreement to be unsatisfactory in stopping nontrade barriers.  Therefore, he devotes much of the chapter to arguing in favor of a “procedural” requirement that he contends could further reduce substantive divergence – a requirement of international cost-benefit analysis and transparency.  The discussion of how cost-benefit analysis might meet this goal was interesting on its own terms.  But I was drawn to the background context in which the entire conversation was taking place – a world in which agreement on substance was difficult, agreement on procedure was easier, and agreement on the latter was expected to generate convergence regarding the former.  I have been thinking about these questions in the context of international tax – in particular the shift away from attention to tax competition (which was perceived as seeking agreement on substance – or at least rates) and towards information exchange and disclosure on a grander scale. Continue reading "Reading to Challenge Your Tax Thinking"

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