Harmonisation

The rationale for harmonisation

A way to work with others with similar objectives

Harmonisation can be a good option for countries that share policy objectives and where a common approach is suitable given the different conditions in those countries. If regulatory approaches are already similar, it can be easy to negotiate a common approach which works for the countries involved.

Harmonisation also extends to rules developed by an international multilateral organisation, which are often backed by a formal international instrument or model law. Countries which adopt these rules will end up with a harmonised regime.

International organisations

Benefits and risks

Benefits include greater certainty and easier international trade

Harmonisation can offer benefits including:

• Providing a high level of certainty and reducing costs for businesses and the public, as they only need to know about, and comply with, one set of regulatory requirements, policies or standards.
• Helping improve the quality of policy, regulation and standards through access to a wider pool of expertise and resourcing across the participating countries.

Risks include complex negotiations and less control over domestic settings

Harmonisation has some potential shortcomings:

• It may limit the ability of individual countries to determine their own policy and regulatory settings.
• It can be highly resource intensive to set up and maintain.
• It may favour the larger countries in the arrangement.
• In order to satisfy all the countries involved, it may result in the ‘highest common denominator’ prevailing, leading to over-regulation.

Some of these risks can be managed through opt-out provisions which reintroduce some flexibility. Another option would be to create a dual regime whereby a business that operates only domestically can opt to comply with domestic rules, but if it wants to operate in the participating countries, a single harmonised regime is available.

Case studies