Unilateral action

The rationale for unilateral action

A low-cost way to adopt best practice and access international markets

Unilateral action could be a useful first step towards greater integration or cooperation over time where countries share regulatory objectives or have similar approaches to risk and the protection of the public. It is also a useful way to supplement domestic capacity or capability, particularly in areas requiring specialist expertise. Unilateral action is particularly useful for smaller countries, allowing them to draw on the expertise and efforts of larger, better resourced jurisdictions.

It may also be appropriate where global regulatory approaches are converging in a sector without the backing of a formal international organisation, to consider unilaterally adopting that approach.

Aligning regulatory settings to those of key partners may make global value chains easier to establish and reduce barriers to cross-border trade.

Benefits and risks

Benefits include flexibility and a lower regulatory burden

Unilateral action allows countries to retain maximum flexibility to determine their regulatory settings while having many of the benefits of cooperation, such as:

• A reduction in learning/information costs for businesses operating in countries where the regimes are similar (unilateral adoption).
• A reduction in compliance costs for businesses moving into another market, if they need to comply with only 1 regime (unilateral recognition).
• A familiar policy and regulatory environment for businesses  can lower the hurdle for entry to another market.
• Reducing the need to maintain an expensive domestic regulatory capacity.

Risks include limited influence and reduced domestic capability

Unilateral action has some potential shortcomings:

• There is no provision for reciprocity. For example, compliance with the regulatory requirements of the country acting unilaterally will not necessarily be recognised by the other country or countries.
• There is limited ability to influence future policy and regulatory developments in the other country or countries.
• Unilateral action generally means reduced domestic regulatory policy capability, with a resulting reduction in the ability to assess and monitor developments in the other regulatory regime. It is important to continue to assess whether their regulation and policies remain appropriate and to maintain alignment over time.
• With no requirement for information sharing, the country acting unilaterally may miss out on critical information about emerging problems in the system.
• Where there is heavy reliance on unilateral recognition, domestic capacity and capability at regulator-level may not be fully developed.
• There are likely to be fewer opportunities for policy advisors and regulators to learn from their peers.

Case studies