Presentation by Frank van Tongeren, Head, OECD Policies in Trade and Agriculture Division, at the joint meeting of the OECD Regulatory Policy Committee and Trade Committee on 5 November 2015, Session 1: Learning more about IRC mechanisms, Paris, 5 November 2015. Further information is available at http://www.oecd.org/gov/regulatory-policy/irc.htm.

1. 16/11/2015
1
Towards a theory and good
practice in IRC
Frank van Tongeren
OECD/TAD
Joint meeting of the OECD Trade Committee and
the Regulatory Policy Committee
5 November 2015
2
Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | tad.contact@oecd.org
Two perspectives on the same issue
• Regulatory perspective: use trade agreements to lock in
GRP
• Trade perspective: use IRC to reduce unnecessary trade
costs
• Starting points:
• Recognition of regulatory autonomy and differences in
regulatory processes between jurisdictions
• Assuring domestic regulatory objectives, while reducing
trade costs.
• Regulatory approaches often address the same problem
in different ways in different countries

2. 16/11/2015
2
3
Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | tad.contact@oecd.org
The industrial revolution and science allowed testing of the
ingredients in food /chocolate in the 19th century
• Showed that adulteration was widespread, not just
with cheap substitutes, but also with poisonous
ingredients
=> Public outrage induced regulations and standards
But: different regulatory approaches
• Ex France vs UK vs Germany
Example: Chocolate standards in Europe
4
Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | tad.contact@oecd.org
1. Britain: negative- list approach
• 1860/75 : general food safety laws
• sale of adulterated food 'injurious to health' was forbidden
• labelling of (safe) ingredients was mandatory.
• Cacao Butter Equivalents (CBEs: non-cacao vegetable
fats) were not forbidden
2. France: recipe approach
• 1910: Positive list of ingredients plus composition
• Defines ‘quality’
3. Germany: private standards and regulation
• 1879 General food laws + industry standards (negative-list)
• From 1933: Private standards (recipes) become basis for
regulation
Three approaches to Chocolate regulation

3. 16/11/2015
3
5
Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | tad.contact@oecd.org
1957:
• The six founding EU members had chocolate regulations close to
the French model.
• The new EU chocolate standards are very close to the 1910
French approach
1973:
• UK, Ireland and Denmark join. Their chocolate follows the British
model (and allows CBEs)
1980s and 1990s:
• More countries join and it becomes close to 50/50.
2003 (After 30 years !):
• A compromise : CBEs are allowed up to 5% in all of the EU
• Most chocolate companies stick to their pre-2003 strategies & use
the “traditional way” as a quality signal
A 30-year Chocolate War in Europe
6
Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | tad.contact@oecd.org
• In 2003 Codex Alimentarius revised its chocolate
standard to allow the use of up to 5% of vegetable fat –
in line with EU legislation
Post script: international chocolate spillovers
Like to taste more? See:
Swinnen and Squicciarini (Eds.), 2015, The
Economics of Chocolate , Oxford University
Press

4. 16/11/2015
4
7
Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | tad.contact@oecd.org
• we need a theory: understand which IRC mechanisms
work and when
• different regulatory approaches lead to alternative
distributions of costs and benefits for consumers,
producers and the government
• understanding and dealing with distributional effects is
key to constructive IRC solutions
• we need observations: existing IRC mechanisms
• inherently sector/issue specific
• we know more about trade effects of lack of IRC than
about benefits of IRC
The way forward
8
Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | tad.contact@oecd.org
• We need practical conclusions: a tool to guide
negotiators and regulators through the options available
• Progress can be made on two fronts:
• Instruments to reduce trade costs related to existing ‘stock’
of regulations and NTMs
• some form of ‘mutual equivalence’, transparency
provisions, international standards etc
• Innovative solutions to better design future regulations
• agreements on process for co-designing regulations
• Extended GRP?
• Joint bodies – but which mandate would they have?
Which participation?
The way forward - 2

5. 16/11/2015
5
99 9
Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | tad.contact@oecd.org
Access all of the
information from the
Trade & Agriculture
Directorate at:
www.oecd.org/tad
You can reach us via
e-mail by sending your
message to the following
address:
tad.contact@oecd.org
We invite you to connect
with us on Twitter by
following:
@OECDagriculture
We look forward to hearing from you!
Contact us