US embassy cable - 05OTTAWA418

UNCLAS SECTION 01 OF 02 OTTAWA 000418 
 
SIPDIS 
 
OMB PASS TO JOHN MORRALL III 
 
E.O. 12958: N/A 
TAGS: ECON, ECIN, ETRD 
SUBJECT: SMART REGULATION IN CANADA:  IMPLICATIONS FOR 
CANADA AND THE NORTH AMERICAN INITIATIVE 
 
REF: 04 OTTAWA 3431 
 
Summary:  As we go forward with plans to integrate further 
our North American economies, Washington agencies should 
realize that there is little tradition, much less practice, 
of cooperation within Canadian federal agencies or between 
federal, provincial, and local governments in most aspects of 
regulatory processes.  GOC efforts to coordinate regulations 
are only now getting started, and we envision that any 
progress is likely to be incremental and gradual.  End 
Summary. 
 
1. (U)  Following the September 2004 report on Smart 
Regulation (www.smartregulation.gc.ca), the Privy Council 
Office's group for Implementation Strategy for Smart 
Regulation is gearing up to put principle into practice.  PCO 
plans to propose a number of new initiatives to improve the 
quality and responsiveness of Canada's regulatory apparatus. 
 PCO hopes for improved coordination, at least at the federal 
level, early on as "Smart Regulation" approaches are applied 
to new regulatory projects.  PCO also views Smart Regulation 
as a component of NAI.  Action request:  see last paragraph. . 
 
2. (U)  Members of Post's Econ section met with the Executive 
Director of PCO's Smart Regulation implementation committee, 
Julia Hill, and staff to discuss the future of Smart 
Regulation in Canada.  In 2002, GOC invited the OECD to 
review the Canadian regulatory system; the OECD report 
recommended "more systemic and strategic review."  In 
response, GOC created the External Advisory Committee on 
Smart Regulation (EACSR) in 2003 and requested private input; 
the committee then presented its report in September 2004. 
The report showed that Canada's regulatory approach is 
fragmented (within jurisdictions, regions and sectors), 
focuses too much on short-term issues, burdens industry with 
complexities and inconsistencies, reduces transparency 
because of incomplete information and reporting, and lacks a 
strategic international approach.  PCO officials told us that 
the government has clearly gotten the message; when Treasury 
board chief Reg Alcock held his first organizational meeting 
on implementing smart regulation, the entire Cabinet showed 
up. 
 
3.  (U)  PCO's Smart Regulation implementation committee is 
considering a number of  ways to "make regulation a key 
contributor to improved Canadian quality of life".  In 
general, Smart Regulation implementation is still very much 
in the planning stages.   The Smart Regulation group's 
primary goal is to "target thematic areas and approaches to 
improve process and results."  Measurable results may include 
life-cycle reviews of regulations, regular reporting on 
actions and plans, and improved 
Federal/Provincial/Territorial cooperation.  PCO wants to see 
new regulatory initiatives based on international best 
practices, such as peer review, international and local 
sources of knowledge, and systematic life-cycle review of 
regulations, as well as improved responsiveness to the public 
comments which are already required to be solicited for new 
regulations.  In March, PCO intends to publish its first 
"Report on Actions and Plans", which will serve as a forum to 
notify the public of issues in the very early states of 
regulatory consideration (i.e. before regulations are 
drafted) and to request earlier comment.  The GOC is also 
developing a website for one-stop shopping for Canadian 
regulatory issues, similar to the U.S. www.regulations.gov. 
 
4.  (U)  PCO is also beginning to convene interagency groups 
centered on a series of themes:   healthy Canada, 
environmental sustainability, public safety and security, 
innovation, productivity and business environment, and 
aboriginal and northern prosperity.  The objective is to 
break down a number of existing walls, including departments' 
traditional practice of developing regulations in house with 
ad hoc or minimal interagency consultation, and inadequate 
coordination with and among provinces, as well as offering 
guidance to new regulators in territorial governments.  One 
intangible benefit, PCO hopes, is the "ah ha!" factor, that 
moment when an obvious realization is made obvious by the 
fact that people have had a chance to see the topic from a 
different angle.  At the moment, British Columbia is chairing 
a provincial working group on eliminating excessive 
regulation (a theme on which the current provincial 
leadership campaigned.)  PCO is also in the early stages of 
developing a framework for the EACSR's 
proposed public-private "SWAT teams"; possibly one of the 
first trials will be a group set up to recommend implementing 
regulations for Canada's new ban on trans fats. 
 
5.  (U) Smart Regulation officials are also looking at 
developing more coherent criteria for Regulatory Impact 
Analyses (RIAs) comparable to those required under U.S. law. 
  Post's informal review of a number of recent proposed 
regulations in Canada's Gazette 1 suggests that Canadian RIAs 
currently vary widely in scope and depth; some clearly 
estimate costs and benefits of various proposed options, with 
assumptions explicitly stated, while others are more 
perfunctory. When asked if Canadian RIAs would be required to 
provide more detailed analysis, Ms. Hill suggested that her 
office may be looking at something less rigid than a 
check-list; Canadian officials are aware of the potential for 
controversy generated by cost-benefit analysis of human 
safety and health regulations. 
 
6.  (U)  Life cycle review is another element PCO hopes to 
incorporate into its rulemaking process.  While there is no 
clear framework yet, life cycle review could include sunset 
clauses in new regulation as well as scheduled sectoral 
retrospectives to clear out obsolete regulations - especially 
in provincial statutes, which include, as Ms. Hill noted, one 
limiting the depth of horse manure on municipal streets. 
Above all, PCO is trying to ensure that the approaches 
recommended by the EACSR are incorporated into current 
regulatory projects.  Both ministers' communications staff 
and PCO's existing regulatory analysis staff are responsible 
for reviewing pending regulations to ensure that they meet 
smart regulations criteria. 
 
7.  (U)  PCO is eager to increase regulatory cooperation 
between Canada and its trading partners, particularly the 
United States.  (Comment: regulatory cooperation is on 
Canada's agenda for its relations with both China and the 
European Union.  End comment.)  Despite the External Advisory 
Committee's call for maximum North American harmonization, 
however, Ms. Hill made clear that national differences will 
persist, using as an example the fact that automobile bumpers 
in Canada are required to be lower since Canada has a greater 
number of subcompact cars than the United States. 
 
8.  (U)  One "ah ha!" moment mentioned by Ms. Hill that has 
great potential for regulatory streamlining is uniquely 
Canadian, arising from the GOC's official bilingualism. 
According to Ms. Hill, if after a regulation is enacted it is 
discovered that the official translations differ, even 
slightly, the entire process must be run through again, with 
proposed changes, comment, and final publishing of the "new" 
regulation.  Ms. Hill said that one of her office's goals is 
to make it possible for minor translation discrepancies to be 
addressed without the lengthy notice and comment period and 
full-dress Ministerial review, allowing Ministers to focus on 
substantive changes. 
 
9.  (U)  The Smart Regulation group intends to encourage 
participation from stakeholders across the value chain 
(citing the agricultural regulatory models that work "gate to 
plate, farm to fork"), from provincial and territorial 
governments, and from private-sector and academic experts. 
In March 2005, the first of GOC's biannual "Report on Action 
and Plans" should be published, and over the next fiscal year 
the Smart Regulation group plans to review and modernize the 
regulatory government framework. 
 
10. (U)  Comment: Post believes that this process can 
potentially offer opportunities to address some of the 
nagging regulatory disparities, such as baby food jar 
restrictions and duplicative marine safety certification 
requirements, that have proven to be trade irritants. 
Washington agencies may want to share with us any complaints 
about regulatory barriers not already on the table so that we 
can bring them to PCO's attention.  End Comment. 
 
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CELLUCCI