International Regulatory Co-operation: Case Studies, Vol. 2 International Regulatory CANADA-US CO-OPERATION, EU ENERGY REGULATION, Co-operation: RISK ASSESSMENT AND BANKING SUPERVISION Case Studies, Vol. 2 Contents Chapter 1. The Canada-U.S. Regulatory Cooperation Council CANADA-US CO-OPERATION, Chapter 2. European Union energy regulation EU ENERGY REGULATION, RISK ASSESSMENT Chapter 3. The Global Risk Assessment Dialogue AND BANKING SUPERVISION Chapter 4. Prudential regulation of banks In the same collection International Regulatory Co-operation: Addressing Global Challenges (2013) In t e International Regulatory Co-operation, Case Studies, Vol. 1: Chemicals, Consumer r n Products, Tax and Competition (2013) a t io International Regulatory Co-operation, Case Studies, Vol. 3: Transnational Private n a Regulation and Water Management (2013) l R e g u www.oecd.org/gov/regulatory-policy/irc.htm la t o r y C o - o p e r a t io n : C a s e S t u d ie s Consult this publication on line at http://dx.doi.org/10.1787/9789264200500-en. , Vo This work is published on the OECD iLibrary, which gathers all OECD books, periodicals l. 2 and statistical databases. Visit www.oecd-ilibrary.org for more information. ISBN 978-92-64-20049-4 -:HSTCQE=WUUY^Y: 42 2013 16 1 P International Regulatory Co-operation: Case Studies, Vol. 2 CANADA-US CO-OPERATION, EU ENERGY REGULATION, RISK ASSESSMENT AND BANKING SUPERVISION ThisworkispublishedontheresponsibilityoftheSecretary-GeneraloftheOECD. Theopinionsexpressedandargumentsemployedhereindonotnecessarilyreflect theofficialviewsoftheOrganisationorofthegovernmentsofitsmembercountries. Thisdocumentandanymapincludedhereinarewithoutprejudicetothestatusof orsovereigntyoveranyterritory,tothedelimitationofinternationalfrontiersand boundariesandtothenameofanyterritory,cityorarea. Pleasecitethispublicationas: OECD(2013),InternationalRegulatoryCo-operation:CaseStudies,Vol.2:Canada-USCo-operation, EUEnergyRegulation,RiskAssessmentandBankingSupervision,OECDPublishing. http://dx.doi.org/10.1787/9789264200500-en ISBN978-92-64-20049-4(print) ISBN978-92-64-20050-0(PDF) The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities.TheuseofsuchdatabytheOECDiswithoutprejudicetothestatusofthe Golan Heights, East Jerusalem and Israeli settlements in theWest Bank under the terms of internationallaw. Photocredits:Cover©JörgVollmer-Fotolia.com. CorrigendatoOECDpublicationsmaybefoundonlineat:www.oecd.org/publishing/corrigenda. ©OECD2013 Youcancopy,downloadorprintOECDcontentforyourownuse,andyoucanincludeexcerptsfromOECD publications,databasesandmultimediaproductsinyourowndocuments,presentations,blogs,websitesand teachingmaterials,providedthatsuitableacknowledgmentofthesourceandcopyrightownerisgiven.All requestsforpublicorcommercialuseandtranslationrightsshouldbesubmittedtorights@oecd.org.Requests forpermissiontophotocopyportionsofthismaterialforpublicorcommercialuseshallbeaddresseddirectly totheCopyrightClearanceCenter(CCC)[email protected]çaisd'exploitationdudroitde copie(CFC)[email protected]. 3 FOREWORD – Foreword This report is part of a mini collection of books on the topic of international regulatory co-operation (IRC). It comprises four case studies, upon which the synthesis report (International Regulatory Co-operation: Rules for an Interdependent World) builds: • The Canada-U.S. Regulatory Cooperation Council; • European Union energy regulation; • The Global Risk Assessment Dialogue;and • Prudential regulation of banks. These case studies have sought to capture the main characteristics of selected IRC experiences and follow a common structure to ensure comparability of approach. This work on IRC has been conducted under the supervision of the OECD Regulatory Policy Committee whose mandate is to assist both members and non-members in building and strengthening capacity for regulatory quality and regulatory reform. The Regulatory Policy Committee is supported by staff within the Regulatory Policy Division of the Public Governance and Territorial Development Directorate. The OECD Public Governance and Territorial Development Directorate’s unique emphasis on institutional design and policy implementation supports mutual learning and diffusion of best practice in different societal and market conditions. The goal is to help countries build better government systems and implement policies at both national and regional level that lead to sustainable economic and social development. The directorate’s mission is to help governments at all levels design and implement strategic, evidence-based and innovative policies to strengthen public governance, respond effectively to diverse and disruptive economic, social and environmental challenges and deliver on government’s commitments to citizens. INTERNATIONAL REGULATORY CO-OPERATION: CASE STUDIES, VOL. 2 © OECD 2013 4 – FOREWORD This publication was co-ordinated by Céline Kauffmann, Senior Economist, under the supervision of Nick Malyshev, Head of the OECD Division on Regulatory Policy. The case study on Canada-U.S. Regulatory Cooperation Council was provided by Jeff Heynen in the Canadian Secretariat of the Canada-U.S. Regulatory Cooperation Council in coordination with officials in the US Office of Information and Regulatory Affairs (Office of Management and Budget). The case studies on EU energy regulation, the global risk assessment dialogue and prudential regulation of banks were written by Julia Black, Professor of Law, London School of Economics and Political Science. The report was prepared for publication by Jennifer Stein. INTERNATIONAL REGULATORY CO-OPERATION: CASE STUDIES, VOL. 2 © OECD 2013 5 TABLE OF CONTENTS – Table of contents Acronyms and abbreviations ................................................................................. 7 Chapter 1. TheCanada-U.S. Regulatory Cooperation Council ...................... 9 Introduction: The context ................................................................................ 10 Short history of the development of the RCC ................................................. 11 Main characteristics of the Canada-U.S. RCC ................................................ 12 Early assessment ............................................................................................. 17 Chapter 2. European Union energy regulation .............................................. 21 Introduction ..................................................................................................... 22 Identification of the main characteristics of IRC ............................................ 23 Forms that the co-operation is taking .............................................................. 24 Short history of the development of the IRC .................................................. 27 Assessment ...................................................................................................... 37 Conclusion ...................................................................................................... 43 Bibliography .................................................................................................... 47 Chapter 3. The Global Risk Assessment Dialogue .......................................... 51 Introduction ..................................................................................................... 52 Identification of the main characteristics ........................................................ 53 Short history of the development of the Dialogue........................................... 55 Assessment ...................................................................................................... 63 Next steps envisaged ....................................................................................... 65 Bibliography .................................................................................................... 67 Chapter 4. Prudential regulation of banks ..................................................... 69 Introduction ..................................................................................................... 70 Identification of the main characteristics ........................................................ 71 Short history of the development of the IRC .................................................. 75 Assessment ...................................................................................................... 81 Next steps envisaged ....................................................................................... 83 Bibliography .................................................................................................... 87 INTERNATIONAL REGULATORY CO-OPERATION: CASE STUDIES, VOL. 2 © OECD 2013 6 – TABLE OF CONTENTS Tables 1.1. RCC Working Groups and their respective lead departments/agencies .............................. 13 1.2. Forms of collaboration under the RCC ..................................... 16 3.1. Outline of the uncertainty tables ............................................... 61 Figure 4.1. Structure of global financial regulations ................................... 71 INTERNATIONAL REGULATORY CO-OPERATION: CASE STUDIES, VOL. 2 © OECD 2013 7 ACRONYMS AND ABBREVIATIONS – Acronyms and abbreviations ACER Agency for the Cooperation of Energy Regulators BCBS Basle Committee on Banking Supervision BIS Bank of International Settlements CBRSP Committee on Banking Regulations and Supervisory Practices CEER Council of European Energy Regulators CPLG Core Principles Liaison Group CPSS Committee on Payment and Settlement Systems EC European Commission EFSA European Food Safety Agency ENTSOs European Network Transmission System Operators ERGEG European Regulators Group for Electricity and Gas EWAG Exposure Assessment Workgroup FSB Financial Stability Board GDP Gross Domestic Product IAIS International Association of Insurance Supervisors INTERNATIONAL REGULATORY CO-OPERATION: CASE STUDIES, VOL. 2 © OECD 2013 8 – ACRONYMS AND ABBREVIATIONS IASB International Accounting Standards Board IOSCO International Organisation of Securities Commissioners ITS Intelligent transportation systems NAFTA North American Free Trade Agreement NRAs national regulatory agencies OIRA Office of Information and Regulatory Affairs RCC Regulatory Cooperation Council RM Risk Management TEN-E trans-European energy network TSO Transmission System Operators WTO World Trade Organization INTERNATIONAL REGULATORY CO-OPERATION: CASE STUDIES, VOL. 2 © OECD 2013 9 1. THE CANADA-U.S. REGULATORY COOPERATION COUNCIL – Chapter 1 The Canada-U.S. Regulatory Cooperation Council By Jeff Heynen(cid:13) Given the highly integrated nature of the Canadian and US economies, Prime Minister Harper and President Obama created the Regulatory Cooperation Council in 2011, with an aim to establish more effective approaches to regulation that enhance the economic competitiveness of both countries, while maintaining high standards of public health and safety and environmental protection. This case study shows how and through which instruments the RCC, an umbrella regulatory co-operation agreement between both federal governments, aims to achieve greater alignment in regulatory systems as well as smarter, more effective and less duplicative regulations and regulatory practices in specific sectors. (cid:13) Jeff Heynen is a policy advisor in the Canadian Secretariat (Privy Council Office) of the Canada-U.S. Regulatory Cooperation Council. INTERNATIONAL REGULATORY CO-OPERATION: CASE STUDIES, VOL. 2 © OECD 2013