For "Big League" Regulation Cuts, Look to Canada

For "Big League" Regulation Cuts, Look to Canada
AP Photo/The Canadian Press, Justin Tang

Shortly after taking office, President Trump made a remarkable claim: His administration would roll back federal regulations massively, perhaps by 75 percent or more. Some commentators took this as more political hyperbole from a politician who has a reputation for embellishing the truth. Yet while 75 percent may be overly ambitious, rollbacks of around 50 percent are indeed possible. And it’s been done before. 

The experience of British Columbia, Canada — not a place one usually associates with unbridled free-market capitalism — demonstrates how it can be done. In the early 2000s, the province was able to implement huge reductions in its regulatory burden without jeopardizing residents’ health or the environment. The key was to target red tape — regulations that are unnecessarily costly or fail to have any basis in the public interest — and then follow a fairly straightforward, step-by-step process.

That process begins by settling on a consistent way to measure regulation. In 2001, British Columbia chose to count the number of regulatory requirements in place. My colleagues at the Mercatus Center have developed tools to produce quick and inexpensive estimates of regulatory restrictions, a similar measure to British Columbia’s. The next step is to determine how much regulation is actually on the books and set a reduction target with a deadline. British Columbia had 382,139 requirements in place in June of 2001 and set a goal to reduce requirements by one-third within three years. 

Identifying which rules should stay and which should go will largely fall on regulators themselves. But without rulemaking process changes, these regulators may simply go about business as usual. President Trump has required that two rules be identified for elimination for every new one introduced this year. British Columbia instituted a similar policy, at one point eliminating as many as five requirements for every new one introduced.

There should also be an oversight body to ensure that targets and deadlines are met. The Office of Information and Regulatory Affairs (OIRA), which has been tasked with implementing President Trump’s executive order aimed at reducing regulation, is the obvious choice. However, since OIRA reviews a mere 8 percent of all federal regulations, it’s likely that most new rules will avoid oversight — and may skirt the offset requirements as a result. To solve this problem, OIRA’s staffing levels should be increased, and far more regulations should be reviewed by OIRA before going into effect.

British Columbia achieved its goal of eliminating a third of its red tape within three years. Impressively, the province’s level of regulation has fallen even further in the years since the initial effort was completed, declining by a total of 47 percent since 2001. Meanwhile, British Columbia maintained a first-place ranking in Canada for environmental quality and health outcomes, according to a 2009 provincial benchmark report

So far, most of the red tape reduction under the new Trump administration has consisted of tinkering around the edges of the enormous federal regulatory system. Nothing like the promised 75 percent reduction appears likely any time soon. Fortunately, British Columbia offers a roadmap for how to make “big league” reductions in red tape a reality. 

In fact, British Columbia’s program was so successful that the national government in Canada followed its lead by becoming the first country to pass a law requiring that the administrative burdens of new regulations be offset by amending or repealing at least one existing rule.

Canada’s progress should also serve as a warning here in the United States, so that we don’t fall behind other countries that are emphasizing economic competitiveness and 21st century policymaking. President Trump has taken some important steps toward reducing red tape, but not all of the critical elements of a successful reform are in place yet. A more aggressive and comprehensive reform program will be needed if President Trump’s ambitious goals are to become concrete policy achievements.

James Broughel is a research fellow at the Mercatus Center at George Mason University and author of the new study “A Step-by-Step Guide to Using Mercatus Tools to Reduce State Regulation Levels.”

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