Global commerce is experiencing a rapid shift from government- to private-sector standard-setting for everything from product safety and quality to corporate behavior abroad, according to a report released today by the C.D. Howe Institute. In “The New Multilateralism: The Shift to Private Global Regulation,” respected trade lawyer Lawrence Herman identifies a broad shift to rulemaking by the private sector rather than governments that has accelerated since the collapse of the World Trade Organization (WTO) negotiations.
“This is a wake-up call for governments. While it is beneficial for the private sector to fill this need in the marketplace, there are also risks associated with the current proliferation of rules and private regulatory bodies, noted Mr. Herman. “Governments have been oblivious to this trend and need to do more to ensure private regulatory bodies operate in a fair and transparent manner, and don’t stymie competition or operate as private clubs.”