The Regulatory Process in Japan in Comparison with the United States

Across the globe, regulations govern the workings of financial markets, the safety of our cars, the approval process for new drugs, and the quality of our air and water. Not surprisingly, and for many reasons, regulatory requirements vary widely across nations. However, as the global marketplace has expanded and traditional trade barriers such as tariffs diminish, governments and stakeholders have increasingly recognized that diverse approaches to regulation can compromise economic growth and trade unnecessarily. Indeed, regulatory barriers in various areas have been a key feature of the Trans-Pacific Partnership (TPP) negotiations. 

Governments, experts, and international organizations have also focused increasingly on the importance of the regulatory process and certain, consensus "good regulatory practices," which the Asia-Pacific Economic Cooperation (APEC) has noted "contribute directly to trade, investment, job creation, and sustained economic growth."  For these reasons, the TPP includes a chapter on "Regulatory Coherence" in which member nations are likely to commit to several of these practices, including public consultation and transparency, central government coordination, the use of regulatory impact statements, and the review of existing regulations. This is the first chapter of its kind in a major trade agreement, and the focus is on how member nations develop regulations, not on any particular policy outcome. Improvement of these practices across nations will also increase the chances that future efforts at international regulatory cooperation are successful. 

Should the TPP pass, it will come as Japan continues to implement several significant reforms over the last two decades that have improved the process by which ministries develop new regulations. In addition, Prime Minister Shinzo Abe has made the review of existing regulations a central component of his "third arrow" structural reform efforts. As a result, this is a particularly interesting and useful time to consider the Japanese regulatory process. Using the U.S. system as a comparative point of reference, I will briefly share my impressions of the current state play in Japan with a focus on public comment, regulatory impact analysis, review of existing regulations, and central government coordination.

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