What We Heard Report: Stakeholder Consultations on a Proposed Competitiveness Assessment Tool

On this page

• Background
• Overview of consultations
• Support for a Competitiveness Assessment Tool
• Regulatory alignment across jurisdictions
• Factors to consider when assessing competitiveness impacts
• How decisions would be made on the relative importance of various considerations
• The competitiveness assessment process
• Comments on the regulatory process in general
• Next steps
• Appendix: participating organizations

Background

Regulations act as the “rule book” for how businesses and organizations must operate. They are essential to:

• protect consumers
• ensure the health, safety and security of Canadians
• safeguard the natural environment

The Government of Canada has established processes for how regulations are developed, including consultation and engagement with stakeholders. As part of these processes, some industry stakeholders have suggested that the government explicitly consider the unintended impact of regulations on the competitiveness of regulated industries and companies. Between 2021 and 2022 the External Advisory Committee on Regulatory Competitiveness provided recommendations related to the development of a Competitiveness Assessment Tool (CAT). The Committee, first established in 2018, brings together external stakeholders to develop recommendations on how to improve Canada’s regulatory system. As a first step towards adding a competitiveness lens to the regulatory development process, the Committee recommended that the Treasury Board of Canada Secretariat (TBS) pilot a simple checklist for federal regulators to help assess the impact of regulatory initiatives on competitiveness. Further, they recommended that as part of the pilot, additional consultations be pursued with Canadians and the business community to gather perspectives on considerations within the proposed lens regarding economic growth and trade, cumulative effect and innovation.

In response to those recommendations, a draft CAT was developed. Its objective is to provide a checklist of key considerations that federal regulators can use to identify potential unintended negative impacts of regulations on the competitiveness of regulated companies and industries. The tool could be used at any stage in the regulatory process to gain insight into any impacts that could put a regulated company or industry at a competitive disadvantage relative to other competitors, domestically or internationally.

The tool aims to help regulators do the following:

• identify opportunities for improvement
• avoid unintended impacts such as creating an unlevel playing field or limiting the capacity for innovation among Canadian firms
• ensure that regulations are responsive to changing technologies and business realities

Using a series of questions, the CAT presents commonly cited challenges that have a negative effect on competitiveness:

• addressing regulatory duplication and unnecessary regulatory differences, and aligning regulations across governments
• aligning with economic growth strategies and other government-wide initiatives intended to support business and trade
• streamlining digital processes
• providing clear information and support
• removing barriers to competition
• providing flexibility and risk proportionality
• enabling innovation and testing new products

Overview of consultations

In August and September 2022, feedback was sought from stakeholders, particularly:

• business and industry associations
• sector-specific industry associations
• businesses, including small and medium-sized enterprises
• other organizations interested in competitiveness issues

The consultation asked stakeholders to provide input on the draft CAT, including:

• competitiveness considerations that should be top of mind for regulators when they review regulations or design new ones
• how stakeholders might see their organizations or industry supporting regulators in completing a competitiveness assessment

Through the consultation, 38 comments and submissions were received from 21 organizations, either through the online platform or by email. Organizations that participated were primarily industry representatives, including associations that represent key industries in the Canadian economy. The Appendix contains a list of all participating organizations.

Support for a Competitiveness Assessment Tool

Stakeholders who responded strongly supported the use of a tool to help departments assess the impacts of new or existing federal regulations on the competitiveness of Canadian businesses. They also liked the idea of trying to avoid unintended impacts and making regulations future-proof so that they will not become outdated or irrelevant. Some suggested that coordination with provincial and territorial regulators would be valuable, particularly with a focus on future-proofing regulations.

Some stakeholders suggested additional considerations that could be added to the tool, while others preferred to see a shorter checklist. Some suggested that competitiveness impacts should be assessed according to the totality of regulations (the cumulative regulatory burden) rather than one regulation at a time.

Regulatory alignment across jurisdictions

Regulatory alignment refers to the extent to which regulations in one jurisdiction are the same as, or aligned with, regulations in another jurisdiction. This topic generated the most comments in the consultation, with respondents wanting to ensure that the most relevant jurisdictions for their industry were selected for comparison. Many industries see competition at the international level, so they want to ensure that the jurisdictions in which they and their competitors and trading partners operate have similar regulatory requirements, or at least that requirements imposed by Canadian regulations do not exceed those of other jurisdictions.

The draft CAT specifically identified the United States and the European Union as jurisdictions with whom alignment would be important. Many respondents suggested using a broader (or in one case, narrower) list of jurisdictions, and it differed by industry. For example:

• some industries see the United Kingdom, New Zealand and Australia as important points of comparison, as they are important components of their competitive environments
• on the other hand, certain industries such as the auto manufacturing industry, operate in a highly integrated North American market, so alignment within North America was seen as critical

Respondents generally preferred to define relevant jurisdictions specific to the industry being regulated.

It was suggested that the assessment of the degree to which regulations are aligned with other jurisdictions should be more specific within the tool. The draft tool proposed to assess alignment using a three-point scale, ranging from “fully” to “somewhat” and “not at all.” It was felt that many assessments could fall into the “somewhat” category, making the assessment less useful.

Factors to consider when assessing competitiveness impacts

The draft CAT included many factors for regulators to consider when assessing competitiveness impacts. Several other factors were suggested to be added, such as:

• the economic and social importance of an industry, not just its size
• labour shortages and skills shortages
• consideration of whether emissions-intensive trade-exposed industries or other industries with known competitiveness issues would be impacted
• impacts on Canada’s supply chain
• industry costs to comply with the regulation

Respondents also commented on some of the factors included in the draft tool. For example, the draft CAT proposed consideration of government priorities when assessing the impact of a proposed regulation. Some respondents felt that such priorities would be an important consideration and should apply to existing regulations as well. Others wondered if it was appropriate to consider current government priorities, since they could change, and regulations should be able to stand the test of time.

Similarly, the draft tool proposed consideration of whether, in the development of the regulation, techniques such as sandboxes, test beds and policy labs had been used. Some respondents welcomed the recognition of these techniques, while others felt that these terms may be ambiguous to some users and that such processes may give priority to anecdotal evidence. Respondents also had different reactions to whether disruptive technologies should be an important factor when developing or changing regulations. Some recommended paying less attention to this factor as not all industries achieve innovation through disruptive technologies.

It was also noted that the draft tool seemed to unfairly portray self-regulatory or co-regulatory regimes as being unsupportive of competition.

How decisions would be made on the relative importance of various considerations

Stakeholders commented on their preference for which considerations should be prioritized over others. For example, some respondents suggested that safety and security should always be the most important factor and should outweigh any other considerations, such as eliminating barriers to competition.

Similarly, many wondered what the weight of a competitiveness impact would be relative to the goal of the regulation. If a proposed or existing regulation would have a competitiveness impact, would it, or should it, still proceed?

There was concern expressed about the confidentiality of information provided by corporations to support the assessments.

The competitiveness assessment process

Many participants commented on the process by which the competitiveness assessment would be undertaken and completed. Comments included reference to:

• the role industry would play in an assessment
• whether use of the tool would be mandatory
• whether and how assessments would be coordinated across government
• most importantly, how decisions would be made subsequent to the assessment

With respect to the role of industry in the assessment, many participants indicated that the process should include industry participation. Specifically, a role was seen for industry to review and validate a competitiveness assessment after it was completed.

Regarding the mandatory or optional nature of the tool, many respondents felt its use should be mandatory for new regulations, and some felt it should be used on a regular basis (for example, every five years) to consider the impacts of existing regulations as well.

It was suggested that the Treasury Board of Canada Secretariat should coordinate assessments across government. Such coordination was suggested to facilitate a whole-of-government assessment of cumulative impacts of a regulation and to manage the consultation workload with stakeholders in the event of parallel reviews.

The most common concern regarding the process was how the competitiveness assessment would be used once completed. Specifically, respondents were interested in who would approve an assessment. More importantly, they were concerned with how any conclusions would be made about whether identified impacts on competitiveness were justified.

Comments on the regulatory process in general

Although beyond the specific scope of this consultation, comments were provided on the regulatory process more generally. For example:

• some respondents reinforced the need for evidence-based regulation, regulatory certainty, and avoidance of redundancy and duplication in regulations
• some also voiced support for new consultation formats and for regular reviews of regulations

Although these comments were not specifically in scope, they were provided to the relevant departments and agencies for consideration.

Next steps

The Government of Canada thanks all participants for their feedback. Submissions and comments have been shared with the appropriate departments and agencies.

The Government is exploring how best to address competitiveness concerns highlighted in the feedback on the draft CAT. Over the coming months, we will work with federal regulators to develop guidance, tools and advice on how to measure the impact of regulations and regulatory changes on Canada's prosperity and competitiveness. Next steps will be released as soon as they are available.

If you would like to stay up to date on regulatory development and modernization, email us at regulation-reglementation@tbs-sct.gc.ca to join our distribution list to receive newsletters and other updates.

Appendix: participating organizations

The following list contains all identified organizations who provided submissions through this consultation process.

• Air Line Pilots Association, International
• Aurora Geosciences Ltd., NWT & Nunavut Chamber of Mines
• Canada Grains Council
• Canadian Canola Growers Association
• Canadian Cattle Association
• Canadian Consumer Specialty Products Association
• Canadian Federation of Independent Business
• Canadian Produce Marketing Association
• Canadian Standards Association (CSA Group)
• Canadian Vehicle Manufacturers’ Association
• Canola Council of Canada
• College of Professional Pilots of Canada
• Dickson Wright PLLC
• Fertilizer Canada
• Fruit and Vegetable Growers of Canada
• Gowling WLG
• Grape Growers of Ontario
• Protein Industries Canada
• Robin Ford Consulting
• Rust-Oleum