Embedding mutual recognition at the WTO

Abstract:

Mutual recognition is a useful tool for international liberalization in particular contexts. However, it poses two important types of risk. First, it could jeopardize a satisfactory level of prudential regulation. In order to address these risks, mutual recognition should be limited to initiatives that can be supported by satisfactory essential harmonization that can protect a satisfactory level of prudential regulation. Second, mutual recognition could disadvantage poor states, either de jure through closed recognition among developed states or de facto through harmonization or equivalence conditions that are excessive, or excessively costly, for poor states. In order to address these risks, mutual recognition initiatives should be designed to be accessible to poor states.