How Standards will Modernize Canadian Regulatory Policy
The development and strategic application of standards in supporting regulatory modernization
Outdated regulatory provisions are impeding Canada’s economic growth prospects and social wellbeing. While the need to uphold the principles of regulatory policy has not changed, the world around us has. This calls for an immediate review to ensure we have standardized protections that reflect contemporary realities.
Our regulatory policy is antiquated and lacks formal structures explicitly mandated through national legislation to keep up with the timely adoption of standards and safety codes. It struggles to keep pace with emerging technologies that continue to threaten our safety and security and neglects the complicated array of negative spillovers, most often to the detriment of vulnerable persons and children. The speed with which these technologies are evolving is exacerbating the negative effects of an already slow process, disproportionally affecting domestic innovators and increasing risks to consumers. Our counterparts in similar jurisdictions including the US, European Union and the United Kingdom have not only undertaken and implemented changes to address these challenges by prioritizing a strategic approach to standards setting, they also mandated their effective use in legislative instruments decades ago. Additionally, in recognition of the velocity of change as well as the overwhelming value emerging technologies and resulting intangible assets contribute to the global market, many jurisdictions have built in mandatory reviews to ensure regulations are meeting their present-day objectives and anticipate the need to address unknown challenges.
The Importance of Standards
Standards establish accepted practices and eliminate unnecessary complexity and needless duplication. The absence of organized Canadian priorities guiding critical standards and regulations limits our growth prospects and erodes both our sovereignty and security, essentially compromising our ability to address the issues raised by our changing world. The slow legislative and regulatory process to incorporate and update standards by reference in regulation is a design failure. Additionally, incorporation by reference in regulation is an outdated tool in achieving regulatory outcomes. The stark number of outdated and withdrawn standards incorporated in regulation leaves organizations exposed to risk and uncertainty. At a time where the federal government is making major strategic investments in digital infrastructure and modernization, understanding the design failures in the development and strategic application of consensus-based standards is crucial.
“Canada’s current regulatory regimes expose our population to risk both known and unknown.”
By design, regulatory policy must protect the public from harm created by unsafe products, under-performing services and hazardous conditions, while enabling an innovative marketplace. In Canada, the Government already references hundreds of standards in a myriad of public health and safety regulations across ministries accountable for the safety and security of consumer products, services and infrastructure. Recent proposed changes to 29 acts through 46 amendments contained in Bill S-6, An Act Respecting Regulatory Modernization, address just two of the 100-plus acts and associated regulations from two of the 18 federal organizations that have outdated standards incorporated by reference. In short, Canada’s current regulatory regimes expose our population to risk both known and unknown, and recent attempts to update them are well intended but woefully inadequate.
Standards are an essential component of the regulatory process and are deeply embedded into our daily lives. Simple things like walking into a building, riding an elevator and charging your device are possible because of thousands of standards and regulatory structures at play that anticipate and mitigate risks. The rise of the production-based industrial economy of the 20th century saw engineers use standards to support the work of commercializing revolutionary technologies such as electricity and telephones. This same strategic orientation is needed to address the rapid and changing nature of our economy resulting from the digital transformation. Countries attuned to these realities have updated their regulatory regimes and are engaging in standards setting to establish the rules of the road toward a digital future that is aligned with their values and plans for growth.
How to Keep Our Standards Up-to-Date
A principal recommendation to keep federal regulations relevant and updated is to enact Governor in Council powers to list recognized standards, codes of practice and certification programs for regulations it administers to provide sufficient and relevant safeguards. Governments around the world have turned to combining legislation, regulations, standards and certification programs as the go-to compliance mechanism for managing traditional sectors and high-risk, emerging technologies. The simplest, most scalable choice to support the selection and use of appropriate technical safeguards is to recognize standards and certification programs developed by organizations that have accepted the WTO/TBT Annex 3, Code of Good Practice for the Preparation, Adoption and Application of Standards.
A proven successful example of such an approach is the List of Recognized Standards for Medical Devices managed by Health Canada supporting the Food and Drugs Act. The list, which was launched in 2002, is regularly updated by Health Canada officials to reflect rapid technological and product development cycles in this field. More recently, the proposed Bill C-26 aligns with the principal recommendation to enact Governor in Council powers to recognized standards for regulations it administers to provide sufficient, up to date and relevant safeguards.
“Regulations need to remain technology-agnostic.”
In addition, regulations need to remain technology-agnostic. The Cabinet Directive on Regulation needs to be updated to limit regulations to essential requirements by defining the results to be achieved or hazards to be addressed as a substantive measure to avoid economic paralysis. In the very early days of electronic commerce, the Secure Electronic Signature Regulations promised to encourage the adoption of electronic signatures. Instead, with the regulation last amended a decade ago, it languishes with technology provisions that are expensive to implement and now outdated. The regulation, still in effect, has become a barrier to adoption, causing the opposite of its intended effect.
Canada would be well-served by adopting the European Union’s New Approach directives, which were set in force more than 30 years ago. It restricted the content of legislation to “essential requirements”, leaving the technical details to European harmonised standards. It established a coherent mechanism between EU member states’ regulators and standards-setting bodies. Under the New Approach, regulators have the authority to join standards bodies in developing new mandatory standards and conformity assessment programs covering emerging issues that require regulatory intervention to achieve regulatory objectives. All member states have an obligation to adopt the newly published standard and to withdraw duplicative regulations. Harmonised standards remain voluntary under this approach and organizations may use other methods to demonstrate regulatory compliance – an approach that respects parliamentary accountability.
“Standards and certifications offer the flexibility required to effectively regulate new, emerging and evolving technologies.”
Standards and certifications offer the flexibility required to effectively regulate new, emerging and evolving technologies. Technology standards are more than guiding principles. From the smallest screw thread to the most complex utility network, technology standards prevent harm, ensure reliability and improve our way of life. They are essential to spearheading technology advancement, innovation and trade. Standards allow us to establish accepted practices, technical requirements and at times, modernize complex policies.
By adapting the current regulatory regime to reflect these recommendations, Canada will be well-positioned as a leader in supporting regulatory modernization to the benefit of our economy, the security and sovereignty of our national interests and the wellbeing of our society.