Despite the profound and far-reaching impact of the COVID-19 pandemic throughout the world, the momentum of economic globalization cannot be changed. Confronted by multiple global problems, including sluggish economic recovery, severe inflation, food insecurity, and energy crisis, the international community needs further strengthen international economic cooperation and maintain the global value chain, to promote economic globalization in a more open, inclusive, balanced, and win-win manner. In the post-pandemic era, what the international community urgently needs to do is not only to boost socio-economic recovery but more importantly, to reconstruct and innovate international rules as well as reform and rebuild the global governance system. As tariffs and non-tariff measures (NTMs) have been reduced and even eliminated, different rules, regulations, standards, and executive bodies among countries have emerged as new “behind-the-border” trade barriers, which has a deeper impact on international trade in goods and services compared with traditional tariff barriers. It is recommended that BRICS countries strengthen international regulatory cooperation (IRC), emphasize macroeconomic policy coordination, and speed up the cultivation of talents in the field of global governance, thus stimulating post-pandemic economic growth and social progress.

I. The COVID-19 pandemic has affected the world widely and deeply, bringing several challenges to economic globalization and global economic governance. However, it cannot reverse the trend of economic globalization and instead will accelerate a new round of globalization.

Confronted by a series of problems including sluggish economic recovery, severe inflation, food insecurity, and energy crisis, the international community should work together to further strengthen international economic cooperation and maintain efficiently the global value chains (GVCs), so as to make economic globalization more open, inclusive, balanced and beneficial to all. With the introduction of various economic stimulus policies and the development of emerging industries worldwide, the world economy continues to recover and global trade demand remains stable. In 2021, real global GDP went up to $96.1 trillion, with a growth rate of 5.9%, which was 3.4% in 2022.

Global Cross-border Investment Is in a Slump. According to the World Economic Outlook, influenced by geopolitical tension and other factors, policymakers and related companies are increasingly considering production shifts to enhance the resilience of supply chains. In the long run, the shifting of foreign direct investment has a relatively more severe impact on emerging economies. Currently, cross-border investment by multinational corporations accounts for one-third of global trade, and weak investment growth has an extensive and lasting influence on global trade, long-term output, and sustainable development of emerging market economies.[1]

Some Major Countries’ Economic Policies Experience Sever Spillover Effects, and Global Value Chains Face Great Challenges. Currently, under sustained high inflationary pressure, the American Federal Reserve has accelerated its tightening policy and raised interest rates rapidly and sharply, with European countries following suit. The spillover of U.S. monetary policy has led to unprecedented inflation as well as systemic risk in the international financial system.

II. The challenges in the post-pandemic era are not only about economic recovery and development but more importantly, about the reconstruction and innovation of international economic and trade rules as well as the coordination and cooperation of international regulations.

The Supply of International Economic and Trade Rules Lags Seriously Behind the Demand. The current international economic and trade rules have failed to match with the development of the world economy, trade and investment, and cannot satisfy the needs of economic globalization. With the emergence and innovation of emerging technologies such as artificial intelligence, digital technology has given birth to the digital economy and digital trade.

Strengthening the Coordination and Cooperation of International Regulations Is Increasingly Urgent. With the drastic reduction of tariffs, behind-the-border trade barriers have become the primary problems plaguing international trade, which poses huge challenges to the trade, investment, and economic growth patterns of emerging markets and developing economies. Moreover, due to man-made fragmentation and obstruction, the updating of rules is lagging behind or even regressing and the regional rules are fragmented. These have restricted the benign cooperation of global economic governance. In this context, BRICS countries, as emerging markets, should take the initiative to shoulder the responsibility, jointly steering IRC in a fair, sustainable and healthy direction, advancing regulatory cooperation and exchanges, and building a new cooperation mechanism.

III. In the post-pandemic era, the international community will undoubtedly pay more attention to the theoretical research and practical actions of IRC and call on countries around the world to promote IRC in a broader scope and at a deeper level.

International regulatory cooperation (IRC) is not a new topic and was proposed at the early stages of the General Agreement on Tariffs and Trade (GATT) negotiations. Since the establishment of the WTO, IRC has attracted more attention and made some progress, but its practice and development are still struggling. International organizations, such as WTO, Organization for Economic Co-operation and Development (OECD), Asia-Pacific Economic Cooperation (APEC), and the United Nations Economic Commission for Europe (UNECE), are all vital forces to promote IRC. As the IRC and international trade policies become increasingly interconnected, some regional and mega-regional free trade agreements basically include provisions on IRC.

Developed countries started exploring IRC earlier and have done a lot of related work around this issue relying on international organizations as well as many bilateral and multilateral agreements. The OECD is one of the most important international organizations that promote IRC. As early as the 1990s, the OECD began exploring the path to promote IRC and set up the Regulatory Policy Committee (RPC), and began to follow up on IRC of its member states.

In the European region, the UNECE has set up a specialized working group called the Working Party on Regulatory Cooperation and Standardization Policies (WP.6). The WP.6 summarizes experiences and lessons learned from national, regional, and global technical standards, regulations, testing, and related activities, discusses good regulatory practices and ways to promote IRC, and strives to establish an open, fair, rule-based, predictable, and non-discriminatory multilateral trading and financial system.

In addition, bilateral and multilateral agreements such as the EU-Canada Comprehensive Economic and Trade Agreement(CETA) and the United States-Mexico-Canada Agreement (USMCA) also have dedicated chapters to the topic of IRC, outlining the main objectives of strengthening regulatory cooperation among countries.

Developing countries urgently need to promote IRC. As representatives of developing countries and emerging markets, the BRICS is a key variable in the current world economic reconstruction, playing an important role in the fulfillment of developing countries’ aspirations to establish a fair and reasonable international economic order as well as in the development of emerging markets. With great potential in promoting IRC, the BRICS will provide new impetus, which is not only helpful to safeguard the interests of developing countries in global governance, but also vital to stimulate the vitality of cooperation mechanisms among developing countries.

IV. The Great Importance of Promoting International Regulatory Cooperation in the New Situation

IRC promotes a new round of economic globalization as well as social and economic development in the post-pandemic era. IRC mechanisms reduce trade tariffs and non-tariff barriers, improve the effectiveness and transparency of regulations, and promote regulatory consistency through a series of institutional frameworks. The benefits of strengthening the coordination and cooperation of domestic regulation, reducing trade barriers, and enhancing overall economic development, risk management and information exchange still far outweigh the costs.

Strengthening IRC in the financial sector is a significant tool to stabilize the global financial system. With new and old international financial risks intertwining, the prospects for international monetary and financial cooperation are dim. Geopolitical tensions and the emergence of regional interest groups even have worsened the situation. The globalization of modern finance has brought at least four major challenges to regulatory agencies in various countries: First, it is difficult to assess the operations of financial institutions that operate beyond the borders of their home countries. Second, financial institutions may take advantage of regulatory differences between countries to move high-risk businesses to areas with the weakest regulations. Third, once complex institutions operating in multinational jurisdictions go bankrupt, it is difficult to dispose of them. Finally, countries may compete freely in the international financial sector but relax their own regulatory standards for their own firms at the same time. Therefore, financial regulatory cooperation is more necessary than ever to ensure the security and soundness of global financial markets and to help build a more equitable and stable international financial system.

1. Set up an Information Exchange Platform, to Enhance Domestic Macroeconomic Policy Communication, and to study a new model of IRC for BRICS and other developing countries as a Non-OECD countries’ IRC Model.

Under the framework of the BRICS Regulatory Cooperation Council, a “BRICS Regulatory Cooperation Forum” can be established to discuss regulatory barriers and seek opportunities for regulatory cooperation. This forum can also facilitate information sharing among BRICS countries on international standard-setting, promote good regulatory practices, and plan regulatory measures to achieve regulatory objectives. Additionally, specialized committees can be established under the BRICS Regulatory Cooperation Council to help address issues and challenges faced by regulatory cooperation in different professional fields, such as trade in goods and services, financial services, government procurement, and investment liberalization. These specialized committees can report their work and submit decision drafts to the regulatory cooperation council for authorization of implementation. The regulatory cooperation council can also establish new specialized committees during the working process to address new issues as they arise. These specialized committees can create international websites for a particular regulatory cooperation field to collate the regulatory standards, relevant initiatives of international organizations, trade agreements, and regulations of various countries in this field, facilitating the exchange of information and enabling rule-makers to grasp the latest regulatory developments in their respective fields.

Facilitate Cooperation between BRICS Countries and International Organizations. International organizations provide a platform for continuously conducting dialogues on new issues in IRC, help countries reach consensuses, better coordinate regulatory measures, and provide resolution mechanisms in case of disagreements. BRICS countries should reject unilateralism, protectionism, unilateral sanctions, the practices of exerting maximum pressure, and methods that “erect walls and impose trade barriers” or result in “decoupling and cutting supply chains”. The BRICS Regulatory Cooperation Council needs to step up efforts to embark on a new journey of multilateral trade negotiations, and set up an IRC system in line with the reality in developing countries, adhering to the principles featured by progressive development, advantages integration, and breakthroughs realization. Accelerating IRC and boosting international trade development among developing countries for win-win cooperation and common development will help to strengthen North-South cooperation and facilitate global IRC.