One-In, X-Out: Regulatory offsetting in selected OECD countries

         Governments are increasingly trying to limit the costs of regulatory compliance. One of the approaches that has been gaining ground in the last five years is the “one-in, x-out rule”, or the offsetting of regulatory costs stemming from new regulations by reducing the existing regulatory stock. This paper presents examples of regulatory offsetting approaches in selected OECD countries. By comparing the different approaches and discussing their key features, the paper provides guidance to countries considering introducing regulatory offsetting. This paper finds that there are many methodological and implementation issues that need to be resolved before a government decides to use a one-in, x-out approach as part of its regulatory policy. Key suggestions for countries introducing regulatory offsetting include i) ensuring a solid methodology for calculating regulatory costs ii) linking the responsibility for finding offsets to the “owners” of regulation iii) setting up quality oversight mechanisms iv) securing strong political commitment and support and v) implementing regulatory offsetting as a complement to other regulatory management tools.      