Abraham L. Newman

The European regulatory state and global public policy: micro-institutions, macro-influence

ABSTRACT Across a broad range of sectors, Europe is increasingly shaping global public policy. Existing research stressing the importance of market size for international regulatory influence cannot satisfactorily account for this. We contend that the rise of the regulatory state within Europe has significant international implications, augmenting Europes ability to shape global market rules. The article develops an institutional explanation of regulatory influence stressing domestic regulatory capacity. An analysis of two hotly contested transatlantic policy fields – data privacy and financial market regulation – provides a first test of the argument.

Making global markets: Historical institutionalism in international political economy

ABSTRACT As dramatically evidenced by the global financial crisis, the interaction of domestic regulatory systems has significant international consequences. Nevertheless, these relationships have received only limited attention from international relations scholars. This special issue, therefore, provides a detailed examination of international market regulation – the processes through which the domestic regulatory activities of states and other actors set the effective rules of internationally-exposed markets. To this end, we borrow and extend on arguments developed by historical institutionalists in comparative politics and American political development. In particular, the contributions adapt two mechanisms – policy feedbacks and relative sequencing – to explain state and bureaucratic preferences over international market regulation as well as bargaining strength in relevant negotiations. In addition to contributing to central IPE debates about international economic governance, the individual contributions shed light on a number of important empirical domains such as corporate accounting, intellectual property, pharmaceuticals, hedge funds, and financial market standardization.

Building Transnational Civil Liberties: Transgovernmental Entrepreneurs and the European Data Privacy Directive

Democratic nations have long struggled to set the proper balance between individual freedom and government control+ The rise of digital communica- tions networks, market integration, and international terrorism has transformed many national civil liberties issues into important international debates+ The European Union was among the first jurisdictions to manage these new transnational civil liberties with the adoption of a data privacy directive in 1995+ The directive substantially expanded privacy protection within Europe and had far-reaching consequences inter- nationally+ While international relations scholars have paid considerable attention to the global ramifications of these rules, research has not yet explained the origins of the European data privacy directive+ Given the resistance from the European Com- mission, powerful member states, and industry to their introduction, the adoption of supranational rules presents a striking empirical puzzle+ This article conducts a struc- tured evaluation of conventional approaches to European integration—liberal inter- governmentalism and neofunctionalism—against the historical record and uncovers an alternative driver: transgovernmental actors+ These transgovernmental actors are endowed with power resources—expertise, delegated political authority, and net- work ties—that they employ to promote their regional policy goals+ This article uses the historical narrative of the data privacy directive to explain the origins of a criti- cal piece of international civil liberties legislation and to advance a theoretical dis- cussion about the role of transgovernmental actors as policy entrepreneurs within the multilevel structure of the European Union+

Domestic Institutions beyond the Nation-State: Charting the New Interdependence Approach

What is the relationship between domestic and international politics in a world of economic interdependence? This article discusses and organizes an emerging body of scholarship, which the authors label the new interdependence approach, addressing how transnational interactions shape domestic institutions and global politics in a world of economic interdependence. This literature makes three important contributions. First, it examines how domestic institutions affect the ability of political actors to construct the rules and norms governing interdependent relations and thus present a source of asymmetric power. Second, it explores how interdependence alters domestic political institutions through processes of diffusion, transgovernmental coordination, and extraterritorial application and in turn how it changes the national institutions mediating internal debates on globalization. Third, it studies the shifting boundaries of political contestation through which substate actors affect decision making in foreign jurisdictions. Given the importance of institutional change to the new interdependence agenda, the authors suggest several instances where historical institutionalist tools might be exploited to address these transnational dynamics, in particular, mechanisms of cross-national sequencing and change strategies of substate actors. As globalization continues, it will be ever more difficult to examine national trajectories of institutional change in isolation from each other. Equally, it will be difficult to understand international institutions without paying attention to the ways in which they both transform and are transformed by domestic institutional politics. While the new interdependence approach does not yet cohere as a single voice, the authors believe that it offers an innovative agenda that holds tremendous promise for both comparative and international relations research as it calls on scholars to reconsider the dynamic nature of globalization for global politics.

Transgovernmental Networks and Domestic Policy Convergence: Evidence from Insider Trading Regulation

Cross-border cooperation among domestic regulators and public officials has become a defining feature of global governance. While a number of studies have tracked the emergence and institutionalization of such transgovernmental networks, less is known about their effect on domestic policy. This study explores this link for the important case of insider-trading regulation in original data for 116 countries between 1977 and 2006. It offers quantitative evidence that transgovernmental cooperation is related to domestic policy convergence but that the relationship is more complex than often assumed. Direct ties to powerful regulators increases a jurisdictions likelihood of adopting internationally promoted policies such as insider-trading rules. Separately, membership in the International Organization of Securities Commissions (IOSCO), a forum designed to diffuse best practices among regulators, increases a jurisdictions likelihood of subsequently enforcing newly adopted policies. The findings in this study suggest that different network components are associated with distinct aspects of domestic policy convergence. The results are directly relevant for current public policy debates about the reregulation of global financial markets as transgovernmental networks among domestic regulators have assumed a critical role.

The Long Arm of the Law: Extraterritoriality and the National Implementation of Foreign Bribery Legislation

Can the application of domestic law by bureaucracies in powerful states alter policy dynamics globally? Courts and regulatory agencies with jurisdiction over large markets routinely impose national rules to conduct transpiring outside of their physical borders. Such extraterritoriality has expanded to issues ranging from antitrust to the environment. Proponents claim that extraterritorial acts can have far-reaching international consequences, spilling over into the domestic political economy of regulation in target states. Skeptics, however, question the effects of these sanctions against internationally mobile actors. In this study, we offer the first quantitative analysis of extraterritorial intervention for global policy convergence. In particular, we construct an original time-series panel data set to test the association between extraterritorial actions by U.S. prosecutors and the national enforcement of foreign bribery regulations in target countries. Our empirical analysis finds strong statistical evidence linking extraterritoriality to national policy implementation, with jurisdictions that experienced a U.S. intervention being twenty times more likely to enforce their national rules. The findings suggest the important influence that domestic law in powerful states may have for global cooperation in general and sheds light on the key pillars of international anticorruption efforts in particular.

Governing lipitor and lipstick: Capacity, sequencing, and power in international pharmaceutical and cosmetics regulation

ABSTRACT Over the last three decades, the pharmaceutical and cosmetics industries have become increasingly global. To ensure product safety and consumer protection, regulators in leading markets have applied domestic rules extraterritorially and have joined forces to harmonize rules through transgovernmental cooperation. Yet whereas the United States has long been the dominant player in international market regulation of pharmaceuticals, the European Union has decisively shaped global rules for cosmetics. What explains differences in agenda setting power across the two closely-related industries? We compare and contrast the expectations of a realist account focused on market size and a liberal functionalist argument centered on the role of market friction with a historical institutionalist explanation stressing the relative sequential development over time of domestic regulatory capacity in leading markets. The empirical evidence shows that domestic regulatory institutions systematically shape international market regulation. Historical institutionalism provides an important complement to existing transgovernmental research, offering clear expectations for the origins of and terms of influence within such cooperation. More generally, it opens up a rich toolbox for the analysis of industry-level global market governance, which affects the daily lives of many millions of consumers.

The New Politics of Interdependence Cross-National Layering in Trans-Atlantic Regulatory Disputes

How are regulatory disputes between the major powers resolved? Existing literature generally characterizes such regulatory disagreements as system clash, in which national systems of regulation come into conflict, so that one sets the global standard, and the other adjusts or is marginalized. In this article, we offer an alternative account, which bridges early literature on interdependence with work from Historical Institutionalism in comparative politics. We argue that rule overlap creates opportunities for regulatory actors to develop transnational alliances in support of an alternative institutional agenda. Over time, the resulting “cross-national layers” have the potential to transform domestic institutions and in turn global rules. International regulatory disputes are less discrete international conflicts between sovereign jurisdictions than ongoing battles among regulatory actors within jurisdictions (and alliances across them). We examine two critical issue areas—surveillance information sharing and accounting standards—which allow us to contrast our argument against standard accounts emphasizing veto points and switching costs, respectively.

International interdependence and regulatory power: Authority, mobility, and markets

This article revisits a fundamental question of international political economy: when does cross-border economic interdependence become a source of power. The view that economic interdependence is a source of potential power, not just mutual benefits, has a long lineage traceable to political realism, organizational economics, Ricardian trade theory, and structural Marxism, and researchers typically focus on preferred causal variables in isolation. Despite important contributions, little attention has been paid to understanding the interactions of multiple perspectives on asymmetric interdependence, or to making sense of contradictory expectations of the various models. As a consequence scholars engaged in globalization debates, such as those about policy convergence or private actor governance, frequently talk past one another. To deduce expectations about the relationship between power and interdependence, we build a model synthesizing standard approaches that analyze the effects of market size and market scope separately, and then add the critical variable of jurisdictional boundaries. By decoupling geography and authority, our analysis produces a respecification of classic interdependence models and advances core international political economy debates concerning power dynamics in a globalized economy.

Transnational feedback, soft law, and preferences in global financial regulation

ABSTRACT Pre-crisis global governance of finance was marked by considerable preference alignment between the two regulatory great powers, the US and the EU. The articles explanation of this surprising pattern in regulatory preferences takes the institutional context of global finance seriously. It highlights the endogenous, temporal effects of inter-national institutions at the core of global economic governance: transnational regulatory networks and the soft law they produce. Transnational soft law is not simply an articulation of a focal point, we demonstrate, but also a political resource that may be employed by reform-minded agents dissatisfied with their domestic policy status quo. We label such feedback processes ‘templates-as-disruptors,’ meaning that the establishment of transnational soft law by regulatory networks at t1 creates policy templates that disrupt pre-existing internal (e.g. domestic) political contests at t2. In addition to improving an understanding of historical events and great power preference alignment, the paper highlights the temporal effects of informal cooperation and domestic--international interaction in global governance.