The Brussels Effect: How the European Union Rules the World

okay good afternoon and welcome I'm delighted to see you all here I'm delighted that this talk is taking place I'm very grateful to everyone who has enabled about to happen my name is Daniel kinderman I teach political science and international relations and direct the European Studies program here at UD Europe is an interesting and important part of the world and European studies has exciting classes and programming these are some of the many reasons why I recommend students to pursue a minor or major in European studies for all the students in the audience if you're not already European study students which brings us to today on today's speaker and talk in the current era of populist nationalism President Trump in this time of existential crisis of liberal democracy Brussels is often associated with unelected bureaucrats with an elite that lives in a bubble and is out of touch with reality sound familiar these are this is how people such as mr. brexit Nigel Farage and popular strongman and Hungarian Prime Minister Viktor Orban talk about Brussels whatever the merits of their critiques and I don't mean to suggest that their critiques are entirely without merit this betrayal of Brussels completely misses the message of this bold and important so the European Union rules the world yes you heard me correctly the European Union rules the world it regulates global markets and raises regulatory standards in several important areas regulating the digital economy we're all in the digital ecosystem consumer health and safety the environment market competition even in this age of populist nationalism the prep the Brussels effect matters professor Bradford's book suggests that global economic capital competition and capital mobility do not have to lead to a race to the bottom in social environmental standards in short Brussels which is about 6,000 kilometers or 3700 miles from us may matter more to of us more to us today in these perilous times than ever before I don't know if that's right but I look forward to finding out now it gives me great pleasure to introduce our speaker a new Bradford who is the Henry L Moses distinguished professor of law and international organization at the Columbia Law School she also directs the European Legal Studies Center at Columbia her research and teaching focus on European Union law international trade law and comparative and international antitrust law Bradford holds a law degree from the University of Helsinki and she earned her master's a Master of Laws and doctor of juridical science degrees from the Harvard Law School she taught at the University of Chicago before moving to Columbia she will talk for about 45 minutes and then we'll have time for Q&A before I hand things over to professor Bradford my colleague Amy Foley from the Institute for Global Studies will make a few remarks good evening I'm going to be short and to the point the Institute for Global Studies is always thrilled to partner with the Center for global and area studies on programs across campus for our students and University community and this fall Daniel asked if we could partner together on a Fulbright lecture we are always on the lookout for members of our community who have earned Fulbright Awards visitors to our campus who have won this prestigious award so that we can educate other UD members on the merits of being a fulbrighter how to go about and to come see us so that we can support you in those efforts I have handouts we have an information session coming next week and workshops later this spring as a part of the Fulbright lecture series and you yourself did a Fulbright in the US as a scholar correct I wanted to present to you a special pin this is a u D Fulbright community pin it has a little bit of bling on it I'd love for you to hear it proudly and I don't - do we thank you so much for coming to campus and bringing your knowledge and sharing it with all of us thank good thank you so much welcome thank you thank you so much Amy and thank you so much a new a welcome to the University of Delaware and we look forward to your talk thank you thank you Daniel for the invitation and thank you all for coming it is it's truly a pleasure so maybe I start with a few words of why I wrote the book the Brussels effect how the European Union rules the world and it is really an attempt to counter the narrative on Europeans weakness and and this is something that whether you listen to the press or general conversations such as the perception of the European Union today where there seems to be this very entrenched idea that Europe's best days are over that Europe has very little say on the the state of the world and very little ability to influence where the world is going instead we talk about the rise of China if we think about technology war it is between the United States and China and Europe is very absent from those conversations and it certainly hasn't helped that to the extent Europe is in the news it is really about one crisis or another so whether we talk about the euro crisis or then followed by the migration crisis the rise of populism the assertive Russia or then brexit something that then finally took place are in the end of January so it seems to be that at best Europe is trying to survive in responding to this crisis but while all these crisis narrative was dominating the news in my own research I came across constant examples of very strong Europe and manifestations of Europeans strong ability to influence at the global marketplace and this was my decision then to write that narrative that I think it's much more complete and much more accurate it is not to say that the crises are not significant because they are I think there are true challenges for Europe to tackle but that doesn't take away the power that Europe has and the strength that Europe has and that will be the focus of our conversation today so what are there some examples of the strengths of Europe that I discuss in the book so it is the power that Europe exercises through law hence that the wording how Europe rules the world it sets the rules and regulations that really affect all of us everyday so the European law impacts basically the food we eat and the air we breathe and the products we produce and consume so it is something that does not go unnoticed but it is not the kind of hard power when we think about military power it's not the power through economic sanctions it is not the power the way we traditionally has defined necessarily influence but it's very penetrating and it really are shapes the decisions of some of the most powerful corporations around the world so let's think about some examples of that so if you take for instance Facebook you take Microsoft Apple or Google and think about the data protection practices the data privacy policies these companies have they follow European data protection policies not just in Europe but here and around the world if you think about for instance again Facebook or Twitter or YouTube and think about how those companies decide what kind of speech they take down from BAE platforms because they consider that speech to constitute hate speech they don't follow the First Amendment of the United States Constitution they follow European definition of hate speech which is much more stringent in terms of what kind of speech is allowed in Europe so these powerful American companies are actually getting their instructions from Brussels and not from Washington DC and why is that so if you think about what the Brussels effect means that it really refers to this idea that European Union is a large and affluent consumer market and there are very few companies including the companies that I just mentioned that can afford to forego engaging with the European market and these companies in order to trade in Europe do need to obey the European rules as the price for engaging in business there that's not something that is necessarily surprising what is interesting is what follows not only do these companies decide to follow the European rules with respect to they provision of goods and services to European consumers often these companies decide to extend the European rules across the global production and global conduct so these companies are applying the European rules worldwide in order to avoid the cost of complying with multiple compliance regimes these companies don't want to set up a second production line or they don't want to set up a second set of practices in order to serve the remainder of the world with respect to different rules and because the European rule often is the most stringent most demanding rule by complying with the EU standard these companies can ensure that they can do business in the remainder of the world as well so all the European Union needs to do is to regulate the single market the European market and it is the global companies that then globalize those European rules so I mentioned a few examples from technology but and an involving American companies but that is not the only set of examples the European Union law also determines how timber is harvested in Indonesia what kind of chemicals Japanese toy manufacturers put into those toys on how honey is produced in Brazil what kind of pesticides Cameroonian farmers use when they are producing cocoa and what kind of facilities Chinese dairy factories include and and use in those facilities so it really is something that we can observe from sector to another and across the global marketplace so that is what I call influence and that is something that really shapes the global business practices and as a result also the products that we are exposed to on a daily basis so why do we see the Brussels effect and why don't we see for instance the Washington effect why don't we see the Beijing effect or the Tokyo effect or the Delaware effect and we do see Delaware that that is always if you think about the global races in terms of standards Delaware has been actually an important standard setter in the u.s. we've talked about the California effect that's the opposite to the Delaware effect so but why do we see why do I talk about the Brussels effect and so let me walk you through the various conditions of when a single jurisdiction can be a global standard setter and there's nothing that in principle would prevent Washington from taking the place of the of Brussels in this regard but for some reason currently Washington is not in that role but in many ways even though I call it the Brussels effect the book really outlines the theory when a single jurisdiction can unilaterally roll the global marketplace so what do you need to be able to do that so first thing you need is a large enough of a market so if Costa Rica for instance decided to apply very stringent environmental standards what would the global companies do if they decided that those standards were too costly to comply with they would stop to a business in Costa Rica Costa Rica just doesn't matter enough because it's too small of a market but Washington is a big the United States is a big market China is a big market so the market size alone does not determine which jurisdiction is setting the standards claw you also need to have what I call the regulatory capacity the legal institutions that help you leverage that market size and convert it into tangible regulatory influence so for instance Beijing today does not have the kind of bureaucracy it does not have the regulatory sophistication across many areas of the economy which would allow China to really exercise the kind of regulatory power that would be comparable to its market size there's plenty of regulatory capacity in Washington DC that is not the problem so why not Washington effect because there is no political will to deploy that capacity that regulatory capacity in the United States largely sits idle because the United States has chosen not to regulate there's been this shift since 1990s up until when the global standards came from the United States but since then the u.s. decided to take a back seat there's been a tremendous movement towards deregulation whereby very few environmental laws for instance have emanated from the United States there has not been a any federal privacy law that would have provided an alternative standard to the European general data protection regulation but JDP are when it comes to antitrust laws it is Europe that goes after Google and many other big companies whereas the US antitrust laws have not been deployed much at all in the recent decades so the US has been missing the third condition for the Brussels effect so you need the market size you need the regulatory capacity but then you need the political will to deploy that capacity and that's why we have not seen the United States to be a player when it comes to global regulation the book explains a little bit further the kind of areas where the EU is able to set the rules there are many areas where the EU is not powerful and where Brussels effect doesn't so Brussels effect only works the EU is able to rule the world only when it regulates what I call in elastic targets so what is elastic capital is elastic if the EU is regulating financial markets with too stringent standards the capital can move you can list your companies in Hong Kong you can list them in New York the EU is not able to regulate the global market the way it wants but the EU is generally regulating what I call in elastic targets the targets that don't move mainly consumer markets and the environment so Google for instance cannot circumvent the European data protection practices by processing the European data outside of Europe the European rules apply as long as European consumers the European data subjects the European residents are being affected so in that sense you cannot circumvent when the rules apply to inelastic targets the final condition of when the Brussels effect happens and this to me is the most interesting part of the theory and that is when the Brussels effect only applies when we talk about non divisible production so we talk about instances where it's not in the interest of the company to provide different products for different markets when there are enough scale economies or other benefits of uniform production that lead the companies to use the Brussels rule across the globe or production so that is exactly when for instance the EU decides to ban a merger between two companies you cannot have a merger or acquisition to be valid with respect to the United States if Europe has been that global transaction so this is for instance what happened when the European Union banned the attempt by an American company General Electric to acquire another American company Honeywell the United States said go ahead we give green light that doesn't violate that you antitrust rules but Europe said it did because it affected the European market Europe had the power to block an acquisition of an American company by another American company and the deal was dead worldwide it did not gain any effect in the u.s. either so in that sense it is non divisible in a legal sense and the European rule the most stringent regulator gets to determine the fate of a global merger sometimes some products are technically non divisible so for instance the technology companies sometimes find it hard to distinguish whether we should have different rules depending on the IP address of the person engaging in an activity online it may be feasible but it is not perfect to use Jill for instance geolocation technologies there's also technical difficulty sometimes to for instance separate the GMO and non-gmo crops on open fields because there's unintentional cross-pollination that may entail that when a farmer would want to have a field where the farmer doesn't use GMOs which makes the products than the crop fit for European market there's still a risk that the neighboring fields where GMOs are being used do you find a way and did you get commingled with the non GMOs practices so those are the instances where I consider or what I call that technical non divisibility then there's the economic non divisibility and that's what we generally think about scale economies it is just expensive to produce a different variety for different markets the companies don't want to have multiple production lines instead they want to have a uniform product very often and this is where they gravitate towards the most stringent standard in order to be able to produce for the rest of the markets so if you think about chemicals now you have chemicals are not just that the end product chemical but clothing the shoes the plastic bottles that the pains that the cars the toys there are chemicals everywhere and Europe has very stringent list as to what chemicals are being permitted and if you want to manufacture toys for the global marketplace you need to remove those chemicals from those toys if you want to sell them in Europe but you really want to introduce those chemicals into another set of toys that you then produce for the rest of the world so often the global companies tend to then remove the chemicals from across their production the same happens for for instance makeup so you have an American company Revlon that refrains from using chemicals in their cosmetics that are not fit for Europe but they have removed those chemicals also from the product sold in the United States even if the United States had not prohibited those chemicals so those are there that is the logic of why the European regulation gets to penetrate the global marketplace but at the same time the Brussels of a it's also a roadmap for any jurisdiction that wants to rule the world and that actually in unilaterally could set the standards for the world if the United States develop the political will again and rediscovered is its interest in regulation that the US could set an alternative standard but that's what we have not seen it so let me say a few words of whether this is something that the EU consciously wants to do and there the book claims that the EU is not regulating because it wants to rule the world the EU actually has been very focused on setting the rules for the European market its focus has been to remove the barriers from trade across Europe the global effect of the regulation has really been an afterthought it's been a side product it's been ancillary and something has been largely unintentional Europe only woke up to its ability to rule the world when the trading partners like the United States was saying well look your regulations are actually influencing the business practices in the US and we're not necessarily always happy about it but then the last 10 years or so the Europe when it has understood the power it has it has become a little bit more conscious of it and you start seeing references to the EU actually wants to also influence the global standard it wants to set the gold standard when it comes to regulation of privacy because in many areas like environmental law it helps Europe to be able to shape practices globally Europe alone cannot solve for instance climate change it needs those standards to be adopted by others and even if it doesn't get that that governments across the board to adopt the European rules it helps to make a change if global companies start behaving according to European rules ok so those are the main instances that I want to mention about that what the logic of the Brussels effect is the book then has four chapters where I go through various case studies and show how this happens so the book has a chapter on market competition which really talks about the antitrust regulation then there is a chapter on the digital economy which talks about the general data protection regulation and the regulation of hate speech online then there is a chapter on consumer health and safety which talks about chemical regulation and food safety and then finally one on environmental regulation that talks about electronic waste and animal welfare and then also on climate change but let me now move maybe to the the last two chapters of the book that ask the question of whether this is a good thing or bad thing so the book is not written to criticize what they need us know is it written to defend what the EU does it doesn't take a position on whether the EU regulation is desirable or not but I think they paves the way for the conversation to ask that question as well and I think it really depends on whom one asks whether you want to think about this as something that enhances the welfare of the world or something that should a cause for concern it may depend on where you stand in general as to whether regulation is good or bad and or how much you want to trust the markets to determine outcomes so the government but may also be that you're that the view depends on you in one area of regulation you may welcome the Brussels effect and in the others you don't and the final question asks whether this will last or whether the Brussels effect will be replaced by let's say Beijing effect in the coming decades so let me now talk a little bit about those two questions the desirability and the future of the Brussels effect so the desirability like I said I do not take a stand on whether this is good or not but I engage with the three different criticisms that have been leveled against the Brussels effect so first of those is this idea that the regulation is costly it does impede innovation and if the Brussels attack multiplies this regulation by making sure that the global marketplace is also regulated very heavily it might be that then there is a reduction in innovation worldwide so here I think there is a reasonable argument that sometimes regulation if one over does it that is an impediment to innovation I remember having talked to Google this was a Facebook actually it was there there the quote that I use in the book I talked to an executive from uber and I asked the question of whether rubriz interactions with regulators in Europe and America are different and this executive responded of by saying that yes if I think about what European regulators want us to do they want us to satisfy a consumer need if I think about what American regulators want us to do they want us to change the world or allow the world to be changed and if you think about if all the companies gear they innovation efforts to satisfy your consumer need some most disruptive innovations probably would never take place so I think there is a reasonable concern that if the regulation is too heavy-handed it may curtail innovation but I am not too quick to conclude that every time we when we see regulation we also see less competitive markets less economic output less innovation so a lot of for instance the energy efficiency technologies that regulation in Europe mandates that is an opportunity not just to advance environmental goals but also it may pave way for more efficient products and hence greater innovation there's also a wonderful book by a French economist Thomas Philippe in who is a professor at NYU and who has written this book called the great reversal how America gave up on free markets and he basically shows how the lack of regulation in the United States has led to excessively concentrated markets which has reduced competition which has elevated the corporate profits but also prices that consumers pay that's why I pay so much more when I fly internally in the United States compared to when I just came from Europe and I pay hardly anything when I fly from Berlin to Paris and so forth because there's much more competition there has been much more heavy use of antitrust regulations the same thing for your cell phone plants the same things for your protein in Internet there is much less competition in the US market because there is less regulation so I think it is not there's no easy answer that generally regulation always leads to less or more innovation but I think it's a reasonable question to be asked about the Brussels effect and if you think whether it's good or bad the second criticism that has been are leveled against the Brussels effect is this idea that the regulation coming from Brussels is protectionist it is scared to try to get a leg up to European companies that are otherwise not able to compete with a more dynamic and innovated American counterparts if you think about that the big technology companies they are American companies and Chinese companies are not European companies and one question is that is it because there's been so much regulation and is that the reason why Europe is now trying to level the playing field by going after American tech companies so especially that recent antitrust cases about 10 billion in fines against Google have really provoked this conversation but this is where I take quite a strong stand in the book that I do not think that the regulation coming from Brussels is motivated primarily by protectionism so if you think about for instance the cases against Google there is no European search engine that European regulators are trying to protect who brought the complaint against Google it was Microsoft it was another American company that wounded Brussels to take and bring a case against Google and and quite a few years back when Microsoft was the target of antitrust investigations it was again a group of American companies that wanted Europe to sue Microsoft there was a very big fight against another American giant in technology field Intel who was the main beneficiary when Brussels went after Intel it was another American company AMD when I talked to the former US ambassador to the EU under President Obama Tony Gartner he told me that he never lobbied the European institutions in any of these antitrust cases because it was impossible to discern what an American interest was they were normally European they were normally American companies on both sides of the dispute I've also done some empirical study for instance studies including we looked at all the merger decisions taken by the European Commission and we looked at whether there is a greater likelihood of a challenge if you have an American company acquiring a European target we see no such there is no crater likelihood of Europe challenging a merger if we have an American company merging with an American company or an American company trying to acquire European target and what we see that Europe is very tough in general including when European companies are the targets of the investigation there was recently a very prominent merger case where there was a proposed merger between Siemens and Ostrom in the rail sector involving a German company and a French company and Germany and France were pushing very hard for this merger to go through that was the opportunity to build a European national champion and the argument was if we let this merger go through the European company can compete much better for instance against the Chinese rivals and the European Commission blocked the merger and they said no to these German and French invitations to let the merger go through so there are many anecdotal evidences as well on the other side not just Europe going after Google and the American companies but generally Europe taking the view that markets do not self-correct that there is space for antitrust intervention in order to restore competition on the markets the last set of criticism that are engaged in in the book is this idea that European Union is a regulatory imperialist that by regulating the foreign markets it is undermining the political autonomy of each and every one of you that basically gets the European consumer consumers preferences imposed on you and maybe we shouldn't be as concerned about the you but if you think about then African consumers African farmers for instance that refrain from using GMOs in order to be able to export agricultural products into the European market even thought the criticism says that these farmers would need to use GMOs in order to feed their own population so there may be instances where we are seeing the European preferences penetrate the global markets including those markets where consumers do not trade off product safety environmental benefits and the price of the product for instance the same way so I think that is a criticism that one needs to take seriously but at the same time it is not clear that in all the instances we are undermining the democratic systems are elsewhere we have many examples where the foreign governments for instance welcomed the Brussels effect because they don't have the capacity to regulate they do not have the capacity to remove all those chemicals from the supply chain of powerful international corporations and they want their consumers to be safe there is this narrative that Europe is often providing a global public good where there is a positive spillover if environmental benefits are also enjoyed by consumers in other markets there are many are for instance global antitrust agencies who said I am glad that European Union stops global cartels and the prices will go down also for the consumers in the markets even though we would not have the capacity to go after those cartels I hear sometimes in the United States many people say that well it is good that at least Brussels is watching us because our government does not protect our privacy our government does not care enough about environmental regulation and in many ways because of the role of money in politics in the United States maybe the state of the regulation in the United States today does not fully reflect the kind of local regulation we would see in the democracy that was less shaped by the role of money in politics so these are some of the counter arguments that I also hear in response to this idea that whether Europe really is the regulatory imperialist but I think that the answer that European Union generally gets when it gets accused of regulatory imperialism is that if you think about the logic of the Brussels effect all we are doing is regulating our own market we we have the sovereign right to do it is not a regulatory a sign of regulatory imperialism if global companies then decide that it is in de self-interest to extend those practices to other markets as well the European Union is not imposing these rules on anybody it is basically regulating its own market keeping its own consumers safe according to its own preferences and it's really the self-interest and the market forces self-interest of global companies and the market forces that then transmit these rules around the world so those are some of the thoughts and conversations that I invite with the normative chapter that discusses the desirability of the brazos effect but ultimately I really leave it for the reader to decide whether this is something that is good or bad the main goal of the book to explain that it is a phenomenon that is happening why is it happening why is it so persuasive irrespective whether you like it or not the final chapter then looks into the future and ask the question whether we will see Brussels event going forward as well and I think there's again three arguments that would suggest that we will see the Brussels effect wane in the coming decades and I will then address all of them are in turn so the first obvious criticism is that the European that the relative size of the European Union of the global economy will go down and no matter which statistics you look at the European GDP as the proportion of the global GDP will be smaller going forward China and the other emerging markets will become more important destinations and if you think about it the whole idea of the theory is that Europe needs to be an a an unavoidable trading destination that the global companies need to feel that they cannot not rate in the EU but the smaller the relative size of the EU becomes the more opportunities there are do you occasionally say that well I don't need to serve the European consumers I will be in that trade to China and to other growing markets so I think that is something that we really need to take seriously and over time we'll potentially are mitigate at the regulatory power that the EU has and I am NOT trying to rewrite those statistics in the book the argument the book makes though is that the EU was regulatory power will outlive its economic power measured based on the GDP alone and why is that the reason I argue in the book is that there is no alternative regulatory standard emerging any time soon the GDP growth is not a predictor of the country's propensity to regulate compared to the predictive power of GDP per capita it will be a while before Chinese consumers for instance are wealthy enough to be able to afford to care about regulations as much as the Europeans do even in 2050 the Chinese GDP per capita is little over half of the European GDP per capita and it's the affluence of the consumers that make them prioritize issues like food safety and their health benefits the environmental benefits that come with regulation so by the time the Chinese consumers are wealthy enough to care about this at the level that the Europeans care I believe that the general GDP growth of China has waned to the extent that the government is quite reluctant to adopt costly regulations for the fear that that may further dampen the growth in China so that's why I don't think that we'll see Beijing affect anytime soon and to the extent that China is building its regulatory capacity today it is largely importing rules and regulatory models from Europe so what we may say that by the time China is regulating more extensively and we might see a Beijing affect the Beijing effect will be indirectly exporting the rules that were imported from the European Union so that's the the few thoughts that the book offers on potentially a long lasting power of the Brussels than the pure focus on the GDP would suggest the second potential threat if you like to Brussels effect I think comes from technology so if you think about these companies finding that it's expensive to use the European rules across the global production they may have an incentive to start developing technological solutions that allow them to customize production and we already see some of those technologies emerging so additive manufacturing in particular 3d printing may in the future offer the opportunity for these companies to produce different products for different markets you print them locally you can tailor it to domestic preferences and you do not need to introduce a single product variety that often would be reflecting the most stringent regulations so there is something that may happen in the future and if it will it will directly undermine the process effect but I doubt that is going to be available on a large scale across a large number of industries anytime soon those technologies are still at the experimental phase or are more niche applicable to very high-value industries and a lot unlikely to be deployed at the scale where I would see a sort of mass chase in the industrial processes to the extent that scale economies for instance no longer matter but it's something that I think it's an interesting development and something that I certainly would watch for and and and that might over time will come to mitigate the value of the global standardization that sustains the Brussels affect the final threat or a development that I think will be on potentially undermining the Brussels effect and this is the last thing I'm going to say before I open it open it up it is what I think is an internal challenge to the Brussels effect so as much as I mentioned the Brussels effect is a creation of internal goals to regulate the single market the external imp being the side product also the biggest threats may come from within the EU itself so Daniel already mentioned that the rising populace threat this anti European sentiment that is simmering in many parts of the European Union and if those populist views become to prevail in large part of Europe we may see the European countries scaling back they willingness to transfer regulatory powers to Brussels and that makes it harder to regulate at the European level I think it is a serious concern I doubt though that we can see a a legislative agenda where we would be repealing existing regulations but we may be less willing to go forward with a very ambitious regulatory agenda but at the same time if you think about what are the most salient policy issues for these populist parties they don't worry about food safety they don't really worry about any issues relating to single market they don't complain that the EU is going after Google with its antitrust rules they are not really worried about the general data protection regulation what they are worried about is migration the control over qu who comes into the country Free Press on that they like to be less free and the judiciary that they also want to control so these are not the heart of the issues that these political parties want to advance of course there may be a casualty whereby these cadiz are parties pushed for an agenda whereby they vote against anything coming from Europe or anything to do with with transferring sovereignty but many of these single market areas the legislation does not require unanimity so we will really need these populist parties to take over significant segments of the the decision-making bodies being able to halt the legislation and for instance also to take over the Parliament in the sense that they could be preventing the legislative support by the European Parliament and in the last election that was the fear but it did not materialize so I think it may be for a while before we see this populist agenda truly compromised the Brussels effect but it's something that I think we should be mindful of so let me end with another internal threat to the Brussels effect and that is brexit so with brexit the EU just lost a huge chunk of its market share it also lost a lot of regulatory capacity when the UK civil servants that are by the way very skilled and that really contributed to the recession making and the quality of legislation are now gone so at first sight it would seem that the breaks it really undermines the Brussels effect but the book actually suggests the otherwise that actually it is the Brussels effect that undermines brexit and the reason is that the UK companies will continue to trade with the EU going forward about 45% of the UK's trade is with the European Union the European Union is the number one export destination for all key industries in the UK aerospace automobiles chemicals food and beverages pharmaceuticals telecommunications financial services the companies from these industries need to trade in the EU market after brexit and in order to trade with the EU market they need to follow in your regulations and these companies do not want to set up a second production line for instance let's think about the automobile sector the UK market is six times smaller than the EU market do these companies care more about being consistent with the EU regulation or the UK regulation they want to produce for the market that is more important for them and it would be very costly for them not to apply the EU standard across there are they entire production so the the brexit will not free the UK from the EU s regulatory release leash there will no be such thing as regulatory sovereignty waiting on the other side a brexit instead the EU rules continue to apply to the UK companies and there is no political choice available for the UK government to decide really otherwise or it can decide the otherwise but the companies will be tailoring they conduct according to the rules coming from Brussels something will change though and it will it means that the UK will no longer have any say over those regulations that will be affecting the the UK companies the UK's political choice was not regulatory sovereignty the UK's political choice was to become a rule taker as opposed to rule maker in what I think might be even more regulated Europe when UK will not be sitting at the table when those regulations are being drafted this important pro market regulation voice will be gone and there's much more space for the franco-german preferences that are much more welcoming on regulation and much more skeptical of the markets to prevail so what the UK companies will be finding out after brexit is that the breaks it really was easier to deliver us a slogan than as a viable policy and they might be producing their products and offering those services in an all the more regulated Europe with very little boys to exercise over what those regulations actually will look like so let me end it there and I welcome any questions and conversation on anything that I've said or any proto topics that I may not have addressed clearly presented thank you [Music] yeah so to being to the extent the UK airlines want to fly to Europe they need to comply that you would actually then not provide the services to the EU so it is not an option that they have so I think there is a lot of what you call posturing so they will say such a political commitment and promise made that they will be delivering this regulatory sovereignty that it's very hard to walk back from it it's very hard politically to concede that actually it was a false promise we are not able to deliver it for you so there needs to be this continuing insistence that this is what we are going to do even though I think the UK government to some extent is aware that it is very difficult promise to deliver so if you think about for instance in the area of data the Information Commissioner herself Elizabeth lemon said that look well breaks it doesn't really mean breaks it when it comes to data protection because three-quarters of the data flows from the UK are with the European Union they don't have a choice not to abide by those rules but I think it is one of those that that we see a such a gap between this political framing of what breaks it was supposed to be about and and and what the economic realities actually require the British companies that there will be an inevitable walking back from some of the campers from some of the promises or then we see a certain set of regulations being introduced but the companies will not be following those regulations the same way now when the Trump administration is rolling back many of the environmental standards is rolling back a lot of the protections against harmful chemicals the US companies are not starting to introduce asbestos into their products if they want to export those products to the EU even if no the Trump administration says that we don't really care about some of the chemical safety regulations so I think that will be happening in the UK as well yes so I think there may be emphasis in a few areas where they can assert sovereignty so free movement of people will be one thing where they need to say that they were still some point to brexit or they may be some areas where they can where the Brussels effect does not really apply so when it comes to for instance labor protections there's very little scale economies of having for instance we don't see the the global companies over European holidays here in America I'm sorry to say Brussels effect will not give you the careers with five weeks out of every year so there are certain areas where I think the UK government will make a big deal of how they will have they own a regulatory freedom being exercised and try to play down maybe the areas where that sovereignty is an illusion as opposed to something real yeah so the one way to introduce the visibility and be able to evade the application of EU rules across the board is to use geolocation technology is to be able to identify they are the IP address and be able to then determine that okay these rules will apply to those queries those searches may use in the European IP address versus the others but as you suggest there are technologies that make it very easy to hide these companies don't always know whether the individual interacting online is actually of a certain national or resident of Europe or not which has made it harder to fully rely on the information that they can get on the IP address and I think that makes it harder to balkanize that their regulatory response as well or they the company's business responds to a certain regulation I don't know how common these are but I think they have been that the companies are aware they they can't do this perfectly and I think these issues become more and more common when we also trying to decide whether for instance some of the the --use applications do you apply globally the right to be forgotten online or the idea that when you have you post something that is considered hate speech do you actually need to remove it from all the platforms and who are you protecting if you cannot really be sure of the identity of the consumer that is active online so I think this is one yet another reason why we might see more of the EU regulation being extended globally because there's not full certainty of the companies being able to perfectly identify the user so I think it can be a problem or it can be an opportunity if you think about the Internet freedom and the idea that there can be individuals who would be blocked from engaging online that if they are actually able to have creative access to Internet because they can hide the origin so I think it is one of those that doesn't only cut in one direction but I think also if we think about various illegal activity online whether it is the engagement in speech that is considered we've talked about hate speech but electron election interference the spreading of fake news for the enforcement purposes you would want to be able to identify who is posting that kind of illegal material that you are trying to curtail so in that sense I think it's a huge problem and the EU is in the process of preparing its new digital Services Act that will be unveiled by the end of this year and they are planning on going much further than the current regulations for instance on hate speech intro and in trying to curtail the harmful speech and and and basically place creator restrictions and obligations on those online platforms in control and remove the speech that is undesirable yes please [Music] they're allowed to outsource yes oh I think I share your frustration inability of the EU institutions to curtail the rule of law backsliding in countries like Hungary and in Poland they're being imperfect set of remedies because the way the EU treaties are currently drafted you have very little opportunity through coordination to curtail those practices if you have to member states that are involved so Poland will always block any efforts to try to halt the practices instituted by Orban in Hungary and in Hungary will extend the same to Poland and shield in Poland from liability so the treaties and the institutions were not designed to confront the challenges when it comes now to rule of law backsliding the question is why do we still allow for instance the economic engagement and outsourcing and various activities there and I think they're there the reason is likely that there is a big commitment to create the single market to make sure that there is economic activity across the the borders whether it's free movement of people whether it's free movement of capital whether it is the the investments made across the borders in addition to just trading made across the borders and there's been a commitment to even also the economic opportunities across the common market including in Hungary and give those opportunities for people in Hungary to also benefit from the fruits of the single market and there hasn't been an effort to try to combine the kind of economic regulatory goals and opportunities to the the efforts that have been quite unsuccessful to address the political problems that emanate from Hungary right now [Music] [Music] yeah so what you are suggesting days that we would apply economic sanctions and prevent the corporations from engaging and that step hasn't been taken and I think it is it is quite difficult because against when it comes to the economic sanctions the decision-making can't be halted and it's very difficult to have the kind of unanimity and the consensus in being able to impose economic sanctions and actually curtail then the freedom of companies and a decision on engaging in those markets so I am afraid that the book for instance has very little to tell you on how we could use the various market-based instruments to really curtail the political problems that are emanating from places like Hungary what I do mention if we think that the book also invites you to think about different manifestations of power and one power that has often been associated with the EU was the kind of power that was soft power and that power values that the EU was providing to the world a model for rule of law and the kind of more benevolent view compared to the kind of America and hard power and that the U was able to be a champion of democracy and the values that many people around the world aspire towards and I think that the the normative power as such has taken a hit with what is happening in Poland and Hungary which means that I think for instance the Brussels effect has been quite insulated from that kind of power but that power I think is something that is hard for you to restore unless it can really show that it has a way to curtail those abuses within the US yeah great so I did see sort of three dimensions to the question so first is that the social mutant and the advocacy aspect the second is lobbying which is that because you have some soil as well and then there the more on the climate change and and the sort of fight towards a low-carbon economy so the answer is yes I think to all of them so if you think about the extent to which the EU legislation has also been used as a model for many civil society organizations NGOs around the world have ceased the European model and used it in the advocacy in their home country so we see many American NGOs for instance used the EU the law quite successfully in trying to institute change domestically but it also invites the kind of lobbying that we have American companies and companies around the world that lobby for the legislative changed at home because they have already made the adjustment they already play by European rules so now they have the incentive to level the playing field also domestically in order then to make sure that they are not a disadvantage compared to their domestically oriented companies that would not need to abide by the EU rules because they don't export to the EU so we saw also very recently Mark Zuckerberg to call for the EU style privacy regulation to be adopted in the United States we often see it again very passive power by the EU if you can outsource the lobbying to foreign companies that then become the advocates together with the civil society of the legislative changes at home so deeply this leads to something that what I call the de jure Brussels effect not just the de facto but we don't just see the companies are just they behavior worldwide but these companies lobbied a governments which then also start following the EU rules but I think that lobbying is also complemented by what the civil society does so lobbying yes the companies increasingly know that if you Lobby Brussels you can influence what is happening in the world and that's why we see a massive increase in the present presence and expenditure of the global companies including big US companies in Brussels they are increasingly trying to influence policy making there what is interesting though is that still compared to Washington money plays a much smaller role in politics and the companies are not as effective as they are in the u.s. to change the course of the policy outcomes so US companies for instance we're vehement in the opposition of this very strict chemical regulation rich coming from the EU the same thing the companies opposed at first very strongly the general data protection regulation US government opposed it but also the companies but these these policies came out of the legislative process relatively unscratched and the research actually shows that the civil society is also very effective in lobbying for the legislation so the outcome is much more balanced in favor of both business and then the civil society interest but we certainly I think seen an increase and will see an continuing increase in by day at least the efforts of the companies to influence the outcomes and if I now think about two areas where I see most lobbying activity one is exactly what you say the environment and the other one is the digital economy because the EU has just unveiled its new white paper on the regulation of artificial intelligence which which shapes a lot of the industries that's why we saw Facebook and Google and the others do set up meetings with the highest levels of the Commission just two weeks ago but also then the EU has now revealed its new policy the Green Deal which really tries to introduce a set of measures that would fight that lead the fight towards a a decarbonization and climate change and there I would say that some elements of the policies that are being pursued by the EU probably lend themselves to the Brussels effect if the EU regulates the way products are being produced so what kind of materials can you use for instance those are the instances where the companies are most likely going to adopt a change globally but then they maybe other elements of the the green policies that are not the kind of under the radar where the global companies automatically would be exporting the EU rules across the world for instance the proposals for carbon Porter Terry that doesn't follow the logic of voluntary market adjustments that requires actually an adjustment by foreign governments to start regulating carbon if they don't do that if they don't have a domestic tax on greenhouse gas emissions there would be a border tariff imposed by the Europeans and that is a much more kind of politicize a messer that I think will create a backlash I'm not saying that it's not fight that is worth fighting and that there wouldn't be a a way to design the carbon tax that would be consistent with for instance international trade rules but it goes a little bit beyond the dynamic that is much more self enforcing oh yes there was a question in the front Nonna's pad on the brussels avec i think they can be still very damaging so if such agreement I think would there be a very significant I think you touched on something that is at the heart of the single market the free movement across the community and the challenge with the migration crisis for those who probably may not be as familiar how the EU that the division of competencies between the centralized the institutions and the member states work so member states remain in charge of migration policy individual countries can decide whether they take migrants or not but the Schengen area the free movement of people is an EU level competence and once those migrants are taken in they can they can travel freely because there are no border controls within Schengen so there's a misalignment there with the EU being in charge of the free movement within the EU while the migration should be a matter of a member state but many member states that are reluctant to have migrants fear that because of the open borders in the EU another countries decision to take migrants becomes also they problem if they see it as a problem because you cannot stop those migrants are behind the border within the EU so there have been some temporary efforts to reintroduce border controls and basically dismantle these free movement rules across the Schengen and that I think is a very serious restriction because the whole idea has been that we we have not only good smooth freely but we also have then people move freely across their borders but the idea is that you almost would need to do one so you either need to reintroduce the Schengen border control in in order to ensure that the migrants stay within the Member State that decides to take microns or then you actually need to give more powers to Brussels over the question of migration whereby that would become much more of a centralized and that has been one of the issues where I think that politically this has been very difficult to do what I think there the dire situation would have required you to do there has been more of an EU level reinforcement of the external borders so we've seen the crisis response to be in that sense more Europe the more integrated response but I think right now one of the biggest questions of the day is whether there is enough solidarity to help Greece fight the the difficult situation on the border when it's dealing with the flow of migrants are beyond its capacity is there in the back yeah so I'm not sure [Music] yeah so I think the Brussels effect has not been a tool to export democracy it's basically to export market regulation and exporting democracy is very hard I think this country has made serious efforts at it and quite unsuccessfully it is not very easy to try to topple on democratic leaders to institute regime change it is something that it's very hard to do with fighter jets it is something that is very hard to do by preaching and like I mentioned early in my engagement there that the EU s way of trying to provide the model for democracy that model is no longer intact because the democracy is quite imperfect within many of the er countries themselves but I think there's still a criticism that has been very pervasive for a long long time that even EU regulation and EU institutions are imperfect they are not democratic because often the the the regulations emanating from Brussels are quite far from the sort of the national democratic structures that people are more comfortable with and I don't think that I make a defence in the book at least intentionally trying to say that the regulation would be free of those concerns in fact the conversation about the criticism of the Brussels effect I extend that to the question of when that preferences from Brussels not only extend to European citizens in many parts of Europe who feel alienated from the decision-making but when they start shaping economic life in America and in Latin America in Asia you do not have anything to say over the regulations from Brussels that do influence the products that are you are consuming and the services that you see provided online so in many ways I think the question of democracy is probably even more urgent if you think the global ramifications of that the and so in that sense I don't think the book are engages with because it doesn't defend it or doesn't really criticize it but I think it does also recognize that all these are the recipient jurisdictions are not necessarily perfect democracies the conversation about how the state of the regulation today in the US may not reflect the kind of the status quo in a democracy where money wasn't as influential driver of politics so it does engage with the question of democracy I recognize the importance the question that you are posing but I think the book itself doesn't offer as direct discussion on democracy compared to many other books and contributions and debates that are squarely and directly trying to engage with this very you can differentiate between different kinds of a for example one that is a kind of Brussels effect it's more beneficial for example to labor you know sort of labor capital variations political either based on the sort of political ideology that's informing them or their final outcome yeah or is it not very useful to really try to differentiate within yeah so I don't think I think it would be useful the whole idea is that the Brussels effect is really not politicized which is I think partially why it is so effective that it has really happened under the radar as opposed to then the kind of political harmonization where we are really putting it on the agendas of the government so when the EU and I have one chapter where I compare this sort of deep politicized way of exerting influence to more political tools so for instance trade agreements where the U is trying to negotiate a set of regulations that it's exporting through these trade agreements and I think in many ways it has been successful because it is not as elevated there's not a backlash because it is really more of a technocratic a governance mechanism and if you think about for instance EU regulations it does not get us undermined by the crisis narrative because the crisis focuses on issues that are being politicized so the next morning after the brexit vote there was a commission meeting on pesticides of the meeting on pesticides went forward and the vote took place and the machinery kind of hums along so it is somewhat disassociated from that but that doesn't mean that the regulation would not have political impact and and would not empower certain or would would not have sort of politically consequential impact because there are winners and losers and and there are certain groups of people and companies that do benefit from it more than more than others I don't think there's a kind of systemic impact that I and I would need to think about it more whether sort of labor or certain capital benefits from that there is that the benefit obviously on European companies as such because it levels the playing field for themselves and there for for them there's the possibility that the EU can accomplish its environmental goals without hampering the competitiveness of the European industry because the others to play by the same rules as well and the Brussels effect ensures that that doesn't only happen when we level the playing field when foreign companies compete in the EU that you can also change the winners and losers and the political balance on the export markets by protecting the European companies competitiveness there as well so yes I think the implications are of political significance but I have not systemically looked at because I think it's somewhat different in different sectors that whether there is a more of a political takeaway that we think about certain groups that are systematically and always being empowered whereas others that always it are at disadvantage yeah yes please yeah so if I'm right my sense is that your generation cares about many issues that go beyond just the sort of the economic gains on the markets and the company is adding the shareholder value there's a lot of set of issues I think where the the European values that are embedded in the regulations have garnered special residence in your generation so the sustainability whether we think about sort of environmental implications because you do care about the future so you don't want to discount the future as much as some who will not be living that life and living on the planet as long so I think there is more of a movement towards create a caring of privacy sort of consciousness of their harmful conduct online but also then the sort of sustainability whether it's clean food whether it's local with its organic food and I think it's a more sort of conscious generation that has a sell welfare function that is a somewhat more nuanced than just thinking about what is the price of the product they might even be willingness to ask questions about the product that wake away beyond price that may be more important and if that is a correct or description of you or your peers that resonates I think you take certain comfort that the EU is actually exporting some of those values and that those become to be prevalent also in the markets where we may not see the kind of advanced thinking or advanced is the word to use at least where there would be less of a consciousness of the future consequences of the decisions of the companies so it may be something that your generation welcomes more than some other generations but in the end I think your generation - there's not sort of one set of values there are still others who also think that well I do not have the luxury of paying more of the products I have my debts when I'm studying and that's I think price still matters for me as well and you may be concerned that their regulations lead to somewhat costlier products that will also then be economically there sequential for you so I think it's more hopefully a helpful framework for you to understand how the regulatory choices are not confined within the borders you ability to think about if you do not like the state of the affairs in your own country they may be tools for advocacy that you can use by looking at what that what the regulator's are doing elsewhere so those are the disappear ways how you may think about it of how whatever so the choices you make daily how they are shaped by global markets and regulators that can actually be pretty far from where you're sitting yes please [Music] with with regards to applo it's always seem to me that they don't really care regulation for example one of the things that was instantly pushed through in have a standard charging cable in animals markers and I just really can't see Europe or I can't see Apple complying with that unless it's I guess you see the three different cables you happy able you guys meet you we know you have the USBC which I mean assuming that assuming that they go down direction and you'll find them I mean what kind of fine would you look at to really influence them to go with this standard charger in other examples where Apple is kind of ignored here a regulation is using Ireland taxi yeah they did for over a decade and then only got fine I think thirteen billion dollars of which over three or so years there's a three point five point two five billion dollars a year but even still for Apple that's kind of pennies recently they were also fined for throttling their phones with their software which France charged them twenty seven million dollars again it was it's kind of pennies so I just it kind of I kind of question between what degree regulation actually impacts these larger corporations I don't know Apple apples yeah so actually these companies comply so I think you I agree with your concern I share that if you just look at how well today's companies are that even high fines are not very high if you think about the revenues that these companies have so they may not have an incentive if you just think about that we would not need to care about it because we we rather buy a pate is fine but what they are worried about is that they are basically prevented from being able to operate and serve these products in Europe if they do not comply so ultimately these companies do bring their practices into compliance with the year because they want to be able to retain the right to over those products in the ear so I think that fine alone still does deter many companies but it also sends them a signal that they are not willing to battle with the European regulators in all the issues whether its privacy whether its copyright online whether its antitrust cases in Apple's case it was that the state aid so they tax arrangements that were called by the European state aid rules and it is not very sustainable business model when you are in constant regulatory battle with one of the main regulators of your activity in one of the markets that you need the most so the Apple for instance does follow the general data protection regulation the moment the day that the gdpr came into effect you have this sentence pop up on your iPhone saying Apple believes that privacy is a fundamental right so that's the European language then Apple has adopted that it's been much more costly to adapt for companies whose business delight relies on data and and advertising the way Facebook's listen to the revenues does not fully I think captured how these companies ultimately they may find if they competitive they appeal it but if they well fight they are forced to bring their practices into compliance they alternative is to basically abandoned Europe and with withdraw from that market but that is even prosecuted for that well I mean in a case of like for example the charger the charging cables I was mentioning right I wouldn't expect the air PS to say okay I'm gonna block you from entering into our market over a charging cable and I just feel like that would be kind of unrealistic especially and Europe's power with Apple also seems to be weighing too may be considering that they recently are about to now for the first time enter the Indian market which is a huge market thanks to trump which basically well III don't want to say like Trump specifically but you know at least thanks to the new situation for going to the Indian government reduce regulations on foreign companies under market whatever I don't know I like I mean assuming to find even a billion dollars which I think would be I think that would be really high for a cable I just I just don't see the European saying no Apple you can and I think that apples like extremely protectionist over their brand I think that was the case with India because the reason Apple didn't go in India was they refused to use a third-party to have their products distributed is the difference with Indian and Chinese markets for instances that these consumers is plenty of them they're very attractive markets but they don't have the same buying power here expensive products they can't pay for their products as much as you and I think in many ways the question that for Apple is that even if I don't like the European regulation is it really that costly for me that I am willing to forego the European market or is it actually it may be a regulation I disagree with it's a regulation that it's not in my business interest but it is still valuable enough to serve the European market that I'm willing to go with it and then the question is with the Brussels effect is that we said actually something I'm going to extend worldwide or can i curtail my practices to the to the EU market and then follow a different standard elsewhere so in that says often these companies unless it is a regulatory demand that fundamentally compromises a business model it is so expensive for them that they decide that it is not worth engaging with the European market but they do not yet have enough consumer buying power in this alternative mark so these companies would have they reach the decision whereby the value of the market access is less than the cost of changing their products to meet the standards of those models and the EU has the ability to say that for instance a lot of the big electronics manufacturers which is electronic waste regulation which also is about the electronics and cables whether it is the Korean or Japanese manufacturers they did all transform their products globally to conform with the electronic waste regulation of the East not that they necessarily liked it but that change was not as costly compared that what the cost would have been had they decided to abandon me any more questions I know I think they talk also it's fascinating because it outlines there's an interesting story it might be in your book as carefully as a blanket before your visit here about regulating in the public interest right it's not only capacity but there's this story on some political science and apply politics if the public isn't paying attention and it's going to be rent-seeking and well it will not be good for the public right and I think there's a lot of evidence to support that Pepperell temper and oxford days has made that argument it is a very nice book but I think your book suggests something very different this is quite politics but in fact in many cases one could make a compelling or possible argument that the European Union is argue it is regulating us in the public interest or at least at least not clearly damaging it's fascinating and we couldn't use all the hope we can get right now he's in these perilous times we are living in so please join me in giving a thank to Professor undergrad

Channel: University of Delaware

Views: 12,902

Rating: 4.7342191 out of 5

Keywords: college, University, UD, Udel, Delaware, University of Delaware, Brussels Effect, EU, European Union, global markets, law, regulation, standards

Id: JyocpI59rVU

Length: 91min 41sec (5501 seconds)

Published: Thu Apr 23 2020

Reddit Comments

[u/iuseaname]

To think the EU has such a positive force on the world, while the Americans bomb and overthrow countries and the Chinese pollute and create waste. Yet it's the EU that has trouble convincing its own citizens that it's a positive thing.

[u/[deleted]]

But the EU lacks the propagandal force that America has. America creates a narrative on what goes wrong in Europe, spreads it through their propaganda network / media industry and EU citizens pick it up before their own news has a chance to fact check or report on it.

Just look at this video: we're getting news about Europe from a lecture in an American university.

EU countries keep getting dragged into useless wars, have no control over their tech production (which has also been outsourced to Asia + increasingly Africa), have no control over their drug policies which are heavily influenced by Americans, and when they do achieve something, barely anyone knows about it because it's drowned out by America.

[u/stergro]

https://en.wikipedia.org/wiki/Brussels_effect

Since this is a relatively new concept: Translations to other languages on Wikipedia are always welcome. I did the translation for German and Esperanto already.

[u/andytandreou]

Excellent watch! 10\10

[u/MoustacheAmbassadeur]

very good talk! if anyone is interested i also highly recommend the talks from Andrew Moravscik

https://www.youtube.com/watch?v=DOPPyGyeh-o

[u/[deleted]]

And yet some people still doubt the EU could be a superpower...

[u/UNSKIALz]

The loss of a market like Britain will be a big hit in this regard. We need to look at that and possible solutions.