Anu Bradford - The Brussels Effect - How The European Union Rules The World-Oxford University Press (2020)
Anu Bradford - The Brussels Effect - How The European Union Rules The World-Oxford University Press (2020)
Anu Bradford - The Brussels Effect - How The European Union Rules The World-Oxford University Press (2020)
BR ADFORD
is the Henry L. Moses Professor of Law and OBSERVERS, THE
International Organization and a Director “Anu Bradford’s The Brussels Effect is essential reading for anyone interested in Europe’s place EUROPE AN UNION
for the European Legal Studies Center at
in the world. Decried as a powerless entity, vainly committed to multilateralism, Bradford IS MIRED IN A DEEP
Columbia Law School.
shows how the EU has, in fact, turned unilateral regulatory measures into a source of global
ANU BRADFORD C R I S I S. Between sluggish growth;
“In The Brussels Effect, Anu Bradford has economic clout. A timely and powerful antidote to prevailing euro-pessimism.” political turmoil following a decade
developed her brilliant and insightful theory of austerity politics; the uncertainty
ADAM TOOZE
of the European Union’s global power into
“In The Brussels Effect, Anu Bradford offers a A NNE-M A R IE S L AUG HTER The Brussels Effect shows how the EU has
perceptive analysis of the influence the EU CEO, New America
can and must have well beyond its borders. acquired such power, why multinational
With global governance being challenged, companies use EU standards as global
The Brussels Effect is filling a desperately standards, and why the EU’s role as the
needed void. It gives us yet another reason
world’s regulator is likely to outlive its
why we cannot afford to have the European
ISBN 978-0-19-008858-3
gradual economic decline, extending the
ambitions fail.” —Paul Polman,
Co-founder, IMAGINE and
1 90000
EU’s influence long into the future.
4
Chair, International Chamber of Commerce, www.oup.com
The Brussels Effect
ii
iii
The Brussels
Effect
How the European Union
Rules the World
z
ANU BRADFORD
1
iv
1
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v
Äidille ja isälle
Contents
Preface ix
Introduction: The Brussels Effect xiii
4. Market Competition 99
7. Environment 207
vi
viii Contents
Notes 289
Index 387
ix
Preface
The idea for this book was born as a reaction to the nearly constant pub-
lic commentary about the European Union’s demise or global irrelevance that
permeates modern popular discourse. That narrative contradicted the data and
patterns I observed in my own academic research, which provided many pro-
found examples of the EU’s global regulatory power and influence. Accurately
examining these examples affirms the EU’s continuing, even growing, global rel-
evance to the conduct of international regulatory affairs. These conflicting nar-
ratives sparked the idea to initially write an article about the mechanisms driving
the EU’s regulatory influence in an effort to correct the misperceptions about
the EU’s decline, and to advance a more informed view of the EU’s role in the
world. In that article, published in 2012 in Northwestern University Law Review,
I coined the term the “Brussels Effect”—to capture the origins of the EU’s power
that stems from its Brussels-based institutions and to pay tribute to, and to build
on, David Vogel’s pathbreaking work on the California Effect.
Encouraged by the debate the article generated, I accepted the Oxford
University Press’s invitation to expand the article into a book. Much has hap-
pened since 2012, yet the EU’s influence over global markets has only grown,
despite the seemingly constant series of crises that the EU has continued to face.
This book seeks to advance a considerably more detailed and nuanced theory of
the EU’s global regulatory clout than the one initially articulated. It also broad-
ens the scope of the inquiry into new areas of regulation, new industries, and new
countries while also asking new questions, such as whether the Brussels Effect is
welfare-enhancing and whether it will endure into the future.
The main contribution of the book is descriptive. It explains how and why
the EU has become the global regulatory hegemon unmatched by its geopolitical
rivals, without endorsing or criticizing the EU for the regulatory power it pos-
sesses. Like anyone, I hold my own normative views about the EU, and deeply
care about its destiny. My pride of the EU’s many accomplishments is as pro-
foundly felt as are my frustrations about its repeated failures. Toward the end
of the book and for the purpose of simulating discussion, I propose a normative
x
x Preface
stand on the Brussels Effect. However, the core argument and the overall contri-
bution of the book does not turn on my own views on the EU. The Brussels Effect
exists whether one likes it or not, and ultimately, I leave it for the reader to decide
whether the Brussels Effect is a phenomenon that advances the state of the world
or presents a cause for concern.
With this book, my hope is to engage supporters and detractors of the EU
alike. It challenges the critics’ view that portrays the EU as a powerless global
actor, and shows how such a criticism focuses on a narrow and outdated vision
of what power means today. For the most ardent supporters of the EU, the book
gives comfort that the EU matters, but also undermines the narrative that further
integration is needed for the EU’s revival and relevance. Even in the absence
of a European federation, the EU is already able to advance its interests, both
within and beyond its borders, through the Brussels Effect. Similarly, this book
is written for European and non-European audiences alike. It hopes to speak to
the Brussels policy insiders as well as to foreign governments, companies, and
citizens with little direct experience with the EU as such—until they notice how
pervasively and persistently the EU regulations reach their shores and affect
their daily lives.
As a result of my personal and professional journey from Europe to the
United States, today I have the benefit of observing the EU at the same time
as an insider and as an outsider. For nearly two decades, I have studied the EU
as a European living in the United States. Being part of the American scholarly
and public conversation creates a certain distance to the debates taking place in
Brussels, affecting the way I perceive and write about the EU. Yet I will never be a
genuine outsider: I grew up in Finland; studied and worked in Belgium, France,
and Germany before moving to the United States; and wrote the bulk of this text
while living in Spain and traveling throughout Europe. When I write about the
EU regulations and institutions today, I write about something deeply familiar.
To me, EU law remains domestic law, not foreign law.
Throughout the writing process, I benefited from rich and varied conver-
sations with an incredible group of individuals, both in the United States and
Europe. The manuscript improved immensely as a result of those conversations—
yet all errors and deficiencies are mine alone. The book made its greatest leaps in
two manuscript conferences that took place in New York in 2018 and Madrid in
2019. I am deeply grateful to an amazing group of scholars who took the time to
read the manuscript and share a daylong conversation about it. Warmest thanks
to Alberto Alemanno, George Bermann, Katja Biedenkopf, Adam Chilton,
Marise Cremona, Grainne De Burca, Piet Eeckhout, Dan Kelemen, Suzanne
Kingston, Katerina Linos, Abe Newman, Mark Pollack, Tonya Putnam, Anne-
Lise Sibony, Thomas Streinz, David Vogel, Maria Weimer, Jan Wouters, and Tim
xi
Preface xi
Wu for putting aside your own projects and lending your brilliant minds to dis-
cuss the Brussels Effect with me. This is a very different and a much-improved
book because of those conversations.
I had the opportunity to present drafts of the manuscript in various confer-
ences in Europe and the United States, including at the Council for European
Studies 26th International Conference of Europeanists in Madrid; Trade Lecture
Sessions at the WTO in Geneva; Observatory of the European Union at the IE
School of Global and Public Affairs and Universidad Carlos III de Madrid in
Madrid; 10th Forum of Trans Europe Experts in Paris; EU Law Workshop at the
European University Institute in Florence; Global Governance Colloquium in
the Graduate Institute of Geneva; European Union seminar series at Princeton
University; Faculty Workshop at Columbia University; Workshop on Modeling
Convergence of the EU with the World at The City Law School, City, University
of London; and at the Duke-Yale Foreign Relations Law Roundtable at Duke
University. I am deeply grateful for the excellent feedback I received.
I also greatly benefited from generous reading and invaluable insights from
many of my trusted colleagues. Special thanks to Rachel Brewster, Tom Ginsburg,
Katharina Pistor, Eric Posner, Dave Pozen, and Matt Waxman for your thought-
ful read and astute feedback, and to the anonymous reviewers at the Oxford
University Press who offered numerous insights that pushed the argument
further. Warm thanks also to Jessica Bulman-Pozen, Stavros Gadinis, Kathryn
Harrigan, Bert Huang, Olati Johnson, Ben Liebman, Florencia Marotta-Wurgler,
Sophie Meunier, Joanne Scott, Alex Wang, Jonathan Wiener, and Angela Zhang
for helpful conversations and reading suggestions. I owe deep gratitude to numer-
ous EU officials, legal and policy experts, and representatives of governments and
corporations for sharing their perspectives with me and directing me to the right
questions or sources. Of course, the arguments advanced in this book are mine
alone and cannot be attributed to these individuals or their organizations. In par-
ticular, my sincere thanks go to Julia Backmann, Matthew Bye, Riccardo Falconi,
John Frank, Tony Gardner, Bruno Gencarelli, Hans Ingels, Cyril Jacquet, Sabine
Juelicher, Michael Kefi, Esther Kelly, Nicholas Levy, Guillaume Loriot, Patrick
Robinson, Jessica Schonberg, James Stevens, Emiliano Tornese, Nicolas Veron,
Peter Zapfel, and Karolina Zazvorkova.
This book would not exist without my incredible team of research assistants.
Teaching and working with such an immensely talented and dedicated group
of students is an enormous privilege and makes this the best job in the world.
My sincere thanks to Phil Andriole, Bruna Barletta, Kelly Benguigui, David
Blackman, Andrew Brickfield, Sami Marouf Cleland, Marie-Marie De Fays,
Pap Diouf, Haley Flora, Hui Zhen Gan, Jonah Garson, Rohan George, Rossana
Gonzalez-Munoz, Julia Grabowska, Isabella Harris, Emily Hush, Lear Jiang,
xi
xii Preface
Janet Kanzawa, HyunKyu Kim, Deul Lim, Yu-teng Lin, Ravi Kumar Mahto,
Marie Menshova, Kevin Minofu, Peter Neuboeck, Julie-Irene A Nkodo, Liuyi
Pan, Neeraj RS, Aakanksha Saxena, Elvira Sihvola, Eric Sliva, Alastair Smith,
Sreenidhi Srinivasan, Julia Szinovatz, Laura Weinblum, and Mitra Yazdi. Without
them, this book would have taken years more to write and would never have its
current reach. Their research allowed me to bring examples of the Brussels Effect
across Asia, Africa, and Latin America and discuss many regulations or industries
I discovered only through their research. Thank you for sharing my ambition and
going out of your way repeatedly for me. I also want to extend my warmest thanks
to my fantastic editor, Chris Lura, whose utmost care, dedication, and profession-
alism made this a far more readable book.
I want to acknowledge with gratitude the funding by various centers and
institutes at Columbia University whose support made this research possible:
Jerome A. Chazen Institute for Global Business; Millstein Center for Global
Markets and Corporate Ownership; and Richard Paul Richman Center for
Business, Law, and Public Policy. The research also benefited from the support of
the Erasmus + Programme of the European Union.1
Finally, my family. My heartfelt thanks to my three children—Oliver, Sylvia,
and Vivian—whose patience extended to Saturday mornings over the past two
years. My 12-year-old Oliver can articulate the Brussels Effect as well as anyone.
As a bicontinental citizen who is concerned for the future, he takes comfort in
how the Brussels Effect reaches him in New York City every day. My deep grati-
tude to my husband Travis, who never grew tired of discussing the Brussels Effect
or reminding me how much this insight mattered. Thank you for reading and
rereading every word of the draft manuscript and gifting me with both uncom-
promised honesty and unwavering support. You helped me see further and think
deeper, and many of the most important insights of the book can be traced to the
numerous conversations we shared.
This book is dedicated to my parents, Riitta and Lauri, who deserve my most
profound gratitude. The key elements of this book were developed while working
from my childhood home in Finland. Thank you for the countless hours of child
care, which gave me the vital space to think and write. Thank you for your tireless
support, for this project and for every past endeavor on which this project builds.
You always encouraged me to chase my own dreams, not yours or anyone else’s.
All my accomplishments, including this book, I owe to that.
Madrid, Spain
June 2019
xi
Introduction
The Brussels Effect
xiv Introduction
Introduction xv
xvi Introduction
Introduction xvii
xviii Introduction
the EU is the only regulatory regime that can wield unilateral regulatory influ-
ence across global markets today.
Chapter 3 places the EU’s unilateral regulatory influence in context of the
EU’s broader external influence. The Brussels Effect is not the sole manifestation
of the EU’s global regulatory power. Instead, the EU wields norm-setting power
through a number of different channels such as trade agreements and participa-
tion in international institutions and transnational government networks. This
chapter reviews these alternative channels of the EU’s regulatory influence in an
attempt to provide context for the Brussels Effect within the broader set of tools
that the EU has at its disposal. It then compares the relative advantages and disad-
vantages of those alternative methods when contrasted with the Brussels Effect,
and discusses when these other channels of influence are likely to complement or,
alternatively, substitute the Brussels Effect.
In Part II, the book turns to the empirical evidence of the Brussels Effect.
Chapters 4–7 illustrate the Brussels Effect by reviewing several areas of regula-
tory policy where companies are converging their global production and conduct
to EU regulations (the de facto Brussels Effect) or where foreign governments are
emulating EU regulations domestically (the de jure Brussels Effect). These case
studies include the EU’s regulation of market competition (chapter 4), digital
economy (chapter 5), consumer health and safety (chapter 6), and the environ-
ment (chapter 7). The goal is to explain why and how the EU has emerged as the
most prominent global regulator in these policy areas, and to provide concrete
examples of the manifestations of the Brussels Effect.
Part III, consisting of chapters 8 and 9, considers the normative implications
and reflects on the future of the Brussels Effect. Chapter 8 asks whether the
Brussels Effect is beneficial in terms of advancing people’s welfare, both in the EU
and abroad. In examining this question, the chapter engages with economic and
political criticism leveled against the Brussels Effect. It asks if the global reach of
EU regulations is costly and capable of hindering innovation, or driven by protec-
tionist motives. It also queries if the Brussels Effect should be viewed as a mani-
festation of regulatory imperialism, undercutting the power of foreign sovereigns
to make critical decisions regarding their economies and serve their citizens in
accordance with their democratically established preferences.
Chapter 9 concludes this book by looking into the future. It addresses
both external and internal challenges to EU’s regulatory hegemony and exam-
ines whether and how the Brussels Effect will persist, given these challenges.
The impending departure of the United Kingdom from the EU may appear to
weaken the EU’s regulatory power. The growing concerns over the future of mul-
tilateral institutions and international cooperation may also challenge the EU’s
ability to shape the global regulatory environment. Additional challenges loom
xi
Introduction xix
on the horizon. These include the rise of China and other emerging powers that
will gradually erode the relative market power of the EU. Technological change
may revolutionize industrial processes, allowing for greater customization and
thereby reducing the need to produce to a single global (often European) stand
ard. Finally, the EU’s internal political struggles may compromise its ability to
engage in effective rule-making as the anti-EU sentiment grows. This chapter will
consider each of these challenges in turn, offering an account of not just the EU’s
regulatory power but the persistence of that power. In doing so, it also invites a
question as to whether this book will be read as describing the history or the pres-
ent in the decades to come.
x
1
PREFACE TO PART ONE
Theory
Part I of this book lays the theoretical foundation for the Brussels Effect and
sets it in the context of the EU’s broader external influence. Chapter 1 discusses
the EU’s emergence as a global regulatory power. It explains how regulation
has offered a key tool to advance European integration, giving EU institutions
a powerful motivation to pursue an ambitious regulatory agenda. Chapter 2
shows how market forces have externalized this regulatory agenda through the
Brussels Effect, leading to a significant de facto globalization of EU regulations.
Specifically, it outlines the conditions under which the Brussels Effect occurs and
shows how the EU is in a unique position to exert unilateral regulatory influence
globally today. Chapter 3 situates the Brussels Effect in the broader context of
the EU’s global regulatory influence. It reviews alternative channels of the EU’s
regulatory influence and discusses when and how these channels complement or,
alternatively, substitute the Brussels Effect.
Before proceeding with Part I, however, it will be useful to take a moment to
define the “Brussels Effect” and distinguish it from other mechanisms of global
regulatory influence. Following that definition , the rest of this preface situates the
Brussels Effect within the current scholarly debates on regulatory politics and regu-
latory races as well as the EU’s external relations and its global role—while also
showing how the Brussels Effect relates to, and builds on, the influential scholar-
ship on the California Effect.
2 T he Brussels Effect
instances, the EU does not have to do anything except regulate its own market to
exercise global regulatory power. The size and attractiveness of its market does the
rest. Thus, in essence, the Brussels Effect emerges from market forces and multi-
national companies’ self-interest to adopt relatively stringent EU standards glob-
ally. At the same time, the Brussels Effect is not only the result of private power: it
is the interplay between EU regulations and the market forces’ ability to external-
ize those regulations in different markets that give rise to the Brussels Effect.
Further, there are two variants of the Brussels Effect: the “de facto Brussels
Effect” and the “de jure Brussels Effect.” The de facto Brussels Effect explains how
global corporations respond to EU regulations by adjusting their global conduct to
EU rules. No regulatory response by foreign governments is needed; corporations
have the business incentive to extend the EU regulation to govern their worldwide
production or operations. The de jure Brussels Effect—which refers to the adop-
tion of EU-style regulations by foreign governments—builds directly on the de
facto Brussels Effect: after multinational companies have adjusted their global con-
duct to conform to EU rules, they have the incentive to lobby EU-style regulations
in their home jurisdictions. This ensures that they are not at a disadvantage when
competing domestically against companies that do not export to the EU and that,
therefore, have no incentive to conform their conduct or production to costly EU
regulations.1
This kind of situation—where the de facto Brussels Effect changes the incentives
of foreign multinational companies and leads them to lobby for regulatory adjust-
ment in their home markets—illustrates the strict definition of the “de jure Brussels
Effect.” Sometimes this process alone can lead to the formal adoption of EU-style
regulations by foreign governments. However, often the decisions of foreign govern-
ments to emulate EU regulations will be the result of multiple factors that may only
partially have their origins in the de facto Brussels Effect. As a result, the term “de
jure Brussels Effect,” less-strictly defined, can also be used to describe a broader set
of mechanisms that transmit EU rules to foreign jurisdictions. For example, the EU
often exports its regulations to foreign jurisdictions through various economic and
political treaties and via international organizations and governmental networks.
EU regulations can also mobilize foreign consumers to support regulatory reforms
at home. These other instruments and mechanisms can facilitate, amplify, or oth-
erwise interact with the Brussels Effect, but they can also lead to the diffusion of
EU regulations on their own. Empirically, it is often difficult to separate the vari-
ous motivations that lead a foreign government to adopt an EU-style law. For this
reason, this book adopts the less-strict definition of the de jure Brussels Effect and
discusses the various empirical examples that stem from these varying motivations.
Between the two variants of the Brussels Effect, the de facto Brussels Effect is the
primary focus of this book and the core of the theoretical discussion in chapter 2. The
3
Theory 3
de jure Brussels Effect has been conceptually developed elsewhere: the strict defini-
tion of the de jure Brussels Effect—the regulatory adjustment that follows from the
lobbying efforts by firms that have experienced the de facto Brussels Effect—was
developed by David Vogel in his work on the California Effect and will therefore
not be revisited in detail in this book. The broader definition of the de jure Brussels
Effect—including the diffusion of EU norms through international treaties and
institutions—has similarly been extensively discussed in prior literature. However,
empirical evidence of the de jure Brussels Effect has not been extensively examined
except in narrow policy areas and with respect to selected jurisdictions. Thus, in
addition to its theoretical and empirical contribution to the understanding of the
de facto Brussels Effect, the objective of this book is to show how pervasive the de
jure emulation of EU regulations is and how the de jure Brussels Effect comple-
ments and interacts with the de facto Brussels Effect. Together, this will hopefully
offer a more comprehensive picture of the EU’s influence.
This book’s primary focus within regulatory theory is market regulation—
typically as applicable to consumer markets. The Brussels Effect is not inherently
limited to product regulation but extends to the regulation of production processes
as well. This “product versus process” distinction is common in the literature on
trade and economic regulation but analytically less central to the Brussels Effect,
which accommodates both.2 Several examples of the Brussels Effect deal with
product regulation—such as personal data that is available online, the presence of
certain chemicals in a product, the inclusion of hazardous material in electronics,
or certain software package that is offered by a developer. Other examples of the
Brussels Effect deal with process regulation—such as the process of storing data,
a particular testing method (such as animal testing) of cosmetics, or the regula-
tion of greenhouse gases emitted as part of a production process. Thus, there is
nothing that inherently limits the applicability of the Brussels Effect to the regula-
tion of products as opposed to production methods. Instead, the conditions for the
Brussels Effect, described in detail in c hapter 2, delineate the types of regulations
that can be subject to the Brussels Effect. For example, the Brussels Effect is typi-
cally limited to “inelastic targets” and therefore rarely applicable to financial regula-
tion given the elasticity of capital. Similarly, corporations’ conduct or production
needs to be “non-divisible” for the Brussels Effect to occur, leaving many labor
standards such as minimum wage typically outside the phenomenon. Moreover,
the Brussels Effect is tied to the EU’s ability to leverage its “market size,” making
it rarely applicable to constrain, for example, human rights violations that occur
abroad and that are typically not subject to EU’s market access.
Further, while this phenomenon is labeled the “Brussels Effect” herein and
used to explain the EU’s role as a global regulatory hegemon today, the condi-
tions for this phenomenon are generic as opposed to EU-specific in nature. They
4
4 T he Brussels Effect
are designed to explain any jurisdiction’s ability to unilaterally supply rules for the
global marketplace with the help of market forces. In this sense, they are inde-
pendent from and should outlive the EU’s regulatory hegemony, explaining if
and when such a hegemony would diminish or be displaced by another unilateral
global regulator when the similar conditions might arise elsewhere. Consequently,
the Brussels Effect is more a theory of unilateral regulatory power that any juris-
diction may derive from the interplay of its size, behavior and market forces—the
EU’s ability to do so in current times is only a powerful and underappreciated
application of that theory.
Theory 5
can incorporate in any state irrespective of where they do business, all states have
an incentive to relax their chartering requirements in order to attract corporate tax
revenues. Delaware has won this race by being the most attractive place to incor-
porate, either from the perspective of management, shareholders, or both.8 The
“California Effect” captures an opposite phenomenon: due to its large market and
preference for stringent consumer and environmental regulations, California is, at
times, effectively able to set the regulatory standards for all other states.9 Businesses
willing to export to California must meet its standards, and the benefits from uni-
form production give these firms an incentive to apply this same (stringent) stand
ard to their entire production.10
This book builds on the California Effect yet goes beyond it in some critical
ways. First, the Brussels Effect expands the dynamics of the California Effect from
a US federal system to a global context.11 In doing so, it uncovers and explains per-
haps the most significant example of the California Effect—its global occurrence—
which has been undertheorized and underestimated as an empirical phenomenon.
Second, the Brussels Effect outlines the precise conditions that allow an upward
regulatory convergence to emerge. The theory underpinning the California Effect
recognizes the importance of market size and scale economies as a source of a
jurisdiction’s external regulatory clout. Yet it fails to acknowledge factors such as
regulatory capacity and inelasticity as key components of the theory, and overlooks
factors other than scale economies that can prevent a company from producing
different varieties for different markets. Thus, the discussion of the Brussels Effect
provides a more nuanced theory of the conditions under which a single jurisdiction
can exert regulatory influence outside its borders. This more accurate and complete
understanding of the conditions underlying the Brussels Effect explains why the
EU, as opposed to any other large economy, can unilaterally supply global stan-
dards. It also makes the theory more generalizable. Assuming the specific condi-
tions outlined by the theory are met, what today amounts to the Brussels Effect
may one day be described as the “Beijing Effect.”
Finally, the literature on regulatory competition—including the California
Effect—focuses on a dynamic where a lax foreign regulator formally adopts the
stringent rule of the lead regulator.12 This attention to “de jure regulatory conver-
gence” fails to account for regulatory convergence that takes place in the absence
of formal changes to legal rules. In reality, this type of formal “trading up” often
fails to occur. Instead, we typically see only a “de facto regulatory convergence”
whereby much of global business is conducted under unilateral EU rules even when
other states continue to maintain their own rules. This is true, for instance, with
respect to US competition laws, privacy laws, and rules on food safety. Unilateral
regulatory globalization does not need to elicit a formal regulatory response from
another nation. The EU law governs whether other countries follow suit or not.
6
6 T he Brussels Effect
Seen in this light, the Brussels Effect is more about one jurisdiction’s ability to over-
ride others than it is about triggering an upward regulatory race.
The Brussels Effect also departs from the existing scholarship on the relation-
ship between regulatory convergence and regulatory power. Daniel Drezner has
argued that great-power consensus leads to regulatory convergence whereas great-
power disagreement leads to regulatory divergence and the emergence of rival stan-
dards.13 Which rival standard trumps the other depends on the regulatory powers’
relative ability to seek allies supporting their respective regulatory preferences.14 In
contrast to Drezner, this book shows that de facto convergence can take place in the
midst of a great-power disagreement. When the conditions for the Brussels Effect
exist, rival standards between two equal powers fail to materialize. Instead, the out-
come of the regulatory race is predetermined: the more stringent regulator prevails.
Prevailing theories on regulatory globalization explain the emergence of regula-
tory convergence as a result of either cooperation or coercion. The Brussels Effect
adds to this theoretical discussion but differs from it because it falls between coop-
eration and coercion. It can be distinguished from political cooperation where
convergence results only after a consensus is reached between states or regulatory
authorities. It is also different from unilateral coercion, where one jurisdiction
imposes its rules on others through threats or sanctions. In contrast, unilateral reg-
ulatory globalization occurs when the law of one jurisdiction migrates into another
in the absence of the former actively imposing it or the latter willingly adopting it.
Finally, Part I’s contribution to the regulatory debate is descriptive. It shows
that the Brussels Effect is pervasive and relevant, without endorsing or criticizing
the phenomenon. The broader normative questions of whether the Brussels Effect
is desirable or not will be discussed in Part III. Part I puts this normative question
aside for the moment and focuses on articulating a descriptive theory on when and
how the Brussels Effect takes place—and when it fails to do so.
7
The Brussels Effect. Anu Bradford, Oxford University Press (2020). © Oxford University Press.
DOI: 10.1093/oso/9780190088583.001.0001
8
8 T heory
representing the interests of the individual EU member states, the European citi-
zens, and the EU as an institution, respectively. In addition, European courts play
a crucial role in the interpretation and enforcement of EU treaties, regulations,
and directives.1
The Council brings together the executive branches of the member states and
is composed of the government ministers of each member state. It forms the leg-
islative arm of the EU and meets in different configurations, depending on the
policy area being discussed. For example, when the Council considers an environ-
mental regulation, each member state sends its environmental minister. Similarly,
when the Council legislates on agricultural policy, the minister responsible for
agriculture represents each member state. These representatives are authorized
to vote on behalf of their member state, binding their respective countries to the
decisions the Council makes collectively. The Council makes decisions in accord
ance with a simple majority, qualified majority, or unanimous vote, depending on
the subject matter.
The EP represents the EU citizenry and exercises legislative authority in
conjunction with the Council in this capacity. The EP consists of 751 mem-
bers (MEPs) who are directly elected by European citizens. Each member state
is afforded representatives in the EP roughly proportionate to its population.
For example, while Germany, as the most populous nation in the EU, is allot-
ted 96 MEPs, Malta, Estonia, Cyprus, and Luxembourg each have 6 MEPs. The
MEPs organize themselves into political groups and typically vote with their
political group as opposed to along national lines. For example, Spanish center-
right parties align themselves with MEPs representing center-right parties in all
other member states (European People’s Party) while the Spanish socialists align
themselves with socialists from all other member states (Progressive Alliance of
Socialists and Democrats).
The Commission functions as the EU’s executive arm and enjoys substan-
tial independent decision-making authority. The Commission consists of the
political “College of Commissioners,” with one commissioner hailing from each
member state. Each Commissioner is assigned responsibility over a certain pol-
icy department known as a Directorate-General (DG). Each DG focuses on a
specific policy area, such as health and food safety or competition policy. Even
though commissioners come from all twenty-eight member states, the commis-
sioners advance the common EU interest as opposed to that of their own member
state. In addition to the politically selected commissioners, the Commission has
a large bureaucratic staff of approximately thirty thousand career civil servants.
The Commission has significant agenda-setting power through its right to
propose legislation. It remains influential throughout the legislative process, act-
ing in close cooperation with the Council and the EP, and is also in charge of the
9
10 T heory
12 T heory
industry similarly resisted the GMOs, largely in response to the public opposi-
tion. Through the lobbying by these key stakeholders, in 2003 the EU adopted
two regulations—one establishing a system to trace and label GMOs and one
regulating food derived from GMOs.18 Since 2003, these partnerships have per-
sisted, maintaining joint pressure on the Commission to ban all non-authorized
GMOs in food.19
Similarly, this dual purpose behind regulations has often helped political par-
ties from the left and the right find common ground. Harmonized environmen-
tal or product safety standards across the EU allow political parties on the left
to protect consumers while also allowing parties on the right to prioritize trade
across the common market. Of course, political tensions may still remain and
interests are not always easy to align. However, this dual purpose broadens coali-
tions and increases the likelihood that the key interest groups—which in other
political and regulatory contexts might have agendas firmly in opposition—have
something to gain from a regulation, paving the way for a compromise that allows
stricter standards to emerge.
The EU’s tendency to harmonize standards upward has also been facilitated
by changes to treaties that enabled regulations and directives to be adopted with a
qualified majority of the Council—requiring the support of 55% of member states
representing a minimum of 65% of the EU’s population—as opposed to unanim-
ity. This move toward qualified majority voting can be traced to the adoption of
the 1987 Single European Act (SEA)—a major treaty revision that paved the way
for the completion of the single market—and has continued with each treaty revi-
sion since.20 The ability to proceed with legislation even in the absence of consen-
sus established the foundation for significant rule-making in the aftermath of the
SEA. Had the member states insisted on unanimity as the default decision-making
rule, it is doubtful that its ambitious regulatory agenda would have emerged. The
reliance on legislative techniques, such as minimum harmonization, further fos-
tered an extensive regulatory agenda by relaxing the EU’s insistence on complete
uniformity in favor of greater flexibility in national implementation.
A qualified majority makes it easier to adopt regulations as it often silences
the laggards; the more ambitious states prevail because they do not need to con-
vince everyone to support a legislation.21 However, wealth, expertise, and issue
salience also matter. The member states eager to elevate regulatory standards in
many policy areas are often wealthier countries from Northern Europe, vested
with greater political leverage associated with their economic success. For exam-
ple, high growth rates and competitive economies in Northern Europe enhance
these countries’ ability to advocate for environmental regulations that do not
compromise economic goals. These countries are also often vested with greater
persuasive authority stemming from their experience in already regulating that
14
14 T heory
most common in the budgetary sphere but were also used in environmental
legislation as well as health care and consumer protection.29 The addition of
new member states to the EU through multiple rounds of EU enlargement
has further enhanced the reliance on package deals as EU institutions have
managed increasingly diverse policy preferences.30 This way, the regulatory
density in the EU has had the effect of enabling more ambitious rule-making
as the reluctant member states have been brought onboard though conces-
sions on other policy areas.
16 T heory
becomes a global standard setter, which enhances the legitimacy and influence of
its standards, both at home and abroad.
The Brussels Effect also strengthens the Commission’s bureaucratic interests
by enhancing the impact of its regulatory activities. Regulators generally have
the incentive to generate more regulation rather than less because their success is
measured by how much of their agenda is accomplished.33 Among the EU insti-
tutions, the Commission, in particular, is widely portrayed as a “competence-
maximizer,” constantly looking to expand its powers and increase its influence
over policy making. And when the Commission seeks to expand its competen-
cies, it tends to do so via regulation.34
To a large extent, the Commission’s tendency to govern through regulation
is a result of the EU’s small budget. The EU’s budget amounts to only around
1% of its GDP, which comes primarily as transfers from member states.35 To put
this figure in perspective, US federal government spending regularly exceeds 20%
of its GDP.36 These tight budgetary constraints restrict the Commission’s abil-
ity to pursue direct-expenditure programs, such as large-scale industrial policy,
innovation policy, or job creation programs at the EU level. In contrast, there
is no “regulatory budget” to limit the amount of regulations and directives the
Commission can promulgate.37 The Commission does not even need significant
funds to enforce its regulations—it can leverage member state funds by delegat-
ing the actual implementation and enforcement to them. Thus, the only way for
the Commission to expand its influence without extensive financial resources is
to engage in regulatory activity, as regulations do not depend on the tax revenues
available to the Community institutions.
As Giandomenico Majone has noted, “since the [Commission] lacks an
independent power to tax and spend, it could increase its competencies only by
developing as an almost pure type of regulatory state.”38 In Majone’s demand-
and-supply model of EU regulation, the Commission is the primary actor on
the supply side due to its right of legislative initiative.39 Historically, vesting
the Commission with so much regulatory power might have been uninten-
tional: the member states wanted to restrict the powers of the Commission
through tight budgetary discipline. Yet in the absence of traditional powers
of states to tax and spend (not to mention wage a war), the Commission has
built an empire of laws and regulations, maximizing its own influence in the
process.40
Regulatory policies, including their extension though the Brussels Effect,
are nearly costless for the Commission to pursue because the actual costs of
complying with regulations fall on the firms and individuals that the regula-
tions target. In addition, enforcement costs are borne by member state gov-
ernments whose task is to implement the regulations.41 Take, for example, the
17
18 T heory
Sets Out Its Vision, the Parliament highlights its goal to “Export European
Standards.” The document refers to the Parliament’s 2017 resolution on the
impact on international trade, which details a variety of mechanisms by which
the EU may export, monitor, and enforce the extension of European policies
abroad.47
Similarly, the European Courts’ pro-integration tendencies are likely to be
reinforced by the Brussels Effect. The Brussels Effect creates market-based incen-
tives for compliance with EU rules, including with court rulings aimed at enforc-
ing them. This enhanced compliance further helps to preserve the authority and
legitimacy of the European Courts. In some recent decisions, including a case
still pending querying whether the right to be forgotten should extend to global
domain names, the ECJ is clearly invited to consider the external effects of its rul-
ings.48 The 2009 Lisbon Treaty provided the court with a constitutional founda-
tion for external policy considerations, authorizing the court to look beyond the
single market.49 These changes in treaty framework have made the ECJ even more
conscious of the external effects of its rulings and empowered it to issue rulings
that have an effect outside of the EU’s frontiers. Regardless of how far the ECJ
will push the EU’s external powers, most commentators agree that all EU institu-
tions have obtained significant gains from entrenching their regulatory priorities
across the world.
Internal Motives: Single Market
The EU has traditionally externalized its regulations without any active effort to
shape markets other than its own. It has been sufficient to simply generate regula-
tions to strengthen its single market, with external influences emerging as inci-
dental by-products of this internal goal. As noted earlier, inconsistent regulations
among member states are seen to threaten the single market, prompting the need
to enact EU-level regulations that harmonize laws across the member states. For
instance, many regulations in the environmental domain were enacted to serve
the dual purpose of protecting the environment and facilitating the single market
through harmonized environmental standards.50 Rather than aiming to provide
global environmental standards, the EU was thus concerned with the efficient
functioning and the legitimacy of the single market program.51 Advancement of
the single market also provided a solid legal basis for EU institutions to act, pro-
viding a rationale that regulation at the EU level, as opposed to the national level,
was necessary.
The internal market rationale was central, for example, in enacting the chemi-
cal safety regulation “REACH,” discussed in detail in c hapter 6.52 In its 2001
white paper, the Commission stated that one of the key objectives of the EU’s
new chemical policy was to “[p]revent fragmentation of the internal market.”53
In its first recital, the 2003 legislative proposal for REACH notes that “(1) The
free movement of substances, on their own, in preparations and in articles, is an
essential aspect of the internal market and contributes significantly to the health
and wellbeing of consumers and workers, and to their social and economic
interests, as well as to the competitiveness of the chemical industry; (2) The effi-
cient functioning of the internal market for substances within the Community
can be achieved only if requirements for substances do not differ significantly
from Member State to Member State.” Similarly, the 2005 Council’s Political
Agreement for a Common Position discusses REACH’s aim and scope stating
that “The purpose of this Regulation is to ensure a high level of protection of
health and the environment as well as the free circulation of substances on the
internal market while enhancing competitiveness and innovation.”54
The EU’s regulation of data protection similarly has its origins in the goal of
establishing a single market for the transfer of data across the common market.
Earlier statements by EU institutions make no references to the external aspects
of data protection but rather cite disparate national measures as adversely impact-
ing the single market.55 For example, the 1981 Commission Recommendation
regarding the automatic processing of personal data notes:56
20 T heory
Several other preparatory works confirm that a key goal of the EU’s data
protection regulation has always been the desire to “unleash the potential of the
Single Market.”57 The 1994 Commission white paper on “Europe and the Global
Information Society” emphasizes the risks associated with “[d]isparities in the
level of protection of such privacy rules [which] create the risk that national
authorities might restrict free circulation of a wide range of new services between
Member States in order to protect personal data.”58
The 2010 Commission Communication on personal data protection similarly
warns of the “divergences between the national laws implementing the Directive,
which run counter to one of its main objectives, i.e. ensuring the free flow of
personal data within the internal market,” acknowledging that private stakehold-
ers have complained about administrative costs stemming from the lack of har-
monization.59 The legislative history of the GDPR continues to stress the single
market, emphasizing the need to remove a “considerable divergence in the rules
across Member States” and to remove “the uncertainty and uneven protection
for individuals” associated with the “fragmented legal environment” in the EU’s
single market.60
These statements call into question critics’ views arguing that the EU is a
“regulatory imperialist” that is consciously seeking to externalize the single
market.61 Instead of having a deliberate external agenda, these communica-
tions illustrate how much of the EU’s rule-making stems from the internal goal
to protect the integrity of the single market. Especially early on, the external
effects of the single market were, at best, an afterthought for the EU institu-
tions that were preoccupied with the market integration goal. This internally
driven, passive externalization of EU rules has been particularly effective in
that the EU institutions have only had to generate the consensus to pursue
a goal that lies at the heart of the EU project: European integration and the
establishment of the single market. Often, EU standards have been external-
ized as a by-product of that mission, not by EU institutions but by market
participants who need to comply with EU rules and who often decide to apply
the EU standard globally.
21
22 T heory
paper, “A Single Market for Citizens,” the European Commission envisions the
EU and its internal market to be standard setters at the international level:68
[The EU] has spurred the development of rules and standards in areas
such as product safety, the environment, securities and corporate govern
ance which inspire global standard setting. It gives the EU the potential
to shape global norms and to ensure that fair rules are applied to world-
wide trade and investment. The single market of the future should be the
launch pad of an ambitious global agenda.
Around this same time, in a notable change from its earlier communications
on data protection regulation, the Commission also began to emphasize the
importance of promoting EU data privacy laws as a benchmark for global stan-
dards. In its 2009 communication, for example, the Commission noted that the
“Union must be a driving force behind the development and promotion of inter-
national standards for personal data protection and in the conclusion of appro-
priate bilateral or multilateral instruments.”69 These comments are in contrast to
earlier statements when the Commission simply emphasized the need to harmo-
nize standards to ensure a smoother flow of data across the common market. In a
2010 communication, the Commission defended its stringent standards, noting
that “[a]high and uniform level of data protection within the EU will be the best
way of endorsing and promoting EU data protection standards globally.”70 The
Commission also called for universal principles based on EU norms:
This vision of the EU as providing a benchmark for the world affected the
drafting of the GDPR. In 2017, the year before the GDPR came into force, Vera
Jourova—the Commissioner for justice in charge of data protection—announced
unambiguously that “we want to set the global standard.”72
Over time, the EU has also become more explicit in stating its goal to
promote its regulatory preferences through trade agreements.73 Today, the
23
Council’s website discussing the EU’s trade policy denotes that “[o]ne of
the most important aspect of EU’s trade policy is that—alongside protect-
ing European businesses and consumers—it is promoting the EU’s principles
and values,” citing human rights and environmental regulation as examples.74
Recent EU treaty revisions also reflect a change in the mindset toward a more
externally focused Europe. For instance, the 2007 Lisbon Treaty vests the EU
with an explicit mandate to project its internal norms and values externally,
emphasizing the importance of those values in the EU’s relations with the
wider world.75
Overall, these statements point to a growing awareness of the external effects
of the single market, and the realization that this dimension presents the EU with
opportunities. The internal goals have not faded and the external motivations
seem to supplement, rather than substitute, the internal agenda of EU institu-
tions, which remains paramount. While the fundamental rationale underlying
the internal goal to strengthen the single market is well understood, it is less obvi-
ous as to why the EU would care about being a global standard setter. What does
the EU gain from being a global leader in regulatory reforms, setting benchmarks
for rules and standards worldwide?76
The economic goal of ensuring a level playing field for, and protecting the
competitiveness of, European industry likely goes a long way in explaining the
EU’s willingness to externalize its regulatory agenda. A failure to export its stan-
dards to other countries would put European firms at a competitive disadvan-
tage.77 Yet by acting as a global regulator, the EU can defend its social preferences
without compromising the competitiveness of its domestic industries. If foreign
companies adhere to EU norms on the European market, the import-competing
industries are assured a level playing field. If the EU’s norms further spread to
third countries, the EU can ensure that its export-oriented firms are not disad-
vantaged either. Being able to influence global standards minimizes the adjust-
ment costs for European companies, which are then able to operate in foreign
markets based on their home market rules.
Beyond the concern over the competitiveness of the European industry, the
EU may have additional incentives to project its regulatory power abroad. For
one, the EU may be motivated by a desire to obtain greater legitimacy for its
rules through globalizing them. If foreign companies and governments endorse
EU standards, those standards are seen as having a wider appeal and thus greater
legitimacy.78 One concrete benefit from this is that the EU’s trade partners are
less likely to challenge the legality of EU standards before forums like the WTO
if those standards are already replicated globally. Less tangibly, being the global
standard setter has the benefit of expanding the EU’s soft power and validating its
regulatory agenda, both at home and abroad.
24
24 T heory
The Brussels Effect
The Brussels Effect. Anu Bradford, Oxford University Press (2020). © Oxford University Press.
DOI: 10.1093/oso/9780190088583.001.0001
26
26 T heory
Market Size
In the global economy, power is correlated with the relative size of any given
country’s internal market.2 Existing scholarship on global regulatory influence
emphasizes the significance of market size as the proxy for economic power.
Daniel Drezner argues that global regulatory outcomes are a function of state
power, which states derive from the size and diversity of their internal market.
Large markets have a gravitational effect on producers, pulling them toward the
regulatory standards prevailing in these countries.3 Chad Damro agrees, conceiv-
ing the EU as a “Market Power Europe,” and arguing that the EU’s identity “is
crucially linked to its experience with market integration.”4 The single market
provides the foundation for the EU and is key to its ability to externalize its regu-
latory measures outside of Europe.5
Market size is a relative concept. The extent of any state’s market power
depends on the attractiveness of its consumer market compared to the alterna-
tive markets available. In the case of consumer goods, the number and affluence
27
The Brussels Effect 27
28 T heory
As the importance of markets such as China and India continues to grow, pro-
ducers may, over time, have the option to divert part of their exports there. Yet
given the relatively small purchasing power of consumers in those markets today,
few international firms are in a position to abandon the EU market and recoup
the forgone revenue elsewhere. The distinctly high value of market access to the
EU therefore explains why many producers are prepared to incur even significant
adjustment costs to retain their ability to sell goods and services into the EU.
The value of access to the EU’s internal market has also been growing notably
over the past several decades as new countries have joined the EU. As a result of
its 1995 enlargement, the EU grew by twenty-two million people, adding $383
billion to its GDP. With its 2004 enlargement, the EU grew by seventy-five mil-
lion people, and added $685 billion to its GDP. Its 2007 enlargement added
thirty million people and $267 billion in GDP, and its 2013 enlargement added
four million people and $81 billion.13 The EU’s various association agreements,
which extend its regulations to neighboring countries such as Georgia, Morocco,
and Turkey, have further grown the Union’s de facto market size.14 These coun-
tries largely align their regulations with those of the EU, adding to the total GDP
and consumer base covered by EU regulatory standards. This further increases
the benefits of conforming to European standards.
Though it may seem that the enlargement process inevitably enhances the
EU’s market power, there are important limits to how much the EU can grow
its market size through accession of new members without compromising the
influence tied to its market size. In their study on the optimal size of a nation,
Alberto Alesina and Enrico Spolaore highlight the trade-off between nation size
and preference heterogeneity among the citizens.15 The larger the market, the
cheaper the provision of public goods. For example, when additional countries
join the EU, the opportunities to trade across the single market grow, enhancing
the value of the common market. At the same time, with each new member, the
preference heterogeneity among EU member states increases as well. This com-
plicates decision-making over optimal regulations and limits the policies the EU
can pursue. Thus, while a larger union would seem to enhance the EU’s market
power, there is actually an equilibrium point after which the EU’s market power
begins to erode as policy making becomes stymied by member states that oppose
further integration and additional regulations. Thus, there can be such a thing as
a “suboptimally large market” where the market’s ability to influence regulation
actually fails to increase with market size. In this sense, the growing internal divi-
sions within the EU suggest that the EU’s influence tied to its market size may,
indeed, already be at (or past) its peak.
Regardless, even a more static view on the EU’s current market size suggests that
the EU is an important destination for a large segment of foreign producers today.
29
The Brussels Effect 29
30 T heory
Regulatory Capacity
Large market size alone does not explain a state’s ability to project its regula-
tory preferences onto others; not all states with large markets become sources
of global standards. Being a regulatory power is a conscious choice pursued by
a state rather than something inherent to its market size. The state must commit
to building institutions and vesting them with regulatory capacity to translate
its market power into tangible regulatory influence.28 Regulatory capacity refers
31
The Brussels Effect 31
32 T heory
conscious efforts to build its extensive regulatory machine was motivated by the
need to further the integration process and complete the single market, which
was largely done through regulation.
The internal regulatory capacity of the EU has only continued to grow since.
All key EU institutions—the Commission, the Council, and the European
Parliament (EP)—have experienced significant bureaucratic growth over time.
In 2016, EU institutions employed 39,715 staff members. These numbers have
grown on average by 5.2% a year since the establishment of these institutions.36
This has been continuous across all EU institutions from 1959 until 2011, at which
point EU institutions deliberately cut staff in response to the 2008 financial and
budgetary crisis under pressure to streamline. However, aside from the crisis
response, the number of EU civil servants has been steadily growing. In 1959—
the early years of the European Economic Community—the total staff of the EU
consisted of 2,591 staff members, with Commission staff at 1,930, EP staff at 315,
and Council staff at 264. In 2016, the Commission had the largest number of staff
(24,044), followed by the EP (6,762), and finally the Council (3,040).37 Further,
the average annual growth rates for all three institutions were similar: 5.0% for
the Commission, 6.0% for the EP, and 4.7% for the Council.
While the EU bureaucracy has exhibited steady growth over the years, it is
still relatively low in staff when compared with the breadth of the EU’s man-
date and the EU population, which has expanded to over 500 million people.
The relative size of the EU bureaucracy seems even more modest when compared
to the US federal bureaucracy. The US federal government employs over 4 mil-
lion people across the executive, legislative and judicial branches.38 According to
the Office of Personnel Management report, the federal executive branch con-
sisted of 1.87 million employees in fiscal year 2017, a figure that reflects full time
civilian employees (excluding postal service employees and uniformed military
personnel).39 For example, the Department of Agriculture and Department of
Transportation alone had over 73,000 and 53,000 employees, respectively.40 On
a per capita basis, the relative size of the US federal government is even larger
compared to the more populous EU.
Of course, a direct comparison of staff numbers between the US federal
bureaucracy and that of the EU is somewhat misleading given that EU mem-
ber states themselves are vested with significant responsibilities to implement
and enforce EU law, indirectly but substantially adding to the EU’s bureaucratic
capacity. The EU has delegated the enforcement of many key EU regulations—
including the General Data Protection Regulation (GDPR)—to its member
states. The Commission is further vested with the power to bring infringement
proceedings against individual member states that fail to fully implement or
enforce EU law. This way, the Commission can ensure that the member states
3
The Brussels Effect 33
have the incentive to obey their mandate and thus effectively contribute to the
EU’s regulatory capacity.
Further, regardless of the metric used, the quantity of EU staff alone fails to
capture the extent of regulatory capacity vested in EU institutions. The quality
of the EU bureaucracy matters, as well. For example, the Commission has been
able to carry out its competences with the help of a bureaucracy that is distinctly
skilled and mission driven. It consists of highly educated bureaucrats that share
a mission for European integration. No fewer than 70% of Commission officials
hold a postgraduate degree, and 58% have studied in more than one country,
partially explaining why the Commission is often viewed as being composed of
a cosmopolitan, educated elite.41 Commission officials also possess significant
technical expertise, which gives their rule-making an additional layer of legiti-
macy and contributes to an aura of objectivity and neutrality that enhances their
authority.42
The shared mission of Commission staff further amplifies its rule-making
capacity. A recent survey of Commission officials carried out by Lisbet
Hooghe reported that 72% of respondents claimed “commitment to Europe”
as a motivation for joining the Commission, with supranationalists outnum-
bering state-centrists by more than two to one.43 An earlier survey found that
“top Commission officials appeared significantly more pro-European than
either national elites or public opinion.”44 Rather strikingly, Hooghe’s survey
revealed that while over 40% of Europeans viewed themselves as maintain-
ing national identity only, no member of the European Commission staff sur-
veyed responded as such, with over 80% identifying themselves as European
to some degree.45 The Commission’s culture “revolve[s]around a teleological
vision of the EU, one that sees deeper integration as the means of achieving
broader political goals.”46 This distinct homogeneity in its mission allows the
Commission to substitute political infighting with a relatively clear and coher-
ent vision of how to deploy its competences, paving the way for more extensive
rule-making.
The Commission has also skillfully enhanced its expertise and resources
through the establishment of European regulatory agencies (ERAs) over the
past two decades, particularly in domains where it has had limited discretion or
power. In this way, the Commission can leverage the ERAs to expand, rather than
rival, its role in regulating the single market.47 Furthermore, by not traditionally
vesting the agencies with any general rule-making powers, the Commission has
guarded its own rule-setting prerogatives instead. Thus, most ERAs provide the
Commission with additional expertise, personnel, information, or financing
when needed, adding to the regulatory capacity the Commission possesses with-
out undermining its powers and control over policy making.48
34
34 T heory
The Brussels Effect 35
legal basis for regulatory action, vesting the EU institutions with a relatively broad
mandate to act. For example, the ECJ found in 2006 that this harmonization
article allowed the EU to extend its capacity to regulate tobacco advertising even
though the regulation of public health was outside the competences of the EU—
as long as discordant national regulations on tobacco advertising obstructed the
functioning of the internal market.55 Relatedly, the EU institutions have been
adamant in deploying the competences granted to them in a wide variety of ways.
For instance, while the EU Treaties do not vest the Commission with the capac-
ity to act in the corporate tax domain, the Commission has been pursuing the tax
arrangements of companies such as Apple and Starbucks by relying on its wide
powers under the Treaties’ state aid provisions.56 These provisions prohibit mem-
ber states from giving selective financial advantage to certain companies57—as
discussed further in chapter 4.
Changes to the EU institutions’ voting rules have also been critical in extend-
ing the EU’s regulatory capacity. The Council’s ability to promulgate regulations
has expanded over the years, in particular as a larger set of regulations have become
subject to a qualified majority as opposed to unanimous voting.58 For example,
environmental policy has only required qualified majority voting since the 1992
Maastricht Treaty.59 This has made it easier to pass legislation, further broadening
the EU’s regulatory reach. EU institutions have acquired these increased powers
as a result of the need to further integrate the common market and maximize
gains from deeper integration. Several rounds of enlargement have increased the
heterogeneity of EU membership, making unanimous decision-making all the
more challenging. The trend toward qualified majority voting has therefore been
essential in allowing for continued regulatory action.
Another institutional change that has contributed to the EU’s enhanced reg-
ulatory capacity is the gradual empowerment of the EP. Ever since the 1986 SEA
and the 1992 Maastricht Treaty, the EP has gained influence in the EU’s legislative
process.60 The Maastricht Treaty was particularly notable in that it introduced
a co-decision procedure that vested the EP with the power to adopt legislation
jointly with the Council. The Lisbon Treaty made this co-decision procedure the
default mode of legislation.61 Driven by concerns of democratic deficit in the EU,
the strengthening of the EP has sought to address the need to further legitimize
EU decision-making by granting a greater role to an institution directly elected
by European citizens. The EP is known for its pro-regulation stance, typically
supporting enhanced environmental regulation and consumer protection as part
of its desire to demonstrate that it fulfills its mandate to serve the interests of
European citizens. Greater European integration also tends to reinforce the role
of supranational EU institutions, including that of the EP, further explaining the
EP’s pro-integration tendencies.62
36
36 T heory
The Brussels Effect 37
global regulatory power is limited to policy areas in which the member states
have ceded either exclusive or shared regulatory competence to the EU. In those
instances, the EU enjoys the requisite regulatory capacity that can unleash the
power of the single market and convert it into concrete regulatory influence.
Stringent Regulations
The institutional competence and expertise vested in the EU’s key institutions—
the European Commission in particular—form the foundation of the regulatory
state in Europe. However, even significant regulatory capacity by a large market
does not guarantee regulatory influence unless such regulatory capacity is sup-
plemented with the political will to deploy it. Thus, the Brussels Effect requires
that the jurisdiction also has the propensity to promulgate stringent regulatory
standards.
The domestic preference for stringent regulation is more likely to be found in
countries with high levels of income.73 Wealthier countries can better afford pur-
suing environmental and consumer protection, even at the expense of the prof-
itability of their firms, whereas less-wealthy countries remain more sensitive to
the costs of regulation that constrain business activity and hence limit economic
growth. This lower tolerance for the costs of stringent rules, together with their
lack of regulatory capacity, explains why emerging markets are unlikely to exercise
rule-making power that would match their growing market size anytime soon.
But even wealthy countries differ in their predisposition to regulatory inter-
vention. Until the end of the 1980s, the United States set global norms in con-
sumer and environmental regulation, leading European firms to adjust to the
higher standards that originated from the United States.74 At that time, American
regulations also often served as benchmarks for European activists who criticized
the EU for lagging behind, for instance, in the regulation of automotive emissions,
the lead content of fuel, or chemicals harmful to the ozone layer.75 Since the 1990s,
the roles have been reversed as the EU has increasingly adopted more stringent
consumer and environmental protection standards, while the United States has
failed to follow the EU’s lead.76 The only way for the United States to supersede
EU standards today would be to adopt even higher standards itself—something
that it does not consider to be welfare enhancing and thus in its interest.
David Vogel explains the shift in the 1990s as a result of the changes in citizens’
risk perception and decision-makers’ increased willingness to respond to mount-
ing demands for more regulation.77 Europeans have perceived health, safety, and
environmental risks caused by businesses as credible and politically unacceptable.
This increased breadth and salience of public risk perception can partially be
traced to “triggers” that have elevated the public’s consciousness about the risks
38
38 T heory
they face. While Americans experienced a cascade of alarming news about vari-
ous such risks from the 1960s until the 1990s—ranging from contaminated cran-
berries, thalidomide, mercury-contaminated fish, or large oil spills—some widely
published disagreements about those alarm bells had eroded their salience, tem-
pering the demand for further regulations by the 1990s. In contrast, in Europe,
alarm bells continued to ring ever more loudly—be it with regard to concerns
of dead seals in the North Sea, “mad-cow” disease in the United Kingdom,
HIV-contaminated blood in France, radioactive waste following the Chernobyl
nuclear disaster, or a large-scale chemical spill turning the Rhine River red with
toxins.78 This nurtured a “precautionary risk culture” and elevated the need for
regulation in the eyes of the public.
This shift in the citizens’ perceptions is important, but likely not the only rea-
son that caused the EU to eclipse the United States as the predominant global
regulator. An alternative explanation emphasizes the EU’s conscious decision to
accelerate its integration process and embark on a determined policy to complete
the single market by the early 1990s—through regulation. With the adoption
of the EU’s SEA in 1986, the EU reinvigorated the integration project with the
objective of establishing a single market by the end of 1992. The SEA became
a key catalyst for regulatory reforms and further integration.79 The substantive
scope of the EU expanded to new policy areas such as the environment and
social policy. To help implement the SEA, the EU also vested its institutions
with greater ability to pass regulations through qualified majority voting. Even
the more Euroskeptic countries, including the United Kingdom, agreed to limit
their sovereignty in favor of qualified majority voting given the benefits associ-
ated with the single market program.80 These changes adopted in the early 1990s
paved the way for an ambitious agenda to pursue stringent regulations that would
serve the broader integration agenda.
In addition to leveraging the stringent regulatory agenda as a tool for promot-
ing the broader goals of European integration, two additional factors are critical
in explaining the EU’s pursuit of distinctly stringent rules: Europeans’ greater
faith in government as opposed to markets to generate fair and efficient outcomes
(ideology); and the relative importance of public regulation over private litigation
and lower threshold for intervention by regulators in cases of uncertainty (pro-
cess). These will be discussed in turn. For any given regulatory policy, the salience
of these factors may vary, and their relative importance may change over time
or across key decision-makers. Additionally, policy-specific drivers for high stan-
dards also exist. These will be addressed in Part II. The discussion of these two
key factors—ideology and process—will, therefore, only seek to capture the more
generic background norms that explain the EU’s overall predisposition to prom
ulgate stringent standards across many different policy areas. After reviewing
39
The Brussels Effect 39
these two factors, the discussion then provides some counterexamples where the
missing regulatory propensity limits the Brussels Effect.
The Union shall establish an internal market. It shall work for the sus-
tainable development of Europe based on balanced economic growth
and price stability, a highly competitive social market economy, aiming
at full employment and social progress, and a high level of protection and
improvement of the quality of the environment. It shall promote scientific
and technological advance.
40 T heory
The Brussels Effect 41
explains the EU’s relative reliance on competition regulation versus the US’ reli-
ance on markets as a primary means of maintaining market competition.
The political environment in the EU has similarly been conducive to extensive
rule-making. European political elites have been ideologically less divided than
their US counterparts, and consequently are more responsive to the demands of
the general public to provide more stringent regulations.92 Parties across the ideo-
logical spectrum may differ in the extent of their support for regulation but share
a fundamental commitment to a regulated market economy, including social pro-
tections.93 It is illustrative that the Commission President Jean-Claude Juncker—
who represents the conservative EPP Party—vowed during his candidacy speech
to the European Parliament: “I will not sacrifice Europe’s safety, health, social and
data protection standards or our cultural diversity on the altar of free trade.”94
Thus, even the most pro-market, center-right parties endorse the EU’s regulatory
agenda that balances free trade with extensive protections for its citizens.
42 T heory
agency expertise over adjudication before generalized courts. Courts often lack
specific knowledge of health and safety matters that require evaluation of scien-
tific facts.96 The Commission has a relatively large staff divided across specialized
Directorate Generals, all of which focus on specific policy areas. This allows offi-
cials to develop considerable expertise in their area of regulation. For example,
private individuals may not even be aware that some adverse health effects that
they are experiencing are due to exposure to carcinogenic agents or materials.
Without such knowledge, they would not even know to bring a liability suit
against the manufacturer of the product containing such ingredients.97 By leaving
the regulation to the Commission, the EU mitigates some of the informational
constraints that private litigants face in activating tort liability through litigation.
Considerable scale economies also allow the EU to efficiently acquire the knowl-
edge to prepare, promulgate, and enforce regulations across the common market
that protect the rights of over five hundred million consumers.98
Whether countries rely more on private tort law or public regulation to
organize their regulatory systems depends on broader features that character-
ize their legal and administrative systems. For example, the US-style tort system
requires extensive rules of discovery, the availability of class actions, and substan-
tial monetary awards to function effectively. In the EU, discovery and collective
redress have both been historically limited. Monetary awards when fault is found
are similarly modest compared to remedies such as treble damages that US liti-
gants can obtain. These features reduce incentives to sue in the EU, making tort
law a less-viable alternative for public action.
Addtionally, the EU is more ideologically comfortable than the United States
with administrative regulation resting on “social command” exercised by public
institutions.99 Relying on the vigilance of private individuals is foreign to most
European countries where the state has always played a key role in regulating
markets. The United States takes the opposite view. It is accustomed to limiting
the government’s ability to exert social control in favor of reserving a larger role
for private litigants. Private enforcement fits better with the US’ individualistic
tradition and culture of litigation. The United States also recognizes that govern-
ment regulation can burden even harmless activity, making the tort system more
appealing as it limits the liability to instances where actual harm has occurred.100
Finally, ex ante regulation also resonates more with Europeans who have a low
tolerance for many health and environmental risks and often opt for precaution-
ary regulation to eliminate even more distant or uncertain risks. A tort system has
the inherent characteristic of allowing the harm to materialize before any action
can be taken.101 This feature is in tension with the more precautionary attitudes
prevailing in Europe, leading the EU to embrace preventive control where regula-
tors act before harm occurs. While the EU’s regulatory process can obviously be
43
The Brussels Effect 43
slow at the outset, regulatory intervention is still designed to take place preventa-
tively before risks have materialized.
The reasons just mentioned illustrate why the EU primarily relies on bureau-
cratic rule-making rather than judges to generate deterrence through tort liti-
gation. Of course, administrative rule-making plays an important role in many
areas of US law, and courts are not irrelevant in the EU. Many important ECJ
rulings have emanated as preliminary references from national courts and are
hence initiated by private litigants.102 Also, private litigation may become more
important in the EU going forward. In 2018, the Commission proposed legisla-
tion that seeks to introduce an EU-wide class action system in consumer protec-
tion cases.103 The new Directive would extend class actions to several areas of EU
regulation, including consumer protection, product liability, environment, finan-
cial regulation, health, tourism, passenger rights, and data protection. Even with
these reforms, many proposed features such as the requirement that consumers
must “opt in” as opposed to “opt out” of redress orders, more limited discovery
rights, and the unwillingness to implement contingency fees will make it unlikely
that the US-style mass-tort litigation culture would emerge in the EU anytime
soon. There is also little to suggest that the class action reform would lead the
Commission to rein in its rule-making and promulgate less-stringent regulations
going forward.
The EU’s emphasis of administrative rule-making over tort liability is not
the only process-driven reason that has contributed toward the EU’s stringent
regulations. The EU’s regulatory stringency is also explained by the different role
that cost-benefit analysis (CBA) and precaution play in the regulatory process.
Today, the EU and the United States both share the administrative culture of
analyzing the costs and benefits of regulatory action before enacting a new regu-
lation. However, the adoption of CBA—known as “impact assessment” in the
EU—is more recent and hence less entrenched in the EU. When regulatory risks
are uncertain and hard to accurately quantify, the EU is more comfortable inter-
vening, even based on precaution. These reasons explain why, on balance, the EU
remains more concerned with false negatives—instances when it erroneously
fails to intervene, allowing a harm to materialize—than false positives—instances
when it erroneously intervenes, limiting beneficial economic activity in an effort
to protect its citizens from a potential risk that may or may not materialize.
In the United States, CBA dates back to President Reagan’s 1981 executive
order requiring all new rules to meet the cost-benefit test before being issued.104
Every subsequent president since, whether Democrat or Republican, has
endorsed a variant of CBA. CBA forces all US regulatory agencies to substantiate
that the benefits of intervention outweigh its costs.105 This obligation applies to
all regulations that impose compliance costs exceeding $100 million or that raise
4
44 T heory
significant novel policy questions.106 As a result, in all these instances, any risk
must first be quantified and found to be unreasonable before regulatory interven-
tion can be justified.107
Impact assessment is more recent in the EU, being formally introduced
in 2002.108 The EU requires an impact assessment for all Commission initia-
tives that are likely to have “significant economic, environmental or social
impacts.”109 The method underlying the impact assessment in the EU differs
from the method employed in the United States.110 While the CBA requires
US agencies to provide a primarily quantitative assessment of the anticipated
costs and benefits of a regulation and its alternatives, the Commission has
adopted a more holistic approach. It integrates various types of ex ante pol-
icy evaluations, such as CBA, cost-effectiveness analysis, and multi-criteria
analysis. It also conducts a more qualitative assessment of policy elements—
including both aggregate and distributional impacts—which cannot easily
be quantified. The Commission is further obliged to assess the impact of any
legislative proposals on the fundamental rights in the EU.111 The EU’s impact
assessment is subject to a review by the Regulatory Scrutiny Board. While the
Regulatory Scrutiny Board’s review focuses on whether the impact assessment
reflects high quality analysis, its US-counterpart—the Office of Information
and Regulatory Affairs (OIRA)—additionally reviews whether a regulation
is consistent with the president’s agenda, adding a layer of political control to
the review process.112
The EU’s impact assessment and the functioning of the Regulatory Scrutiny
Board have over time evolved closer to their US counterparts.113 For example,
while the Regulatory Scrutiny Board initially could not veto proposals that did
not pass the CBA, it gained such power in 2010. It would therefore be mistaken
to exaggerate the US–EU differences and attribute the relative stringency of EU
standards to differences in the CBA. That said, on balance, it is fair to say that
the EU subscribes to a more flexible CBA that leaves more space for regulators to
intervene with stringent standards.
The EU and the United States also differ in their relationship to scientific
evidence and precautionary regulation in the face of uncertainty.114 As of the
1990s, influential scholars, business elite, think tanks, and media in the United
States began to increasingly question what they perceived as excessive precaution
that dominated rule-making and that, in their view, had led to the enactment of
overly burdensome health and safety regulations.115 This also resulted in a change
in the public perception, which became more skeptical of the need for regula-
tion.116 Partially due to this change, US agencies began to conduct a rigorous
scientific assessment in their regulatory decision-making as of the 1990s.117 The
45
The Brussels Effect 45
strict requirement to carry out a CBA and amass convincing scientific data—or
else fail a possible judicial challenge to rule-making—elevated the administrative
hurdle for all regulations promulgated by US agencies.
In contrast, while scientific evidence remains central to regulating risk in
the EU,118 it is tempered by the EU-wide adoption of the “precautionary prin-
ciple.” This principle dictates that precautionary regulatory action is proper even
in the absence of an absolute, quantifiable certainty of the risk, as long as there
are reasonable grounds for concern that the potentially dangerous effects may
be inconsistent with the chosen level of protection.119 The precautionary prin-
ciple emanates from Swedish and German environmental law dating back to the
1960s,120 and the Maastricht Treaty, which officially embraced the principle at the
EU level in 1992,121 largely reflecting Germany’s effort to “Germanize” European
environmental policy.122 The additional impetus for the precautionary principle
came from various food safety and environmental scandals that made the general
public eager to preempt regulatory risks with precautionary regulation. As the
public support for the precautionary principle grew, all institutions were eager to
capitalize on it and endorse precaution to earn greater legitimacy in the eyes of
the public.123
The Commission has sought to curtail the excessive reliance on the precau-
tionary principle by member states as a pretext for limiting trade from other
member states by emphasizing the importance of science as a foundation for
risk regulation.124 At the same time, the Commission is clear in its willingness to
retain the ability to defend EU-level risk regulations vis-à-vis the EU’s trade part-
ners in instances where regulation was enacted in response to “potential risk” or
based on “inconclusive” or “imprecise” evidence. For instance, in its 2000 com-
munication, the Commission reserves for the EU the ability to act when faced
with a “level of risk that the public considers appropriate,”125 acknowledging citi-
zens’ fears as a legitimate basis for regulatory intervention.
In practice, the precautionary principle has become a central component
of the EU’s regulatory decision-making. It has been systematically incorpo-
rated into key policy documents,126 providing a foundation for many regula-
tions, such as REACH, the regulation of beef hormones, and GMOs.127 The
European courts have also been consistent in endorsing the principle128 by
granting the Commission wide discretion to act based on precaution.129 The
ECJ even elevated the precautionary principle to the status of a “general princi-
ple” of EU law in its Artegodan judgment,130 further demonstrating the Court’s
strong approval of precautionary standards. This stands in stark contrast to US
courts, which have exercised relatively strict scrutiny when reviewing agencies’
regulatory measures.
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46 T heory
Part II describes in detail many selected policy areas where the Brussels
Effect has already emerged. One common feature in all those areas is that the
EU has exhibited a manifest preference for stringent regulation. These include
competition policy and data protection, as well as the desire to limit hate speech
online. They also include policies to protect the health and safety of consumers
and citizens as well as the protection of the environment. These areas reflect the
prevalent view in Europe that markets fail to deliver optimal outcomes, necessi-
tating the government to step in. They also reflect the precautionary view accord-
ing to which the EU is prepared to err on the side of intervention to prevent the
harm from occurring. What they further have in common is the degree to which
the European citizens and policy makers agree on the benefits of intervention and
hence the necessity of stringent rule-making.
Yet it is important to note that there are policy areas where the EU fails to
become the source of global standards because its regulatory propensity—the
preference for high standards—is absent or where other economic powers prefer
even higher standards. In some instances, all or most EU member states share a
preference for low as opposed to high regulation. Often the EU’s missing regula-
tory propensity, however, reflects a preference heterogeneity across the member
states. Online gambling is an example of an area where harmonization within
the EU has failed,131 with the United Kingdom favoring legalization of online
gambling, while countries such as Germany and France resisting legalization in
an attempt to protect their state monopolies or licensing regimes on gambling.132
The lack of a sufficient consensus within the EU itself means the EU has no com-
mon regulatory position to export.133
The EU is also divided on the question of corporate tax harmonization with
countries such as Ireland (with its 12.5% corporate tax rate) opposing any step
toward tax harmonization, and countries such as France (with its 33% corporate
tax rate) endorsing common rules.134 Given the requirement for unanimity in
this area, it very unlikely that the EU could successfully harmonize tax rates or
set some minimum levels for corporate taxation. Recognizing the difficulty of
harmonizing tax rates, the EU is actively considering a proposal relating to a
Common Consolidated Corporate Tax Base proposition (CCCTB).135 The pur-
pose of the CCCTB would be to standardize how large companies calculate their
taxable profits and how they should allocate those profits to different parts of
their business.136 This could curtail companies’ abilities to engage in aggressive tax
planning by shifting their profits to low-tax jurisdictions.137 Even though the pro-
posal would leave actual corporate tax rates for each member state to decide, the
CCCTB faces obstacles from countries such as Ireland. Ireland fears that profits
currently taxed there could in the future be apportioned to other EU countries,
shifting tax revenue away from the country and compromising Ireland’s attrac-
tiveness as a low-tax jurisdiction.138
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The Brussels Effect 47
The EU’s global regulatory clout is also limited in instances where other states
prefer higher standards. For example, while the EU is generally more stringent
on the regulation of food safety, the United State mandates pasteurization for
all milk and milk products, whereas the EU allows for the sale, marketing, and
distribution of raw milk.139 The United States has also acted before the EU in
regulating trans fats in food, banning partially hydrogenated oils since 2018,140
while the EU is only in the process of carrying out impact assessments and con-
sultations in preparation for a regulation of this area.141
Similarly, the United States’ Sarbanes– Oxley Act of 2002 (Sarbanes–
Oxley), which sought to improve corporate responsibility in the post-Enron
environment, is widely perceived as establishing the highest global standard for
corporate governance.142 Another manifestation of the United States’ prefer-
ence for stringent financial regulation is the Dodd–Frank Wall Street Reform
and Consumer Protection Act of 2010.143 Where the United States opts for
stringent standards, it can become the source of global standards, assuming the
conditions for unilateral regulatory globalization are met. As the United States’
recent regulatory pursuits have predominantly targeted the financial sector, it is
unlikely that these rules will become global standards because of the elasticity of
capital. For instance, it has been debated whether the effect of Sarbanes–Oxley
was to heighten financial regulation standards worldwide, or to cause US stock
exchanges to lose listings of foreign corporations.144 In any event, it is evident
that the EU’s ability to set global rules alone is always contingent on it preferring
the highest rule.
There may also be situations where one jurisdiction is most stringent on one
dimension of a regulation but another country most stringent on another dimen-
sion. When that is the case, the EU standard does not incorporate all other stan-
dards, ensuring compliance worldwide. In instances where the corporations are
unable to segment the markets, corporations may thus end up adhering to even
more stringent standards than any single regulator would have required. The
regulation of conflict minerals offers an example of an area where the EU and
United States have both responded with stringent, yet somewhat different, stan-
dards. Conflict minerals refer to minerals extracted in conflict zones and traded
to benefit the armed groups engaged in fighting. The US regulation is more strin-
gent in the sense that it extends liability to downstream operators in addition to
direct importers. In contrast, the EU regulation only covers direct importers.145
At the same time, the geographical scope of the EU regulation is expected to be
ultimately wider,146 covering conflict minerals extracted in all “conflict affected
and high-risk areas” in the world.147 The EU regulation also imposes broader due
diligence requirements.148 Thus here, a multinational corporation engaged in this
field typically has to comply with at least two different regulatory regimes—both
stringent on different dimensions—to ensure its global compliance.
48
48 T heory
Another example comes from data protection. India’s new proposed data pro-
tection regulation emulates many of the provisions embedded in the EU’s data
protection regulation (GDPR) but, in some ways, goes beyond the GDPR. For
example, the Indian law, if adopted, would impose a general duty to process per-
sonal data in a fair and reasonable manner that respects the privacy of the indi-
vidual.149 This is in line with designating the data controller as a “data fiduciary”
under an Indian draft bill,150 which comes with more onerous obligations regard-
ing the processing of personal data than data controllers have under the GDPR.
The Indian draft bill also contains a generalized data localization requirement,151
under which “a data fiduciary shall ensure the storage, on a server or data centre
located in India, of at least one serving copy of personal data.” Additionally, for
certain categories of personal data that are determined by the Indian government,
these categories of data can only be processed in India.152
These examples illustrate scenarios under which corporations may face mul-
tiple cumulative regulatory standards, potentially forcing them to conform to
the combination of the most stringent regulations provided by different jurisdic-
tions. Consequently, this could lead to an even more forceful version of unilateral
regulatory globalization, where the global rule is racheted up by an interplay of
regulations provided by different jurisdictions, as opposed to by the EU regula-
tion alone. This amplified version of the Brussels Effect further highlights the
central role that the relative stringency of regulations plays in explaining which
jurisdiction(s) ultimately set the rules for the global marketplace.
Inelastic Targets
Stringent domestic regulations can operate as global standards only when aimed
at inelastic—as opposed to elastic—targets.153 “Inelastic targets” refer to products
or producers that are non-responsive to regulatory change and hence tied to a cer-
tain regulatory regime. For example, when the EU regulates consumer health and
safety, the targets of these regulations are products sold to consumers in the EU
market. The location of the consumer within the EU, as opposed to the location
of the manufacturer, determines the application of EU regulation to the targeted
product. The inelastic nature of consumer markets does not leave producers with
a choice regarding the jurisdiction; they cannot “shop” for favorable regulations
without losing access to the regulated market. This makes the target producer
inelastic or, using another word, immobile. The EU primarily regulates inelastic
consumer markets, such as food safety or data privacy.
To illustrate the distinction between elastic and inelastic targets, consider
the capital and consumer markets. Elastic regulatory targets, such as capital, are
more mobile and thus can easily be moved to a different jurisdiction. In contrast,
49
The Brussels Effect 49
consumers of food, or data subjects bestowed with privacy rights, are typically
immobile. Food manufacturers or data controllers cannot choose which sets of
rules they apply to those consumers or data subjects, making it impossible to cir-
cumvent EU standards. Whenever a firm wants to sell products to the EU’s over
five hundred million consumers, it needs to comply with the EU’s consumer pro-
tection regulations; these consumers cannot simply be transferred to a jurisdic-
tion where lesser protections govern what products can be sold to them.
The examples of the Brussels Effect discussed in this book all involve inelas-
tic targets that are difficult to detach from the EU’s regulatory domain. For
example, the REACH regulation on chemical safety is indifferent as to which
company produces a restricted chemical or where the chemical is produced: as
long as a chemical product is sold on the European market, REACH applies.154
Many of the EU’s environmental regulations follow the same logic: for example,
the Restriction of Hazardous Substances (RoHS) Directive restricts the use of
hazardous substances in electronics whenever such electronics are sold on the
European market.155 The manufacturer’s location is irrelevant—moving to a new
location will not allow the manufacturer to circumvent RoHS without losing
access to the EU market. EU competition law is similarly indifferent with respect
to the nationality of the companies regulated or the place where the anticompeti-
tive conduct occurs. As long as a firm’s conduct has an effect on the EU market,
EU competition law applies. The EU’s data protection regime, the GDPR, like-
wise applies to all companies processing personal data of data subjects residing
in the EU, regardless of where the data processing takes place or where the com-
pany processing the data is located.156 The company therefore cannot evade EU
rules by relocating its data controllers or processors outside the EU. In each of
these instances, the EU can effectively assert regulatory authority over market
participants without fear of its regulatory targets evading regulation by moving
to another jurisdiction.
This reality contrasts sharply with, for example, corporate law—where a
global corporation has wide freedom in deciding what nationality to incorporate
in without limiting its access to global markets. Another example is maritime
law, where a shipping company can choose what flag its ships sail under without
losing access to international ports. In such cases where the regulatory regime is
determined by the location of the company’s headquarters or place of incorpora-
tion, companies have a choice over what regulations will apply to them. In those
instances, elastic regulatory targets—here, the incorporating company—have the
ability, and in fact the incentive, to incorporate in the jurisdiction that offers the
most favorable regulatory framework. The place of incorporation is relevant, for
example, in determining the tax regime that applies to a corporation. Similarly, a
company gearing up for an initial public offering (IPO) can choose from over a
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50 T heory
hundred stock exchanges for its listing. The regulatory burden of the jurisdiction
is one relevant consideration in making that choice, given that the IPO destina-
tion determines the rules and requirements that apply to the listing and subse-
quent trading of the company’s securities.
The challenge of regulating stock markets illustrates how difficult it is to assert
jurisdiction over elastic targets such as capital. For example, Nikhil Kalyanpur
and Abraham Newman examined the number of delistings from the US stock
market following the adoption of the Sarbanes–Oxley Act of 2002, which
introduced more stringent standards on public company accounting and inves-
tor protection.157 While many foreign companies exhibited “inelastic behavior”
in response to the new stringent rules—retaining their US stock market listing
because the cost of exiting, relative to the regulatory burden, was too high—a
notable number of EU-based companies responded with “elastic behavior” and
switched their listing to the EU. The delisting was facilitated not only by the size
of the EU market but also by the EU’s credible institutional structure governing
that market, including the introduction of a common set of accounting rules and
the ability to issue Euro-denominated bonds. This suggests that capital is, indeed,
often elastic and can move as long as a credible exit opportunity exists.
The regulation of over-the-counter derivatives (known as “swaps” in the
United States) presents another example of financial regulation that deals with
a highly elastic target. In the aftermath of the financial crises, both the EU and
United States proceeded to regulate the derivatives market by requiring their
central clearing. Such reliance on central counterparties (CCPs), as opposed to
private bilateral contracts for clearing, concentrates the market risk with clear-
ing houses. These specialized firms, reformers argued, are easier to regulate than
disperse market participants.158 Derivatives clearing relies on a jurisdictionally
detached financial infrastructure in that it can take place in any jurisdiction in
which parties to the contract reside or in any jurisdiction whose law the parties
choose to govern the contract. According to a study by Yesha Yadov and Dermot
Turing, traders of credit derivative contracts (credit default swaps) conduct busi-
ness four times more often with counterparties outside their own jurisdiction
than they do with counterparties in their home jurisdiction.159 The authors illus-
trate this flexibility with the following example:
The Brussels Effect 51
52 T heory
to different parts of their business.170 While leaving the actual level of corporate
taxation unregulated, this reform would restrict companies’ ability to shift their
profits to low-tax jurisdictions, limiting the de facto mobility of capital as a result.
The EU is also considering a “digital tax,” which would tax digital companies
based on where they generate advertising revenue as opposed to where they claim
their profits.171 This would similarly eliminate these firms’ ability to book profits
in low-tax jurisdictions, forcing them to pay taxes in countries where actual value
is created or business generated. If adopted, this tax would restrain the elasticity
of corporate profits by attaching tax liability to the jurisdiction where the value is
created, revenue earned, and customers located.
While most elastic regulatory targets pertain to the regulation of capi-
tal markets, other examples can be found elsewhere. For instance, the ECJ’s
recent denial of the patentability of embryonic stem cells is unlikely to lead
to a global standard.172 Critics claim that the EU’s regulatory stringency only
drives stem cell research and business out of the EU, highlighting the elasticity
of patent protection and the mobility of the industry relying on patents.173
Stem cell research remains patentable in many parts of the world, including the
United States, where critical research activity could easily relocate in response
to the EU’s strict regulatory stance.174 Another example comes from the EU’s
approach to regulating waste management. High standards for waste disposal
are costly for domestic producers, and so producers gain little by disposing
or recycling their waste in the EU.175 Waste is movable, and illegal transfers
of hazardous waste remain common as producers have an incentive to evade
stringent regulations by finding jurisdictions that do not enforce waste man-
agement standards.176
The discussion of the elastic versus inelastic nature of regulatory targets
is closely related to the literature on regulatory races and jurisdictional com-
petition.177 The early literature argued that globalization produces a “race to
the bottom,” which leads states to lower their regulatory standards in order to
attract firms and capital. According to this view, mobile capital exploits regula-
tory arbitrage and locates to a jurisdiction where it can earn the highest rate of
return. These returns are higher when firms are not burdened by high corporate
tax rates or stringent labor or environmental protection standards. Other states
then respond by lowering their respective regulatory standards to avoid capital
flight.178 The result of this race is, theoretically, regulatory convergence at the
bottom. However, subsequent empirical studies have questioned the extent to
which a race to the bottom occurs in practice.179 Influential literature has further
emerged to argue that economic globalization has instead produced a “race to the
top,” where countries are elevating their regulatory standards in response to first
mover regulators’ introduction of stringent regulatory standards.180
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The Brussels Effect 53
While empirical support for a global race to the bottom is limited, most would
agree that corporate relocation is more likely in instances where the firm can
freely select its regulatory jurisdictions (such as stock listing) without any need to
physically move its operations to another jurisdiction.181 In such instances, recent
research demonstrates an occurrence of “Tiebout sorting” where no race to the
top or bottom can be observed, but where firms instead sort themselves across
jurisdictions depending on their differential cost structures, heterogeneous pref-
erences, and market segments.182 Some firms are likely to prefer lower regulatory
standards, while others, in fact, prefer higher regulatory standards. Under this
assumption, (some) elastic targets are likely to move to less-burdensome jurisdic-
tions while others stay in more stringent jurisdictions and simply absorb higher
costs. To the extent this sorting happens, certain regulatory targets are able to
constrain the Brussels Effect by exiting to less-burdensome markets, or by threat-
ening to do so.
Focusing on inelasticity of regulatory targets helps further illustrate why we
observe the “Brussels Effect” more commonly than the “Washington Effect.”
The United States’ regulatory efforts have predominantly targeted the more
elastic financial sector in recent decades, making the United States a less likely
source of global standards. In contrast, the EU’s focus of regulating consumer
markets and the environment has reinforced its role as a global standard setter
whose regulations cannot be undermined by the elasticity of its targets. In this
sense, governments are not typically able to influence the elasticity or inelasticity
of their regulatory targets as such; elasticity is an inherent feature of the target
itself, such as capital—which is typically elastic—or consumer goods—which
are typically inelastic. However, the governments do retain influence over the
choice of the types of targets they choose to regulate. Unlike the EU, the United
States has chosen to regulate elastic targets, with an unintended side effect that
it can rarely rely on markets to externalize its regulations outside its domestic
jurisdiction.
Non-divisibility
The conditions just described only ensure that the stringent jurisdiction is able
to regulate extraterritorially. The EU meeting these conditions does not, by itself,
mean that the stringent standard will actually be globalized. The Brussels Effect
is only triggered when the multinational corporation, after having converted its
products or business practices to comply with the EU standard, decides to apply
this new standard to its products or conduct worldwide. In other words, global
standards emerge only when corporations voluntarily opt to extend the regula-
tory requirements of the most stringent regulator to their global operations.
54
54 T heory
A company has the greatest incentive to adopt a global standard whenever its
production or conduct is non-divisible across different markets. Non-divisibility
refers to the practice of standardizing—as opposed to customizing—production
or business practices across jurisdictions and hence applying a uniform standard
to govern the corporation’s global conduct. Often this will occur when the ben-
efits of a uniform standard due to scale economies exceed the costs of forgoing
lower costs in less regulated markets. For example, complying with just one reg-
ulatory standard allows a corporation to maintain a single production process,
which is less costly than tailoring its production to meet divergent regulatory
standards.183 When opting for standardization, a corporation further prefers
to conform to the “leading standard,”184 which typically is the most d emanding
standard imposed by a major jurisdiction that represents an important market for
the corporation. This leading standard is particularly attractive in that it typically
incorporates other standards as well, ensuring compliance across all markets in
which the corporation operates.
For a simple illustration of non-divisibility, imagine someone hosting a dinner
party and inviting eight guests. Two of them do not eat red meat. One other guest
prefers red meat but happily eats everything—as long as it is gluten-free. The host
could prepare a tailored meal for everyone, offering options with and without red
meat and with and without gluten. However, the host is more likely to opt for
fish and keep all dishes gluten-free to limit the time, hassle, and expense associ-
ated with customizing the dinner party experience to everyone’s distinct dietary
preferences. In the end, when faced with a variety of dietary restrictions, the most
restrictive diet wins: a gluten-free and meat-free dish is served. For the same rea-
son, schools often tailor their policies with a similar eye toward non-divisibility.
While the school may only have a handful of students with a peanut allergy, the
entire school adopts a nut-free policy to accommodate the more-restrictive needs
of the minority.
The same principle applies for global producers serving many different mar-
kets, particularly when they cannot economically or practically tailor their pro-
duction for every market. As the Brussels Effect encourages firms to standardize
production, it also unavoidably limits the product variety that is available on
the market. In the process, it produces a variation of the “tyranny of the mar-
ket” originally described by Joel Waldfogel.185 Waldfogel argues that markets
do not produce efficient outcomes when fixed costs limit the number of prod-
uct varieties that firms can economically produce. In these instances, only the
majority’s preferences will be satisfied. Waldfogel compares this market-driven
outcome to the outcome produced by a political process where the “tyranny of
5
The Brussels Effect 55
the majority” dictates electoral outcomes, challenging the pro-market belief that
markets always deliver more efficient outcomes. Markets thus entail shortcom-
ings akin to the shortcomings associated with voting. Furthermore, with the
growth in international trade, we may increasingly witness “the tyranny of alien
majorities,” as domestic producers operating on a global marketplace adjust their
production patterns to cater to the majorities who may consist of predominantly
foreign consumers.
The Brussels Effect partially validates and partially challenges this theory. The
Brussels Effect differs from the tyranny of the market in that instead of simply
the market dictating global standards, it is the duality of both the market and the
government that gives rise to uniform production. Instead of focusing on mar-
ket actors and fixed costs as a limitation to product variety, the Brussels Effect
emphasizes government regulation and multiple factors—law, technology, and
economics—as drivers of non-divisibility and hence lower product variety. This
distinction points to the tyranny of the government as much as to that of the
market.
Whenever producers offer only the EU-variant of the product globally, the
market does not, indeed, seem to produce optimal outcomes for all consumers.
For example, for many Americans, the Brussels Effect may represent an example
of “the tyranny of alien majorities” where the EU can dictate the products avail-
able to them. However, globally, the Brussels Effect may also be seen as a mani-
festation of the “tyranny of the regulated alien minority” more than that of the
global majority, further departing from the argument underlying the tyranny of
the market. The product varieties that are offered can be interpreted as reflecting
the stringency of government regulation as opposed to solely consumer choice.
This is so even if market forces are critical in entrenching those choices globally.
Regardless of the outcome, the Brussels Effect offers an alternative explanation
for why firms forgo product variety and cater predominantly to customers in the
most regulated jurisdictions.
Leaving aside the normative question on whether the Brussels Effect should
even be viewed as a “tyranny” of any kind, the next discussion will focus on illus-
trating different types of non-divisibility. Non-divisibility of a corporation’s
production or conduct comes in three primary varieties: legal non-divisibility,
technical non-divisibility, and economic non-divisibility—the last one being
the most common variant driving the Brussels Effect. The discussion reviews the
logic underpinning each type of non-divisibility and provides examples to illus-
trate how this feature leads businesses to standardize their production across the
global marketplace.
56
56 T heory
Legal Non-divisibility
“Legal non-divisibility” refers to legal requirements and remedies as drivers of
uniform standards. It typically manifests itself as a spillover effect that follows
from the corporation’s compliance with the laws of the most stringent juris-
diction. Global mergers provide an illustrative example in that they cannot be
consummated on a jurisdiction-by-jurisdiction basis. Instead, the most s tringent
competition jurisdiction gets to determine the worldwide fate of the transac-
tion.186 For example, when the EU requires the company to spin off an asset as
a condition for approving a merger—like ordering a divestiture of a production
plant—such a divestiture cannot be consummated in the EU only. For the same
reason, whenever the EU prohibits an anticompetitive merger, the transaction is
banned worldwide. Facing the EU prohibition, the only way to proceed with the
merger would require the parties to carve out enough assets from the transaction
to strip the EU of jurisdiction over the merger. Given the importance of the EU
market, such restructuring of the deal would often require a complete withdrawal
from the EU market, removing the business rationale for the merger. This makes
it all but impossible to circumvent the EU jurisdiction in practice.
Cartel remedies often have a similarly global effect. Leniency programs
designed to destabilize cartels by incentivizing cartel participants to act as
whistle-blowers often dissolve the cartel across all jurisdictions.187 Thus, even if
the European Commission implemented a leniency program aimed at seizing
collusion that affects prices in Europe, cooperation with the Commission is likely
to also unravel the collusion in other markets. This is because the trust sustaining
the cartel among participating firms dissipates with such a defection. Similarly, if
the Commission detects and pursues a cartel following its own investigation (as
opposed to following a leniency application), the cartel participants likely aban-
don collusion worldwide. The cartel participants know that the Commission
investigation will likely alert foreign authorities to the possibility of collusion in
their markets as well, making the operation of the cartel in practice non-divisible
whenever a major jurisdiction such as the EU proceeds to dismantle it.
While not manifesting a pure form of legal non-divisibility, legal risks asso-
ciated with compliance errors induce companies to adopt internal policies that
govern the company’s global operations. These company-wide policies typically
reflect the legal standards prevailing in the most demanding jurisdiction. For
example, even if price fixing remains unregulated and hence potentially benefi-
cial in some markets, most companies refrain from colluding even in those mar-
kets. Multinational corporations typically maintain a global compliance manual
that prohibits discussion of prices with competitors regardless of the jurisdic-
tion involved. This ensures that noncompliance does not accidentally spill into
company practices in markets that maintain stringent regulation on price fixing,
57
The Brussels Effect 57
exposing the company to legal liability. When the management can monitor
internally consistent company policies across all the markets in which the com-
pany operates, the risk-adjusted compliance costs are lower. This need to mini-
mize compliance errors is even greater for listed companies because the stock
price is not affected only by the legal risks materializing in the listing jurisdiction.
Instead, the prospect of legal liability in any jurisdiction can destabilize a com-
pany’s operations worldwide, adversely affecting its stock price.
The tendency to deploy standardized contracts manifest forces of both legal
and economic non-divisibility.188 When the company uses standardized clauses in
its distribution contracts across multiple markets, internal monitoring processes
are streamlined, resulting in fewer compliance failures and greater efficiencies.
For example, a global company is unlikely to negotiate its licensing agreements
or distribution agreements with numerous licensees or distributors anew in each
market. Instead, those agreements are likely to be highly standardized.
Legal non-divisibility can further stem from the company’s choice on the place
of incorporation, which can expand the set of business operations that fall under
the legal requirements of the chosen jurisdiction. Data protection regulation in the
EU provides an example of this scenario. Since Facebook has its headquarters in
Ireland, the GDPR applies to all Facebook entities that are part of the Irish corpo-
rate structure.189 Until recently, most non-EU users outside the United States have
been governed by the Irish corporate entity. By choosing to incorporate in Dublin,
Facebook has therefore assumed a legal obligation to offer EU’s privacy protections
to data subjects outside the EU as well, making the rights enjoyed by Facebook
users outside the EU legally non-divisible from those enjoyed by Facebook users
in the EU. Interestingly, as will be discussed in chapter 5, in response to the entry
into force of the GDPR, Facebook has revised its terms and conditions, moving
users in Asia, Africa, Australia, and the Middle East away from the EU and placing
them under its US legal structure. This allows Facebook to introduce divisibility,
limiting the rights of non-EU users to complain about any foreign data protection
violations to the data protection officers in Ireland.190
Technical Non-divisibility
The principle of “technical non-divisibility” refers to the difficulty of separating
the firm’s production or services across multiple markets for technological reasons.
It often applies to the regulation of data privacy. For example, to operate in the EU,
Google has to amend its data storage and other business practices to conform to
European data protection standards. Given the difficulty of determining with cer-
tainty whether a particular user is a “European data subject,” Google cannot easily
isolate its data collection for the EU. As a result, Google adopts a strategy whereby
the company adjusts its global operations to the most demanding EU standard.191
58
58 T heory
With the entry into force of the GDPR, companies are obliged to design
their products with EU’s regulatory requirements in mind. As will be discussed
in chapter 5, companies including Microsoft and Apple follow this principle by
incorporating the GDPR requirements into the initial technical design of their
products, making privacy-consistent technological solutions on behalf of the
consumer at the outset. It is, obviously, much harder to make such technically
embedded data protections divisible across jurisdictions. Whether the consumer,
as the “data subject,” operates the devices in the EU or in a third country, the con-
sumer is likely to adhere to the default settings incorporated in the device at the
development stage. Thus, the GDPR’s “privacy by design” principle, incorporated
in Article 25 of the regulation, increasingly ensures that products are designed
to a single standard, with the EU determining the default settings as the most
stringent regulator of data protection.
A very different example of technical non-divisibility is the EU’s general regu-
lation of food safety and GMOs in particular.192 This regulation has led to stan-
dardized production in farming industries where cross-contamination between
crops can take place. For example, some farmers are deterred from using GMOs if
they also want to produce non-GMO varieties for Europe due to the risks associ-
ated with cross-pollination and the resulting “adventitious presence” of GMOs in
non-GMOs grown in neighboring fields. This type of contamination can occur
in the growing, storage, or transportation stage of production if one fails to sepa-
rate, however inadvertently, the GMO varieties from non-GMO varieties.193 The
same logic applies to pesticides and other chemicals used by the farming industry.
It is often difficult to ensure that pesticides used in one field do not affect crops in
adjoining fields due to the technical impossibility of preventing cross-pollination.
Similarly, while farmers may sell different cuts of meat derived from the same
animal to multiple geographical markets, the EU’s meat safety and hygiene stan-
dards affect all markets due to the obvious impossibility to limiting the use of
growth hormones or certain sterilization methods to only one part of the animal.
Economic Non-divisibility
Often companies are able to identify a technological solution that allows them to
produce different product varieties for different markets. However, the underly-
ing economics—in particular, the importance of scale economies associated with
uniform production—can make such division untenable in practice. This type of
“economic non-divisibility” is perhaps the most common reason why manufac-
turers opt for a global standard, and is most typically exemplified in corporations’
responses to the EU’s health, environmental, and product standards. An illus-
trative example is European chemical regulation, which applies to all companies
59
The Brussels Effect 59
60 T heory
The Brussels Effect 61
62 T heory
jurisdiction. For example, confectioner giant Nestlé has been plagued by reports
in Western media that it employed child labor in its supply chain in Africa and
South America.214
Activist pressures have given further impetus for companies to obey the most
demanding standards across all markets in which they operate. Industries that
produce consumer products, such as household goods or cosmetics, are common
targets of such pressures. Consumer awareness is often further increased in the
case of high-profile regulatory failures, or whenever a brand name is involved, as
the public can relate to those products. In these instances, consumers and activ-
ists can easily call out the company for its efforts to exploit regulatory arbitrage
and take advantage of less-burdensome obligations in some markets rather than
others. Public campaigns by non-governmental organizations (NGOs) and other
activists can effectively expose the double standards of multinational companies,
if they, for example, continue to use or produce chemicals in the rest of the world
that they no longer use in the EU.215 As a result, many cosmetics firms protect the
reputation of their highly visible and valuable brands by conforming to European
standards worldwide.216
The Brussels Effect 63
that came with no internet browser.218 Similarly, in response to the EU’s com-
petition ruling banning Google from giving more prominent placement to its
own comparison-shopping service (as opposed to its rivals’) in its search results,
Google spun off its comparison-shopping service in Europe into a stand-alone
unit, thus limiting the adopted remedy to the European market only.219 Finally,
Google decided to avoid complying with new domestic copyright legislation in
Spain that would have required Google to make payments to Spanish media out-
lets. Instead, Google decided to remove certain Spanish sources from its broader
News service, by simply shutting down its Google News service in Spain220—
something the company was able to do without also shutting down Google News
in other jurisdictions.
At times, variance in consumer preferences limits the benefits of standard-
ization. In the food industry, for example, consumer preferences remain balkan-
ized by jurisdiction across numerous products.221 For example, Coca-Cola has
different levels of sugar for the same product in different markets.222 Similarly,
McDonalds has a highly uniform brand but continues to customize its prod-
ucts and menus across different markets.223 This stands in stark contrast with the
production of drugs designed to treat illnesses, given that consumer preferences
rarely vary across the types of drugs, allowing the same drug to serve all mar-
kets.224 In addition, while the automotive industry often benefits from standard-
ized mass production, as discussed earlier, counterexamples exist showing that
the industry must also sustain some level of local preference customization.225
The examples just discussed suggest that the globalization of EU standards is
unlikely to happen whenever the costs of product diversification in some indus-
try or product category remain trivial and where the benefits of customized
production are significant. In such instances, firms are expected to make their
production divisible and take advantage of the lower standards prevailing in mar-
kets outside the EU.226 However, even in instances where differences in consumer
preferences induce companies to produce several varieties, companies often ben-
efit from standardizing the “product platform.” They may introduce variety on
some aspect of production while continuing to share standardized components
and processes across these varieties. This strategy reduces complexity, risks, and
the need for inventory, and hence lowers the costs associated with production.227
64 T heory
of the stringent regulator and divert their trade elsewhere. In such a case, the
presence of extensive regulatory capacity or the other remaining conditions are
irrelevant. Similarly, if the jurisdiction lacks the regulatory capacity or fails to
promulgate the most stringent standard, other jurisdictions may supersede its
standards with those of their own, regardless of the presence of other conditions.
Finally, if regulatory targets are elastic or corporate conduct divisible, multina-
tional corporations may elect to move to less-burdensome jurisdictions or forgo a
global standard in favor of customization across different markets, undercutting
the Brussels Effect regardless of the strength of other conditions.
While all necessary, these conditions may vary in their relative significance
across policy areas. For example, some policy areas are more complex to regulate—
including the monitoring of the competitive conduct or data processing practices
of technology companies—accentuating the importance of regulatory capacity
in the theory. Some conditions may also be more invariant across policy areas—
such as market size or regulatory capacity—while others are likely to be more
variant—including non-divisibility that depends on a range of industry-and
firm-specific considerations. Finally, the first three conditions are typically rel-
evant as opposed to absolute. What matters is the relative market size, relative
regulatory capacity, and the relative regulatory stringency, as compared to other
larger economies. For example, there is no absolute market size that triggers the
Brussels Effect. Instead, what matters is whether businesses can afford to forgo
a large market, which depends not merely on the size of that particular market
but also on the size of the other consumer markets that may offer an alternative
destination for their products and services.
While developed to explain the Brussels Effect and the EU’s role as a global
regulatory hegemon, the conditions discussed in this chapter are generic as
opposed to EU-specific, and hence designed to explain any jurisdiction’s ability
to unilaterally supply rules for the global marketplace. In this sense, they should
outlive the EU’s regulatory hegemony and also help us explain if and when
such a hegemony might come to an end or be displaced by another unilateral
global regulator. These conditions could therefore explain the already mentioned
“Washington Effect” or the “Beijing Effect” alike—as long as the United States or
China had the combination of the market power, the regulatory capacity, and the
political will to generate stringent regulations, together with the desire to pursue
inelastic targets that are non-divisible across jurisdictions.
As will be explained in chapter 9, which discusses the future of the Brussels
Effect, each condition is also sustained or challenged by somewhat different
external forces, influencing their durability over time. For example, the EU’s mar-
ket power will be constrained in the coming decades by the rise of China and
other emerging economic powers. Consensus needed to promulgate stringent
65
The Brussels Effect 65
regulations can be harder in the future if divisions within the EU grow. At the
same time, stringent rules may become easier to generate with the departure of
the United Kingdom from the EU, which has often opposed the EU’s extensive
rule-making. Finally, a possible move toward greater divisibility of production
is likely to be caused by advances in technology. This further suggests that each
element has an independent role in explaining the emergence, or the persistence,
of the Brussels Effect.
6
67
The Brussels Effect is certainly not the only way the EU exercises global
regulatory influence. In fact, the EU wields norm-setting power through a num-
ber of different channels, including via trade agreements and participation in
international institutions and transnational governmental networks. Many
countries and regional organizations also adopt EU regulations in other ways,
whether by engaging in legislative borrowing, replicating EU institutions, cit-
ing legal concepts and principles developed by European courts, or engaging in
“copycat” litigation in cases where the EU has acted first. EU norms can simi-
larly act as influential focal points for regulatory convergence, absent any market
effects or effort on the EU’s part, because of the EU’s perceived role as a “norma-
tive power.”
This chapter first reviews these various other channels of the EU’s global regu-
latory influence in an attempt to provide context for the de facto Brussels Effect
discussed in chapter 2. It also examines why EU law offers such an attractive tem-
plate for emulation, facilitating the de jure Brussels Effect in all its forms. It then
assesses the relative advantages and disadvantages of market-driven harmoniza-
tion compared to treaty-driven harmonization, and considers when these other
channels of influence are likely to complement, amplify, or substitute the Brussels
Effect.
The Brussels Effect. Anu Bradford, Oxford University Press (2020). © Oxford University Press.
DOI: 10.1093/oso/9780190088583.001.0001
68
68 T heory
70 T heory
agreements with third countries aimed at closer economic and political coop-
eration. With these agreements, the EU seeks to build a more stable, peaceful,
and prosperous world. To date, it has negotiated forty-nine economic partner-
ship agreements, twenty-three association agreements, and eighteen other simi-
lar agreements such as global agreements, customs unions, and others.13 The EU
has been particularly active in its engagement with its Southern and Eastern
neighbors, pursuing legislative approximation through the exporting of its acquis
communitaire.14 At first, this was done through soft obligations embedded in
Europe Agreements and Partnership and Cooperation Agreements. Later, for
the countries that were not candidates for EU accession but sought otherwise
closer economic and political ties with the EU, the EU instituted a “European
Neighborhood Policy” (ENP) in 2004.15 The ENP currently covers 16 countries
ranging from Morocco to Azerbaijan.
EU treaties consistently acknowledge that projecting the EU’s norms and val-
ues is central to the EU’s relations with the wider world.16 The Lisbon Treaty
further gives EU institutions a “transformative mandate” in their relations to the
EU’s neighboring countries.17 The ENP, in particular, rests on the idea that the
EU either exports stability to, or imports instability from, its neighboring coun-
tries.18 This need to ensure a stable political environment in its broader region
calls for the EU’s deep engagement with these countries’ economic and political
systems. In practice, this entails offering a closer economic and political relation-
ship to ENP countries in return for “concrete progress demonstrating shared
values and effective implementation of political, economic and institutional
reforms, including aligning legislation with the EU’s acquis.”19 Thus, while fall-
ing short of extending the promise of an actual EU membership, the bargaining
process remains highly asymmetrical, leaving the EU’s neighbors few options but
to comply with the EU’s existing members’ demands.
However, in practice, many of the ENP’s goals remain unfulfilled. The EU’s
record in promoting democracy, rule of law, respect for human rights, and social
cohesion has been at least a disappointment and at worst, according to some,
an “outright failure.”20 The ENP’s envisioned political, social, and institutional
reforms have largely failed to take place. Some ENP countries—including Libya,
Syria, and Ukraine—have been torn apart in violent conflicts and civil wars while
others—such as Egypt—have experienced military coups. Corruption remains
widespread across many countries in the region and rule-of-law reforms have
been modest or inexistent. Given the deep internal and external challenges these
countries continue to face, some commentators conclude that the EU has largely
failed to spread its values or protect its interests through the ENP.21
The EU’s attempts to export its regulatory model via treaties beyond its
immediate region take place primarily through bilateral trade agreements. The
71
EU has negotiated an extensive array of PTAs that influence the type of regula-
tions that trade partners must have in place in order to secure access to the EU’s
single market. To date, the EU has signed more than 50 PTAs of various forms,22
in addition to various other economic and political partnership treaties. Its treaty
partners comprise both large and small economies, ranging from economic pow-
erhouses such as Japan and Canada to smaller economies such as Lesotho and the
Faroe Islands; from other European countries such as Albania and Macedonia to
countries halfway across the globe, such as Chile and Madagascar. Its network of
PTAs is considerably larger compared to that of other big trade powers such as
Japan and the United States, which have signed 18 and 14 PTAs, respectively.23
The EU’s negotiated treaty obligations lead to a greater or lesser degree of
externalization of EU regulations depending on the treaty partner. In particu-
lar vis-à-vis less-powerful trading partners, the EU can use its vast market size as
an asymmetric bargaining chip that allows it to demand significant changes in
treaty partners’ domestic regulatory regimes—whether on environmental policy,
development goals, competition laws, or human rights.24 The PTAs that the EU
has negotiated over the last decade in particular reflect such a trade agenda by
incorporating extensive commitments to regulatory standards.25 Furthermore, as
most of the EU’s PTAs follow the same template, they also serve as a model for
other agreements,26 further extending the EU’s influence.
The types of regulatory standards that the EU exports through PTAs are sub-
stantively varied. For example, the EU’s failure to institute a multilateral treaty
framework on global forest governance led to a reliance on bilateral trade agree-
ments in order to export EU norms on forest management strategies.27 Other
typical PTA provisions include obligations to adopt or maintain certain human
rights and labor standards. Provisions requiring the adoption of domestic com-
petition laws are also embedded in the EU’s PTAs as a matter of course today.
However, the EU does not always require its trade partners to adopt portions
of the EU’s acquis as a condition for market access.28 Often, the EU uses PTAs
to transmit general regulatory principles or international regulatory standards as
opposed to EU-specific regulations.29 The EU’s demands for regulatory reforms
addressed at weaker trading partners typically come with an offer of technical
expertise or financial support given the difficulty of implementing many such
reforms. However, it remains unclear if even those general provisions have led
to lasting changes in trading partners’ actual regulatory practices. At best, the
EU’s record in fostering change in recipient countries’ regulations is mixed, as
discussed further along in this chapter.
In addition to these general trade agreements that cover a substantial part of
the economy, the EU has entered into various sectoral agreements with coun-
tries near and far. For example, the EU has concluded several Sustainable Fishing
72
72 T heory
the Basel Committee on Banking Supervision (BCBS), the ECB and the EU’s
Single Supervisory Board have full membership alongside nine EU member
states, while the Commission and the European Banking Authority (EBA) have
observer status as well.
The EU also exerts influence in international institutions focused on
standard setting across different areas of market regulation. For example, the
Food and Agriculture Organization (FAO) and World Health Organization
(WHO) formed the Codex Alimentarius Commission to implement global
food standards.36 Historically, the EU—which petitioned for, and attained,
membership alongside its member states—has successfully defended a number
of controversial policy positions, such as the role of the precautionary prin-
ciple in Codex decision-making.37 The EU’s extensive influence at Codex can
be at least partially attributed to the EU’s long experience in regulating food
safety.38 Food safety is a policy area where the EU successfully established the
single market already in the 1960s. This has allowed the EU to accumulate valu-
able expertise, which it has often leveraged to shape standard setting at Codex.
Today, the EU and Codex have some specific overlap in their standards, sug-
gesting that two-way regulatory harmonization often takes place. For example,
Codex adopted the 1999 EU standards for the detection of irradiated foods,39
while a 2008 EU regulation on food additives utilized an almost identical
definition for additives as that employed by Codex.40 Such harmonization
facilitates international trade and is one of the primary purposes of Codex as a
standard-setting body.41
There are many examples of where the EU has successfully transmitted its
rules to foreign jurisdictions via international organizations. The EU was able
to export its motor vehicle emission control standards via UNECE—the UN’s
Economic Commission for Europe—not only to the broader European neigh-
borhood, but also to countries as remote as Argentina, Brazil, China, India, Peru,
and Thailand.42 The relevant “Euro” standards were widely adopted over equiva-
lent United States’ “Tiers” standards, even though many viewed US standards to
be more effective, and many of the adopting countries did not even export cars
to the EU. The lack of a market-access motive for foreign producers to emulate
the EU standard in this case is what differentiates this type of influence from the
Brussels Effect. The EU’s success in exporting its standard can thus be partially
explained by its more universally appealing policy design, which may be more
amenable to different market settings as compared with the US standard, which
was designed with US-market idiosyncrasies in mind. In addition, given that
UNECE is mainly composed of European countries, there was a strong inclina-
tion to adopt European standards. Yet UNECE also engages actively with other
international organizations that have a geographically broader membership, and
74
74 T heory
76 T heory
Community law over national law, citing the ECJ’s landmark case Costa/Enel,
which established the doctrine of supremacy in the EU.57 The ATJ has similarly
cited the ECJ in numerous other landmark cases,58 including Van Gend & Loos
on the direct effect of community law,59 as well as key cases regarding the opera-
tion of the internal market.60 However, despite the extensive emulation of the
ECJ, the ATJ does not resort to “blind mimicry” of the EU.61 Instead, it engages
in selective emulation to better serve the particular needs of the region.62
The close emulation of the ECJ by the ATJ is perhaps not surprising given the
similarities in the founding treaties and institutions. In addition, experts from the
Institute for the Integration of Latin America and the Caribbean (INTAL), who
were tasked with evaluating the best judicial model for the Andean Community,
recommended the ECJ as a template. Many of these experts had deep connec-
tions with, and knowledge of, the EU and the ECJ, having attended European
universities, worked with major EU scholars, and participated in various pro-
integration academic events in Europe.63 Members of the Andean Community
also consulted European experts such as ECJ Judge Pierre Pescatore and Professor
Gerard Olivier, the assistant director general of the European Commission Legal
Service,64 further adding to the near inevitability that the ECJ model would serve
as a template to follow.
In addition, some foreign courts have turned to European courts and other
institutions, citing them in support of their judicial decisions as an example of
a more established judiciary. The Colombian Constitutional Court (CCC),
for example, in a case concerning the use of the herbicide glyphosate to eradi-
cate certain illicit crops, turned to EU law and institutions in two ways. First, it
requested the official opinion of the European Food Safety Authority about the
risks involved in the use of glyphosate. Second, it cited the EU’s General Court
when analyzing the precautionary principle in the matter.65 In another case con-
cerning a controversy on GMOs, the CCC stated that “[t]he European Union
has taken a clear position and has become an international reference in the fight
against [GMOs], in accordance with its Resolution 1829 of 2003, which also
establishes the labeling for this type of product.”66 Further, in a case concern-
ing another health and safety matter, the CCC showed deference to the EU’s
view when ruling whether the HPV vaccine caused certain diseases in a minor. In
deciding the matter, the CCC cited the EU and took into consideration the fact
that the European Commission approved the vaccine’s commercialization based
on the European Medicines Agency’s prior approval.67
Other foreign agencies and courts regularly cite EU competition law as well,
often in support of their interpretations of domestic competition rules. For exam-
ple, the Indian Supreme Court has referred to EU law in deciding whether cer-
tain entities fall within the scope of their domestic competition law’s provisions
7
78 T heory
80 T heory
largely because of the strong cultural and linguistic bonds between Latin America
and Europe—coupled with the EU’s active outreach and technical assistance.75
The African courts’ tendency to copy the ECJ is similarly at least partly explained
by the close linguistic and educational ties of both anglophone and francophone
countries to the United Kingdom and France, respectively76—the same way
that close ties of former colonies in Latin America to Spain and Portugal have
facilitated the emulation of ECJ rulings there. Ecuador, which copied Spain’s
competition laws almost word for word, provides a specific example of this copy-
cat legislation, as discussed in c hapter 4.77 In doing so, Ecuador indirectly emu-
lated EU competition law given that Spanish competition law is, in turn, largely
derived from EU law. This indirect leverage through the layered structure of EU
law and institutions broadens the EU’s sphere of regulatory influence. Another
indirect form of influence takes place via regional organizations in Africa and
Latin America, including the Andean Community, Economic Community of
West African States (WAEMU), and Common Market for Eastern and Southern
Africa (COMESA).78 These organizations model their institutions directly on
EU institutions, indirectly embedding EU rules into the legal systems of their
member states in the process.79
Finally, the EU has combined statutory precision with flexible drafting. EU
regulations are designed to work across many different legal systems. Their goal
is to create a cohesive single market across individual countries with diverse legal
traditions and political institutions. The regulations are drafted through a pro-
cess that thus reflects member states’ heterogeneous interests and accounts for a
wide range of legal traditions. This balancing requires legislative techniques that
achieve uniformity while preserving some degree of sovereignty. For example,
many EU regulations are drafted as directives, which lay out clear objectives but
allow for variation in implementation nationally. This flexibility embedded in
EU regulation makes for better templates for export to foreign jurisdictions with
different characteristics than those found in the EU.
These pragmatic reasons and the ease of copying may lead to greater
emulation—at least when it comes to enacting laws on the books. However,
whether this emulation is ultimately effective and leads to actual change in
the conduct of market actors is a different question. If a foreign country
adopts EU style rules because they were drafted in an accessible language, it
is not certain the country has fully committed to actual implementation of
such rules. Adoption following a deep domestic debate or a change of actual
preferences better indicates genuine motivation to adopt similar rules. For
this reason, the change in the preferences of the domestic business interests
due to the de facto Brussels Effect may give a more lasting foundation for a
regulatory reform.
81
Yet, EU rules do not serve as global templates merely because they are detailed
and available in multiple languages. Several commentators also emphasize the
“normative appeal” of EU rules, which increases their attractiveness as a model
for emulation. If this appeal exists, the EU’s influence also rests on the quality
of its ideas and its normative power of persuasion. Ian Manners developed the
concept of “Normative Power Europe” to capture the EU’s ability to exert influ-
ence through persuasion.80 Manners argues that the EU is best conceived as a
normative power, which vests the EU with “ideational power” and the ability to
shape what is normal in international relations.81 This power can be traced to the
goals and values that gave rise to EU integration, and to the EU’s commitment to
democracy, rule of law, human rights, and fundamental freedoms. The appeal of
these principles means the EU sets a “virtuous example,” leading to a diffusion of
its norms across the world.
The normative appeal of EU rules may explain the willingness of foreign
courts to cite and emulate EU laws and ECJ judgments, even in instances where
no Brussels Effect takes places. In analyzing the reasons for the EU institutions’
influence on other regional organizations, including their courts, Michel Levi
Coral emphasizes the perceived success and visibility of EU integration, lending
the EU experience notable credibility.82 Amadeo Arena reaches the same conclu-
sion, observing that EU principles are seen as having worked well for Europe and
therefore can serve as an example for other regions pursuing deeper integration.83
In addition to the EU model’s normative appeal, several commentators note
how the EU actively promotes the replication of its institutional structures.84 The
EU provides legal and technical expertise and financial support to many third
states implementing their rules.85 Notably, studies of the EU’s influence over
foreign courts reveal no coercion, but rather persuasion. These studies suggest
that norm recipients have embraced the EU model willingly, viewing the emula-
tion of the ECJ as a way to enhance compliance with law and deploy the courts
as a means of advancing integration in their own region.86 According to Alan
Tatham, references to ECJ rulings allow foreign courts to mitigate criticism of
their own judicial activism, lending legitimacy to local pro-integration rulings by
referencing the “regional court par excellence in integration.”87
However, alternatively some have argued that there may be resentment asso-
ciated with the idea that the EU would be portrayed as a “normatively superior”
model for “lesser jurisdictions” to follow. Chapter 8 will address such criticisms,
which are often associated with the perception of the EU as a regulatory imperial-
ist whose norm exports, purportedly as a “benevolent hegemon,” are really a new
form of colonialism. The EU’s recent struggles, ranging from financial crises to
rule-of-law backsliding, also call into question whether the EU can still claim its
integration project is a “virtuous example” fit for replication abroad.
82
82 T heory
84 T heory
leaves them skeptical that trade agreements can effectively be utilized to ratchet
up labor protections in foreign jurisdictions.99
Even the monitoring and enforcement of unilateral trade instruments, such
as the Generalized System of Preferences (GSP) programs, can be difficult. GSP
programs are designed to provide preferential market access to developing coun-
tries’ goods in order to facilitate their growth through trade. Both the United
States and EU deploy GSP programs, attaching various domestic reforms as con-
ditions for extending such preferences, where the breach of these conditions can
lead to their unilateral withdrawal. Yet a review of the EU’s GSP programs reveals
that it rarely enforces commitments attached to the preferences it provides. Even
though the EU holds considerable economic power over the GSP recipients—all
of which are developing countries—it rarely suspends GSP preferences despite
reported violations of GSP conditions.
Laura Beke and Nicolas Hachez’s case study on Myanmar illustrates this
dynamic, showing that the threat of withdrawal of GSP preferences fails to
induce effective implementation of GSP standards.100 Indeed, the EU has sus-
pended preferences on only a handful of occasions: against Myanmar in 1997,
Belarus in 2007, Sri Lanka in 2010, and Cambodia in 2019. This has led critics
to conclude that “GSP withdrawals have the worst record of success of all EU
sanctions”101 and “have not recorded a single case of compliance yet.”102 There
are several explanations for the ineffectiveness of GSP provisions in fostering
regulatory change, including that until recently the Commission did not have
the exclusive competence to make decisions regarding the withdrawal of ben-
efits but needed to subject the contested decisions to the (often disagreeing)
Council.103 It remains unclear whether the recent 2014 GSP+ program reforms,
which emphasize reporting and monitoring, will increase the effectiveness of this
instrument.104
All of this suggests that the limits of exporting standards through trade agree-
ments mainly relate to the difficulty of enforcement rather than the conclusion
of agreements in the first place. However, every trade agreement also carries sub-
stantial contracting costs due to the often-protracted negotiations. It is also con-
siderably harder to impose standards in cases where the EU is negotiating with
strong trade partners. In addition, contracting costs are high not only because of
the disagreements between the EU and its trading partners but also because of
fragmentation within the EU itself. The modern trade agreements often contain
provisions that convert them into “mixed agreements,” indicating that the com-
petence to negotiate the instrument does not rest exclusively with the EU but
rather requires member states ratification as well.105 For example, the recent EU-
Canada Comprehensive Economic and Trade Agreement (CETA) almost failed
due to the multiple internal veto points within the EU, including the need for
86
86 T heory
88 T heory
90 T heory
encourage diffusion of competition laws.121 The deterrent effect of the EU’s com-
petition laws has the potential to be compromised if anticompetitive practices
remain profitable elsewhere. This could be the case, for example, if members of a
cartel have the ability to offset any EU fines by reaping supra-competitive profits
in markets that fail to control for their collusive practices. Climate change offers
another example, such as when China’s failure to limit its greenhouse gas (GHG)
emissions directly compromises the EU’s efforts to halt climate change.122 Even
though the Brussels Effect could, under some conditions, constrain Chinese
GHG emissions with respect to production of products that are imported into
the EU, the Brussels Effect does nothing to constrain emissions that stay in China
yet contribute to the global problem.
Furthermore, in some instances the EU may pursue treaty-driven harmoniza-
tion in order to “lock-in” certain market-driven EU standards by institutional-
izing them. This can be an astute way of preempting a future state of the world
where market access becomes a less-effective tool for exerting influence. The EU
knows that its relative economic clout will inevitably diminish in the future as the
size and wealth of consumer markets in Asia and elsewhere continue to grow. The
de jure Brussels Effect is less vulnerable to these economic shifts than the de facto
Brussels Effect, providing a rationale for the EU to seek to embed its regulations
in treaties as opposed to relying on markets to sustain them indefinitely.
Finally, market-driven and treaty-driven harmonization can also take place
in sequence. The EU may be able to more successfully institutionalize its stand
ard where a limited Brussels Effect has already taken place. In instances where a
number of foreign companies or governments already follow EU regulations—
whether as a result of a de facto or de jure Brussels Effect—the EU is better able
to reach the critical mass necessary to tip the balance in the EU’s favor in inter-
national negotiations. Thus, the Brussels Effect can facilitate the EU’s efforts to
reach an agreement on international standards that, while modeled after EU
rules, will be embedded in treaties and viewed as reflecting an international con-
sensus. The Brussels Effect may also pave the way for multilateral cooperation
by changing the underlying bargaining dynamics. For example, the threat of the
EU’s unilateralism was an important factor in harnessing international consen-
sus on regulating GHG emissions in aviation through the Carbon Offsetting
and Reduction Scheme for International Aviation (CORSIA),123 discussed in
chapter 7. The participating countries were incentivized to agree on the CORSIA
to a large extent because of the prospect that, absent international agreement, the
EU was going to regulate the industry unilaterally. This example illustrates how
the EU, at times, is able to leverage unilateralism to promote multilateralism.
91
The Brussels Effect is one of many mechanisms through which the EU’s
regulations transform corporate practices and regulatory regimes around the
world. As a passive yet powerful market-driven mechanism, the Brussels Effect
often prevails over other, more active, mechanisms through which the EU exerts
regulatory influence. However, the Brussels Effect has its limits; it may vari-
ously be absent, incomplete, or sometimes an ineffective way to exert influence.
Ultimately, the precise mechanism of regulatory influence chosen is likely to vary
across policy areas or even over time—such as when market-driven harmoniza-
tion gives way to more active promotion of regulations through treaties and insti-
tutions. What sets the EU apart is that, unlike in many other jurisdictions, both
market-driven and treaty-driven mechanisms can coexist, or even amplify one
another, maximizing the influence EU regulations have over market outcomes
worldwide.
92
93
PREFACE TO PART TWO
Case Studies
Part II forms the empirical heart of the Brussels Effect by applying the theoreti-
cal frameworks of the previous section to its observed operation across four dis-
tinct policy areas. Chapter 4 focuses on market competition, discussing the EU’s
global influence through its competition regulation—both de facto and de jure.
Chapter 5 focuses on the digital economy, demonstrating how the EU has exerted
influence over digital companies’ global data-protection practices as well as their
policies regarding hate speech on their platforms, and prompted regulatory
reforms abroad. Chapter 6 turns to risk regulation, showing how the EU’s efforts
to regulate consumer health and safety—in particular pertaining to food safety
and chemical safety—have penetrated the global marketplace. Finally, Chapter 7
examines the global impact of the EU’s environmental regulation through exam-
ples on the control of hazardous substances and electronic waste, protection
of animal welfare, and mitigation of climate change. At times, the policy issues
included in the chapters can be overlapping, and many of the issues could easily
be examined in another chapter with alternative policy areas. For example, while
the regulation of chemical safety and regulation of GMOs are both addressed in
chapter 6 discussing consumer health, they could equally be handled as part of
the chapter 7 discussion on environmental regulation.
These policy areas—market competition, digital economy, consumer health
and safety, and the environment—were selected because they are important EU
policy areas that illustrate the operation of the Brussels Effect in practice. While
they share many features—including their origin in a strong EU-level regulatory
mandate—they also exhibit important differences. Some of them represent well-
established areas of traditional EU regulation (such as food safety), while others are
more recent regulatory innovations (such as online hate speech). Some were driven
by largely internal motives (such as hazardous substances in electronics), while
others were promulgated from the outset with both internal and external motives
in mind (such as emissions trading). In many areas, the EU regulation consists of
mandatory rules (such as chemical safety) whereas others rely on voluntary regula-
tory instruments (such as hate speech online). Some policy areas feature extensive
94
94 T he Brussels Effect
Case Studies 95
surely exist, those are not as prevalent given that the EU rarely represents a major
export destination for them.
Further, these case studies reveal little variance in three additional conditions
underlying the Brussels Effect—strong regulatory capacity, preference for stringent
rules, and the inelastic nature of regulation. While the EU acquired its regulatory
capacity at different times and as a result of distinct political processes in various
policy areas, these case studies suggest that the Brussels Effect occurs in policy
domains where the EU has either exclusive competence or competence it shares
with member states over the regulatory policy in question. The Brussels Effect is
further amplified if the Commission enjoys substantial autonomy (such as in com-
petition regulation), is supported by the expertise of the European Regulatory
Agencies (such as in chemical safety or food safety), or where other regulatory pow-
ers such as the United States are particularly weak regulators, enhancing the EU’s
relative regulatory capacity (such as in digital economy).
The Brussels Effect in all case studies stems from the EU’s preference for strin-
gent rules—typically not just within the Commission that predictably favors regu-
lation but also among European consumers, citizens, activists, some critical actors
representing the industry, as well as among a group of influential member states
that had been regulatory pioneers in the field. Obviously, there are examples of pol-
icy areas—including financial regulation—where other jurisdictions often harbor a
preference for even more stringent rules. In these instances, no Brussels Effect takes
place. These case studies identify one exception: in the regulation of online hate
speech, some other major jurisdictions, including China, are even more restrictive
regulators of online speech, yet global companies still converge to the EU’s (“most
stringent politically acceptable”) rules.
Typically, the EU’s stringent regulations encompass other jurisdictions’ less-
stringent standards. Regulatory standards are rarely mutually incompatible. No
country orders companies to generate electronic waste, include harmful chemicals
in toys, cultivate GMOs, fix prices with competitors, or infringe data privacy. Thus,
by adhering to EU’s protective regulations, multinational companies can typically
ensure compliance worldwide. However, the case studies show that in a limited set
of policy areas, other jurisdictions’ standards may, indeed, be incompatible with
those of the EU. In such instances—such as the case study discussing the EU’s ban
and China’s requirement to conduct animal testing of cosmetics—compliance with
the EU’s stringent standard does not ensure compliance with all other markets.
Here, a more limited or partial Brussels Effect takes place as companies likely apply
the EU standard in most foreign markets but retain a separate production line for
China to meet its conflicting standard. Case studies also reveal some (rare) exam-
ples where “the Brussels Effect plus” may occur (such as in the regulation of the
digital economy). The EU may be more stringent on one dimension of a regulation,
96
96 T he Brussels Effect
but some other jurisdiction may be more stringent on another dimension. In such
a setting, an even stronger version of the Brussels Effect is likely to take place as
companies can operate globally only by adhering to the combination of these (two
or more) most stringent standards.
All these case studies further compound the importance of inelasticity as a
core driver of the Brussels Effect—the discussed policy areas are all forms of con-
sumer market regulation, which make it inherently more difficult to circumvent
EU regulations through relocation or other corporate strategies as the location of
the consumer in the EU determines the applicability of EU regulation. Inelasticity
is therefore a fundamental yet simple condition in the case studies: one that shows
little variance across regulatory policies that are targeted at consumer markets. In
contrast, the Brussels Effect condition that shows the greatest variance both across
and within the individual case studies is that of non-divisibility. Non-divisibility is
often the single most salient factor explaining the variance in the occurrence of the
Brussels Effect. This is demonstrated particularly in the case studies on competition
regulation, digital economy, and food safety, which reveal many examples of prod-
uct or service divisibility that have been sufficient to prevent the Brussels Effect
from taking place—even when all of the other conditions underlying the theory
were present. Another useful case study on the limits of the Brussels Effect is the
EU’s emissions trading scheme (ETS) and the EU’s largely unsuccessful attempts
to extend the ETS into the international aviation industry. It also provides one of
the rare counter-examples where foreign governments have successfully reined in
the Brussels Effect.
Aggregating the numerous examples from across Africa, Asia, Latin America,
Middle East, Russia, and the United States, these case studies reveal a story of the
vastly underestimated global reach of the de jure Brussels Effect, which comple-
ments the extensive de facto Brussels Effect. They demonstrate how many coun-
tries show a particularly strong willingness to emulate the EU with some countries
explicitly acknowledging the use of the EU as a model for their own legislation
(such as Korea), while other countries emulating the EU more selectively (such as
Japan). The case studies also suggest that the Brussels Effect is not binary, but a
greater or lesser force depending on the type of regulation and the particular juris-
diction emulating EU regulations. For example, the case study on the RoHS regula-
tion demonstrates how the de jure Brussels Effect may exist in strong form in one
market (Korea) while at the same time in a weaker form in another market ( Japan).
Some countries rarely want to be seen as copying the EU, presumably as they do
not want to be seen as rule takers that are overly influenced by other powers—in
particular if they are large powers themselves. The United States, for example, sel-
dom features in case studies on the de jure Brussels Effect despite the extensive de
facto Brussels Effect on American companies. At the same time, the de jure Brussels
97
Case Studies 97
Effect is more common among individual states in the United States. Finally, case
studies reveal examples of the de jure Brussels Effect that exists on paper but may be
limited in practice (such as China copying EU’s data protection regulation). This
serves as a reminder that the actual effectiveness of the de jure Brussels Effect is dif-
ficult to measure in precise terms.
While there is no separate case study dedicated to areas that do not lend them-
selves to the Brussels Effect of any kind—those would be short case studies—it is
important to keep in mind that the Brussels Effect is inherently limited when its
underlying conditions are weak or nonexistent. This is the case in instances where
the EU is not a significant export market for foreign companies; where it does not
have regulatory capacity to act; where it does not promulgate most stringent stan-
dards; where regulation is elastic; or where the corporate conduct or production is
divisible. The case studies included in Part II are therefore not representative of the
entire universe of economic regulation—while the Brussels Effect has penetrated
many sectors of the economy, there remain many areas of regulation that do not
emanate from Brussels and where the EU is not setting the global standards. Also,
the case studies discussed do not represent the entire universe of regulatory policies
that are characterized by the Brussels Effect. There are additional policy areas that
lend themselves to the Brussels Effect even though there is no case study dedicated
to them. For these reasons, Part II may be viewed as alternatively overstating or
understating the prevalence of the Brussels Effect. Yet even with these limitations,
the selected case studies that follow should provide a diverse set of examples that
illuminate the theoretical claims made in Part I, and demonstrate the vast and var-
ied areas where the Brussels Effect is driving the global regulatory agenda today.
98
9
Market Competition
The Brussels Effect. Anu Bradford, Oxford University Press (2020). © Oxford University Press.
DOI: 10.1093/oso/9780190088583.001.0001
10
Major Legislation
EU competition law was enacted in 1957 as part of the EU’s founding treaties.
Article 101 of the Treaty of the Functioning of the European Union (TFEU)
expressly prohibits anticompetitive agreements between firms.11 Such prohibited
agreements include, for example, price-fixing cartels between competing firms or
distribution agreements where suppliers dictate the prices for their distributors.
Article 102 of the TFEU prohibits the abuse of a dominant position.12 This pro-
vision is targeted at companies that hold significant market power and engage
in practices that reduce competition on the market. Examples of such abusive
practices would be the dominant company’s refusal to supply products to certain
competitors or predatory pricing behavior in an effort to oust competitors from
the market. The European Merger Control Regulation (EMCR) was first pro-
mulgated 30 years later, in 1990, and revised in 2004.13 The EMCR introduced
a pre-notification obligation for all mergers and acquisitions above a certain rev-
enue threshold and vested the Commission with the power to attach conditions
or prohibit a transaction when it harms competition in the common market.
EU competition law is considerably more recent than its US counterpart. Key
US competition laws include the 1890 Sherman Act,14 which regulates anticom-
petitive agreements and monopolies; and the 1914 Clayton Act, which regulates
mergers.15 The EU and US competition laws share many similarities but also
important differences. Both jurisdictions recognize similar types of behavior as
potentially anticompetitive and structure their laws around the following catego-
ries: 1) anticompetitive agreements, 2) monopolization, and 3) control of mergers.
In addition, EU competition law regulates illegal state aid, which refers to selec-
tive advantage given by national authorities to certain but not all firms.16 The EU
and the United States differ in terms of the degree to which they tolerate market
power and therefore intervene in the conduct of a dominant company. The EU
is more likely to conclude that a company has a “dominant position” on the mar-
ket and, once dominance is established, more likely to find that the company is
abusing its dominance.17 The EU is also generally viewed as more stringent when
10
Political Economy
Reasons for the differences between US and EU competition regulation are
manifold, reflecting the different political economy conditions prevailing in the
two jurisdictions. At the most fundamental or philosophical level, EU competi-
tion authorities are inherently suspicious of the markets’ ability to deliver effi-
cient outcomes and are therefore more inclined to intervene through a regulatory
process.24 While the EU is more fearful of the harmful effects of noninterven-
tion (so-called false negatives, anticompetitive practices that the EU might fail to
regulate), the US authorities are often more mindful of the detrimental effects of
inefficient intervention (so-called false positives, pro-competitive practices that
the United States might erroneously restrict).25 This difference partly explains
why the EU has generally been prepared to intervene more frequently and more
aggressively.
This distinction between EU and US regulatory responses reflects, to some
extent, a different ideology embraced by Europeans and Americans. Europeans
place greater trust in the government whereas Americans trust the markets more.
Yet it is also a reflection of past experiences with how markets work. Europeans
remain more skeptical of the market’s ability to self-regulate, partly due to the
fact that many European economies were for a long time characterized by a large
number of state-owned companies. Once these companies were privatized, they
continued to enjoy market power as incumbents, which necessitated competi-
tion regulation to ensure that those incumbent privileges did not distort mar-
ket competition.26 In addition, capital markets are less well developed in the EU
than in the United States, making it harder to raise the necessary funds to enter
the market in Europe. Consequently, the threat of new entrants alone does not
always provide a sufficient check on existing market players, making government
intervention necessary.
EU competition law is driven by two primary objectives: the protection of
consumer welfare and the furthering of the single market. Competition law is
thus aimed at maximizing the welfare of European consumers and ensuring that
the common market remains open and competitive. This long-standing tendency
to link competition law to the EU’s broader market integration agenda is perhaps
the most distinctive feature of EU competition law.27 As described by a European
parliament document: “The fundamental objective of EU competition rules is to
prevent distortion of competition. This is not however an end in itself. It is rather
a condition for achieving a free and dynamic internal market.”28 Seen this way,
competition law is an essential complement to trade liberalization, enacted to
ensure that private anticompetitive practices do not frustrate the economic gains
accomplished through the removal of public barriers, such as tariffs and quotas,
between member states.
103
suggested that the EU should “[l]et the Chinese be Chinese. We would be lousy
Chinese. They are much better at it.”56
De Facto Brussels Effect
Most of the conditions underlying the Brussels Effect—market size, regulatory
capacity, stringent standards, inelastic targets, and non-divisibility—are clearly
present in the case of competition law. The EU is an important market for many
multinational companies, and they cannot afford to forgo selling their prod-
ucts and services to the large number of relatively wealthy European consumers.
Companies like Google, which have a heavy user base in the EU, will not be able
to divert that amount of trade elsewhere because of the EU’s market size. Any
allegedly anticompetitive conduct or transaction pursued by these companies is
likely to affect the EU market and thus invite scrutiny by the Commission.
Of course, there are still numerous business practices and corporate transac-
tions taking place around the world that do not involve European markets and
hence do not fall within the purview of EU competition law. For those instances,
the EU’s market size is irrelevant. A cartel fixing prices exclusively in Latin
America would not involve the EU market and hence would not lead the EU to
act. Similarly, a purely local or regional merger between two companies in Africa
with trivial revenue in Europe would not trigger an EU merger review. A distri-
bution agreement between a European supplier and a Japanese distributor would
also fall outside the scope of EU competition law, as long as the distributor was
only supplying products to Japanese customers. Yet, generally speaking, any com-
pany over a certain size and wishing to serve the EU market typically concludes
that the costs of compliance with EU competition law are worth it in exchange
for gaining access to over 500 million consumers. In these instances, the first con-
dition of the Brussels Effect—market size—is met.
Several other conditions of the Brussels Effect are typically present as well.
As already acknowledged, the EU has built tremendous regulatory capacity in
this area. Competition law is one of the most well-established fields of EU-level
competence, and the Commission has gained extensive experience enforcing
competition rules since 1957. The Commission enjoys an unusually high degree of
delegation in the enforcement of competition law, allowing it to often act without
the need to involve other institutions.57 This makes competition law an area where
the EU’s regulatory capacity is vast and least constrained by political checks—
whether by the Council, European Parliament, or the individual member states.
If anything, the EU has harnessed the regulatory capacity of the member states
to further the goals of EU competition law. EU competition law coexists with 28
national competition regimes in its member states. These individual EU members
107
have the power to enforce not only their national law but also EU competition
rules, further adding to the regulatory capacity of the EU.58
The European Court of Justice (ECJ) exercises judicial review over the
Commission decisions, yet these judicial checks are much more limited than
those in the United States. For instance, unlike the DOJ antitrust division, which
needs to go to a federal court to enjoin a merger, the Commission is authorized
to impose remedies without pursuing litigation before European courts. In this
sense, the Commission has a lower threshold at which it will dispatch its regu-
latory capacity than its US counterparts. Many critics have suggested that this
procedure essentially renders the Commission the prosecutor, judge, and jury of
merger review throughout Europe.59 The parties do have the right to appeal the
decision to the EU’s General Court and, ultimately, the ECJ. Yet strikingly few
Commission decisions in this area are appealed: 99% of mergers reviewed by the
Commission are not challenged before the courts, making the Commission the
single most important player in worldwide merger enforcement.60
The EU’s regulatory capacity in competition law is also broad in the sense
that it comprises control of state aid. This extends the EU’s regulatory reach to
instances where EU member states provide selective advantages (subsidies) to
certain companies. For example, the EU’s state aid rules formed the basis for the
recent, controversial ruling involving the Irish government and Apple. In 2016,
the Commission ordered Ireland to reclaim €13 billion ($15 billion) in unpaid
tax revenue from Apple. According to the Commission, Apple took advantage of
a parent-branch profit attribution scheme that attributed 90% of the profits the
company derived from its non-US sales to Apple’s Irish subsidiaries. This resulted
in Apple paying a conspicuously low tax rate of 4% on nearly $200 billion in
profits it earned outside the United States over the past decade. But to do so,
Apple had relied on a tax ruling issued by Irish tax authorities back in 1991; a
ruling that the Commission found to be contrary to EU state aid rules in this
case. Consequently, the Commission ordered Ireland to claw back the unpaid
taxes from Apple on grounds that it gave Apple an undue tax advantage, which
distorted competition and hence violated EU’s state aid rules. This is an interest-
ing case as it sits between competition law and tax law. The EU has no regulatory
authority over tax policy, which remains the prerogative of member states. Yet it
found a basis to act based on its powers within EU competition law.
Market size and regulatory capacity alone do not explain the EU’s global dom-
inance in competition law. Both the US and EU agencies are vested with extrater-
ritorial regulatory capacity and exert jurisdiction over a large domestic market.61
It is thus not the regulatory capacity as such that has made the EU the world’s
de facto competition enforcer. Instead, it is the EU’s sustained preference to more
stringent competition law than the United States that sets it apart. The EU harbors
108
(by, for example, spinning off EU subsidiaries) so that the parties to the transac-
tion would not generate notable revenue in Europe. However, such restructuring
of the transaction would typically remove the business rationale underlying the
transaction.
With other conditions fulfilled, whether or not the Brussels Effect takes
place typically turns on the question of divisibility. Here, notable differences exist
across different types of competition matters: merger review, cartel behavior, and
abuse of dominance. A prohibition by the EU of a transnational merger repre-
sents the purest example of the Brussels Effect due to the legal non-divisibility
of such a merger. Yet in many cases against dominant companies, no de facto
Brussels Effect takes place, as companies are able to divide their conduct across
jurisdictions and limit their remedies to the EU only. The next discussion looks
at these various examples in turn.
In terms of merger control, there are several examples where the de facto
Brussels Effect has taken place. However, there are also many instances where it
has not. As discussed in c hapter 2, global mergers cannot be consummated on a
jurisdiction-by-jurisdiction basis. In this sense, mergers are legally non-divisible.
In practice this entails that the most stringent merger-review jurisdiction gets to
determine the worldwide fate of the transaction.67 The proposed GE/Honeywell
merger, discussed earlier in this chapter, is arguably the most famous example of
the Brussels Effect affecting large cross-border mergers.68 When the Commission
blocked the merger, it was irrelevant that the US antitrust authorities had previ-
ously cleared the transaction: the acquisition was banned worldwide because the
merger was legally non-divisible—as a matter of law, it was impossible to let the
merger proceed in one market and prohibit it in another.
Although the GE/Honeywell deal is the most prominent, there are several
other examples of the Brussels Effect globalizing EU merger control decisions.
In 1991, the EU blocked the acquisition of the Canadian company De Havilland
by the French-Italian company Avions de Transport Régional, which had been
approved by the Canadian authorities.69 Soon thereafter, in 1996, the EU pro-
hibited a merger between the South African company Gencor and the UK-based
Lonrho,70 even though the most significant effect on competition was felt in
South Africa. More recently in 2013, the Commission blocked the attempted
acquisition of the Dutch logistics company TNT Express by its US-based rival
UPS.71 While its primary market was Europe, TNT Express was active in over 60
countries. The EU decision had an impact on all those markets due to the Brussels
Effect. This case is also particularly interesting for how it has evolved—because
UPS had the merger decision overturned by the EU’s General Court in 2017,
it is now seeking $2.14 billion in damages from the EU based on that ruling.
Yet regardless of the UPS’s court victory, the UPS/TNT Express merger cannot
10
agencies to extract a fine—even if they are largely free riding on the investigative
efforts of the EU.
While international cooperation in cartel investigations may be common,
sometimes the remedies imposed in cartel cases by a single jurisdiction, such as
the EU, have a global character. These are the instances where the Brussels Effect
is likely to occur. For example, international maritime container shipping has
been a frequent target of cartel investigations by various national competition
authorities, often involving multiple jurisdictions and overlapping players and
practices. The remedies that result from these investigations appear to be non-
divisible insomuch as international maritime shipping pricing represents a single
transaction across borders as any given shipment travels between continents; thus,
regulating one side of the transaction inherently regulates both. For example, in
2017 the EU settled a cartel investigation with a number of Asian, European, and
Middle Eastern shipping companies in order to change their pricing practices.86
These pricing practices extended to various shipping routes, affecting also the
many non-EU source jurisdictions from which the carriers depart for the EU.
Here, the Brussels Effect was triggered by the technical non-divisibility of pricing
linking the two jurisdictions—the origin and the destination.
In addition to its merger control and cartel investigations, the EU’s enforce-
ment of its rules against dominant companies offers a particularly intriguing
area of competition law for examining the operation of the Brussels Effect. The
EU’s dominance investigations have garnered substantial attention recently. The
Commission has imposed record-high fines and behavioral remedies against
dominant US companies, including Google; Qualcomm; Intel; and, over a
decade earlier, Microsoft.87 These cases suggest that—while the EU is at times
able to influence the conduct of dominant companies worldwide—in many
instances, no Brussels Effect takes place. In these latter instances, the targets of
the EU’s dominance investigations are able to deploy divisibility and limit their
compliance with the EU to the European market.
Whenever the remedies are non-divisible, the Brussels Effect is likely to
occur. For example, in 2006, the Commission required a South African diamond
company, De Beers, to stop buying rough diamonds from a Russian company,
Alrosa.88 Even if South African or Russian authorities would not have required
such a commitment, the EU’s decision impacted their markets as well, making it
impossible to source from Alrosa worldwide.89 Yet in other instances, the Brussels
Effect fails to take place because of the existence of divisibility. For example, in
2005, Coca-Cola committed to substantial behavioral constraints to settle an
EU competition investigation into exclusivity requirements in its distributorship
agreements, as well as certain rebates and tying programs.90 At the same time,
because PepsiCo failed to prove Coca-Cola’s market power in the United States,
13
De Jure Brussels Effect
The de jure Brussels Effect— the adoption of EU regulations by foreign
legislators—in competition law is pervasive, and has had a significant impact on
global market competition. There has been a remarkable proliferation of com-
petition laws around the world over the past three decades. Most of these new
laws closely resemble EU competition law. In addition to this type of “legislative
borrowing,” several jurisdictions look to the EU’s actions to inform their own
enforcement activities. In particular, the EU’s competition investigations have on
15
Legislative Borrowing
Today, over 130 jurisdictions have a domestic competition law, making competi-
tion law one of the most widespread forms of economic regulation around the
world.103 Anecdotally, competition scholars and practitioners have suggested
that several countries look to the EU when drafting their competition laws.104
They typically emulate both the substantive EU competition rules as well as the
administrative model to enforce those rules. A deeper analytic look at many
jurisdictions supports this conclusion, even as the specific reasons for emulating
the EU may vary across them. The following discussion reviews several examples
of countries—both big and small, and developed and developing—showing
that the de jure Brussels Effect has reached countries in Africa, Asia, and Latin
America alike.
To begin with the jurisdiction that most actively regulates competition law
in Africa—South Africa—the EU has had a palpable influence in the country’s
modern competition law, which was enacted in 1998 as part of a broader set of
reforms that brought an end to the country’s apartheid regime.105 Several areas of
South Africa’s competition law were modeled almost verbatim from EU legisla-
tion. In addition, the ECJ jurisprudence has been influential in legislative draft-
ing: notably, the controversial excessive pricing provision in the South African
Competition Act was taken directly from the ECJ’s decision in the United Brands
case.106 According to the provision, a dominant firm is prohibited from charging
an “excessive price to the detriment of consumers.”107 An “excessive price” is one
that bears no reasonable relation to, and is higher than, the economic value of the
good or service in question.108 In addition, the ECJ’s case law is routinely cited by
South African courts on matters such as abuses of dominance109 and price-fixing
allegations.110
There are likely several reasons why South Africa chose to follow the EU’s
example in enacting its competition law. Among these, the frequent interactions
16
to emulate the United Kingdom.122 Second, the UK/EU model was seen as easier
for both businesses and consumers to understand compared to the US model,
which was built over time and which requires consultation of numerous differ-
ent sources.123 The EU had also amassed significant experience in interpreting
its abuse of dominance positions given the frequent adjudication of such cases
before the ECJ.124 This experience lent credibility to using the EU as a model
for enforcement in this particular area, and the clarity of EU competition law
allowed for businesses to have more certain expectations of how the new domes-
tic law would be enforced.
Another example of the de jure Brussels Effect on competition law in Asia
can be found in India, where the Indian Competition Act of 2002 draws inspi-
ration from the EU competition law. According to the 93rd Report on the
Competition Bill from 2001, Indian law was revised with an eye on EU competi-
tion law, stating that “The new Act is more closely in tune with the Competition
Law of the European Commission. Nearly all laws deal with horizontal/verti-
cal agreement, monopoly, abuse of dominance and regulated by Competition
Authority.”125 India’s regulation of abuse of dominance provides an illustrative
example in its similarity with Article 102 of the TFEU.126 The Indian Act defines
“dominant position” as “a position of strength, enjoyed by an enterprise, in the
relevant market, i.e. India, which enables it to operate independently of competi-
tive forces prevailing in the relevant market; or affect its competitors or consum-
ers or the relevant market in its favour.”127 This definition is similar in terms to
the one provided by the ECJ in its famous decision United Brands.128 In United
Brands, the Court references the (now) Article 102 of the TFEU and clarified
that dominant position means “a position of economic strength enjoyed by an
undertaking which enables it to prevent effective competition being maintained
on the relevant market by giving it the power to behave to an appreciable extent
independently of its competitors, customers and ultimately of its consumers.”129
The Competition Commission of India further relied on the United Brands in its
decision in HT Media Ltd. v. Super Cassettes,130 using its three-pronged test for
excessive pricing. These examples of the de jure Brussels Effect—together with
examples from South Africa and Singapore—illustrate not just the external influ-
ence of EU competition law on other states’ domestic laws as they are drafted,
but also the external influence that the EU is able to exert through the deference
given to the ECJ’s interpretation of competition law.
China’s 2008 Anti-Monopoly Law similarly draws inspiration mainly from
EU competition law, even though several other foreign models were also influen-
tial in the legislative process.131 For example, China closely followed the wording
of EU’s key provisions—the TFEU’s Article 101 on anticompetitive agreements
and Article 102 on the abuse of dominance—while also emulating the European
18
Latin America similarly offers numerous examples of the de jure Brussels Effect.
Ecuador is among the several Latin American countries that have closely followed
the EU in the drafting of their domestic competition laws. Ecuador adopted a com-
petition law—The Organic Act for the Regulation and Control of Market Power—
only recently, in 2011.142 The provisions of the law track closely those of the
competition law of Spain, which is modeled after EU law. These include, for
example, articles on the abuse of dominance, cartels, and remedies.143 In addi-
tion, Ecuador has copied some of the soft law instruments promulgated by the
Commission, including the EU Guidelines on the definition of the relevant mar-
ket.144 One possible reason that the EU competition law provided an attractive
model for Ecuador was the EU’s tendency to embrace a broader set of public
policy goals in its competition law beyond a narrow focus on efficiency. This
provided a better fit given Ecuador’s constitutional commitment to “promot-
ing equitable and mutually supportive development.”145 The EU also may have
been seen as a better model for Ecuador to follow given the civil law origins of
Ecuador’s legal system.
These countries just discussed offer some illustrations of the EU’s de jure
global influence. There are many other examples around the world. According
to Evgeny Khokhlov, EU and German competition laws significantly influenced
the 2006 Russian law on the protection of competition and subsequent amend-
ments.146 Hailegabriel Feyissa argues that the Ethiopian competition law regime
is modeled after the EU, with the EU law offering the “primary material” in the
drafting of the 2003 Trade Practice Proclamation that regulates competition.147
Ana Julia Jatar similarly notes that many Latin American countries, includ-
ing Colombia and Venezuela, drew heavily on Articles 101 and 102 of the EU
Treaty when drafting their competition statutes.148 All these examples support
the conclusion that the adoption of EU competition law principles has been
widespread.
As mentioned before, no single reason explains why these countries have pri-
marily, even if not exclusively, turned to the EU in their search of a regulatory
template to follow. The de facto Brussels Effect likely explains some governments’
decisions to follow the EU’s model. The more that firms around the world already
adjust their conduct to comply with EU competition rules, the more likely it is
that they support similar reforms at home. These firms prefer uniform rules and
face fewer adjustment costs if their home governments adopt a law that already,
de facto, governs their business conduct.
Competition law is also a field where other jurisdictions often have little
to gain by adopting less-stringent competition rules compared to the EU, at
least for firms that operate internationally. Any local, more lenient rules would
often only be superseded by the EU rules, making their regulators obsolete
120
similarity of those foreign laws with both the EU and the United States across all
major categories of competition law, such as anticompetitive agreements, abuse
of dominance, merger control, and remedies.
This study reveals that a vast majority of jurisdictions with competition law
regimes have laws that more closely resemble the EU competition laws than the
US antitrust laws—both in linguistic similarity and actual substance. More spe-
cifically, it shows that the emulation of the European model of competition law
by third countries surpassed that of the United States in the 1990s, and the EU’s
“sphere of influence” in the domain of competition regulation has continued to
increase ever since. Thus, a more systematic analysis lends support to the above
anecdotes that the EU competition law has, indeed, provided the most com-
monly copied template for the world competition laws.
Among the countries whose substantive competition regulations more closely
resemble US laws are countries with strong cultural and legal ties to America,
including Australia, Canada, and New Zealand but also an important jurisdic-
tion like Japan. However, in every region of the world, there are many more coun-
tries that have laws exhibiting greater substantive resemblance with the EU than
the United States, including most of the major emerging markets, such as Brazil,
China, India, Mexico, Russia, South Africa, and South Korea. The measurement
of linguistic similarity reveals similar, if not identical, patterns. For instance,
EU competition law language is used in China, India, and Mexico while few
(primarily common law) countries resemble the United States.
In addition to copying the language and the broader substantive content of
EU competition law, most foreign jurisdictions have emulated the EU’s institu-
tional model to enforce competition law. In doing so, their enforcement relies
primarily on administrative actions brought by public authorities as opposed to
private litigants. Indeed, private enforcement of competition law is rare outside
the United States. This public enforcement regime reflects the greater involve-
ment of government in the organization of economic life generally in most
countries as compared to the United States. The notion of “private attorneys
general”—and the large, active, plaintiff ’s bar associated therewith—is a tradi-
tion not found in much of the world outside the United States.160 China’s Anti-
Monopoly Law, for instance, while allowing for private actions, relies largely on a
purely administrative enforcement model.161
Copycat Litigation
There is an additional reason for why a foreign jurisdiction may find it beneficial
to align its domestic competition rules with those of the EU. After emulating
EU law, this jurisdiction can free ride on the EU’s investigations and follow the
123
global cartel, other foreign agencies see little advantage in spending their limited
enforcement resources for replicating the same (and, here, redundant) outcome.
However, in reality, cartel enforcement often requires several jurisdictions to
act, making it difficult to outsource enforcement entirely to the EU. For example,
as discussed earlier, the EU excludes foreign harm from its calculation of a cartel
fine, making it often necessary for other jurisdictions to impose a fine of their
own, or else cartels are not sufficiently deterred. Bringing their own case also
allows these jurisdictions to capture a monetary benefit by collecting a separate
fine. In the abuse of dominance cases, free riding may work as long as the authori-
ties across jurisdictions share the same competitive concerns and as long as the
EU issues a global remedy that alleviates those concerns. However, whenever
the EU’s remedy is limited to the EU, foreign jurisdictions are likely to follow the
EU’s lead and engage in copycat litigation.
There are several examples of this type of copycat litigation, even though
arguably it is difficult to always know whether another jurisdiction acts because
the EU has acted first or whether its reasons are independent, and the timing sim-
ply happens to coincide or closely track the EU’s investigation. For example, in
2005, South Korea followed closely the EU’s 2004 ruling condemning Microsoft
for an abuse of a dominant position in tying (or “bundling”) the Windows
Media Player with its operating system. This case was widely thought to have
been inspired by a similar tying case brought by the EU a few years prior. The
EU case began in 1998 with a complaint to the EU from Microsoft’s competitor,
Sun Microsystems. In 2004, the Commission held that Microsoft violated (now)
Article 102 of the EC Treaty through its bundling behavior.162 As a remedy, the
Commission required Microsoft to produce a version of its Windows operating
system without the Windows Media Player in addition to the bundled version
that Microsoft offered on the market. Shortly thereafter, the Korean competition
authorities went after Microsoft, investigating similar bundling claims. Following
complaints by Microsoft’s competitors such as Daum Communications in 2001163
and RealNetworks in 2004,164 the Korea Fair Trade Commission (KFTC)
fined Microsoft 33 billion Won (approximately $32 million) in 2005 for abuse
of its dominant position. It ruled that Microsoft had engaged in anticompeti-
tive behavior by bundling the Windows Media Player and Windows Messenger
with Windows operating system.165 Like the Commission, the KFTC ordered
Microsoft to market two versions of Windows, one with and the other without
Windows Media Player and Windows Messenger.166 Given the close approxima-
tion of the Korean remedy with that imposed by the EU, it seems highly likely
that the KFTC used the EU’s decision as a template. Daum, the complainant in
the case, had also explicitly noted before the Korean decision that “[it] hopes that
the case of European Union affects the decision of the Fair Trade Commission.”167
125
Microsoft itself further drew a comparison between the EU and KFTC decision,
yet described in its 2006 press release the KFTC decision as even “harsher” than
the remedy ordered by the EU.168
The EU’s multiple investigations into Google since 2010, which have received
prominent attention worldwide, have also led to several instances of apparent
copycat litigation. Several agencies in other jurisdictions have challenged Google’s
conduct following the EU’s investigations. However, many of these jurisdictions
do not explicitly refer to the EU’s investigations, making it difficult to label them
unambiguously as “copycat litigation.” At the same time, it is unlikely that these
agencies are building their cases in disregard of what the EU has done.
For example, Russia opened a formal investigation into Google’s practices
regarding Android concomitant with, or even slightly before, the Commission
initiated its formal proceedings. In February 2015, the Russian Competition
Authority—the Federal Antimonopoly Service of the Russian Federation or
FAS—launched an investigation into Google’s business practices regarding
Android upon a complaint of Google’s biggest local competitor, Yandex NV, a
search engine. Yandex was also one of the complainants in the EU’s investigation
against Google. The opening of the investigation by the FAS in February 2015
precedes the formal initiation of proceedings by the Commission by a couple
of months. However, it was public knowledge at the time that the Commission
was already assessing Google’s practices regarding Android ahead of issuing its
formal initiation of proceedings.169 In September 2015, the FAS issued a decision
in which it found that Google had violated Russian competition laws through
its illegal practices relating to Android. It also issued a cease-and-decease order
and imposed a fine of approximately 440 million rubles (approximately $7.8 mil-
lion).170 With this, FAS became the “world’s first competition authority to issue
a negative assessment of Google’s practices with respect to the Android operat-
ing system.”171 Yet a more skeptical view might note that the reason that Russia
was able to complete its investigation before the EU was the lesser due process
that was afforded to Google in the process. Regardless of the reason behind the
Russia’s early decision, it seems likely that the Russian investigation into Google’s
practices was at least partially triggered by a similar investigation simultaneously
underway in the EU.
Another example of likely copycat litigation can be found in a Brazilian inves-
tigation of Google’s business practices. In October 2013, Microsoft and local
search engines, Buscapé and Bondfaro, lodged complaints against Google with
the Brazilian Competition Authority (Administrative Council for Economic
Defense or CADE). CADE stated that “it is looking into accusations that Google
has unfairly used rivals’ content, discouraged their advertisers and favored its own
product listings in search results.”172 Even after Microsoft dropped its complaint
126
of wording leaves little doubt that the EU decision, indeed, was employed as a
direct model by the Ecuadorian agency.
These examples illustrate some reasons for why copycat litigation—often
emulating the EU—can be attractive for foreign governments. At the same time,
there has been a parallel tendency for foreign companies to increasingly direct
their competition complaints to the EU, making the EU the global arbiter of
most prominent competition disputes of the day. By bringing their competi-
tion battles to the EU as opposed fighting them on their home turf, these firms
engage in so-called forum shopping in order to take advantage of the EU’s
more stringent rules that are viewed as favoring intervention. This has made
the Commission a “hub” for global competition enforcement even without
actively seeking such a role or without the resources to pursue all complaints it
receives. A few examples of this practice—including Microsoft complaining to
the Commission about Google’s anticompetitive behavior in 2011 after having
been the object of a similar EU complaint by two US companies, Novell and
Sun Microsystems, over a decade earlier—were briefly discussed earlier in this
chapter.182 Both forum shopping and copycat litigation, while driven by differ-
ent actors and motivations, have the same effect of increasing the EU’s influence
through a variant of the de jure Brussels Effect and further entrenching the EU
competition rules as the global norm.
Digital Economy
The Brussels Effect. Anu Bradford, Oxford University Press (2020). © Oxford University Press.
DOI: 10.1093/oso/9780190088583.001.0001
132
Major Legislation
In the EU, privacy is considered a fundamental right that cannot be contracted
away.4 Building on the 1950 European Convention of Human Rights, which rec-
ognizes the right to privacy, the 2009 Lisbon Treaty elevated data protection as
a fundamental right guaranteed by the EU institutions.5 Specifically, the Lisbon
13
Treaty gave legal force to the EU Charter of Fundamental Rights, which had
been proclaimed almost a decade earlier. The Charter affords individuals the
right to privacy, including the right to the protection of their personal data.6 The
philosophy behind the EU’s fundamental rights approach to privacy is to foster
self-determination of individuals by granting them enhanced control over their
personal data.7
In addition to these constitutional protections, the EU sets out detailed pri-
vacy protections in its 2016 GDPR that entered into force in May 2018.8 The
GDPR replaces the 1995 Data Protection Directive,9 further solidifying the pri-
vacy rights that European citizens enjoy by making those rights directly appli-
cable across all member states. The GDPR calls for lawfulness, fairness, and
transparency in processing the data.10 It also limits the quantity and purpose for
which data can be collected, and requires that all the entities—whether private
companies or government agencies—collecting and processing the data ensure
the integrity, security, and accuracy of the data.11 Data can further be stored
only for a limited period.12 The GDPR also adds new obligations, such as the
“right to be forgotten” that gives the data subject the right to ask for erasure of
certain data,13 and “privacy by design,” which requires manufacturers to design
their products and services with GDPR obligations in mind.14 It requires mem-
ber states to establish independent data protection authorities to guarantee the
enforcement of the protections embedded in the GDPR, together with establish-
ing a European Data Protection Board.15 The GDPR further provides for heavy
sanctions, increasing the expected deterrence effect of the regulation: noncom-
pliance with GDPR may result in administrative fines of up to €20 million or
up to 4% of the company’s total worldwide annual turnover of the preceding
financial year, whichever is higher.16
The GDPR has a broad territorial reach.17 It applies to all companies process-
ing personal data of “data subjects”—that is, persons residing in the EU whose
personal data is being collected, held, or processed—regardless of the company’s
location or where the data processing takes place. The GDPR thus also applies to
controllers or processors not established in the EU, as long as these actors offer
goods or services to EU residents or monitor behavior that takes place within
the EU. Non-EU businesses processing the data of EU citizens will also have to
appoint a representative in the EU. The EU believes that its high privacy standards
are compromised if the protected data is made available in other jurisdictions. For
this reason, the EU bans the transfer of data from the EU to third countries that
fail to ensure “an adequate level of protection” of data privacy rights.18 What con-
stitutes “adequate” is defined case by case by the EU.
To complement the GDPR, the EU is also in the process of adopting a
new ePrivacy Regulation,19 with the goal of modernizing the existing 1995
134
ePrivacy Directive and ensuring its compatibility with the GDPR.20 The ePrivacy
Regulation imposes additional obligations on companies to safeguard European
citizens’ privacy with respect to their electronic communications, including data
transmitted via text messages and e-mails. It will also limit the companies’ ability
to use cookies to track internet users’ online activity or send out targeted adver-
tising without an explicit user consent.21 The legislative process surrounding the
ePrivacy Regulation has been contentious, with intense lobbying coming from
both civil society groups and industry trade associations.22 On the one hand, crit-
ics of the new ePrivacy Regulation describe the law as redundant and possibly
conflicting with the obligations stemming from the GDPR. On the other hand,
supporters of the law emphasize the need to extend privacy protections to cover
modern forms of online communication such as Skype or WhatsApp.23 The new
legislation has been adopted by the European Parliament and is currently being
discussed in the Council.24
The European courts have further expanded the scope of European citizens’
privacy rights. Already prior to the entry into force of the GDPR, the ECJ issued
several rulings that extended the 1995 Data Protection Directive’s territorial
scope. One of its landmark privacy rulings is the Google Spain—better known as
the “right to be forgotten” case—involving Google searches in Spain.25 The “right
to be forgotten” refers to the internet user’s right to demand all data on him or
her to be permanently deleted upon request. In this case, a user in Spain requested
Google to remove from its search engine results that linked him to old newspa-
per articles detailing his financial troubles. According to the complainant, the
information, while accurate, was no longer relevant since all debts were resolved.
Google refused to delink the information. Through a preliminary reference, the
ECJ was asked to rule on the scope of the privacy right and the applicability of
the then-applicable 1995 Data Protection Directive on data processors or control-
lers such as Google.
The ECJ reaffirmed the broad scope of the right to be forgotten stemming
from Article 12 of the 1995 Data Protection Directive. According to the ECJ,
EU law requires search engines, including Google, to honor requests to make
certain content, which is not adequate, relevant, or up to date, delinked and no
longer searchable. This obligation is also not conditional on demonstrating actual
harm to the data subject.26 The Court further rejected Google’s argument that
the Article 12 should not apply to a search engine, which merely compiles infor-
mation that was already in the public domain, and therefore should not have the
obligations of a data controller. The Court also found the location of the search
engine’s headquarters or the location where the relevant processing or index-
ing of the data takes place irrelevant to the search engine’s obligations as a data
controller. Google’s data processing activities outside the EU were “inextricably
135
have further shown notable willingness to deploy their enforcement powers. For
instance, the Hamburg data protection authority in Germany fined subsidiaries
of Unilever, PepsiCo, and Adobe for “failing to properly ensure the privacy for
employee and customer data transferred to the United States.”34 France has fined
Facebook for collecting information on users with the aim of using the data in
advertising “without having a legal basis” and “unfair” tracking of people on the
internet without offering sufficient warning.35 Other examples abound, ranging
from Sweden suing American Airlines after the company transferred data from
Sweden to a US electronic reservation system without prior customer consent,36
to the Czech Republic banning Google’s efforts to expand its mapping software
program,37 to Italy fining WhatsApp for sharing data with its parent company
Facebook. Facebook also stopped showing targeted advertisements tailored to
users’ expressed sexual preferences, after the Dutch authorities challenged the
practice.38 These cases suggest that member states remain willing to actively
enforce the privacy rights of their citizens, relying on the powers vested in them
under both EU and national laws.
Political Economy
The foundation of stringent data protection in the EU can be traced back to
World War II and the atrocities by the Nazi regime.39 Nazis systematically abused
private data to identify Jews and other minority groups they oppressed. The state
surveillance and the infringement of individual rights continued under the post-
war socialist dictatorship in East Germany when the Ministry for State Security,
known as Stasi, continued the surveillance of its citizens.40 These experiences
have left Germans—and Europeans more broadly—suspicious of state surveil-
lance and government data collection practices that are capable of infringing on
individual rights. These suspicions, combined with a mistrust that corporations
would act in the public interest in this regard, paved the way for a robust privacy
rights regime in Germany, and later in Europe more broadly.
In addition to these historical reasons, EU data protection regulation
emerged in response to the need to integrate the European market. By adopt-
ing common European data protection standards, the EU was able to harmo-
nize conflicting national laws that were emerging as a trade barrier, inhibiting
commerce in Europe. For this reason, GDPR and its predecessor 1995 Data
Protection Directive were viewed as internal market instruments, facilitating
the creation of a digital, single market by allowing an unhindered flow of data
within the entire common market. This internal market rationale was also critical
in offering a legal basis for the EU’s capacity to regulate in this domain.41 When
the Data Protection Directive was enacted in 1995, the EU had no competence to
137
enact fundamental privacy rights legislation, yet it had the competence to enact
measures to safeguard the proper functioning of the single market. Of course,
the market integration objective could also have been accomplished by adopting
common standards that provided a low (yet harmonized) level of data protec-
tion. Yet, as explained in c hapter 2, it was politically more feasible for the EU to
harmonize upward than downward, elevating the data protection standards in
low-regulation member states rather than forcing high-regulation member states
to weaken the data protection laws already governing their domestic markets.
While these internal motivations to integrate the European market pro-
vided the initial impetus for regulating data privacy, the EU’s current regula-
tory pursuits are also shaped by external motivations. Given the global nature
of data processing and the importance of cross-border transfer of data—not
just within the EU but across global markets—the EU has recognized the
importance of promoting international standards for the protection of per-
sonal data.42 With the GDPR, the EU is thus also seeking to contribute to
set the global standard on data privacy with other like-minded countries, cog-
nizant that “if we do not shape standards now, others do,”43 emphasizing also
that those alternative global standards that may emerge may be less desirable
in requiring data localization, or leveraging data protection for censorship and
state surveillance.44
These various motivations have provided a foundation for the EU’s strin-
gent data protection regulation. Yet those regulations have emerged through a
distinctly contested political process. Some member states, including Germany,
France, and Sweden, have been the most active promoters of European privacy
protections. The first data protection legislation was introduced in the state of
Hesse, Germany, in 1970.45 The German Constitutional Court also played a sig-
nificant role in the history of European data protection laws. In its landmark 1983
Census judgment (Volkszählungsurteil),46 the Court found a proposed census of
German population involving data transfers unconstitutional. In doing so, the
Court pronounced a “fundamental right to informational self-determination,”
which later became a cornerstone of European data protection laws.47 The right
to informational self-determination refers to the right of individuals to deter-
mine the principles governing the disclosure and use of their personal data. Any
limitation of this right must be proportionate and grounded on public interest,
for which there must be a constitutional legal basis. The ruling also set limits
regarding the purpose, accuracy, and retention of the data collected, together
with promulgating the right for the data subject to access and revise informa-
tion collected. Finally, the ruling broke new ground in requiring independence
of DPAs. These principles provided the foundation of the later-enacted EU Data
Protection Directive and the subsequent GDPR.
138
able to declare a complete victory—for example, they lost the battle to keep the
proposed fines for data protection violations at up to 5% of global turnover or
€100 million, whichever was higher56—it is fair to say that what emerged from
the legislative process was an unprecedentedly stringent data protection law, with
extensive obligations imposed on data controllers, backed by severe penalties.
In addition to the member states with strong privacy protections and dedi-
cated NGOs, individual citizens have given the impetus for stringent privacy rules
in the EU. The most notorious example is an Austrian lawyer and data protection
activist, Max Schrems, who launched a case against Facebook as a 23-year-old law
student, requesting Facebook to hand over his personal data.57 After learning that
Facebook had amassed 1,200 pages of data on him, Schrems filed multiple com-
plaints to the Irish Data Protection Commission (DPC), which had jurisdiction
over Facebook. Schrems’s complaints gained momentum with the Snowden rev-
elations that the US National Security Agency (NSA) was harvesting Facebook
data as part of a mass surveillance campaign. These revelations called into ques-
tion the adequacy of a 2000 EU-US Safe Harbor Agreement,58 which was meant
to guarantee the protection of personal data transferred between the EU and
the United States. After the Irish DPC declined to investigate the complaint
made by Schrems (due to the validity of the Safe Harbor decision at the time),
Schrems filed a lawsuit before Irish courts for judicial review of the DPC’s refusal
to investigate his complaint on its merits.59 Through a preliminary reference
from the Irish High Court, this lawsuit ultimately led to a ruling by the ECJ,
which declared the Commission’s Safe Harbor decision governing data transfers
between the EU and United States invalid.60
While Max Schrems’s activism may be unusual, his views regarding privacy
resonate broadly among Europeans. The most recent Eurobarometer survey on
European citizens’ attitudes toward privacy was carried out in 2016.61 While
the survey was conducted in the context of measuring support for the new
ePrivacy Regulation currently being debated by the EU, as opposed to GDPR,
its results are illustrative of the public attitudes toward privacy more gener-
ally. The results clearly confirm the importance that Europeans place on online
privacy. For example, over 80% of respondents say it is “important” that cook-
ies and other tools for monitoring their activities can only be used with their
permission, with 56% saying that this is “very important.” Similarly, 90% of the
respondents say that they should be able to encrypt their messages and calls to
ensure that only the intended recipient reads them. Almost as many—89% of
respondents—take the view that the default settings of their browser should
prevent the sharing of their information. Most respondents remain against
information sharing even if it helps companies provide new services they might
like, with 71% of respondents finding this “unacceptable.” The same survey also
140
confirms that Europeans take an active role in guarding their privacy by chang-
ing privacy settings on their computer and installing software to protect their
privacy. A total of 60% of the respondents have changed the privacy settings on
their internet browser by deleting the browsing history or cookies, while 40%
of the respondents avoid certain websites due to a concern that their online
activities are monitored. Additionally, 37% of the respondents have installed
software that protects them from seeing online advertisements while 27%
of respondents have installed software that prevents the monitoring of their
online activities. Unsurprisingly, active measures to enhance one’s privacy are
particularly common among young, educated, and frequent users of e-mail,
internet, and social networks.
In contrast to their deep support among the European public, the EU data
protection rules have faced significant criticism abroad. The United States,
in particular, has been skeptical about the EU’s approach, raising a concern
that data protection legislation is disguised protectionism.62 US companies
have strongly criticized the EU’s regulatory efforts, referring to “unreason-
able restraints” on their business practices.63 These companies also criticize the
compliance costs involved, with Google recently stating that it has spent “hun-
dreds of years of human time” to achieve GDPR compliance.64 US Fortune
500 companies had spent approximately $7.8 billion on GDPR compliance by
May 2018, averaging $16 million per company. Regardless of the costs involved,
many US companies are adjusting their global business practices to reflect
European norms, making data privacy one of the most powerful examples of
the Brussels Effect.
The US criticism is not surprising considering the depth of regulatory diver-
gence between the EU and the United States in this domain. The US data pri-
vacy laws are considerably weaker and their scope restricted to the public sector
and some sensitive sectors, including health care and banking.65 The data pri-
vacy issues of the private sector are largely relegated to self-enforcement by the
industry.66 Individual companies are allowed to create their own privacy poli-
cies, and consumers are expected to contract with those companies for the level
of privacy they want.67 Also the substance of any privacy right is more restrained.
For instance, the US courts have, to date, flatly rejected the right to be forgot-
ten, and favored free speech considerations over individual privacy.68 There is
also no independent regulatory authority with a power vested to enforce privacy
rights. Instead, it is part of a broader mandate of the Federal Trade Commission
(FTC) to protect consumers and police “unfair” or “deceptive” practices affect-
ing commerce.69
This EU-US regulatory divergence can partially be traced to the different
preexisting views that Europeans and Americans have about markets versus
14
De Facto Brussels Effect
The de facto Brussels Effect is particularly strong in the domain of data privacy.
Indeed, given its extraterritorial reach, some commentators describe the GDPR
as “unashamedly global.”75 The EU is an important market for many data-driven
businesses, including Facebook and Google. Facebook has 250 million users in
Europe,76 contributing 25% of Facebook’s global revenue.77 Google’s share of the
search market is over 90% in most EU member states, which exceeds its 67–75%
market share in the United States.78 Abandoning the EU market is not even
remotely a commercially viable option for them. It will further be difficult for
these digital companies to circumvent the GDPR by moving their data process-
ing activities outside the EU. The GDPR’s protection of European data subjects
regardless of where the data processing takes place makes the regulation both
extraterritorial and highly inelastic.
The EU’s regulatory capacity and stringency in data privacy are also consid-
erable, further contributing to the Brussels Effect. This has been the case, espe-
cially after the GDPR bolstered the EU’s data protection regime with demanding
standards and robust sanctions that are calculated based on the global turnover
of the data processors. However, while the GDPR conveys extensive regulatory
capacity in principle, a different question is whether the DPAs across the member
states will have the resources to deploy this capacity in practice. They would need
both substantial technical expertise and monetary resources to take on powerful
multinationals whose resources vastly outweigh the modest budgets of the DPAs.
For example, the Irish DPA is responsible for enforcing GDPR against digital
companies such as Airbnb, Apple, Facebook, Google, Twitter, and Microsoft, as
these companies have their European headquarters in Dublin, Ireland.79 At the
same time, the annual budget of the Irish DPA is approximately $9 million—
which is equivalent to the revenue that the digital companies based in Dublin
generate roughly every 10 minutes.80 Thus, the strength of the Brussels Effect may
ultimately hinge on whether the member state governments will vest their DPAs
with adequate resources to ensure the existence of the required regulatory capac-
ity. Thus far, the vast number of investigations concluded and underway in vari-
ous member states—some of which were mentioned earlier81—indicates that the
DPAs are not forgoing enforcement while waiting for their governments to shore
up their budgets. The following discussion also suggests that the digital compa-
nies are taking extensive measures in anticipation that the GDPR will, indeed, be
vigorously enforced against them.
Whether the Brussels Effect occurs therefore often comes down to the ques-
tion of non-divisibility of the products and services across global users. Various
examples suggest that, for today’s global digital companies, maintaining differ-
ent data practices across global markets is often both difficult (due to technical
143
“We’re making these updates as new data protection regulations come into effect
in the European Union, and we’re taking the opportunity to make improvements
for Google users around the world.”
Airbnb also announced that its revised, GDPR-consistent privacy policy
came into effect for all its existing users on May 25, 2018—the day the GDPR
entered into force.95 Uber similarly follows a single privacy policy worldwide,
including its riders and drivers in all jurisdictions.96 Other companies are simi-
larly undertaking considerable investments to ensure compliance with GDPR.
A recent PWC survey shows that GDPR readiness is a high priority for US
multinationals.97 Of the 200 respondents, 54% reported that GDPR readiness is
the highest priority on their data privacy and security agenda. Another 38% said
GDPR is one of several top priorities, while only 7% said it is not a top priority.
The GDPR’s Article 25 further pushes companies toward global compliance
by calling them to engage in “privacy by design” and “privacy by default.” These
concepts are designed to incorporate privacy considerations into the product
development through privacy-conscious product design. They encourage compa-
nies to develop products with built-in features that conform to strictest privacy
settings by default. Incorporating GDPR compliance into the product design is a
powerful way to globalize the EU norms. Microsoft, for instance, is developing its
products with features that help their clients maintain GDPR compliance.98 The
decision to incorporate EU data protection standards into products at the man-
ufacturing stage is perhaps the most powerful manifestation of technical non-
divisibility, affecting everyday products such as smartphones and more peculiar
products such as domestic robots alike.99
The Brussels Effect typically occurs because of economic and technological
considerations. However, it can also occur when global businesses choose a stan-
dardized, global policy to streamline their internal corporate processes. A desire
to ensure even-handedness in recruiting is but one example. In 2017, the Article
29 working group consisting of the European data protection regulators issued
guidelines, limiting the ability of employers to screen the social media profiles
of their potential employees unless the information on those sites would be “rel-
evant to the performance of the job.”100 This calls for a significant adjustment of
hiring practices of companies, given that a recent survey suggests that 70% of
employers review social media sites of their potential candidates before making
a hiring decision.101 A global firm hiring a multinational workforce is likely to be
discouraged from selectively reviewing some, but not other, social media profiles,
depending on the nationality of the candidate under consideration.
Global privacy policies can also be facilitated by enhanced consumer demand
to obtain matching protection that a company makes available in other jurisdic-
tions. For reputational and brand-related reasons, the companies may find it hard
145
to deny privacy protections for some consumers while allowing them for oth-
ers in another jurisdiction. For instance, Sonos, a wireless speaker company in
California, extended the GDPR protections to its customers worldwide, citing
their belief that “all Sonos owners should have the right to these protections,
[hence] we are implementing these updates globally.”102
At times, businesses have managed to limit their response to any new regula-
tions to the jurisdiction where those regulations have been instituted. At other
times, however, a broader corporate response has led to a global adjustment of
policies. For instance, Yahoo! was prosecuted before French courts for the mate-
rial that it made available on its US website because that material was accessible
to French citizens.103 While Yahoo! initially argued that it could not for technical
reasons limit the remedy to France by blocking only French residents’ access to
the site, independent experts concluded that this could be done with approxi-
mately 90% accuracy.104 Regardless of its technological ability to filter the mate-
rial across jurisdictions, in the end Yahoo! opted to forgo geographic filtering and
banned the material that was prohibited in France worldwide.105
While these examples illustrate the prevalence of the de facto Brussels Effect,
there are also numerous instances where the Brussels Effect has failed to mate-
rialize. At times companies are able to, and find it in their interest to, introduce
divisibility and limit their policy changes to a jurisdiction imposing the demand.
For example, while the European Commission and the European privacy regula-
tors have ordered Facebook to stop collecting WhatsApp data (after Facebook
acquired WhatsApp) citing both privacy and antitrust concerns, Facebook
continues to combine the data acquired through both platforms in the United
States.106 Some companies also responded to the entry into force of the GDPR by
taking down their websites in Europe as they were exploring ways to comply with
the new rules. Immediately after the GDPR took effect, the LA Times redirected
European users to a website featuring the following statement: “Unfortunately,
our website is currently unavailable in most European countries. We are engaged
on the issue and committed to looking at options that support our full range of
digital offerings to the EU market. We continue to identify technical compliance
solutions that will provide all readers with our award-winning journalism.”107
Facebook’s response to the entry into force of the GDPR offers an example
of legal divisibility. While the company has chosen to extend the EU protections
to all its users worldwide, as discussed, it proceeded to limit its legal liability in
the EU by introducing divisibility through changes in its corporate structure.
Specifically, Facebook moved its users in Asia, Africa, Australia, and the Middle
East away from the company’s Irish corporate structure and placed them under
its US legal structure.108 Presumably, this type of legal divisibility was designed to
limit the rights of users in these non-EU countries to report any data protection
146
violations to the Irish DPA and thus reduce the company’s exposure to the
GDPR’s tough remedies with respect to those users.
Some jurisdictions’ requirements for data localization can also form an
impediment to a single global privacy policy. Data localization requirement
forces companies to store or process personal data in a particular jurisdiction.
This may compel the company to create a distinct compliance process for that
jurisdiction.109 Currently, for example, Russia and China require data localiza-
tion.110 The proposed new privacy bill in India similarly contains such a require-
ment.111 Data localization forces companies to make a choice on whether to
create separate operations for a certain market or cease operating there. For exam-
ple, Russia blocked the professional networking site LinkedIn’s Russian opera-
tions due to the company’s refusal to locate the data there.112 At the same time,
LinkedIn has given into China’s demands for data localization and continues to
operate there.113
Another example that may lead to jurisdictionally tailored privacy poli-
cies comes from the 2018 California Consumer Privacy Act, which grants the
Californians the right to prevent the sale of their personal information.114 To
guarantee this right, businesses must “[p]rovide a clear and conspicuous link on
the business’ internet homepage, titled “Do Not Sell My Personal Information.”115
However, the same provision of the law offers the option to provide a California-
specific website that provides this “opt out” right, allowing the businesses to con-
fine their obligation vis-à-vis Californians.116 However, it is unclear how many
companies choose to host a special website only for California in practice.
Perhaps the most important development regarding the divisibility of privacy
policies is currently pending before the ECJ. In 2019, the Court is expected to
rule on whether the EU courts have the authority to order that search engines
such as Google and Bing must apply the “right to be forgotten” decision to their
search domains outside of the EU. This would potentially include delinking
requested information on Google’s global “google.com” site when accessed using
a non-European IP address.117 In July 2017, France’s Conseil d’État, the country’s
highest administrative court, raised this question in a preliminary reference pro-
cedure to the ECJ following an appeal by Google. Google had appealed the deci-
sion by France’s privacy watchdog, the Commission Nationale de l’Informatique
et des Libertés (CNIL), which had fined Google €100,000 for failing to apply the
privacy ruling across all of its global domains, including google.com. The CNIL
called for even greater extraterritorial effect for the right to be forgotten—the
case discussed earlier in this section.118
In January 2019, the ECJ’s Advocate General Szpunar’s Opinion was released
in the case. In that Opinion, AG Szpunar proposed that search engines should
not have to apply a delisting request made within the EU to all global domains.119
147
The opinion draws a distinction between searches executed from within the EU
versus those executed from outside the EU.120 While the Opinion acknowledges
that there are other areas of regulation in which EU law does have extraterritorial
effects—such as in competition and trademark law—and leaves open the possi-
bility that global delisting might be required in some instances, it takes the view
that the global nature of the internet makes extraterritorial effects less certain and
less well-defined.121 AG Szpunar also emphasizes the difficulty of balancing the
fundamental right to be forgotten against the legitimate interest of the public in
accessing information, especially if the applicability of EU law is global, while
the balancing exercise focuses on interests within the EU.122 The Opinion also
recognizes the political sensitivity associated with any decision that would man-
date global delisting; it could lead non-EU countries to retaliate and prevent EU
citizens from accessing information.123
While the outcome of the pending lawsuit is uncertain, the digital companies
are bracing themselves for a potentially adverse decision. For example, Google
reported the possibility of being forced to delist content worldwide due to a
court order among “Risk Factors” in its annual report to the US Securities and
Exchange Commission (SEC) as part of its obligation to give a comprehensive
summary of the financial state of the company, including the risks that it faces.124
In the end, the ECJ may or may not follow the AG Opinion. It could side with
the CNIL, and endorse the CNIL’s view that the right to be forgotten becomes
“meaningless” unless it applies universally, and hence includes the searches from
outside the EU. Otherwise, the past actions and statements regarding the privacy
subject could remain easily visible to American colleagues, or even to a “geeky
curious neighbor” who could use a non-EU country IP address to access infor-
mation.125 Alternatively, it may accept Google’s counterargument that such an
extension of this right would create a serious risk that countries with “more egre-
gious limitations on freedom of speech” would in their turn be able to universal-
ize their restrictions.126 If so, this would lead to a situation where the internet is
strictly governed by whichever jurisdiction has the most restrictive speech regime
in the world—something which would be a pure manifestation of the de facto
Brussels Effect, indeed.
De Jure Brussels Effect
The EU’s data protection regime has also led to a significant de jure Brussels
Effect. According to Paul Schwartz and Karl-Nikolaus Peifer, “EU data protec-
tion has been stunningly influential: most of the rest of the world follows it.”127
Another privacy expert, Graham Greenleaf, notes that “[s]omething reasonably
described as ‘European standard’ data privacy laws are becoming the norm in
148
most parts of the world with data privacy laws.”128 To date, nearly 120 countries
have adopted privacy laws, most of them resembling the EU data protection
regime.129 These countries range from large economies and regional leaders such
as Brazil, Japan, South Africa, and South Korea to midsize economies such as
Colombia and Thailand; and even to small economies and tiny island nations
such as Bermuda.130
That countries choose to emulate EU data protection laws is not surprising.
First, many countries look up to the GDPR as the “gold standard,” providing the
highest and most widely accepted standard to follow.131 Second, given that all
large firms handling EU citizens’ data have already in practice adopted EU pri-
vacy standards, governments face little resistance in entrenching these laws within
their domestic legal frameworks. Foreign corporations affected by EU laws face
no additional compliance costs from the de jure Brussels Effect, giving them the
incentive to lobby for the EU standard at their home market as well. This way,
they can level the playing field vis-à-vis their domestically oriented companies
that currently do not need to comply with the GDPR.
The US market illustrates this dynamic: In October 2018, Apple’s CEO Tim
Cook called the US government to adopt a comprehensive federal EU-style pri-
vacy law, saying that it was “time for the rest of the world” to follow the EU’s lead
and adopt a strict legal framework to protect users’ personal data. Cook described
the amount of data that companies collect of individuals “unsettling,” referring
to it as “surveillance” that can lead to an abuse of the data collected.132 Even
more strikingly, Facebook’s privacy chief, Erin Egan, joined Cook in announc-
ing Facebook’s support for a GDPR-equivalent federal privacy law in the United
States.133 Six months later, Mark Zuckerberg, the company’s founder and chief
executive, called for the adoption of GDPR-style laws worldwide in an op-ed
published in the Washington Post in the following terms:134
Facebook’s business model relies on data collection more than that of Apple’s,
making the stakes even higher for Facebook and Zuckerberg’s statement all the
more revealing of the new reality that these companies are facing, leading them
to embrace, rather than disparage, the GDPR. In the absence of a federal law,
149
companies in instances where the country does not have adequate data protec-
tion laws. However, the future of these standard contractual clauses as a basis of
data transfers is in doubt after the privacy activist Max Schrems challenged these
clauses before the Irish DPC.145 The preliminary decision of the DPC expressed
its concerns that standard contractual clauses provided inadequate privacy guar-
antees. The case has proceeded to the ECJ via the Irish courts.146 If the ECJ invali-
dates these clauses, foreign governments are likely to expend even greater efforts
to adopt EU-style privacy laws in order to retain open data flows between their
country and the EU.
The difficulties associated with cross-border data transfers absent adequacy
recognition has given several countries a strong incentive to align their laws with
the GDPR. For example, Argentina and Uruguay are the two Latin American
countries that have obtained the EU’s adequacy decision. Argentina adopted
its data protection law in 2000,147 closely resembling Spain’s 1992 data privacy
law and EU data protection standards. Three years later, the country obtained
EU’s adequacy recognition. In 2016, Argentina established a working group to
study the legislative reforms that may be necessary in order for the country to
retain its adequacy status in the post-GDPR legal environment, showing the
country’s willingness to keep updating their laws to retain conformity with the
EU.148 Uruguay similarly modeled its 2008 and 2009 data protection laws on
the EU’s data protection framework.149 The prospect of EU’s adequacy recog-
nition, which the country secured in 2012,150 was a key motivation behind the
law.151Uruguay saw the EU’s adequacy decision as important for attracting invest-
ment in the technology sector. For example, the Uruguayan Investment and
Export Promotion Institute highlighted how “[t]he EU recognition will open
the possibility for major European investments, in particular it will help Uruguay
boost its outsourcing industry [ . . . ] and attract more EU-based companies look-
ing for providers of administrative, financial and other data processing services in
Latin America.152
Japan recently concluded its talks on reciprocal adequacy with the EU, which
led both parties to agree in 2018 to recognize the other’s data protection sys-
tems as equivalent.153 Japan had amended its Act on the Protection of Personal
Information (APPI) in 2015,154 in part to bring it in line with the GDPR. The
Japanese business community played a large role in supporting the new law
because their international trading operations with European companies were
already subject to significant data protection regulation, making it dramatically
less costly to comply with similar domestic rules.155 Obtaining the EU’s adequacy
decision was also seen as a boon to Japanese companies, including Toyota Motor
Corp. and Sumitomo Mitsui Banking Corp., as such a decision allows them to
transfer personal data from the EU.156
15
represents a stark departure from the internet governance and privacy principles
in the EU.200 For example, China continues to block and filter online content on
a large scale. It has prohibited several companies from operating in the country.
Many companies, including Google, have also withdrawn from China because
of the extensive censorship rules and hacking attacks.201 China’s commitment to
EU-style data privacy is all the more questionable after reports surfaced of China’s
large-scale deployment of the facial recognition technique that China uses for law
enforcement purposes.202 China has further implemented a social credit scheme
that rates citizens for their trustworthiness on issues such as paying taxes or com-
mitting a crime.203 An untrustworthy rating has negative consequences for the
individual, including banning him or her from buying train or airplane tickets.
Thus, China’s practice of deploying data as a tool for social control is, in practice, a
stark reminder that any de jure Brussels Effect on paper does not necessarily mean
that the EU’s regulations and principles are deployed in any meaningful way.
Finally, India presents an interesting example of a jurisdiction that is in the
process of adopting a GDPR-style law, and which, in some respects, is expected
to be even more stringent than the GDPR. To date, India has not enacted a com-
prehensive data privacy law even though many Indian IT consulting companies,
such as Wipro204 and Infosys,205 have adopted many of the EU data protection
norms to govern their conduct. However, in 2017, an expert committee was estab-
lished to prepare a draft data protection bill. The draft Indian bill replicates many
of the key provisions embedded in the GDPR, including the right to access and
to correct data, right to data portability, and right to be forgotten.206 It also incor-
porates the privacy-by-design principle and requires that organizations carry out
Data Protection Impact Assessments and designate a Data Protection Officer.
The draft bill further envisions sanctions similar to those the GDPR provides.
Yet the bill also goes beyond the GDPR. Most notably, it contains a general-
ized data localization requirement, under which “a data fiduciary shall ensure the
storage, on a server or data centre located in India, of at least one serving copy of
personal data.” Additionally, certain categories of data can only be processed in
India. Data localization constitutes a significant departure from the EU data pro-
tection regime, and has met significant criticism and resistance given that it risks
disrupting the efficient flow of internet traffic and data transfers.207
These examples illustrate the extent of the de jure Brussels Effect but also
serve as a reminder of the dwindling influence of the US privacy regime. The
United States has clearly been an exception, resisting the EU’s lead in privacy
protection—at least until very recently. The Safe Harbor agreement and the sub-
sequent Privacy Shield have introduced changes in the US domestic legal frame-
work that clearly bring the US laws closer to the EU privacy standards.208 Yet no
comprehensive legislative reform has taken place at the federal level. In February
15
of whether this type of speech is prone to lead to violence. While hate speech is
an old phenomenon, its incidents have been on the rise recently. Hate speech is
also increasingly moving online, which has created the need for new regulation.
The following discussion briefly reviews the origins of the EU’s stringent
approach toward regulating hate speech and its willingness to limit the freedoms
of information technology (IT) companies, contrasting it with the United States’
relative reluctance to make internet operators liable for speech that their plat-
forms host. The comparison between the EU and the United States is particularly
interesting in this domain given the stark regulatory differences between the two
jurisdictions, and the reality that US companies are the ones most affected by
EU regulations. It then examines the recent voluntary Code of Conduct that the
EU has signed with leading IT companies and demonstrates how even this type
of voluntary approach toward regulation has allowed the EU to shape the hate
speech norms across the world through the Brussels Effect.
Major Legislation
The EU conceives illegal hate speech broadly, certainly compared with the
approach taken by the United States. Not only is speech that incites violence
banned in the EU, but also speech that incites hatred as such.217 In contrast, the
US Constitution only prohibits speech when that speech threatens and is likely to
provoke an imminent violent response.218 The United States is willing to extend
protection to hateful ideas the same way it protects other types of ideas under its
broader notion of free speech.219 The EU also condemns speech that denigrates
the dignity of a group, which the US jurisprudence does not do.220
These distinct approaches reflect differing philosophies that underlie the free
speech doctrines of the United States and the EU. The US Constitutional tra-
dition treats hate speech as an expression of racist or sexist ideas. Regardless of
how repellent some of those ideas might be to many, they are perceived as having
public utility and hence deserving of constitutional protection.221 This reflects
the United States’ steadfast commitment to free speech and its reluctance to have
the government decide which type of speech is valuable and which ideas should
be silenced. As a further manifestation of this, the United States remains the only
signatory to the International Covenant of Civil and Political Rights that objects
to the Covenant’s Article 20(2) prohibition of “any advocacy of national, racial
or religious hatred that constitutes incitement to discrimination, hostility or vio-
lence.”222 For the United States, Article 20(2) remains unacceptable as it infringes
on the United States’ concept of the freedom of expression.
The EU’s regulation of free speech is embedded in the Charter for Fundamental
Rights, its primary treaties, and in the secondary legislation. Article 11 of the EU’s
157
Charter for Fundamental Rights recognizes that “everyone has the right to freedom
of expression.” Yet, the case law by the European courts has made it clear that this
freedom is far from absolute, and can be curtailed when non-discrimination norms
prevail over free speech norms.223 In its judgment Feryn in 2007,224 the ECJ ruled
that mere speech could constitute an act of discrimination that violated the princi-
ple of non-discrimination enshrined in EU Treaties.225 This stringent stance toward
speech is encapsulated in the opening line of the Advocate General Maduro’s
Opinion in Feryn—“contrary to conventional wisdom, words can hurt.”226
The ECJ often cites the European Convention and the rulings of the European
Court of Human Rights (ECtHR) in its own decisions, making the ECtHR’s
jurisprudence a part of the EU’s fundamental rights fabric. The ECtHR shares the
ECJ’s view that the right of free expression must be balanced against the need to
curtail speech that incites hatred and undermines the “equal dignity of all human
beings.”227 In its 2006 decision Erbakan v Turkey, the ECtHR ruled that it may
be necessary “in certain democratic societies to sanction or even prevent all forms
of expression which spread, incite, promote or justify hatred based on intoler-
ance . . . , provided that any ‘formalities’, ‘conditions’, ‘restrictions’ or ‘penalties’
imposed are proportionate to the legitimate aim pursued.”228 The ECtHR has
also clarified its views on the role of IT companies in disseminating hate speech,
noting that by “provid[ing] a platform for user-generated comments [these com-
panies] assume the ‘duties and responsibilities’ associated with freedom of expres-
sion in accordance with Article 10 § 2 of the Convention where users disseminate
hate speech or comments amounting to direct incitement to violence.”229
EU law also requires member states to penalize the most severe forms of
hate speech,230 and the EU has passed directives to control racist and xenopho-
bic behaviors in the media and online.231 Even though the member states have
responded with varying national norms on hate speech, it is telling that even the
Netherlands—the bastion of free speech in the EU—prohibits the making of
“public intentional insults” in its criminal code. The Dutch code also prohibits
“engaging in verbal, written, or illustrated incitement to hatred, on account of
one’s race, religion, sexual orientation, or personal convictions.”232 Most promi-
nently, the Netherlands has applied its rules on hate speech in the case involv-
ing its right-wing politician, Geert Wilders, who has targeted Muslims and Islam
in much of his political rhetoric.233 This shows that even among the European
nations most sympathetic to defending free speech, hate speech is relatively
broadly defined and strictly enforced.
Not only is the EU more willing to curtail hate speech as a phenomenon, it
is also more willing to generally regulate digital companies.234 It is therefore not
surprising that the EU has evolved into a prominent regulator of hate speech
taking place online, holding the IT companies responsible for the speech that
158
takes place on their platforms. In contrast, the United States is not only a strong
proponent of free speech; it also views the commercialization of the internet as
a testament to the United States’ commitment to entrepreneurship, innovation,
and free markets, all of which have been the drivers of economic success and tech-
nological progress.235 This has led to a light-handed approach toward regulating
the online activities of the tech industry—including online hate speech.
While maintaining a strict legal framework on hate speech in general, the EU
has chosen a participatory and voluntary approach in its efforts to police hate
speech online. In 2016, the European Commission signed a voluntary Code of
Conduct (Code) on Countering Illegal Hate Speech Online with four US IT
companies: Facebook, Twitter, YouTube, and Microsoft.236 The Code requires
these signatories to adopt and maintain “Rules or Community Guidelines”
(Community Guidelines) that reflect the European standard of hate speech. By
signing up to the Code, these IT companies agree to “prohibit the promotion
of incitement to violence and hateful conduct on their platforms.” In addition,
they agree to assess any request to remove any such content from their platform
within 24 hours after receiving a request to do so, and proceed to remove the
content when necessary. The EU complements this voluntary code with a set of
non-binding recommendations that it released in 2017, and another set of non-
binding operational recommendations released in March 2018.237 These recom-
mendations contain guidelines on how IT companies can effectively prevent,
detect, and remove illegal content and how EU authorities can ensure efficient
communication with these companies regarding the content that needs to be
removed.
The EU’s voluntary approach to regulation also operates in the shadow
of binding law, which would consist of a potentially more drastic regulatory
response in the future. The EU has made it clear that it can always implement
binding legislative measures if the Code proves to be insufficient. When releasing
its recommendations in 2017, the Commission announced that it would moni-
tor the IT companies’ activities closely to “assess whether additional measures
are needed in order to ensure the swift and proactive detection and removal of
illegal content online, including possible legislative measures to complement the
existing regulatory framework.”238 The Commission confirmed the possibility of
more coercive legislation once again in April 2018 as a response to Facebook’s
involvement in the Cambridge Analytica scandal.239 The prospect of binding
rules, backed by sanctions, gives firms an enhanced incentive to carry out their
self-monitoring in ways that satisfy European regulators. Because of this threat of
a more severe regulatory response, some commentators have described the EU’s
existing regulatory approach as neither voluntary nor a product of public-private
partnership but instead “government coercion.”240
159
Political Economy
The EU shares the United States’ commitment to the freedom of expression but
is significantly more prepared to curtail that freedom in the case of hate speech.
Unlike the United States, the EU does not view the right to hate speech as a
valuable part of public discourse. Instead, the EU views hate speech as a harm-
ful manifestation of discrimination. Curtailing hate speech is seen as the oppor-
tunity to promote democracy, equality, and citizens’ participation in society.244
The EU’s stand against hate speech is best understood in light of its history of
racist and xenophobic violence, including most prominently the incitement of
hatred by the Nazis against the Jews leading up to World War II. The burden of its
history continues to define the European approach to hate speech, heightening
its sense of the “duty of remembrance, vigilance and combat” against racist and
xenophobic sentiments.245
Many individuals and activists in the EU welcome the recent regulatory
push to make internet operators responsible for the speech their platforms
host. The rise of populist parties with anti-migrant views has contributed to the
rise in the incidents of hate speech, particularly on social media.246 To counter
this trend, several government institutions and NGOs in Europe maintain an
active role in advocating policies and practices against hate speech. Among
those organizations that have spoken forcefully against hate speech and that
have called for increased responsibility for online platforms in censoring such
speech are the following: The Council of Europe’s European Commission
against Racism and Intolerance (ECRI);247 the Council of Europe’s Youth
Department, which has organized the “No Hate Speech Movement” across
Europe;248 and Galop UK.249 Also, journalists in Europe—whose profession
rests on the freedom of expression—have advocated restrictions on that free-
dom in order to curtail hate speech. The European Federation of Journalists
(EFJ), supported by a coalition of civil society organizations, have launched
a European wide #MediaAgainstHate campaign.250 The purpose of the
160
The Brussels Effect
The EU’s efforts to regulate hate speech online provides an interesting example
of the de facto Brussels Effect as it represents a situation in which the EU is not,
at least yet, externalizing a binding set of EU rules. Rather, this externalization
involves voluntary commitments adopted by the companies in cooperation with
the European Commission. Online hate speech is also an intriguing example of
EU’s unilateral regulatory influence because the EU is not the most stringent
regulator of online speech globally, trailing behind other large markets such as
China and Russia.
The EU’s notable market power in this area is determinative, forming the
foundation for the Brussels Effect. European consumers and revenue generated
in Europe is key to the world’s leading IT companies. The EU’s large consumer
base of 500 million potential customers makes it one of the IT companies’ “most
important overseas markets.”253 For example, the EU as a whole represents one
of the largest markets for Facebook, with 250 million users.254 Europe accounts
for around 25% of Facebook’s revenue, making Europe Facebook’s second larg-
est revenue source (behind the United States).255 The European small and
medium-sized enterprises (SMEs) market in particular is a significant source of
advertising revenue for Facebook, with more than 60% year-over-year revenue
growth.256 For YouTube, five member states alone account for 14% of the com-
pany’s global users.257 In most EU member states, Google’s share of the search
market is over 90% whereas most estimates suggest that Google’s market share is
around 67–75% in the United States.258 This likely explains, at least partially, why
Google—after years of aligning its universal hate speech rule with the US First
16
slightly from an already high removal rate of 70% in the third monitoring round
in 2018. While the Code only calls for these companies to review “the majority”
of the notifications within 24 hours, on average the companies are reviewing 89%
of notifications within that time frame, which is over double the number com-
pared to the first monitoring round.273 The IT companies are also building up
their capacity to comply by hiring more staff to review illegal content. Facebook
alone announced in 2017 that it would hire an additional 3,000 moderators to
identify hateful material on its platform, adding to the existing team of 4,500.274
Finally, new companies are joining the Code, some of the latest signatories being
Instagram, Google+,275 and Snapchat in 2018.276
Despite the (relative) success of the voluntary regulation to date, the EU
is considering abandoning the voluntary approach and introducing binding
regulation in the near future. A comprehensive “Digital Services Act” is cur-
rently being drafted by the Commission, and may possibly be introduced by the
end of 2020.277 This new Act would vest the EU with “sweeping legal powers”
to regulate hate speech as well as other illegal content and political advertis-
ing online. As a result, the removal of illegal content would become manda-
tory for social media platforms, and their failure to do so would result in fines.
The reasons for the hardening regulatory approach are likely two-fold. First,
the severity and frequency of controversies relating to illegal online content
has reduced the public confidence in IT companies’ self-regulation. Second,
the decision by some large member states—including France, Germany and
the United Kingdom—to introduce national legislation targeting online hate
speech has given the Commission a strong internal market rationale to act, as
it wants to prevent inconsistent national legislations from emerging across dif-
ferent member states.
Regardless of whether the proposed Digital Services Act will be adopted
in the end, the case of online hate speech remains particularly interesting as an
example of the Brussels Effect because of the way the EU’s regulatory capacity
has thus far been channeled to global markets through voluntary norms, leading
to notable de facto Brussels Effect. Moreover, it is also an interesting case because
the EU is not the most stringent regulator of speech online—a condition that is
typically needed for the Brussels Effect to occur. When it comes to content that
is allowed or censored online, the EU is considerably less stringent in comparison
to countries such as China, Iran, or Russia, which maintain significantly higher
restrictions on the freedom of expression—even if the focus of these govern-
ments’ censorship was politically unacceptable speech more than hate speech as
such. Yet IT companies do not choose to follow, for example, the more stringent
Chinese standard and minimize the content that they allow online, even though
this would guarantee their access to every market.
164
operate.280 A universal rule could further reflect either the most stringent stand
ard, suppressing speech permitted in many markets yet allowing the company to
operate in even the most speech-restrictive nations; or, alternatively, the universal
rule could reflect the least stringent standard, which would maximize free speech
but lead to the company being excluded from several markets, making the plat-
forms unavailable to millions. If the companies instead forwent a single global
rule and tailored their free speech rules to each nation in which they operate,
they could push the outer limits of protection in each nation, retaining their free-
dom to operate across the world markets. From among these options, it appears
that IT companies are predominantly choosing a universal rule. Facebook and
Google adopted universal rules from early on. Twitter used to be the only inter-
net company to adopt purely country-specific rules, but six months after signing
the Code, it too moved toward adopting a universal standard, prohibiting “hate-
ful conduct” in its global Terms of Service. The reasons for the globally uniform
rules are technical, economic, and even social and cultural.
In principle, IT companies could try to pursue country-specific rules by
resorting to “geo-blocking,” which would allow them to ban selected content by
geography.281 Geo-blocking has emerged as a primary way to separate internet
users according to their geography. This is done through the use of geolocation
technology, which allows the service provider to determine where the user is
located based on the location of the user’s “Internet Protocol” (IP) address.282
Geo-blocking can also be implemented through country-specific domain names.
For example, because Germany and France have made it illegal to deny the
Holocaust, the user cannot find Holocaust-denial sites on Google.de and Google.
fr (the German and French Google default search engines) even when those sites
would be available on Google.com.283
However, in practice it is often difficult to isolate European-only data, mak-
ing geo-blocking an inadequate tool to make the online speech “divisible” across
jurisdictions while ensuring compliance with EU standards. Rachel Whetstone,
Google’s former director of Global Communications and Public Affairs in the
EMEA region, acknowledged that legal differences between how governments
regulate freedom of expression “create real technical challenges, for example,
about how you restrict one type of content in one country but not another.”284
For instance, geo-blocking is easy to circumvent as a user simply has to change
its account’s location settings.285 Encryption technology also allows users to
hide their locations online, meaning that it might be technically impossible to
comply with jurisdiction-specific rules without removing content worldwide.
Indeed, the difficulty of isolating European-only data has led to court orders
that require IT companies to remove illegal content in both the specific country
and globally.286
16
identical) comments by the same user who posted the illegal information in the
first place.293 Significantly, the Opinion further suggests that because the relevant
EU directive does not regulate the territorial scope of such an obligation, “it does
not preclude a host provider from being ordered to remove such information
worldwide.” This case presents a similar issue to the other case also currently pend-
ing before the ECJ (and discussed earlier), querying whether the “right to be for-
gotten” imposes on the internet platforms such as Google the obligation to delist
certain information worldwide. Together, these cases offer a novel—and highly
consequential—opportunity for the ECJ to determine how far-reaching, indeed,
the Brussels Effect should be.
As this chapter has shown, the EU has become a significant global regula-
tor of digital companies. Through the GDPR, the EU is shaping transnational
corporate conduct and foreign government legislative activity alike, enhancing
the privacy protections enjoyed by individuals far beyond the EU. Through its
regulation of online hate speech, the EU is redrawing boundaries of acceptable
discourse similarly across jurisdictions around the world.
Data protection provides a strong example of the Brussels Effect, both de facto
and de jure. The EU represents an important market for multinational compa-
nies, ensuring that the fundamental precondition of the Brussels Effect—market
size—is met. The GDPR is also inelastic in that it protects the European data
subjects even if the data processing takes place outside the EU. The GDPR has
further strengthened the Brussels Effect by laying out even more stringent data
protection standards than what existed in the EU before. It has also enhanced
the EU’s regulatory capacity although—unlike in the domain of competition law
where the Commission remains a key enforcer—the enforcement of the GDPR
rests almost entirely on member state DPAs. The long-term salience of the
Brussels Effect will hence depend on the effectiveness of those national regula-
tors in deploying the regulatory capacity that the EU institutions have bestowed
upon them.
While the above conditions underlying the Brussels Effect are typically pres-
ent, the occurrence of the Brussels Effect in data privacy often comes down to
the existence of non-divisibility. This chapter has shown how most multinational
companies today maintain a global privacy policy that closely conforms to the
GDPR, likely for reasons of both technical and economic non-divisibility as well
as to minimize complexity and compliance errors. Non-divisibility is also driven
by these companies’ need to preserve a global brand and offer equal protections
to all their users, in particular today when data protection issues have grown in
salience and drawn global attention to the corporate practices in this regard.
While these dynamics have contributed toward non-divisibility, this chapter has
168
also examined several examples where the companies have been both able and
willing to divide their conduct across various markets. Thus—as was the case
with competition law—data protection also highlights the importance of non-
divisibility in explaining the variance in the manifestation of the Brussels Effect.
The de jure Brussels Effect has also been prevalent in the case of data protec-
tion, as illustrated by the number of jurisdictions across Asia, Africa, and Latin
America adopting domestic data protection laws that closely emulate the GDPR.
This extensive de jure Brussels Effect is likely driven by several forces, includ-
ing the de facto Brussels Effect, which has made multinational companies keen
advocates of the GDPR-type laws in their home markets—including recently
in the United States. The EU’s requirement for “adequacy” as a condition for
international data transfers has given an additional impetus for foreign govern-
ments to emulate the GDPR. The recent scandals, such as Cambridge Analytica
data breach, have exposed data privacy violations and further fueled demand for
tougher data protection laws abroad. In all those instances, the foreign govern-
ments often turn to the GDPR in their legislative drafting, given both its compre-
hensiveness as well as reputation as the “gold standard” worldwide.
In addition to imposing extensive obligations on digital companies to main-
tain users’ data privacy, the EU has put pressure on online platforms to police
content that can be viewed as hateful. It embraces a broad notion of what con-
stitutes hateful speech and does not share the US’ liberal approach toward regu-
lating the internet. It is notable how the targets of its regulation—some of the
most powerful companies in the world—are adhering to the EU’s rules even in
the absence of binding rules and sanctions. This example thus illustrates that
the Brussels Effect can occur even when the EU leverages its regulatory capacity
through voluntary regulation. In addition to being a form of voluntary regula-
tion, online hate speech offers an interesting variant of the Brussels Effect in that
the EU’s regulation does not present the most stringent regulatory standard—
jurisdictions such as China and Russia are even more restrictive of online con-
versations. Indeed, China is among the few jurisdictions that have blocked, for
instance, Facebook altogether.
There are signs that some other jurisdictions are also surpassing the EU in
regulatory stringency, further testing the boundaries of the Brussels Effect. In the
wake of the recent Facebook livestreaming of a massacre that took place in two
mosques in New Zealand, Australia passed domestic legislation that orders social
media companies to “expeditiously” remove “abhorrent violent material” from
their platforms.294 Failure to do so will lead to large fines or even jail time for the
company executives. The law, hastily passed, is considerably more far-reaching
than the online hate speech regulation in the EU, and has led to strong criticism
by IT companies.295 It remains to be seen how the Australian law will affect IT
169
The Brussels Effect. Anu Bradford, Oxford University Press (2020). © Oxford University Press.
DOI: 10.1093/oso/9780190088583.001.0001
172
importer and exporter of foodstuffs—a term that refers to both processed food as
well as livestock and other raw material used for food.1 According to Phil Hogan,
the EU’s commissioner for Agriculture and Rural Development, the EU’s success
as the biggest exporter of agri-food products in the world rests on various regula-
tory reforms that have made the EU producers competitive in global markets but
is also explained by the “worldwide reputation of EU products as being safe, sus-
tainably produced, nutritious and of high quality.”2 Preserving this high-quality
reputation of the European food industry is therefore of enormous economic
significance for the EU.
But beyond its economic importance, food is also often an emotional issue
among Europeans, and food production and cuisine form an important part of cul-
tural and regional identity in many parts of Europe. For instance, the Europeans’
resistance to genetically modified organisms (GMOs) does not merely reflect safety
concerns; it also stems from a desire to restrict intensive farming and limit the power
of monocultures while maintaining the vitality and diversity of the European coun-
tryside and protecting the traditional farming culture. Because of these broader
cultural and emotional attachments to food, along with the sector’s economic
importance, food safety has become a salient policy issue—both for European pro-
ducers and consumers—and hence an important target of EU regulations.
In the last several decades, numerous food scandals have weakened con-
sumer confidence in the food supply chain and prompted broad public sup-
port for regulatory intervention.3 Perhaps the most notorious food scandal was
the BSE—“mad cow disease”—crisis that originated in 1986 from the United
Kingdom, where animal meat and bone meal had been used as feed for livestock.
Once it was discovered that BSE might be transmitted to humans and cause the
fatal Creutzfeldt-Jakob disease, the EU ordered an embargo of all British beef.4
However, BSE had already spread to livestock in other parts of Europe, further
aggravating the crisis and leading to mass slaughtering of infected cows. In the
United Kingdom alone, the crisis led to 156 people dying of Creutzfeldt-Jakob
disease in late 1990s after eating infected beef.5 This scandal sparked widespread
criticism about existing food safety regulations and highlighted the need for
more concerted action at the EU level.6 Other notable food crises that have moti-
vated public support for strong EU-wide regulatory action include the detec-
tion of tainted Spanish colza oil (1981), Benzene-contaminated Perrier in the
United Kingdom (1990), carcinogenic dioxin in feed for poultry and livestock in
Belgium (1999), E. coli deaths in Germany following imports of Egyptian seeds
and beans (2011), and the revelation that horse meat was being served as beef in
burgers in several European countries (2013).
In addition to calling for new regulations after each of these individual food
safety incidents, Europeans have also expressed concerns about food safety
173
Major Legislation
Since its founding, and particularly in recent decades in response to various food
safety crises like those already discussed, the EU has enacted a broad range of food-
related legislation. According to the Commission, “[e]very European citizen has
the right to know how the food he eats is produced, processed, packaged, labeled
and sold.”7 Notable regulations address the safety of food and animal feed, pro-
duction hygiene, health and welfare of animals used as food, use of food additives
such as preservatives and food colorings, food packaging, and labeling of food.8
For example, the EU bans certain contaminants that may expose consumers to
foodborne illness and restricts certain food additives due to their harmful health
effects. The EU also imposes strict limits on the maximum pesticide residue per-
mitted in food after it is harvested and enforces high standards of hygiene to be
maintained in slaughterhouses. Producers must comply with robust certification
processes that provide reliable information on compliance with food safety rules
or, for example, verify that the criteria for organic production have been met. In
174
can track GMOs and make informed choices about food.22 The EU regulation
calls for the labeling of most authorized foods, ingredients, and animal feeds
containing over 0.9% GMOs.23 All foods marketed in the EU that are prepack-
aged GMO food or GMO feed products must have a label indicating “genetically
modified” or “produced from genetically modified [name of the organism].”24
The EU’s labeling threshold is the strictest in the world. By comparison, in many
countries such as the United States and Japan, products may contain up to 5%
GMO material before they trigger the labeling requirement.25
Political Economy
Food has long been a salient issue in Europe, and Europeans take risks associ-
ated with food seriously. A 2010 Eurobarometer survey suggests that Europeans
remain particularly fearful of risks associated with animal infections, chemical
contamination, and new technologies such as GMOs.26 For instance, 70% of
Europeans worry about pesticide residues, antibiotics or hormones in meat, mer-
cury in fish, and dioxins in pork. Cloning of animals for food products invokes
similar levels of concern. The same survey finds that Europeans also have a rela-
tively high degree of confidence in public authorities in managing such risks, fur-
ther explaining the public support for regulatory intervention in this area.
Europeans are also particularly supportive of stringent food safety regulations
relating to food origins and traceability. In today’s market, food is increasingly
sourced from around the world, involving many producers from various jurisdic-
tions before it reaches the final consumer. But these long supply chains can also
lead to uncertainties and problems with traceability. For example, in 2013, the EU
discovered that horsemeat was being served as beef in burgers in several coun-
tries. The horsemeat in question came from a Romanian slaughterhouse, and was
sold by a Cypriot trader to a French supplier, which then passed it onto a French
food processing company, which further sold the product to British and French
supermarkets.27 A few years earlier in 2011, tainted bean sprouts originating from
Egypt killed twenty-two and further sickened two thousand people. Yet, before
the chain of liability was discovered, Spanish farmers were falsely blamed and a
trade ban was imposed on Russia, leading to substantial economic losses for both
Spanish and Russian farmers.28 Scandals like this helped catalyze European sup-
port of stringent traceability rules that can help identify the origin of a food crises
and thus facilitate a regulatory response.
The EU’s pro-regulation view is not always shared by other countries, par-
ticularly the United States, especially when the EU has acted on “precaution”
in instances where the risks associated with food safety are harder to ascertain.
This has made food safety a frequent subject of international trade disputes. For
176
example, the EU has banned the importation of US beef treated with growth
hormones and maintained the ban even when faced with an adverse WTO ruling
regarding the legality of the ban.29 The EU has also banned US poultry that has
been rinsed with chlorine for sanitation purposes, similarly leading to a WTO
complaint.30 However, these high-level trade disputes between the EU and the
United States have not restrained the EU’s tendency to regulate food safety
through stringent standards, something that has been critical for the broader
global impact of the Brussels Effect.
Another major area in food safety regulation where the EU has consistently
sought more rules and oversight than several other jurisdictions relates to the cul-
tivation and sale of GMOs.31 GMOs are regulated in widely divergent ways across
the globe. But in the EU, there is strong political support for the heavy regulation
of their use. Survey data from 2001 and 2006 shows that 62% of Europeans are
worried about the food safety risks posed by GMOs, and 71% of Europeans do
not want GMOs in their food.32 A more recent survey from 2010 suggests that
attitudes toward GMOs have not softened, confirming that a high proportion
of Europeans (70%) agrees that GM food is fundamentally unnatural, and 61%
of Europeans agree that GM food makes them feel uneasy. In addition, 61% of
Europeans disagree that the development of GM food should be encouraged.33
This strong overall support for GMO regulation in the EU masks underly-
ing variation across the member states. While less than half of the population in
countries such as Ireland (46%), Sweden (48%), and the United Kingdom (48%)
worry about GMOs, over 80% of the population in Greece and Lithuania harbor
safety concerns. In Austria, GMOs are ranked as the most serious food safety
concern (67%), together with pesticides.34 Member states’ regulatory policies are
also divided on GMOs and often reflect the composition of their domestic agri-
cultural sector and the influence of the country’s strongest agricultural organiza-
tions. For example, Spain—the largest GMO producer in the EU—together with
the Czech Republic, Portugal, Romania, and Slovakia favor GMO development,
while Austria, France, Germany, Greece, Hungary, and Luxembourg remain
against their cultivation and use. The member states that are reluctant to embrace
GMOs refer to socioeconomic, ethical, or political reasons for their resistance.35
Despite some EU member states being in favor of more GMO cultivation, the
anti-GMO movement in the EU is formidable, and it has generally shaped the
legislative agenda on GMOs. This anti-GMO coalition includes major NGOs,
whose advocacy against GMOs has been more successful in influencing EU leg-
islation than that of the industry promoting the GMOs.36 Importantly, these
NGOs have also been able to harness the support of interest groups representing
European farmers (Copa-Cocega) and the European retail industry (Eurocoop
and EuroCommerce). This traditional “big farm” industry has not embraced
17
GMOs, preferring to focus on conventional farming while the food retailers are
opposed to GMOs because of the intensity of public resistance among their cus-
tomers. In the face of the ardent support for stringent regulation by this large
anti-GMO coalition, the pro-GMO coalition, which includes the large agro-and
food-industry groups such as Monsanto/BASF, Syngenta, Bayer, and DuPont—
have not been successful in changing the consumer perception and influencing
EU policy.37 For example, after the BASF’s genetically modified Amflora potato
was authorized for cultivation in the EU, the online activist network Avaaz and
Greenpeace collected one million signatures on a petition calling for a new mor-
atorium on GMO cultivation,38 forcing BASF to withdraw from the market.39
Monsanto also withdrew all of its pending applications to cultivate GMO crops
in the EU in 2013, conceding that the deep-seated resistance in the EU toward
GMOs showed no signs of being alleviated in the foreseeable future.40
The EU’s stringent regulations of GMOs and biotechnology, more broadly,
also highlight the starkly opposing views between the EU and the United States.
The EU’s general position is against the production, use, and spreading of GMOs,
unless they are proven safe with scientific certainty.41 The EU’s regulatory regime
is based on pre-market approval, the precautionary principle, and post-market
control. In contrast, the United States regards GMO products as substantially
similar to products made using traditional production methods and allows them
unless they are proven unsafe. GMO products can therefore be cultivated and
marketed in the United States without extensive pre-market safety studies.42
These differences replicate similar EU–US divisions in many other areas of regu-
lation, where the EU tends to err on the side of caution whereas the United States
is quick to embrace new technologies and remains skeptical of government inter-
vention, in particular if any harm is uncertain or not fully substantiated.
There may, however, be additional motivations that explain the US–EU regu-
latory divergence on GMOs. The United States is the world’s leading GMO pro-
ducer, while at the same time GMOs are hardly cultivated in the EU.43 In 2015,
the United States had 70.9 million hectares devoted to farming genetically modi-
fied crops; but the EU member state with the highest acreage of genetically modi-
fied crops, Spain, devoted only .11 million hectares.44 Biotechnology-enhanced
production is seen as essential for the United States to remain competitive in
export markets, while the EU places cultural importance on small-scale farm-
ing and remains skeptical of mass production technologies. Consequently, US
farmers and the biotechnology industry are influential in the US political process
regarding GMO regulation, whereas farmers producing non-GMO crops wield
influence in the EU.
Consumer preferences are also reflected in the regulatory divergence. While
Europeans are worried about the food safety risks posed by GMOs, US consumers
178
have shown less concern for the issue. For example, according to an Environics
poll, 78% of Americans support agricultural biotechnology, whereas the com-
parable figure in Germany was 54%, 52% in France, 36% in Britain, and 29% in
Spain.45 US consumers are also relatively uninformed about GMOs in general.46
However, some recent surveys indicate that attitudes toward GMOs in the
United States may be hardening. For example, recent US polls suggest that con-
sumers favor mandatory GM food labeling.47 Additionally, a 2014 study found
that 72% of US consumers take the view that “avoiding genetically engineered
or modified ingredients” was a “very important” or “important” objective when
purchasing food.48 These studies suggest that US consumers’ skepticism toward
GMOs is growing, which may pave way for a regulatory change going forward.
In the past 20 years, GMOs have been the subject of a prolonged trade dis-
pute between the EU and the United States.49 From 1998 to 2004, there was a de
facto moratorium on GMO approval in place in the EU, where member states
refused to support the approval of any GMOs until the EU regulatory framework
changed.50 This moratorium made it practically impossible for GMO produc-
ers to import unapproved varieties to the EU. In response, Argentina, Australia,
Canada, Chile, Colombia, Egypt, El Salvador, Honduras, Mexico, New Zealand,
Peru, the United States, and Uruguay filed a complaint before the WTO alleg-
ing that the EU’s regulatory process was too slow, and its standards were unrea-
sonable given the scientific evidence supporting the safety of GMOs. The WTO
Dispute Settlement Body found in 2006 that the EU’s de facto moratorium vio-
lated international trade rules. Despite this finding against the EU, the EU’s trade
partners allege that the EU’s compliance with the WTO ruling has been tepid,51
and that the EU continues to be extremely slow in granting authorizations for
GMOs.52 Further, even if the EU were to grant authorizations faster, GMOs
would still have only limited access to EU markets.53 The EU’s strict requirements
on traceability and labeling of GMO products remain intact, considerably limit-
ing producers’ ability to penetrate the European market given EU consumers’
distrust of GMO foods. The EU has also tightened its regulation of GMO feed.
In 2011 the EU passed a new regulation setting a 0.1% limit of non-authorized
GMO material in feed imported from non-EU countries,54 basically introducing
a zero-tolerance policy for such feed. This has exacerbated trade tensions by effec-
tively preventing animal feed imports from countries like the United States.55
There are competing arguments about the benefit or harm of the EU’s GMO
regulations for developing countries where GMOs are a significant issue given
the importance of agriculture for their economies. GMOs could increase crop
productivity and help developing nations feed their growing populations. Yet
these countries have fewer resources to manage risks associated with GMOs.
Traditional farming also retains an important cultural role in many societies,
179
De Facto Brussels Effect
The de facto Brussels Effect in the case of food safety has been pervasive in some
industries, yet largely absent in others. Three of the conditions underlying the
Brussels Effect—regulatory capacity, regulatory stringency, and inelasticity of
food safety regulation—are typically met in this area. With few exceptions—
such as allowing for unpasteurized cheese—the EU regulates food safety with
the most stringent regulatory standards in the world. Over time, the EU has also
built the institutional capacity to exercise significant regulatory authority in this
domain. Food is one of the first policy areas that fell under EU competence. The
single market on food was established in the early 1960s, a longevity that has
allowed the EU to accumulate considerable expertise in the domain. The 2002
establishment of the European Food Safety Authority, as well as national food
safety authorities, further enhances EU’s regulatory capacity.60 Food safety reg-
ulation also clearly falls under inelastic consumer protection regulation, which
180
ensures that the EU’s regulatory clout cannot be circumvented by moving the
regulatory targets to another jurisdiction.
There is some doubt as to whether the EU’s 2015 regulatory reform relating
to GMO cultivation enhanced or reduced the EU’s regulatory capacity and strin-
gency, and hence the pervasiveness of the Brussels Effect. That reform partially
decentralized the EU’s regulatory policy by granting the member states the right
to make their own decisions on whether to permit the cultivation of GMOs in
their territories. This new regulatory framework could be viewed as further tight-
ening the regulatory environment for GMOs in the EU, as any applicant willing
to cultivate GMOs in the EU now faces an additional hurdle in seeking for an
authorization to do so. Accordingly, the Brussels Effect could be even stronger
following this reform. However, the existence of a common EU-wide policy has
often provided the incentive for companies to adjust globally to the EU rule.
With the introduction of potentially significant variance across the members
state regulations, the 2015 decentralization reform may remove that incentive,
weakening the Brussels Effect. Regardless of how this particular reform affects
the Brussels Effect, the effect is only limited to GMO cultivation, leaving the
regulation of GMO sales and marketing untouched.
Further, while the EU’s regulatory capacity, as well as the stringency and
inelasticity of food safety regulation are generally well established, it is less clear
that the other two conditions for the Brussels Effect are present. For example,
the EU does not represent a significant market for all major exporters, suggest-
ing that it may not have the requisite market size that would trigger the Brussels
Effect. For instance, for US farmers, the EU is the fifth largest export market
and accounts for only around 8% of total agricultural exports.61 Many US pro-
ducers can thus afford to forgo the EU market and divert their trade elsewhere
if they consider regulatory compliance to be too onerous.62 Indeed, trade statis-
tics show that US producers are increasingly turning to other markets. While
US agricultural exports to the world grew by 181% between 2000 and 2013, US
exports to the EU only grew by 1%. This has been at least partially attributed to
the EU’s stringent regulations.63 However, US farmers’ scope for trade diversion
may be narrowing as several key economies are increasingly emulating EU’s food
safety laws. For instance, Australia, Brazil, China, and Japan are following the
EU’s lead and adopting mandatory labeling schemes for GMO products.64 This
enhances the likelihood that the US farmers may, after all, experience the Brussels
Effect.65 In addition, for many African and some Latin American countries, the
EU remains the most important export destination, suggesting that the Brussels
Effect is likely to impact many of those markets.
The question of divisibility of production is a particularly convoluted one
in the case of food safety, often explaining whether or not the Brussels Effect
18
major markets and where producers can hence obtain real gains from customiza-
tion. For example, there are enough Americans who prefer the bright-colored
Smarties for Nestlé to justify producing a different color variety for the US mar-
ket. Presumably, in the case of Smarties, the costs of customization are also small,
or at least offset by gains available from greater sales resulting from the ability to
cater to the specific needs of US customers. In contrast, companies are likely to
globalize the EU standard when customization is expensive or where gains from
customization are trivial. Production to a global standard is also more likely to
emerge whenever companies sense a growing customer demand for a more strin-
gent standard emerging worldwide.73
Another important factor influencing how a company will respond to EU
regulations is operational feasibility. In some cases, if it is too expensive to convert
global production to meet EU standards, but not feasible to divide production
within existing production facilities, a company may be prompted to search for
alternative business strategies. For example, due to the EU’s stringent food hygiene
and safety standard,74 a Japanese company, The Makurazaki Marine Products
Processing Industries Cooperative, decided not to export bonito flakes (dried
tuna flakes) to France. Instead, the company decided to open a factory in the EU
to avoid having to make a Japanese factory comply with the EU regulation.75
When considering the feasibility of divisibility within food and agricultural
production, GMOs present a complex issue, presenting a particularly valuable area
to examine the operation of the Brussels Effect. Presumably, US farmers could, at
least in principle, separate their production and cultivate both GMO and non-
GMO varieties destined for domestic and EU markets, respectively. Yet such divi-
sion can be difficult in practice for technical and economic reasons.76 GMO crops
must be segregated from the time they are planted throughout the processing and
marketing chain. This entails separating growing areas and preventing pollen drift
from GMO fields to non-GMO fields.77 Producers and distributors must also use
separate equipment, storage areas, and shipping containers, and establish trait
identification systems that allow for the tracking of produce from the farm to the
consumer.78 These risks associated with cross-contamination can be substantial,
especially when considering that if the economic operator makes an error any-
where in the process, the whole line is destroyed, leading to lost sales and the need
to discard the entire production as unfit for market.79 It is therefore not surprising
that some farmers choose to forgo the risks and costs of separation and converge
to the most stringent standard by either avoiding GMOs, or only cultivating EU-
approved GMO crops—irrespective of where these crops are sold.80
Numerous factors can contribute to commingling of GMO and non-GMO
varieties, including “pollen flow, volunteerism, mixing during harvesting, trans-
port, storage and processing, human error and accidents.”81 If commingling
183
occurs from any of these factors, the “adventitious presence” of GMOs—a term
the food safety industry uses for the GMO content threshold that is accidental
and hence unavoidable82—can easily cause the food product to exceed allowable
levels. Strict thresholds, including EU’s 0.9% threshold, make it harder to pro-
duce both GMO and non-GMO crops, as such cross-contamination can rarely
be eliminated entirely. The difficulty of creating fully divisible production in the
GMO context was also reinforced by a recent ECJ ruling. The ECJ found that
honey containing traces of GMOs due to accidental contamination from GMO
test fields 500 meters away was nonetheless considered food produced from a
GMO under EU law.83 The ruling underscores the technical difficulties and legal
risks that farmers and food processors face when attempting to divide the pro-
duction and cater to both GMO and non-GMO markets.
Indeed, a number of recent studies have confirmed the difficulty of avoid-
ing the adventitious presence of GM traces in conventional planting seeds.84 For
example, a recent study examined whether bees transfer the pollen from geneti-
cally modified soy crops to the honey produced in the Yucatan Peninsula in Mexico
given the proximity of the two farming areas.85 A key concern among farmers and
exporters was that GMO transfer could “provoke rejection from European mar-
keters and consumers.”86 While the study found that Yucatan Peninsula’s honey
had “relatively low” amounts of GMO soy pollen, it still recommended measures
to prevent such contamination.87 These technical difficulties—and subsequently
legal risks—associated with any attempts to divide the production and separate
GMO seeds from non-GMO seeds are important factors in explaining the reach
of the Brussels Effect in this area.
The influence and business practices of multinational food processors also
amplify the non-divisibility of production, further entrenching the de facto
Brussels Effect. For instance, Unilever and Nestlé have pledged not to use GMOs
in any of their products, irrespective of the export destination. Gerber and Heinz
similarly exclude GMOs from all of their baby food, including baby food sold in
the US market.88 They are often reluctant to make separate batches for the EU
and United States and frequently refuse to, for example, buy corn that could lead
to marketing problems in the EU.89 Similarly, by refusing to purchase even con-
ventional grain from farmers who also plant GMO varieties, these food proces-
sors have steered some US farmers away from GMO products altogether.90 For
instance, CHS Inc., the largest farm cooperative in the United States, does not
sell seeds or buy grain that contain traits that lack approvals for export.91Archer
Daniels Midland Co, a large Chicago-based global food processing and com-
modities trading corporation, refuses GMO crops that lack global approval. The
reason is that it is “hard to segregate crops containing unapproved traits from the
billions of identical-looking bushels exported every year.” Stine Seed and Bayer
184
similarly have a policy against selling seed traits that have not been approved by
major export markets.92
The reasons for divisibility for these multinational food processors can be
at the same time economic, legal, and technical. Running separate production
lines is costly for the companies. These companies also want to avoid legal risks
associated with accidental commingling of GMO and non-GMO varieties, espe-
cially considering the EU’s stringent rule that tolerates only small traces (0.9%)
of unauthorized GMOs. Further, these multinationals cannot guarantee that
all their suppliers have been able to carry out the separation of authorized and
unauthorized varieties for technical reasons, exposing the entire supply chain to
potential liability.
Beyond GMOs, there are several examples of the de facto Brussels Effect
affecting food safety policies of companies in Africa, Asia, and Latin America.
The EU represents an important export market for the farmers in these juris-
dictions, making it rarely possible for them to abandon the EU market and
divert their trade elsewhere. As a result, they have typically no option but
to comply with EU food safety regulations, however onerous and expensive
it may be. Given the high compliance costs as well as the importance of the
agricultural sector to these economies, the businesses in these countries have
at times benefited from their governments’ help in adjusting to meet the EU
regulations. And once these producers have invested in compliance with EU
regulations, they have typically extended their enhanced production methods
and facilities across their entire production line, as predicted by the de facto
Brussels Effect.
The EU is the most important destination for agricultural products from
Africa, making producers highly sensitive to the EU’s food safety regulation
and thereby allowing the EU to transform agricultural practices in the region.
The African cocoa industry provides an example of this. The EU is the world’s
biggest consumer of chocolate and the largest importer of cocoa beans. It also
has a large-scale cocoa processing industry, making cocoa butter and powder
out of cocoa beans.93 The EU sets maximum levels for certain contaminants in
foodstuffs, including for polycyclic aromatic hydrocarbons (PAH) in cocoa and
cocoa products.94 The rationale behind regulating contaminants in food is the
concern over high toxicological levels in food and hence adverse effect on public
health.95 Some of the main health concerns are the use of pesticides, improper
fermentation, unsanitary processing methods—like drying cocoa beans on roads
or in smoky ovens—and the presence of cadmium, a cancer-causing metallic sub-
stance, in cocoa exports.96 In addition to consumer health, the EU regulation of
the industry has been motivated by its desire to ensure sustainable and ethical
production of cocoa across West and Central Africa.97
185
De Jure Brussels Effect
There is also evidence of the de jure Brussels Effect around the world as govern-
ments are emulating EU’s food safety standards. However, the diffusion of EU’s
food safety regulations is less extensive than the de jure Brussels Effect in many
other areas, such as competition law and data protection. It is also difficult to
find concrete evidence suggesting that foreign multinational companies would
lobby for regulatory change at home after first having adjusted to EU regulations
through the de facto Brussels Effect. Instead, often the EU’s global influence is
channeled through multinational standard-setting organizations such as Codex
Alimentarius Commission, where the EU is an influential member, as discussed
in chapter 3. Through its participation in Codex Alimentarius, the EU has multi-
lateralized some of its food safety standards while also adjusting its own standards
to reflect various jointly agreed Codex standards.118 The EU has an additional
incentive to align its food safety standards with the Codex framework given
that the WTO requires its members to base their regulations on existing inter-
national standards, or else provide scientific evidence to justify departing from
those standards.119
In addition to its engagement in multilateral standard setting, the EU’s proac-
tive bilateral engagement with regulatory authorities in foreign countries forms
an important part of the EU’s food safety regimes, as well as an opportunity to
export EU regulations abroad. The EU has limited capacity to inspect every
product that enters into the EU on the border. In addition to the official controls
at the border, the EU seeks to ensure that the countries that export food products
to the EU have robust domestic food safety regulations and control mechanisms
in place. To facilitate this, the Commission engages in extensive capacity build-
ing and offers technical assistance to foreign regulators. The EU’s Veterinary and
Food Office (“FVO”) also carries out inspections and audits in foreign countries
as part of its mission to ensure the safety of food imports.120 This often leads to
the diffusion of EU regulations and administrative practices abroad. Foreign
governments typically welcome the EU’s assistance and inspections: the veri-
fied compliance with EU food safety regulations not only opens their producers’
access to the EU market, but the EU’s “seal of approval” also enhances export
opportunities in other foreign markets due to the perception of high standards of
the country’s food production.121
Consequently, the de jure Brussels Effect in the food safety domain gen-
erally results from a combination of these unilateral, bilateral, and multilat-
eral diffusion mechanisms. While this is the case with respect to any area of
EU regulation, these alternative channels of influence are more prevalent in
the food safety domain—partly because of the existence of robust multilat-
eral cooperation mechanisms in this area but also because of the EU’s more
189
to establish a tracking system for the sources of raw materials, semifinished prod-
ucts and finished products.128 Examples of the de jure Brussels Effect can also be
seen in the Middle East and North Africa. In 2013, the Cooperation Council for
the Arab States of the Gulf published a new food labeling standard. Many major
amendments to that standard, such as the introduction of mandatory nutrition
labeling and allergen labeling, are similar to those in EU law. In the same year,
Morocco and Algeria published a new labeling regulation comparable to the
EU’s Food Information for Consumers Regulation (FICR), following the EU
standard in establishing minimum-type sizes for labels.129
One area of EU food regulation that is likely to lead to the de jure Brussels
Effect in several countries in the near future relates to organic food production.
The EU has, until today, relied on the “principle of equivalence” and granted
mutual recognition for products coming from countries such as the United
States, assuming those products have been certified as organic in their home mar-
kets.130 However, this has led to highly varied standards for organic products,
depending on the country of origin. For example, US standards fall below those
of the EU. To illustrate, electric goads used for driving cattle are banned under EU
organic standards while permitted under US standards. Similarly, ducks on US
organic farms do not have to be given access to a pool or lake to swim in, which
would lead to a denial of the label “organic” in the EU. Given these discrepancies,
the EU is now revising its organic regulation, which extends EU rules to non-EU
farmers who export their organic products to the EU market.131 The new regula-
tion, expected to take effect in 2021, will forgo the principle of equivalence in
favor of the principle of conformity, requiring foreign producers to comply with
standards identical to those in force in the EU if they want to serve EU’s organic
food market. This is likely to compel reforms in many of the countries currently
exporting into the EU under equivalency rules.
The de jure Brussels Effect is also contributing to the global enactment of
new regulations relating to GMOs, with several examples from around the world
demonstrating the reach of the EU’s influence. The Brazilian honey industry, dis-
cussed earlier in the context of other food safety issues, provides another example
in the context of GMO regulation. Following the 2011 ruling by the ECJ requir-
ing that honey containing traces of pollen from GM plants must be labeled as
a GM product, the Brazilian Ministry of Agriculture, Livestock and Supply
(MAPA), Brazilian Association of Honey Exporters, and other members of the
Honey Chamber started to explore how traces of pollen from GM plants can
best be detected. The Brazilian Beekeeping Confederation complemented these
efforts by starting to identify areas free of GM crops where honey production
could be shifted. The Brazilian Beekeeping Confederation (CBA) also called on
the government to establish GMO-free regions where honey could be produced
19
Major Legislation
EU chemical safety regulations date back to the 1970s,157 but the enactment of
REACH in 2007 constituted a watershed moment in introducing the world’s
most robust regulatory framework for chemical safety. REACH is remarkable in
that it places the burden of establishing the safety of chemicals intended for the
EU market squarely on manufacturers and importers as opposed to regulators.158
This differs notably, for example, from the US regulatory approach. This obliga-
tion entails that manufacturers and importers are required to gather information
on the effects that their substances have on human health and the environment
and to provide this information to EU authorities by registering their substances
in a database.159 Substances of “very high concern” must also be replaced by suit-
able alternatives where economically and technically feasible.160 The EU further
has the authority to restrict the use of substances that pose an “unacceptable”
risk to human health or the environment.161 REACH is also guided by the
“precautionary principle,” which justifies regulatory intervention in the case of
194
Political Economy
The EU’s stringent chemical regulation reflects the high concern among European
citizens regarding adverse impacts that chemicals can have on health and the envi-
ronment. A 2017 Eurobarometer survey reported that 74% of Europeans worry
about the health impacts of ordinary plastic products and 87% worry about plas-
tic’s environmental impacts.172 Similarly, 84% worry about the health impacts of
chemicals in ordinary products, and 90% worry about these chemicals’ environ-
mental impacts.173 These citizens’ concerns, together with significant benefits
available from harmonized regulation to the single market,174 gave the EU a
strong impetus to act.
195
De Facto Brussels Effect
REACH has led to a significant de facto Brussels Effect, driving behavioral
changes in a multitude of industries worldwide.198 Many foreign chemical manu-
facturers that export a substantial amount of chemicals to the EU are switch-
ing to REACH standards globally to avoid being excluded from the EU market.
197
Because manufacturers often find it cheaper to create a single product for various
markets, as opposed to numerous market-specific versions, they have an incentive
to produce their products in accordance with the most stringent global standard,
which is REACH.199 In this context, this non-divisibility is primarily driven by
scale economies in production rather than a legal or technical inability to pro-
duce different products: in principle, it would be possible for companies to run
two production lines involving different chemicals. This would not be legally
problematic or necessarily technically difficult. Yet this would often simply be
uneconomical for companies that would face costs by separating their produc-
tion. Another driver for global conformity to REACH is that many downstream
users of chemicals refuse to include substances in their products if the EU has
identified any such chemical as a “substance of very high concern.”200 Given
chemicals’ long and complex supply chains, even one noncompliant substance
in the supply chain may foreclose the final product from the EU market, steer-
ing export-oriented manufacturers toward strictly EU-compliant production
globally.
An additional reason for applying the higher EU standard uniformly is the
information-generating feature of REACH and the sensitivity of consumers
around the world for “unsafe” products. For example, Linda Fisher, vice president
and chief sustainability officer for DuPont, was quoted as saying that her firm was
“not looking at this as a European program—we’re buying and selling all over the
globe,” adding that “once a chemical is included on the E.U. list, manufacturers are
likely to feel pressure to abandon production . . . Linking the word “concern” to a
chemical is enough to trigger a market reaction.”201 Similarly, Johnson & Johnson
makes a reference to both US and EU regulations202 and claims that it phased
out certain ingredients due to consumer confidence, without citing any health
concerns.203 This effect is likely to be even greater when concern is associated with
items such as childrens’ toys or baby bottles.204 Thus, the reputational concerns
linked to market information are further magnifying the Brussels Effect.
Several examples illustrate how multinational companies have increas-
ingly adjusted their global production to meet REACH’s requirements. Dow
Chemical, a leader in the chemicals industry, announced all of its production to
be REACH consistent, for products sold in the EU and elsewhere.205 Hoffman-La
Roche, a Swiss health care multinational, aims to phase out Substances of a Very
High Concern (SVHCs) from its products within 10 years of the substance’s addi-
tion to the REACH Candidate List.206 To do so, the company is identifying and
removing SVHCs used in their products on a global basis, regardless of whether
the target market is subject to REACH or not. Large cosmetics producers such
as Revlon, Unilever, and L’Oréal have similarly reformulated all their products to
be REACH compatible.207 L’Oréal, for example, acknowledges that it no longer
198
option but to comply with REACH in order to retain access to the EU market. In
2008, the Washington Post reported that “American manufacturers [we]re already
searching for safer alternatives to chemicals used to make thousands of consumer
goods, from bike helmets to shower curtains.”219 The article also cites Mike Walls,
the American Chemistry Council’s managing director of government and regula-
tory affairs, who noted that “90 percent of [the Council’s] members are affected
by the E.U. laws and [ . . . ] some cannot afford the cost of compliance. . . . The
E.U. standards will force many manufacturers to reformulate their products for
sale there as well as in the United States.” Given that the examples mentioned
contain numerous US-based corporations, it is clear these predications were
borne out.
An interesting question remains whether the de facto Brussels Effect will off-
set any of the Trump administration’s ongoing efforts to repeal or limit US envi-
ronmental regulations, particularly those on harmful chemicals.220 For example,
the EPA is pursuing “faster reviews” and a “less dogmatic approach to determin-
ing risk” associated with chemicals.221 The EPA is also reviewing the limits on
production of ten toxic chemicals, including the well-known chemical asbestos
or hexabromocyclododecane (HBCD) that is commonly used in adhesives,
paint strippers, solvents, cleaning products, and automobiles.222 However, if past
examples are any indication, the Brussels Effect suggests that as long as US manu-
facturers continue to export their chemical products to the EU, they are not likely
to make any adjustments to their production processes to take advantage of laxer
US regulations.
De Jure Brussels Effect
REACH has also triggered a significant de jure Brussels Effect, prompting the
adoption of REACH-style laws in several markets. Jurisdictions that have imple-
mented or planned REACH-like regulations include, for example, China, Japan,
Malaysia, Serbia, South Korea, Switzerland, and Turkey.223 Other nations such
as India have also proposed REACH-like regulations.224 The EU has welcomed
such foreign emulation of REACH, declaring that the landmark legislation has
the potential to inspire new standards worldwide,225 and promising to offer tech-
nical assistance when needed. For example, following requests from Argentina,
Chile, China, and Taiwan, the EU pledged compliance support.226 In addition
to providing technical assistance, the European Chemical Agency (ECHA) has
engaged in frequent regulatory dialogues with its foreign counterparts, including
with those from Australia, Canada, Japan, and the United States. This collabora-
tion has led to the development of a pair of software tools—the International
Uniform Chemical Information Database and the QSAR toolbox—available
20
globally to help both regulators and manufacturers organize, assess, store, and
exchange data on chemical safety.227 The EU has further been a driving force
behind a set of multilateral chemical conventions, at times successfully elevating
global standards in the process.228 However, in these settings, the EU’s influence
has been constrained by other powerful countries, such as the United States.229
These multilateral conventions also address a more narrow set of specific chemi-
cal groups as opposed to providing an overarching regulatory regime across a
range of chemicals.230 The absence of any comprehensive global chemicals policy
therefore makes the globalization of REACH even more significant.
There are many reasons for foreign governments to emulate REACH. For
example, export-oriented producers have the incentive to pressure their home
governments to adopt a REACH-equivalent legislation domestically. Because
export producers already meet REACH standards due to the de facto Brussels
Effect, these companies face no additional costs in producing similar products for
their home market.231 The de jure Brussels Effect levels their playing field against
domestic competitors that are not active in the EU market and do not, therefore,
need to conform to REACH’s stringent rules. Another reason for emulation is
foreign consumer health and environmental activists, empowered by the imple-
mentation of REACH, who have embraced the EU regulation as a benchmark in
their efforts to push for legislative reform.232
The de jure Brussels Effect has been effective in varying degrees across differ-
ent jurisdictions. The United States, on the one hand, has amended its federal
chemicals regulations with some influence from REACH but still maintains a
different regulatory posture. On the other hand, South Korea implemented
legislation, K-REACH, closely modeled on REACH. In the middle ground,
countries such as Japan and China have borrowed certain aspects of REACH to
include in their broad chemical regulation strategy.
In the United States, REACH has prompted state-level regulatory reforms.233
These efforts acknowledge the global nature of the chemicals industry and the
existing need for US companies to comply with REACH, including collecting
the safety information relevant for their production.234 In California, for instance,
the existing informational burden imposed by REACH was seen as a compelling
reason to utilize the same data in-state. As a result, the California Department of
Toxic Substances Control is now required to use “to the maximum extent feasi-
ble” the safety information generated in other nations in its regulation of chemi-
cal products, including, most importantly, the EU.235
The efforts by various advocacy groups to amend the TSCA—the US federal
chemicals regulation legislation—were for a long time considerably less success-
ful, largely due to powerful industry opposition. However, TSCA was finally
amended in 2016, largely due to waning resistance from industry as state chemical
201
regulatory systems.247 Following the trend set by REACH of greater data trans-
parency, the EPA released information on more than 7,600 chemicals and made
public information on more than 100 cases of formerly confidential chemical
identities.248 Further, as discussed earlier, California uses EU data in its online
database, the Toxic Clearinghouse.249
Another potential pathway for REACH data to influence market behavior in
other jurisdictions is through private toxic tort litigation.250 For example, a coali-
tion of European agencies and research institutions created an online tool—the
Advanced REACH tool (ART)—to model and assess benzene exposure given
inputs such as ventilation rate and room size. While at least one US federal court
found that an expert opinion based on ART could be reliable in quantifying a
plaintiff ’s benezene exposure,251 there is no evidence yet that such testimony is
common, or that REACH data is widely or often used in private litigation. This
suggests that foreign governments, as opposed to private litigants, more often
use the data generated under REACH. An interesting question is whether this
will change as the current administration in the United States takes steps to roll
back the regulations on chemical safety, as discussed earlier, and safety advocates
increasingly turn to the courts as a defense.
The EU’s influence on South Korean chemical safety regulation provides per-
haps the best illustration of the de jure Brussels Effect. In 2013, South Korea passed
the Act on Registration and Evaluation , etc. of Chemical Substances, also known
as “K-REACH.”252 During the drafting process, South Korea consulted closely
with EU institutions and agencies such as ECHA.253 As a result, K-REACH
closely resembles the EU’s regulatory framework, replicating most of its registra-
tion and reporting provisions.254 While very similar in substance and language,
K-REACH is not identical with EU’s REACH.255 For example, REACH does
not require disclosure for substances produced or imported at a rate below one
ton per year, while K-REACH was amended to require registration for new sub-
stances imported or produced at a rate of > 100 kg annually, making K-REACH
more stringent in this regard.256 On the other hand, K-REACH originally did
not require the registration of existing chemicals, only new chemicals, and was
only expected to cover 2,000 substances.257 This made the K-REACH much nar-
rower in scope than REACH, which requires registration for all existing chemi-
cals, and covers over 22,000 registered substances.258 Under recent amendments
to K-REACH, however, all existing substances will have to be pre-notified and
registration will be phased in through 2030, with timing depending on tonnage
manufactured or imported.259
The adoption of such similar legislation in South Korea is perhaps less sur-
prising given the significant exposure of Korean companies to REACH. A 2007
report by the Korea Trade-Investment Promotion Agency emphasized that while
203
chemicals do not take up a large proportion of Korean exports to the EU, most
of Korea’s key export products to the EU—such as cars, wireless communication
equipment, semiconductors, and ships—contain chemicals, bringing them into
the purview of REACH.260 In 2008, the South Korean Minister of Environment
characterized REACH as posing a “significant trade barrier” to South Korean
companies with significant economic impact, given that the EU is the country’s
second-largest export market after China.261 In the same speech, the Minister
also stated that the EU appears to have the strategic intent to use REACH as a
weapon to increase the competitiveness of EU products in the global market and
to exert industry-wide influence.262
Legislative comments for K- REACH discuss the reasons for its adop-
tion, including the need to respond to the EU’s adoption of REACH and the
increasing regulation of chemical substances in other major trade partners such
as Japan.263 The Korean Ministry of Environment similarly emphasized that
K-REACH was a “necessity” given the EU regulation—together with Japan’s
and China’s decisions to follow with similar regulations of their own. In addition
to these external reasons, K-REACH was also seen as key to protecting citizens’
health and the country’s ecosystem.264
Japan offers another example of the de jure Brussels Effect—albeit of a less
exact kind. Japan has replicated some elements of REACH, but has also drawn
other elements from Canada’s chemical legislation, such as prioritization and
risk assessment.265 For example, it partly followed REACH in amending its
Chemical Substances Control Act in 2009266 to designate endocrine disruptors
as high-risk chemicals.267 Furthermore, Japan follows REACH in how it defines
the scope of chemicals of high concern and provision of expedited review for
substances already on the market.268 However, Japanese law imposes a lesser
informational burden on the industry compared to REACH. Japan does not,
for instance, extend the need to disclose information regarding the entire supply
chain. Importantly, the government conducts risk assessment in Japan, whereas
under REACH, industries that manufacture or import chemicals in quantities
exceeding ten tons bear that responsibility.269 According to Yoshiko Naiki, the
introduction of the principle of industry responsibility was probably not neces-
sary in Japan because the safety and toxicity information was already supplied
under REACH and hence likely already publicly available for regulators outside
the EU.270
REACH has also influenced regulatory reforms in China. Katja Biedenkopf
and Dae Young Park argue that the similarities between China’s 2010 “Measures
on the Environmental Management of New Chemical Substances” and REACH
is evidence that China has borrowed from EU policy.271 For example, China’s
tonnage-based notification system (that is, a system requiring different disclosures
204
for quantities of 1 ton, 10 tons, etc.) is similar to REACH’s structure. Thus, both
systems apply the principle of “higher volume, more data.”272 Also, the Chinese
reform, like REACH, subjects both producers and importers to annual report-
ing and record-keeping requirements.273 Finally, Article 2 of China’s 2010 regu-
lation uses similar wording as REACH in applying the regulation to products
that release new chemical substances in their normal use—although the Chinese
regulation is slightly narrower in scope.274
China’s regulation of various consumer products and children’s toys and rugs
also stem from the Chinese companies’ exposure to EU regulations as their key
export destination. For example, a year after the EU restricted the use of phthal-
ate plasticizers in toys, China similarly updated its own toy safety standard in
2014.275 The new Chinese safety standard presented a significant change, and
it was made with reference to the prevailing EU standards.276 China has also
released a Draft Outline for the Industry Standard of Safety Requirement of
Children’s Rugs, which restricts the use of a substance called formamaide.277 Such
material is listed by REACH as requiring “priority attention,” and categorized
by the ECHA as a harmful substance that could damage fertility or unborn chil-
dren. The new Chinese regulation further restricts the use of soluble metals in
elements in children’s’ rugs, again referring to the relevant EU standard.278
These examples show how REACH has not only shaped the business prac-
tices of private companies but how legislators around the world have enacted
laws that have entrenched the EU’s chemical safety standards into their regula-
tory frameworks. As expected, REACH has been particularly closely emulated
by governments for whom the EU remains a major export market. At the same
time, the United States has steadfastly retained its own approach, unwilling to
embrace the EU’s more precautionary regulatory model. However, given the
extent to which the de facto Brussels Effect has influenced the conduct of large
US companies, the absence of the de jure Brussels Effect in the United States
is perhaps less relevant, especially as the wide adoption of REACH across the
world makes it increasingly hard to find alternative export destinations for prod-
ucts that are not REACH compliant. As a result, only purely domestic operators
in the United States are likely to take advantage of the lax regulations prevailing
in their home market.
chemical safety regulation where the de jure Brussels Effect has taken place even
when these other channels have been weaker.
Despite the varying dynamics underneath each area of regulation, the EU’s
food safety and chemical safety regimes both illustrate how the Brussels Effect
can lead to higher regulatory standards around the world—whether as a result of
companies independently adjusting their standards globally to EU rules or alter-
natively through foreign governments emulating more stringent EU regulations.
In both of these areas, multinational businesses as well as consumers far outside
the EU have felt the effects of EU regulations, both by producing and consuming
safer and more sustainable food or manufacturing and buying products contain-
ing safer chemicals.
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Environment
Major Legislation
The EU’s regulatory capacity in environmental matters was built in parallel with
the rising environmental consciousness among the European public. Before
The Brussels Effect. Anu Bradford, Oxford University Press (2020). © Oxford University Press.
DOI: 10.1093/oso/9780190088583.001.0001
208
Environment 209
these substances from leaking into the environment when many common prod-
ucts such as household appliances and computers reach the end of their useful
life.13 The Directive applies to all products placed on the market in the EU regard-
less of whether they are produced in the EU or in non-EU countries. In 2011, the
Directive was extended to cover all electrical and electronic equipment, including
medical devices and monitoring and control instruments (RoHS 2).14 The EU’s
Waste Electrical and Electronic Equipment Directive (WEEE),15 first adopted
in 2002, complements the RoHS in that it is aimed at removing e-waste from
landfills and redirecting it to recycling.16 Both sets of directives impose upon the
manufacturer the responsibility for product management throughout the life
cycle of the product.17 These directives have therefore had a dramatic impact on
the entire electronics industry.
The EU has also taken decisive regulatory measures to advance animal wel-
fare. The first such provision in 1974 focused on governing slaughterhouses.18
Regulation in this area was expanded in a 1998 Council Directive that lays down
general rules on the protection of animals kept for farming purposes, incorpo-
rating the “five freedoms” for animals as declared in the European Convention
for the Protection of Animals kept for Farming.19 The 1999 Amsterdam Treaty
contains a Protocol on animal welfare, declaring that animals are sentient beings,
a position confirmed by the 2009 Lisbon Treaty.20 From the Lisbon Treaty’s
affirmation that animals feel pain and pleasure grew the EU Strategy for the
Protection and Welfare of Animals 2012–2015. This Strategy implemented new
welfare standards around housing, feeding, transportation, and slaughter while
also targeting the competitiveness of European producers.21 Another prominent
example is the EU’s decision to ban animal testing for cosmetics. Since 2013, no
cosmetics tested on animals can be marketed in the EU.22
The final example discussed in this chapter concerns climate change—in par-
ticular the EU’s emissions trading scheme (ETS). Known as a “cap-and-trade”
system, ETS imposes a limit on overall emissions and, within this limit, allows
companies covered by the scheme to buy and sell emission allowances as needed.
The ETS comprises 11,000 power stations and manufacturing plants in the EEA
area, reaching a total of 45% of EU greenhouse gas (GHG) emissions.23 Initially,
climate change emerged as a policy concern at the member-state level, including in
Germany, the Netherlands, and the United Kingom.24 The EU had first opposed
flexible market mechanisms such as the ETS during the 1997 Kyoto climate nego-
tiations. However, after realizing the significance of the issue for the European
integration, the Commission changed its course and argued that an EU-wide
ETS was necessary to avoid market distortions after the United Kingdom and
Denmark had introduced national ETSs.25 Further, once the EU undertook to
fulfill its own Kyoto commitments regarding the reduction of GHG emissions
210
Political Economy
The EU’s pro-environmental stance, which is typically the strongest of any major
markets in the world, can be traced to a number of factors. These include pub-
lic opinion favoring stringent environmental regulation, active environmental
NGOs (ENGOs), and a wide-reaching political consensus in favor of high lev-
els of environmental protection. Environmental regulation has also offered an
important tool for market integration, while also providing an avenue for the EU
to exert soft power by promoting norms associated with a benevolent and value-
driven world power.
The European public has migrated strongly in favor of environmental regula-
tion over the past fifty years. The modern environmental movement in the EU
dates back to the 1960s, when an increasing awareness was emerging regarding
the deteriorating state of the environment and the threats posed by pollution
and human activities to the planet.27 The publication of a pathbreaking study,
the “Limits to Growth,” produced in 1972 by a group of prominent researchers,
further magnified concerns about the earth’s resources and the ability to sustain
economic and population growth.28 This increased awareness set the EU on a
course toward common environmental policy in the subsequent decades.
A series of specific events also catalyzed public awareness regarding envi-
ronmental damage and paved the way for stronger environmental regulation.
Particularly salient was the 1986 Chernobyl nuclear disaster in Ukraine, which
released extensive amounts of radioactive material over Russia, Belarus, Ukraine,
and parts of Europe.29 This had major adverse effects on human health and the
environment, impacting agricultural and ecosystems in Europe and exposing mil-
lions of Europeans to severe health risks. Another catalyst was the detection of
acid rain in many parts of Europe in the 1970s and 1980s. Acid rain is frequently a
trans-boundary problem whereby acid pollutants—including substances such as
sulfur dioxide and nitrogen oxides—emitted in one country get carried through
winds and are ultimately deposited as acid rain in another country. This became
a notable problem in Europe as it was rapidly industrializing and building power
21
Environment 211
being revisited, while the Greening the Budget initiative refers to efforts to con-
vince EU legislators to direct funds away from environmentally harmful measures.
The most significant civil society actor is a coalition of the largest ENGOs called
the “Green 10.” The group includes many of the key environmental advocacy
groups, including Friends of the Earth Europe, Greenpeace European Unit, and
WWF European Policy Office.44 Acting as a coalition has allowed these NGOs to
pool their resources and better counter the lobbying power by business interests.45
Climate Action Network Europe has also been a critical actor in EU climate policy
since the 1980s. In an effort to gain more influence, it has formed alliances with
business lobbies such as the European Association for the Conservation of Energy
and European Wind Energy Association.46
Despite the ardent NGOs’ advocacy, many commentators argue that the
industry has more influence over policy outcomes in the EU.47 Numerous
individual companies and industry associations engage in lobbying for less
burdensome environmental measures. Indeed, some of the most active indus-
try lobbying in the EU targets the Commission’s Directorate-General for the
Environment. Yet even the industry lobbying can lead to more, as opposed to
less, EU-level legislation. When the industry knows that some regulation is
inevitably forthcoming, it typically supports EU-level measures, as opposed
to divergent and potentially conflicting national regulations that would
increase their compliance costs.48 This was evident, for instance, in the EU
legislation on electronic waste where the industry organizations supported
EU-level harmonization to correct the market distortion caused by regula-
tory differences across the member states.49 For the same reason, the EU’s
pro-environmental policy is bolstered by the EU institutions’ efforts to use
environmental regulation as a tool for market integration.50 Common stan-
dards on environmental measures facilitate intra-EU trade as firms can operate
in a single European market without facing different regulatory regimes that
impede cross-border trade.
The EU’s environmental leadership and high domestic standards have also
served the EU’s aim of presenting itself as a global “soft power,” providing a con-
trast to the more traditional statecraft associated with the US’ leadership.51 For
example, the Commission President Jean-Claude Juncker recently articulated
the EU’s commitment to mitigating climate change in his State of the European
Union address 2017 in the following terms:
I want Europe to be the leader when it comes to the fight against climate
change. . . . Set against the collapse of ambition in the United States,
Europe must ensure we make our planet great again. . . . The EU must
seize this opportunity and become a global leader . . .52
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Environment 213
De Facto Brussels Effect
The de facto Brussels Effect has been common in many areas of environmental
regulation. This section reviews its occurrence with respect to hazardous sub-
stances and electronic waste, animal welfare, and climate change regulation.
These various examples show how the Brussels Effect manifests itself with respect
to both traditional, direct product regulation—as in the cases of hazardous sub-
stance and animal welfare—as well as with respect to regulation relying on market
mechanisms—including climate change mitigation through emissions trading.
In each of these areas, the Brussels Effect has often been amplified by the EU’s
large market size and strong regulatory mandate, and further strengthened by
the recognition of environmental protection as a constitutional obligation for
the EU institutions. In addition, the “precautionary principle”—which allows
for regulatory intervention even in the presence of uncertainty regarding the
harm—features prominently in the EU’s environmental policy making, further
contributing to the EU’s regulatory capacity and regulatory stringency across all
the examples that will be examined. As well, the EU’s willingness to protect the
environment with high standards is well established, with consumers and parties
across the political spectrum typically endorsing stringent environmental regula-
tion. Also, environmental regulation is typically inelastic as EU regulations apply
214
to all products that end up on the European market no matter where they are
produced. Thus, a multinational company is not able to circumvent EU’s strin-
gent standards by relocating production to jurisdictions with fewer environ-
mental protections as long as they want to retain the option of exporting into
the European market. Further, environmental regulation is often non-divisible.
After an investment in compliance with the EU’s stringent environmental rules is
made, the company typically extends those same sustainability practices across its
global conduct or production.
Environment 215
of compliance with RoHS for most products is so high that companies have
reported difficulties in obtaining noncompliant products for sectors not covered
by the RoHS.64 Many companies also see compliance with the EU as a necessity
in the competitive environment where the entire marketplace is shifting toward
the EU standard. When electronics giants such as Dell and Apple advertise their
RoHS-compliance,65 and customers have easy access to sustainable products,66 it
is difficult for smaller players not to follow.
The de facto Brussels Effect has been particularly notable among Japanese,
Taiwanese, and South Korean companies, given the prominence of these coun-
tries’ information technology and electronics industries. For example, in response
to the EU RoHS directive, Hitachi decided to phase out worldwide six chemical
substances included in about 70 of its products that were subject to EU RoHS
by March of 2005.67 The company also decided to switch to lead-free solder
for its products produced by factories in Japan, and subsequently for its prod-
ucts produced throughout the world.68 Taiwan Semiconductor Manufacturing
Company—the fourth largest semiconductor sales leader in the world69—
similarly guarantees that all its products meet EU’s directives, including RoHS,
WEEE, and REACH.70 According to the MediaTek’s 2015 Corporate Social
Responsibility Report, the company’s environmental standards meet simultane-
ously European, Asian, and Taiwanese standards for environmental protection.71
Finally, a June 2006 Korean Science Times article reported that Korean exporters
such as Samsung complied with EU RoHS.72 At that time, the EU market took
up only one-fifth of all Korean electronics exports,73 yet that was sufficient to
steer the industry toward the European standards. Samsung further confirms on
its website that “all [Samsung] products” are RoHS compliant as part of the com-
pany’s global compliance strategy.74
Animal Welfare
Animal welfare offers another prominent set of examples of the de facto Brussels
Effect. For example, the EU’s ban on the sale of animal-tested cosmetics and
chemicals used for such products in particular has had a wide-reaching impact
on corporate behavior.75 The EU is the world leader in the manufacturing of cos-
metics: of the world’s 50 leading cosmetic brands, 22 are domiciled in Europe.76
In 2017, European cosmetics and personal care retail sales were valued at €77.6
billion,77 and exports totaled €20.2 billion.78 The EU has also built significant
institutional expertise and capacity to regulate the industry, as manifested by
the creation of the European Centre for the Validation of Alternative Methods
(founded in 1991 to develop alternatives to animal testing) and the Scientific
Committee on Consumer Products.79 Thus, the EU—which regulates both the
216
safety of the chemicals included in the cosmetics as well as the testing methods
employed—has become an “undisputed regulatory hegemon” in this domain,
setting the benchmark for the entire industry.80
Japanese cosmetics firms are among those that have adjusted their global
manufacturing to conform to EU animal welfare regulations. Shiseido—Japan’s
largest cosmetics manufacturer—halted animal testing in 2013 to abide by the
EU ban on the sale of animal-tested cosmetics.81 Several other Japanese cosmetics
companies, such as Kao Corp. and Kose Corp., followed suit.82 These compa-
nies are now increasingly using cultured human cells to replace animal testing on
products.83 The manufacturers are under no legal obligation to do so in Japan,
but they still refrain from animal testing as it would cost them revenue from
abroad.84 Some manufacturers are even demanding that their suppliers of ingre-
dients promise not to conduct tests on animals.85
Interestingly, while Shiseido abolished animal testing at both its domestic and
overseas laboratories, the company continues to test on animals for its products
sold in China, as Chinese laws require such testing as a condition for market
access by foreign companies.86 More generally, while broadly adhering to the
EU ban across the multiple markets, the cosmetics firms seem to be prepared to
engage in animal testing when such testing is a formal requirement for serving
a certain foreign market. According to e-mail correspondence with Shiseido’s
Customer Care Team in March and April 2018:
Shiseido’s decision to carry out animal testing for products destined for
China while refraining to do so for other markets shows a particularly interest-
ing variant of the Brussels Effect. In such a setting, the company cannot achieve
global compliance by adhering to EU rules alone. In other words, the EU stand
ard fails to incorporate all other (weaker) standards as long as Chinese and EU
standards are mutually incompatible. In these rare instances, companies are
forced to divide their production to serve two (or more) markets that require
opposite behaviors.
Because of the incompatibility between EU and Chinese regulatory stan-
dards on animal testing, some European cosmetics manufactures have also opted
to produce two different varieties of their products. For the fear of legal risks in
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Environment 217
the EU, they refrained from incorporating in their cosmetics sold in the EU the
ingredients they used in China because those ingredients had been tested on ani-
mals for the purpose of qualifying for the Chinese market.88 In seeking legal clar-
ity, the European Federation of Cosmetic Ingredients brought a case before the
European Court of Justice (ECJ) in 2014,89 asking the ECJ to determine whether
the EU’s Cosmetics Regulation prohibits the sale of cosmetics in the EU if an
ingredient in those cosmetics has been tested on animals for the purpose of com-
plying with a third-country regulatory requirement. The ECJ ruled that, in such
an instance, a cosmetic product could not be marketed in the EU if the producer
relied on those animal test results to prove the safety of the product also in the
EU.90 Thus, the ruling suggests that manufacturers had to maintain two different
testing methods—one with and the other without using animals—yet they could
produce a single product for both European and Chinese markets. Had the ECJ
instead ruled otherwise and prohibited the use of such ingredients in the cosmet-
ics sold in the EU, the manufacturers would in practice be required to produce
two different products, or choose between selling their products in the EU or in
China. However, this question of divisibility may be moot soon as the Brussels
Effect on animal testing might be closing in on China as well: in 2014, China
abolished its requirement for domestic companies to conduct animal testing on
“ordinary” cosmetics.91
In many other areas of animal welfare, the EU’s global regulatory influence
is more difficult to trace and measure. It is not always clear if foreign producers
are adjusting their global practices given their exposure to the EU as a key export
market or whether they are changing their practices due to growing domestic
pressures. The EU institutions themselves take the view that EU regulations have
had a significant global impact. The Commission, in its report on the impact of
animal welfare measures on the competitiveness of European livestock produc-
ers, notes that “The EU animal welfare standards have had a lighthouse effect
and often represented a source of inspiration for voluntary industry initiatives on
animal welfare.”92
At times, the de facto Brussels Effect is quite evident, with producers explicitly
citing the EU measures as reasons for the change in their production practices.
For example, the Brazilian farming industry acknowledges how it is respond-
ing to the business opportunity presented by Europe’s sustainable meat market.
Leaders of the country’s pork industry have argued that the country’s producers
must start investing in animal welfare because the EU’s standards were essentially
becoming a requirement of the international market.93 Incorporating European
welfare standards would also increase the value of Brazilian pork and improve its
competitiveness on the international market.94 This is significant given that Brazil
is the world’s third-largest pork producer and its fourth-largest exporter.
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Environment 219
to the part of the journey that takes place in the European airspace, making the
scheme non-divisible. For instance, on a flight from San Francisco to London,
only 9% of the emissions are calculated to occur in the EU airspace (29%, 37%,
and 25% of the emissions occurring over the United States, Canada, and the high
seas, respectively).119 Yet, according to the Directive, the airline was expected to
acquire emission permits for each ton of emissions emitted across the entire flight
since the point of landing was in the EU.120
The Aviation Directive qualified the EU’s unilateralism on two fronts: First,
airlines were exempted from the ETS with respect to their flights landing in the
EU (although not with respect to their flights taking off from the EU) if they
were subject to “equivalent measures” in their home jurisdiction.121 Whether
domestic climate regulation in the United States or China, for instance, would
qualify as an equivalent provision was, however, subject to the EU’s unilateral
decision.122 Second, the Directive stated that the EU could forgo extraterritorial
measures if a global agreement on reducing the GHG emissions from aviation
was negotiated. The Commission further backed up the Directive with tough
sanctions to ensure compliance: a foreign airline refusing to comply was subject
to a fine123 or, even more severely, could be banned from European airports.124
If fully enforced, the Aviation Directive would have provided one of the most
dramatic examples of the operation of the Brussels Effect. However, foreign air-
lines, supported by their governments, launched a series of concerted measures
to counter the EU’s unilateralism. United Airlines, Continental, and American
Airlines, supported by the US Air Transport Association, challenged their inclu-
sion in the ETS before UK courts, alleging that the United Kingdom’s decision
to implement the EU Directive violated international law.125 The UK Court
referred the question to the European Court of Justice. In an important victory
to the Commission, the ECJ backed the EU measure. It confirmed the validity
of the Aviation Directive with various international agreements and customary
international law.126
Yet the international resistance persisted.127 China canceled Airbus aircraft
orders and decried the alleged extrajudicial application of EU regulations, in
particular against developing countries.128 The Civil Aviation Administration
of China also banned all Chinese airlines from participating in the EU ETS in
2012.129 India similarly challenged the extraterritorial reach of the ETS. In 2011,
the Indian Ministry of Civil Aviation hosted a meeting of 26 countries opposing
the Aviation Directive. The participants signed the “Delhi Declaration,” calling
on the EU to reverse its decision.130 China, India, and 21 other countries con-
vened another meeting in Moscow and signed the “Declaration on Inclusion of
International Civil Aviation in the EU-ETS,” which “reject[ed] the EU’s move
as unilateral, and called on the EU to reverse its decision.”131 Ultimately, EU
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Environment 221
member states with deep commercial interests at stake given their connection to
the Airbus persuaded the EU to change its position. The EU “froze” implementa-
tion of the Aviation Directive until the end of 2016, provided the ICAO came to
a global agreement by then.132
Against this backdrop, multilateral negotiations were revived. On October
6, 2016, the ICAO announced it had reached an agreement, called the Carbon
Offsetting and Reduction Scheme for International Aviation (CORSIA).133
CORSIA’s pilot phase will come into effect in 2021, but participation by ICAO
states will not be mandatory until 2027. Unlike the ETS, CORSIA includes
exceptions for Least Developed Countries, Small Island Developing States,
Landlocked Developing Countries, and States with very low levels of interna-
tional aviation activity.134 In March 2017, the ICAO also adopted “the world’s
first global design certification standard governing CO2 emissions for any indus-
try sector.” This certification standard will apply to new aircraft type designs as of
2020, and extends to aircraft type designs already in-production as of 2023.135 As
a result of these measures, the EU agreed to forgo extraterritoriality and limit the
geographic scope of the ETS to intra-EEA flights from 2017 onward.136
The EU’s decision to suspend the extraterritorial aspect of the ETS can be
viewed through two different lenses. On one hand, it shows the limits of the
Brussels Effect. When faced with salient and broad-based international pres-
sure, the EU is prepared to give in. Imposition of concrete costs on EU member
states—here the loss of Airbus sales—proved a viable method of reining in the
Brussels Effect. On the other hand, the ETS and the aviation saga shows how the
EU can use the Brussels Effect as a way to facilitate an international agreement. It
is unclear if the political consensus for the ICAO would have ever emerged but
for the Brussels Effect and the opportunity costs associated with enduring the
costs of the EU’s unilateralism. Granted, CORSIA and The Standard represent a
“fundamental[ly] different” scheme for aviation than the EU ETS cap-and-trade
system.137 Yet still, it is geared at accomplishing the same policy outcome without
the EU having to face criticism of its aggressive unilateralism.
De Jure Brussels Effect
In many instances, these same areas of environmental regulation—hazardous
substances and electronic waste, animal welfare, and climate change regulation—
have also triggered legislative change abroad, leading to the de jure Brussels
Effect. The EU’s influence in these policy areas manifests through multiple
channels. Environmental policy has long been a subject of numerous multilat-
eral, regional, and bilateral negotiations.138 The EU has often played a key role
in these negotiations, spearheading several multilateral and regional conventions
2
Environment 223
even countries that may be less well equipped to handle high compliance costs opt
for EU standards given their industry’s dependence on the EU market.165
South Korea offers perhaps the most striking example of the de jure Brussels
Effect by closely emulating RoHS and WEEE, as well as a related EU regula-
tion on End of Life Vehicles (ELV),166 which sets targets for “reuse, recycling
and recovery of the ELVs and their components” and encourages manufactures
to produce new vehicles without hazardous substances.167 South Korea passed
the Act on the Resource Circulation [also translated as “Recycling”] of Electrical
and Electronic Equipment and Vehicles in 2007.168 The Act seeks to promote
the recycling and reuse of electrical and electronic equipment as well as vehicles,
and restricts the use of hazardous materials in those products. It also requires
businesses to design and manufacture products to make recycling easier.169 On
the basis of this law, the Ministry of Environment and Korea Environment
Corporation implemented an Eco-Assurance System for Electrical and Electronic
Equipment and Vehicles (EcoAs).170
Several sources indicate that the EU was used as a model for South Korea’s
law. The Korean Ministry of Environment website notes that “Advanced coun-
tries enforce a variety of environmental regulations on electrical & electronic
and automobile industry more strictly to serve the cause of sustainable devel-
opment, and such regulations as WEEE, RoHS are expected to influence the
export of domestic companies. Accordingly, on January 1, 2008, South Korea
implemented an Act on the Resource Circulation of Electrical and Electronic
Equipment and Vehicles for resource circulation and environmental conserva-
tion.”171 The EcoAs website, managed by the Ministry of Environment and
Korea Environment Corporation, refers to stringent EU regulations when dis-
cussing Korea’s implementation of its Act in this area.172 It also notes that the
Korean law encompasses features of EU RoHS, WEEE, and ELV.173 Notably, in
the section titled “Summary of EcoAs,” it displays the following equation: “EU
RoHS + WEEE + ELV, etc = Act on the Resource Circulation of Electrical and
Electronic Equipment and Vehicles.” Finally, in a 2014 symposium hosted by the
Korean Ministry of Environment, the deputy director of the Resource Recycling
Division of the Ministry characterized the Korean Act and the EU law as equally
restrictive, and stated that “by 2018, the Ministry plans to reach recycling rate of
57% of production, which matches the EU level.”174
Japan offers an example of more distant emulation of the EU. In 2005, the
Japanese Industrial Standards Committee of the Ministry of Economy, Trade and
Industry (METI) issued JIS C 0950:2005, also known as “J-MOSS.” J-MOSS is
the Japanese Industrial Standard for Marking the presence of the specific chemi-
cal substances for electrical and electronic equipment.175 J-MOSS is similar to,
but less stringent than, the EU RoHS. Like the EU’s RoHS, J-MOSS regulates
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Environment 225
the same six substances and has the same concentration levels. However, while
the EU’s RoHS restricts the use of these substances, J-MOSS relies on manda-
tory labeling requirements.176 When the products’ content exceeds the values
set in J-MOSS, the manufacturers must display the “content mark”—which is
a two-hand clasping “R” symbol on the product and packaging—and the sub-
stance information must be disclosed in catalogs and instruction manuals, as well
as on the internet.177 According to Yoshiko Naiki, Japan did not simply mirror
RoHS but was influenced by EU RoHS in introducing its own version of the
regulation.178
China adopted a “RoHS 2” in 2016. On the one hand and in some dimen-
sions, the China RoHS is weaker than EU RoHS 2, while in other dimensions it
is even more stringent. The China RoHS regulates the same six hazardous sub-
stances as the EU’s RoHS 2, except that the EU added four phthalates in 2015.179
On the other hand, the China RoHS can be considered even more stringent than
the EU RoHS in that it does not exempt several electronic and electrical products
or components which qualify for EU RoHS exemptions. 180 China’s decision to
emulate the EU is not surprising given that all producers in the supply chain need
to follow RoHS to guarantee the access of the final product to the EU market. In
the case of electronic products, the component manufacturers at the beginning of
the supply chain are often based in China.181
In Latin America, the efforts to follow the EU’s lead in this area have been
less successful. The Argentine Senate passed a RoHS-like bill in 2010,182citing the
EU as an inspiration for its content. However, the bill did not gain final approval,
and was only partially enacted in 2011. The categories and list of products covered
under the bill “are nearly verbatim (with slight modifications) to those identified
under Annex I of the European WEEE Directive.”183 According to a 2018 news
report, “[t]he Brazilian government has announced plans to propose a regula-
tion similar to the EU’s Directive on the Restriction of Hazardous Substances
(RoHS) in electrical and electronic equipment (EEE).”184 While existing exam-
ples of legislative copying in Latin America of EU RoHS, WEEE, and similar
regulations are limited, a momentum for legislative reform across Latin America
is growing. These legislative efforts might gain force with the growing tendency
for producers across global markets to meet EU regulatory standards, making it
possible that Latin America will feature examples of the de jure Brussels Effect in
the near future.
Animal Welfare
As with the de facto Brussels Effect on animal welfare standards, the EU’s influ-
ence on legislative change is often hard to disentangle from the domestic advocacy
26
pressures. The EU institutions, again, take the view that the EU’s animal welfare
legislation has been critical in informing regulatory reforms abroad. For example,
the European Parliament has described the EU Directive prohibiting the use of
barren battery cages for laying hens as:185
[having] led to a great improvement in hen welfare and has had much
influence around the world. Similar legislation and retail company stan-
dards are now in place in New Zealand, India, Taiwan, an Australian state,
and several states of the U.S.A. Demand from consumers for high welfare
egg products has increased in many other countries. The EU legislation,
rather than solely EU consumer attitudes, has been a major factor in this
world-wide change, which is accelerating.186
In some other areas, foreign governments also refer to EU laws in their gov-
ernment reports and other legislative documents, suggesting that they are at least
partially emulating the EU in their own legislative endeavors. For example, the
EU’s regulation banning the confinement of sows during pregnancy has led to
the de jure Brussels Effect in several jurisdictions. The EU regulates this area by
a 2008 Council Directive laying down minimum standards for the protection of
pigs.187 The Directive prohibits the tethering of sows and sow stalls, except during
the first four weeks of pregnancy.188 Although the ban did not come into effect
until 2013,189 it was promulgated already in 2001, and since that time, a number
of other countries have moved toward similar bans. In New Zealand, for example,
sow stalls were phased out in 2015.190 The government reported that “[t]he new
code confirms New Zealand’s position as a world leader on animal welfare and
demonstrates the priority this Government places on it.”191 The New Zealand
pork industry publicly supported the ban, noting how “[c]onsumers prefer ges-
tation stalls are not used—we have listened and we are making a change and
removing them.”192 New Zealand was likely also influenced by the EU’s exam-
ple: a government report on the amendment of the pig welfare legislation makes
frequent mention of EU standards and legislation as a point of comparison.193
Similarly, in Australia, sow stalls were phased out in 2017,194 and in Canada, crates
will be phased out by 2024. In the United States, many states began to ban sow
stalls after the EU legislated the ban in 2001. For example, the first US state to ban
sow stalls was Arizona in 2006. California, Colorado, Florida, Maine, Michigan,
Ohio, Oregon, and Rhode Island followed suit by 2012.195
Environment 227
facto Brussels Effect alone was never going to be sufficient to address the chal-
lenge. In particular, the de facto Brussels Effect was not going to mitigate foreign
GHG emissions that were completely local in nature. Conscious of this, the EU
chose to adopt ETS over various other regulatory mechanisms, such as carbon
tax, partly because it knew that the ETS was more likely to gain traction interna-
tionally.196 In fact, around the same time, a limited carbon trading was also being
implemented in the United States, where several states participate in a Regional
Greenhouse Gas Initiative (RGGI), a regional emission trading scheme to reduce
GHGs. The United States had also advocated carbon trading as a preferred regu-
latory mechanism in international negotiations. By adopting the ETS, the EU
hoped to gain the support of the United States and thus also pave the way for
subsequent multilateral cooperation—with the United States as its partner—in
climate change mitigation. This strategy suggests that climate unilateralism never
constituted a permanent or preferred regulatory response for the EU. Instead, it
always hoped to inspire other jurisdictions to follow its example to ultimately
forge a joint global action to mitigate climate change.
On many metrics, the EU has been successful in this regard. The EU’s efforts
to mitigate climate change through the ETS has similarly gained noteworthy
traction abroad, inspiring other countries to develop their own ETSs. According
to data compiled by the Grantham Institute of Imperial College London, 39
national and 23 sub-national jurisdictions have either implemented or are sched-
uled to implement carbon-pricing instruments similar to the ETS.197 Many of
these are individual EU member states but also comprise jurisdictions such as
Australia, Switzerland, and regional schemes in Canada, China, Japan, the
United States.198
This de jure Brussels Effect has occurred despite criticism leveled against the
EU ETS. The EU has been criticized for grandfathering emission allowances,
which distorts competition.199 In addition, the number of allowances given
undermined the effectiveness of the system, preventing prices from driving the
expected reduction in emissions.200 The price of EU emission allowances further
dropped drastically during the financial crises—from approximately €30/tCO2
in mid-2008 to approximately €5/tCO2 in mid-2013201—casting further doubt
on the effectiveness of the EU ETS and its suitability as a global model. Finally,
the EU’s efforts to extend the coverage of its ETS to international aviation emis-
sions, and the subsequent retreat from this strategy, may be viewed as undermin-
ing the EU’s soft power to exert leadership and provide a legislative model for
foreign governments with its ETS.202
However, despite its flaws and limitations, the ETS remains unprecedented
as a system that attempts to set a price for greenhouse gas emissions in a suprana-
tional context, providing the most innovative template for others to follow.203 The
diffusion of the ETS is further motivated by the possibility of “linking” another
28
jurisdiction’s ETSs with the EU’s,204 assuming these foreign schemes meet the EU
ETS’s minimum conditions for linking.205 Some jurisdictions, such as Australia,
California, and Quebec tailored their ETS programs to closely resemble that of
the EU with an aim of linking those programs with the EU ETS market.206
Again, South Korea offers a prominent example of the de jure Brussels Effect.
The country adopted K-ETS—Korean Emissions Trading Scheme (“Act on the
Allocation and Trading of Greenhouse Gas Emission Permits”) in 2012.207 The
implementation took place three years later.208 The K-ETS covers approximately
599 of the country’s largest emitters, which account for around 68% of national
GHG emissions.209 The Act reflects at least partially the realization that Korean
companies are affected by EU’s ETS and that the ETS can play a significant role in
developing new technologies. For example, a 2012 Korean news article mentions
the impact of EU-ETS on Korean airlines operating flights to and from Europe. It
notes that Korean airlines might fall behind European airlines in the global com-
petition because European airlines have had a head start to innovate in an effort
to respond to the EU-ETS, such as developing environmentally friendly fuels.210
Several sources indicate that EU-ETS was used as a model for K-ETS. The
2012 notice of legislation, issued by the Ministry of Environment in relation to
the enforcement decree for K-ETS, notes that “The enforcement decree designed
the emissions trading scheme by referencing foreign examples such as the EU’s and
by reflecting both the global standard and the realities of the Korean economy.”211
The Q&A for K-ETS, posted by the Presidential Committee for Green Growth
in May 2012, emphasizes the positive effects of the ETS by referring to the
EU: “After the EU adopted ETS, greenhouse gas emissions decreased, whereas
businesses did not flee abroad or lose their competitiveness.”212
South Korea also provides an example of the EU’s use of technical assistance
programs to further facilitate the diffusion of its regulatory models abroad. In
July 2016, the Korean Ministry of Strategy and Finance (MOSF) and the EU
launched a €3.5 million, three-year cooperation project, through which the EU
would provide technical assistance for the implementation of K-ETS and also
support policy development regarding K-ETS. The EU will provide a consulta-
tion hotline, training workshops, and expert forums.213 Korea welcomes the EU’s
advice as an opportunity to learn from an established and experienced regula-
tor. According to a statement by vice minister of Korean MOSF: “I hope that
sharing EU’s ample experience in operating the EU ETS [for] more than 10 years
would help K-ETS to become a successful policy instrument for reducing GHGs
in Korea.”214 A statement by Minister Counsellor [sic] of Delegation of the
European Union to the Republic of Korea expresses a similar sentiment, noting
also how this offers a path for broader emulation of ETS in the region: “[The EU-
Korea ETS Project] aims to share the best technical expertise and lessons learned
29
Environment 229
over the past decade of the EU’s ETS operation, the world’s first and largest emis-
sions trading system. By assisting Republic of Korea in the implementation and
operation of its ETS, we aim to set a positive example for other countries in the
region.”215
Finally, China is a particularly remarkable example of the de jure Brussels
Effect, given its role as the leading emitter of GHGs. Today, it has the second-
largest carbon market trading scheme after the EU. China piloted a carbon trad-
ing program in different parts of the country, including in Beijing, Shanghai, and
Guangdong,216 and approved a national ETS in 2017.217 China’s willingness to
emulate the EU’s lead can be traced to different factors, including its increasing
recognition of the limits to command-and-control regulation and its unsuccess-
ful past experiences with emissions trading for sulfur dioxide.218 The EU has also
engaged in active dialogue with Chinese regulators, building regulatory capac-
ity and assisting local regulators with tasks such as data gathering, monitoring,
and inspections.219 Despite these efforts and concrete signs that China is taking
action, it is not yet clear that the EU ETS can be meaningfully transplanted in
China, given its tradition of government intervention with markets and a politi-
cal aversion to energy price increases.220
The ETS is not the sole example of the de jure Brussels Effect involving emis-
sions control and the EU’s efforts to mitigate climate change. The EU has also
taken extensive measures to set emissions standards for the automotive industry,
both to reduce local pollution and thereby improve air quality, and to mitigate
harmful GHGs that contribute to climate change. The EU adopted the Euro-5
standard for passenger cars in 2009 and Euro-6 standard in 2014. Euro-5 pri-
marily reduces fine particulate matter produced by diesel cars, while Euro-6’s
core objective is the reduction of nitrogen oxide (NOx) and carbon monoxide
(CO).221 Additionally, Euro-6 moves beyond direct human health concerns
related to pollutant exposure and addresses broader climate change objectives by
imposing limitations on carbon dioxide.222
In 2016, shortly after the EU adopted these standards, the Russian government
made Euro-5 standard mandatory in Russia.223 It was natural for Russia to emu-
late the EU standard—as opposed to, for example, the prevailing US standard—
given that 69% of the total Russian car exports are destined to Europe.224 This
de jure Brussels Effect was also preceded by a significant de facto Brussels Effect,
paving the way for the domestic legal change. Indeed, many domestic compa-
nies were already producing and selling cars compatible with the Euro-5 and even
Euro-6 standards to ensure their access to the important EU market.225 Russian
oil refineries had similarly begun to adjust their production to EU standards. For
example, a Russian energy company Lukoil completely switched its refineries to
Euro-5 standard in 2012, while Gazprom Neft and Rosneft started producing
230
some of their petrol and diesel under the EU standard in 2013.226 At the same
time, the Brussels Effect has not been complete in Russia. Some local companies
continue to produce cars that fail to meet the EU standard for domestic use—
especially to serve the more remote parts of the country, where access to high-
quality fuel is limited.227
South Africa provides a curious illustration of an interplay between the cor-
porate and government interests in the country’s efforts to move toward the EU’s
fuel standards. The South African government has acknowledged how several
foreign jurisdictions have tightened fuel specifications in line with those of
the EU,228 and have proposed to incorporate the EU’s fuel standards into South
African law as well. The country’s current fuel regulations, “Clean Fuels I,” are
equivalent to the Euro III fuel specifications.229 Updated “Clean Fuels II” regu-
lations, which are equivalent to Euro V specifications, were intended to become
effective in July 2017. However, the new draft regulations were rescinded as the gov-
ernment refused to pledge necessary assistance to refineries that would be forced
to upgrade their facilities to make the transition to cleaner fuel production.230
South African oil refineries acknowledge that the market is shifting toward
the European fuel standards and support the local adoption of EU standards
to keep up with the growing demand of cleaner fuels. At the same time, they
emphasize the necessity of government support to make the substantial capital
investment to upgrade their facilities.231 The industry claims that, absent such
support, the imported supply of cleaner fuels would crowd out the domestic mar-
ket whenever the new standards were adopted.232 Sasol—a large chemicals and
energy company in South Africa—is engaged in ongoing negotiations with the
South African government to ensure that sufficient investment is in place to make
the transition.233 In addition, SAPIA, an industry association representing the
collective interests of the South African liquid fuels industry, has established a
joint task force with the Department of Energy to resolve the impasse.234
This dialogue between the government and the key corporate players shows
how the path toward the de jure Brussels Effect can be long and complicated—
even when commercial realities support the adoption of the EU standard,
and when such emulation is backed by the government and the industry alike.
Lobbying on the part of influential companies like Sasol and industry associa-
tions have played a crucial role in the development of fuel regulations that mirror
those prevailing in the EU by the South African government.235 Yet it is these
same companies’ inability to adjust to EU standards absent government support
that has delayed the manifestation of the de jure Brussels effect in the country.
Environment 231
problems, it has been a policy issue in which the EU has had a keen and proac-
tive interest in externalizing its regulations. This chapter has illustrated the global
impact of the EU’s environmental regulation—both de facto and de jure—
through examples pertaining to management of hazardous substances in elec-
tronics, protection of animal welfare, and mitigation of climate change through
the emissions trading system. The discussion showed that the de facto Brussels
Effect has been particularly strong in the case of management of hazardous sub-
stances in electronics, revealing extensive de facto convergence among multina-
tional electronics companies on EU rules across their worldwide production. This
common de facto Brussels Effect has also paved the way for the de jure Brussels
Effect in multiple countries. The de facto Brussels Effect was similarly shown to
be prevalent in the area of animal welfare, manifested by examples ranging from
the cosmetics industry abandoning animal testing to slaughterhouses amending
the ways they stun animals before slaughter. Examples of the EU’s influence on
foreign legislative practices may be found in this area, but it often remains dif-
ficult to link the various domestic reforms to the de facto Brussels Effect given
the various additional channels, such as consumer and NGO activism, which also
drive domestic reforms in this area.
The EU’s emissions-trading mechanism provided an alternate case study to
examine the dynamics and the limits of the Brussels Effect in environmental
regulation. While foreign governments have often had little success in curtailing
the EU’s regulatory ambitions in other areas, they were ultimately successful in
restraining the EU’s efforts to extend its ETS into international aviation unilater-
ally. This suggests that the Brussels Effect has its limits, in particular when the EU
pursues aggressive unilateralism in an area that is simultaneously economically
salient for foreign jurisdictions and politically controversial. However, the threat
of the EU’s unilateralism was sufficient to catalyze multilateral negotiations,
which eventually led to an international agreement to regulate emissions in the
aviation industry, an outcome that might not have happened without the EU’s
attempts to drive regulatory change. Further, despite the EU’s inability to foster
regulatory adjustment through the de facto Brussels Effect, it has achieved suc-
cess through the de jure Brussels Effect as several countries have since emulated
its ETS domestically. This illustrates a different relationship between the de facto
and de jure Brussels Effect: while the de facto Brussels Effect often paves the way
for the de jure Brussels Effect, the de jure Brussels Effect can also take place in the
absence of any meaningful de facto Brussels Effect, though most effectively when
the EU assumes a proactive role in its promotion.
23
23
PREFACE TO PART THREE
Assessment
This book has thus far focused on the theory behind the Brussels Effect as well
as its manifestation through case studies into a number of policy areas. That dis-
cussion has been purely descriptive, seeking to explain why the EU is in a unique
position to exert, both intentionally and unintentionally, global regulatory influ-
ence today. In this last part of the book, the discussion turns to the ongoing and
future impact of the Brussels Effect—both by asking the normative question of
whether the Brussels Effect is beneficial and to whom (chapter 8) and whether
the Brussels Effect will persist or transform in the future (chapter 9). The discus-
sion that follows will therefore be inherently more subjective than in the previous
chapters, consisting of both value-driven assessments on the costs and benefits
associated with the Brussels Effect as well as inevitably indeterminate predictions
on its endurance.
Chapter 8 takes on the normative charge and examines the various costs and
benefits associated with the Brussels Effect, considering whether the Brussels
Effect, on balance, advances or reduces people’s welfare—in the EU and outside
of it. In assessing the EU’s global regulatory power from a normative standpoint,
the chapter engages with three primary strands of criticism that can be leveled
against the Brussels Effect. First, it asks whether the EU’s global regulatory reach
is costly and detrimental to innovation, imposing a cost on the society as a result.
Second, it engages with the criticism alleging that the Brussels Effect reflects the
EU’s protectionism and can hence be viewed as an industrial-policy driven attempt
to impose costs on non-EU companies while tilting the market in favor of its own
firms. Finally, it asks whether the Brussels Effect amounts to regulatory imperial-
ism, compromising the foreign sovereign interests and undermining the political
autonomy of their citizens.
Chapter 9 looks into the future, asking if the Brussels Effect will likely prevail as
the balance of global economic power changes, technological innovation progresses,
and the EU faces internal challenges ranging from Brexit to rising anti-EU senti-
ments cultivated by populist Euroskeptic political parties. Specifically, the chapter
asks whether the distinct conditions underlying the Brussels Effect—market size,
234
This book has thus far demonstrated the existence and importance of the
Brussels Effect in many areas of global regulatory policy, and revealed the power-
ful impact the EU has on global markets as a result. When considering this broad
impact, an important question arises: Is the prevalence of the Brussels Effect
desirable or undesirable? Of course, since the Brussels Effect creates both winners
and losers, the answer to this question likely depends on whom one asks.
This chapter addresses the normative question of whether the Brussels Effect
is beneficial, specifically by asking whether it advances, rather than reduces, peo-
ple’s welfare both in the EU and outside of it. Welfare in this context should be
measured in terms of giving people access to better products and services—“ bet-
ter” being defined as cheaper, safer, or more sustainable, depending on what peo-
ple value—while respecting people’s political autonomy within the democratic
structures of the societies they live in.
In comparing this welfare benefit to the costs incurred to achieve it, three
broad strands of criticism can be leveled against the Brussels Effect. First, one cri-
tique that has been frequently made by businesses is that the proliferation of more
restrictive EU regulations is costly and hinders innovation. Consequently, accord-
ing to this argument, numerous consumers may become priced out of the market,
leaving them worse off than if less restrictive regulations existed. Industrial prog-
ress would also be thwarted, levying a cost on society at large. Second, another
frequent critique expressed by foreign governments and companies is that institu-
tional and ideological motivations underlying the Brussels Effect reflect the EU’s
protectionism. According to this critique, as a manifestation of industrial policy,
the EU’s regulatory practices may distort the operation of the market and thereby
deprive consumers of the gains that undistorted competition would produce.
Third, a number of scholars have suggested that the Brussels Effect may reflect
the EU’s regulatory imperialism, compromising the democratic prerogatives of
foreign sovereigns and the political autonomy of their citizens.
The Brussels Effect. Anu Bradford, Oxford University Press (2020). © Oxford University Press.
DOI: 10.1093/oso/9780190088583.001.0001
236
236 Assessmen t
238 Assessmen t
broadly to change the world or, at least, allow it to change.”8 If the Brussels Effect
pushes all firms and jurisdictions toward the goal of “satisfying a consumer need”
as opposed to “changing the world,” arguably some products may never be devel-
oped and some progress never be realized as a result.
In addition to absolute costs, the Brussels Effect introduces distributional
costs. The costs of complying with EU regulations are often particularly, even
prohibitively, high for small-and medium-sized enterprises, while the large mul-
tinationals arguably have the resources to meet almost any standard that the
EU sets. Thus, if anything, high regulatory barriers in the EU have the poten-
tial to protect and further entrench the power of already large companies that
can more easily afford to comply at the expense of small companies and entrants
struggling to meet accumulating regulatory burdens. In the end, while big mul-
tinationals such as Facebook or Google make the headlines, the real hidden cost
of the Brussels Effect is borne by the small entrants who do not have the same
capacity to engineer their products and services to meet the EU’s demands. For
example, the EU’s new copyright reform requires platform companies display-
ing copyrighted content to run filters that scan uploaded content for copyright
violations.9 These filtering systems cost $100 million to develop and run, which
can be prohibitive for small entrants yet trivial for companies such as Google.10
This distributive effect is one of the unintended consequences of EU regulations,
tilting the relative regulatory burden in favor of the large incumbents and further
cementing their dominance in the process.
These criticisms are all important, and they present genuine challenges for
regulators, businesses, and voters to consider. However, it is also true that costs to
businesses and high prices for consumers are not automatically an indication that
people’s welfare is being reduced. One way to view the high prices generated by
stringent regulation is through the lens of regulatory paternalism, which justifies
government intervention as a way to force or nudge individuals away from unwise
decisions.11 This lens suggests that while regulations may lead to higher prices,
they also reduce other kinds of costs—both in the present, but also in the future.
For example, in the absence of stringent regulation, consumers may make deci-
sions that will lead to hidden costs they had not considered; they might choose
cheaper products because they do not have the right information on the health
costs of less safe products or a full appreciation of the long-term societal costs of
lesser environmental protections. This might be because they do not spend the
time to educate themselves on the harmfulness of certain chemicals or consider
negative consequences associated with relinquishing control over their personal
data. They may also inappropriately discount the welfare of future generations,
opting for cheaper products today that will lead to environmental harm in the
future. These kinds of consumer choices impose a burden on the next generation
239
240 Assessmen t
Reputational benefits and brand equity can also arise from compliance with
higher standards. Firms can send the markets and consumers a valuable signal by
associating themselves with high standards across many areas of regulation, be it
by listing their company in a stock exchange that holds them to more stringent
reporting requirements,18 or by adhering to high environmental, human rights,
or labor standards. In this way, firms can enhance their legitimacy, obtain reputa-
tional gains, and win over consumers whose values drive their customer behavior.19
For example, observance of EU food standards engenders customer confidence
in many parts of the world. Several domestic companies in China proclaim that
they produce their dairy products in compliance with EU standards in an effort
to send markets a signal of the safety of their products. A Chinese milk producer
Jun Le Bao announced that it is using equipment imported from European coun-
tries, and that every technical aspect of the production line complies with EU
standards.20 Similarly, the Shengmu Group produces organic infant milk powder
that complies with EU standards after having invested in a new specialized fac-
tory. The company emphasizes how EU-compliant milk powder will be available
in China and worldwide.21 The Chinese dairy industry has also actively advo-
cated for the elevation of national standards to meet the EU standard in an effort
to further enhance consumer confidence in the domestic dairy industry.22 For
instance, the Chinese industry association, China State Farms Production Dairy
Association, embraces the EU standard, offering accreditation for domestic pro-
ducers that join the association. Many Chinese companies have thus joined the
association specifically to signal their compliance with EU standards.
Consequently, the criticism on the costliness of the Brussels Effect must
be tempered with the realization of the many economic benefits engendered
through more harmonized, predictable, and stable business environments. These
benefits have created efficiencies that are often passed on to consumers through
more reliable and sustainable products and services that may not inevitably be
more expensive. This is not to say that the Brussels Effect would not reduce some
consumers’ welfare—it does. Subscribing to regulatory paternalism may in the
end be the only way to argue that even these consumers, against their individual
preferences, are still better off under the Brussels Effect—even though it remains
debatable if the particular EU regulation (as opposed to some alternative regula-
tion) is optimal for them. Of course, a question remains if the EU should be mak-
ing this choice for foreign firms and consumers as well. This changes the argument
to a political, as opposed to merely economic, dimension of the Brussels Effect.
The argument over the potential for EU’s “regulatory imperialism” and the ero-
sion of foreign regulatory sovereignty will be examined in more detail later in
this chapter.
241
We have owned the Internet. Our companies have created it, expanded
it, perfected it in ways that they can’t compete. And oftentimes what is
portrayed as high-minded positions on issues sometimes is just designed
to carve out some of their commercial interests.28
242 Assessmen t
The EU firmly denies that it has a protectionist agenda. Its stated agenda aims
to cultivate a regulatory environment that guarantees a level playing field where
EU companies can compete with their foreign counterparts on equal terms.33 The
EU often emphasizes its commitment to the welfare state and the sustainability
of its economic policies. By exporting its standards to other countries, the EU can
pursue its ambitious social and environmental agenda without compromising the
competitiveness of its industries.34 However, the line between “concern for com-
petitiveness”—that is, subjecting domestic and foreign companies to the same
rules—and “regulatory protectionism”—that is, favoring domestic companies at
the expense of foreign companies—is sometimes blurry. If the EU enforces its
competition laws against a US firm, it can be difficult to determine whether the
enforcement action is motivated by industrial policy and the desire to deliver an
advantage to European firms, or whether it is driven by an objective application
of EU law that would be similarly applied, regardless of the nationality of the
target firm.
In perhaps no other domain have accusations of European protectionism
been voiced more frequently than in competition policy, where the European
Commission has issued many rulings against high-profile US companies. In
response to these rulings, the Commission has been accused of using its com-
petition powers to advance European industrial policy objectives over compe-
tition. These accusations go back as far as the 2001 GE/Honeywell merger35—a
merger between two US companies that US authorities cleared but which the
Commission blocked. The US Department of Justice’s chief antitrust enforce-
ment official responded to the EU decision by accusing the Commission of
protecting competitors as opposed to competition.36 This idea that the EU is
protecting competitors and not competition became somewhat of a mantra in
the years that followed.37 Members of the US Congress similarly expressed con-
cerns, accusing the Commission of “using its merger review process as a tool to
protect and promote European industry at the expense of U.S. competitors.”38
In addition to GE/Honeywell, the Commission has blocked or forced significant
restructuring to several mergers involving a wide range of well-known American
firms, including MCI WorldCom, Time Warner, NYSE Euronext, and UPS.39
These cases keep alive the critics’ distrust in the motives that underlie EU’s com-
petition policy.
Most recently, the EU’s competition enforcement has targeted dominant
companies, which, according to the Commission, have abused their dominant
market position. For example, in 2018, the EU imposed a $5 billion fine on
Google, accusing the company of abusive behavior involving its Android oper-
ating system.40 This record-high fine ensued an earlier $2.3 billion fine imposed
on Google in 2017 for manipulating its search results to favor its own shopping
243
comparison service to the detriment of its rivals.41 A third fine of $1.7 billion fol-
lowed in 2019, after the Commission found that Google abused its search systems
to force third-party sites to use its AdSense network.42 Other recent US corporate
giants targeted by the EU’s competition enforcement include Qualcomm43 and
Apple,44 which build on earlier adverse decisions against Intel45 and Microsoft.46
In these high-profile cases, the EU was critiqued for advancing a protectionist
regulatory agenda.
Yet a closer look at these cases suggests that European companies are hardly the
main beneficiaries of the Commission’s competition actions, calling into question
protectionism as the EU’s motive. In most instances, the winners are other US
companies, including the ones who had filed complaints with the Commission as
affected competitors in the first place. For example, Microsoft was the company
that initially lodged a complaint against Google.47 Similarly, the main beneficiary
of the Commission’s enforcement action against Intel was another US company,
AMD, whereas Intel and Apple stood to benefit most from the Commission’s
decision against Qualcomm. While these competition actions might also benefit
some European companies seeking to enter the market in the future, the direct
and current beneficiaries are unambiguously other US companies.
Regulatory disputes in several other areas also involve US interests on both
sides, further bringing into question the allegation that EU regulations are geared
at advancing EU interests at the expense of US companies. For example, the US
music industry has leveraged EU regulations against (mostly US-based) inter-
net platforms in the industry’s fight over liability rules concerning pirated audio
content uploaded online.48 The EU’s new Copyright Directive has presented
them with an important opportunity to seek to impose greater responsibility for
online platforms to detect and remove copyright-infringing content posted on
their sites.49 A number of traditional US telecommunications firms have similarly
lobbied the EU regulators to subject the (mostly US-based) internet-based mes-
saging companies such as WhatsApp, Skype, and FaceTime to the same regula-
tory requirements as telecommunication companies are subject to. Facebook and
Microsoft—the owners of these messaging companies—have opposed any such
EU regulatory requirements proposed by their US-based competitors.50 Given
these multiple examples where US companies leverage EU laws against other
US companies, it becomes questionable to portray the EU as a biased regulator
that is targeting US companies in an effort to offer protectionist gains for their
European competitors.
Even if the EU regulation has not been explicitly motivated by a desire to
protect EU firms, it is possible that the EU is not balancing the costs and ben-
efits of intervention in the tech sector correctly, in part because there are few
European tech giants. Specifically, the Commission may not fully internalize
24
244 Assessmen t
the benefits generated by the industry, given its narrow focus to maximize the
welfare of European consumers. The Commission may thus generally over-
value the benefits of intervention to consumers and undervalue the costs of
its regulations on companies. While this would not amount to direct protec-
tionism, it may still disadvantage foreign interests at the expense of European
interests.
The Commission’s enforcement record further suggests that it would be mis-
leading to portray the EU as a regulator that primarily has US companies in its
sight. While the EU’s prominent decisions against major US companies receive
much press coverage, many Commission competition decisions target EU com-
panies with the same fervor. For example, in a 2016 acquisition involving the
world’s largest and second largest brewer, the Commission required the Belgian
acquirer Anheuser-Busch InBev to sell practically the entire UK-based beer busi-
ness in Europe as a condition for approving the AB InBev’s over $100 billion
acquisition of SABMiller.51 In addition, the year after the Commission prohib-
ited a merger between Deutsche Börse and the American NYSE Euronext,52 it
prohibited a similar acquisition attempt by a European acquirer: the proposed
merger between the London Stock Exchange (LSE) and Deutsche Börse.53 In
cases where the EU has investigated companies for receiving illegal state aid, the
EU has not only ruled against Apple, Amazon, and Starbucks, but also against
the Italian company Fiat.54 The Commission is also currently investigating poten-
tially illegal state aid granted to Alitalia and Ryanair.55 These examples suggest
that the Commission is likely just as eager to go after European companies in its
quest to protect the welfare of European consumers.
Protectionism is, nevertheless, often difficult to detect, let alone measure sys-
tematically. Any protectionist motive would hardly be cited in legislative goals or
as grounds for an enforcement decision against foreign firms. Several arguments,
however, suggest that protectionism is unlikely to be the driver of EU competition
enforcement. For example, consider the Commission’s governance structure as it
investigates mergers. The Commission’s case teams that review proposed mergers
consist of lawyers and economists from across the EU, only a few of which come
from the same nation as the target of the merger. Any final decision rests on the
vote of the entire College of Commissioners, consisting of a Commissioner from
each member state—only one hailing from the target nation. Any decision to
challenge a welfare-enhancing merger to protect a target nation’s economic inter-
ests would hence require the majority of the twenty-eight Commissioners and a
multinational case team to forgo benefits to consumers across Europe to hand a
protectionist victory to a particular nation’s industry. Such a collective decision
in support of one member state’s protectionist agenda is hard to imagine under
any circumstances.56
245
246 Assessmen t
The EU’s environmental and health regulations seem to reflect a similar pat-
tern that is hard to reconcile with any protectionist agenda. For example, while
the EU’s emissions trading scheme (ETS) was initially designed to regulate for-
eign aviation emissions as well, the ETS continued to operate in Europe even after
the EU lost the battle to fold foreign carriers into its ETS. In other words, the
EU kept the regulation in force even when its ability to enforce it against foreign
companies was compromised. Similarly, in assessing the safety of chemicals under
the REACH regulation, the nationality of the exporter of a chemical is typically
not even known to the scientific expert evaluating the safety of the chemical.60
The file containing the information used in the safety evaluation similarly does
not generally allow a precise determination as to whether the chemical in ques-
tion is predominantly produced by domestic or foreign parties, making it diffi-
cult to incorporate industrial policy considerations into the assessment. Instead,
the experts evaluate the dossiers and substances purely from the perspective of
their safety.
In the absence of compelling evidence of any systematic protectionism guid-
ing the EU’s regulatory agenda, a more plausible explanation might be that the
EU is simply a tough regulator—whether against foreign or domestic firms. The
EU’s tough regulatory stance is also consistent with the views of the EU’s citizens
who have demanded more protective regulations, as discussed in chapter 2, pro-
viding an alternative motive for the EU to act. European citizens and NGOs have
been vocal in demanding more stringent consumer, environmental, and health
protections. They have similarly become increasingly distrustful of the conduct
of dominant companies and more concerned about the integrity of their per-
sonal data, leading to greater regulatory scrutiny of companies’ data protection
and competition practices.
Citizen activism also explains the EU’s efforts to externalize the single mar-
ket. Many environmental risks, such as climate change, are global in their nature,
and cannot be resolved by the EU alone. Instead, they require corporations to
adjust their practices globally and foreign governments to respond with domes-
tic regulation. Examples include a ban on importation of timber that has been
illegally harvested in foreign countries, which is critical to EU’s efforts to tackle
deforestation and preserve rain forests.61 Similarly, many health problems, such as
deadly viruses, are known to transmit easily around the globe, harming European
citizens if not contained at their source. Such concerns have given impetus for the
EU to pursue renewed action to contain health risks such as anti-microbial resist
ance, irrespective of their origin.62 Many Europeans have also called for the EU
to address concerns that emanate primarily from foreign practices, with lesser, if
any, territorial connections to the EU. The disregard of animal welfare in foreign
countries offends the Europeans’ sense of morality just as much as the neglect
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of, or cruelty toward, animals in Europe. The 2014 WTO trade dispute between
the EU and Canada regarding an EU ban on seal products to combat what the
EU perceived as inhumane seal hunting by the Canadian Inuit is illustrative. The
WTO Appellate Body upheld the ban as “necessary to protect public morals,”
relying on the EU’s assertion that “moral concern regarding the protection of
animals is a value of high importance in the European Union.”63
If the accusations of the protectionism were well founded, they would pro-
vide a powerful basis for criticizing the Brussels Effect. However, the lack of clear
evidence of protection, together with the alternative explanation that focuses on
entrenched citizen preferences, suggest that the concerns of the EU’s regulatory
protectionism are likely misplaced or, at best, misinterpretations of a broader
regulatory scheme.
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the market-driven Brussels Effect. Instead, the EU is simply asking others to play
by its rules when operating in its home market, and enforcing the norms of the
single market equally on domestic and foreign players.80 If the self-interest of mul-
tinational corporations leads them to voluntarily adopt the EU regulation across
their global operations, the EU can hardly be accused of “imperialism.” The EU
is not compromising US sovereignty if Twitter adopts the EU’s definition of hate
speech to govern its global operations or Dow Chemical conforms to the EU’s
REACH regulation globally. Of course, these companies may be conforming to
the EU rule sometimes reluctantly, following “involuntary incentives” that stem
from the interplay of stringent EU regulation and their market-based incentives
to globalize the EU rule. At most, some may describe the EU’s unilateralism as
“soft coercion,” but even that characterization is subject to dispute given the EU’s
passive role in how the markets transmit its rules.
In addition, the EU often defends its regulatory reach by portraying itself
as a benign global hegemon,81 whose values and policies are both normatively
desirable and universally applicable.82 This way, the EU is a champion of norms
that serve global welfare. The EU emphasizes its quest to create a rule-based
world and offer an alternative to the more controversial and self-serving world-
view advanced by the United States. For example, former Commission presi-
dent Jose Manual Barroso noted that “the EU’s comparative advantage lies in its
normative power or the power of its values [ . . . ]. In the post-crisis world, when
people are looking for new ways to ensure their well-being, peace, prosperity, the
European experience has a great deal to offer the world.”83 An American econo-
mist and Nobel laureate, Joseph Stiglitz similarly emphasizes the global appeal
of European values, calling for Europe to project its “ ‘soft power’—the power
and influence of ideas and example,” which should become “one of the central
pillars of [the] world.” According to Stiglitz, “Europe’s success is due in part to
its promotion of a set of values that, while quintessentially European, are at the
same time global.”84
The EU’s active role in the fight against climate change serves as an example
of a regulation that is presumably driven by largely benevolent as opposed to
imperialistic motives. Climate change is a global problem that requires a global
response. The EU has a limited capacity to mitigate climate change alone if other
states continue to emit greenhouse gases into the atmosphere. As a result, the
EU has led numerous efforts to conclude a new and more potent global climate
change treaty.85 Yet the difficulties associated with international treaty negotia-
tions gave the EU the imperative to act unilaterally and to establish an emissions
trading regime with extraterritorial effect.86 The EU defended its unilateral regu-
lation by arguing that it was acting in the collective interest to provide a global
public good: mitigation of climate change.87
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its benefits, because those costs and benefits are distributed in uneven ways, it is
certain the Brussels Effect will continue to be a target for criticism. However, for
those who view the Brussels Effect as detrimental to their welfare, the opportuni-
ties for challenging EU regulations can be limited. This is particularly the case for
foreign corporations and governments that cannot hold EU leaders accountable
in democratic elections.
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from the EU’s regulatory process largely unscratched despite a fierce corporate
opposition. And even when foreign companies manage to win some concessions
or water down certain aspects of a regulation they oppose, their influence may be
offset by that of other interest groups. Indeed, in a recent empirical study, Andreas
Dür and his coauthors show that business interests are no more influential than
other interests in shaping EU regulations.135 They may be able to delay the enact-
ment of regulations but not prevent their adoption given the strong influence of
citizen groups and other non-business actors in the EU’s legislative process.136
This relative lack of success through lobbying, at times, sends foreign firms to
search for alternative strategies. As a result, “if you cannot beat them, join them”
guides the response of many foreign firms after a failed attempt to stop Brussels
from regulating. The de facto Brussels Effect may lead foreign firms to turn to
their home governments to lobby for EU-equivalent regulation at home—akin
to what Apple and Facebook recently did by urging the US federal government to
adopt GDPR-style federal privacy law.137 Given that these firms already have to
bear the costs of complying with EU rules, they now have the incentive to advo-
cate further externalization of the single market to their home markets: a strategy
that allows them to level the playing field with respect to their domestic, non-
export-oriented competitors which, absent domestic regulation, remain unaf-
fected by EU regulations. Their advocacy at times converts the de facto Brussels
Effect to the de jure Brussels Effect, as foreign governments enact legislation simi-
lar to the EU’s—a dynamic discussed in earlier chapters.138
Another strategy available for foreign firms is to turn the EU’s regulatory
prowess to their advantage by leveraging those stringent regulations against
their own competitors. As noted earlier in this chapter and discussed in chapter
3, the EU has increasingly become a “forum of choice” for litigation by foreign
companies against other foreign companies. The Commission often provides a
hospitable forum for US producers to challenge their competitors’ practices. For
example, the REACH regulation allows interested parties to collaborate with the
European Chemicals Agency (ECHA) to restrict the use of certain chemicals.
This allows any producer of chemicals, including a US company, to seek denial of
its competitors’ (including other US companies’) substances in the EU.139 In the
competition law realm, US corporations have found the EU to offer a particularly
valuable legal battleground whenever they seek to halt practices of their (often
domestic) competitors, as discussed earlier in this chapter and in chapter 4.
These examples illustrate how some foreign firms are occasionally able to turn the
Brussels Effect to their advantage—even if only by shifting the harmful effects of
EU regulations to their competitors.
These examples show that foreign companies adversely affected by the
Brussels Effect have limited strategies at their disposal to rein in the EU’s
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the GDPR triggered fierce opposition in the United States, resulting in unprec-
edented lobbying activity by US companies and the government alike. However,
at times it is difficult for the US government to adopt a coherent government
position for or against any given EU regulation. Anthony Gardner, the former
US ambassador to the EU, remarked that he did not lobby the Commission in
competition disputes, as there were typically US companies on both sides of the
dispute, which made it difficult to distill an unambiguous US interest in any
given case.143
Even in instances where the United States has a uniform lobbying interests
and would actively want to resist the Brussels Effect, there is very little it can do
to stop the EU from regulating its domestic market. In this sense, the Brussels
Effect differs starkly from the California Effect. California cannot promulgate
regulations that are inconsistent with US federal laws absent an explicit waiver
from the federal government.144 Furthermore, each new administration inherits
the ability to reinterpret such waivers, as we are witnessing now that the Trump
administration is challenging California’s Clean Air Act waiver that has allowed
California to maintain more stringent emission standards.145 Federal preemption
thus imposes a serious limitation on the scope of the California Effect; the effect
is particularly circumscribed when the administration disagrees with California’s
regulatory choices and uses preemption to limit the state’s regulatory freedom.146
There is nothing akin to federal preemption that similarly constrains the EU’s
regulatory powers.
When US producers are forced to either comply with higher standards or
be shut out of the EU market, the US government has four potential ways to
respond: 1) try to compel the EU to change its rules by means of, for exam-
ple: diplomacy, suing the EU in the WTO, or offering the EU some rewards
or threatening the EU with sanctions; 2) seek a cooperative solution, such as by
pursuing an international standard that reflects some combination of US and
EU preferences; 3) converge to the EU standard by replicating the EU regula-
tion domestically (the de jure Brussels Effect); or, finally, (4) do nothing and wit-
ness its businesses conform to the EU regulations through the de facto Brussels
Effect.147
The most controversial strategy for the United States, or any other foreign
government, would be to threaten the EU with sanctions. However, the pros-
pect of a trade war is often too costly for the countries themselves to pursue as a
strategy—even in the present political climate where trade conflicts are rapidly
escalating. In many instances, trade sanctions would also be inconsistent with the
countries’ obligations under the WTO. In past US‒EU competition enforcement
conflicts, for instance, the United States threatened the EU with trade sanctions
unless the EU ceased its opposition to the Boeing/McDonnell Douglas merger.148
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However, turning to the WTO does not ultimately offer a strong tool to com-
bat the impact of the Brussels Effect. Despite the occasional victories like the
ones noted for the United States, the WTO offers, at best, imperfect remedies
for foreign jurisdictions frustrated by the reach of EU regulations. The WTO
dispute settlement mechanism is characterized by weaknesses such as non-
retroactive damages.160 In addition, the WTO system cannot compel a mem-
ber state to lift restrictive measures. It can merely authorize sanctions against a
noncompliant member state.161For instance, the EU has maintained its import
ban on hormone-treated beef, preferring to endure US retaliation.162 The EU has
also repeatedly allowed the deadline for implementing the GMO ruling to lapse,
while the United States has suspended its retaliatory measures in anticipation of a
settlement or the EU’s future compliance.163 The difficulties that a leading world
economy like the United States has faced in obtaining the EU’s compliance sug-
gest that the EU’s weaker trading partners will find even less relief for their griev-
ances by going to the WTO. Authorizing a small developing country—which
typically has few tools for retaliation at its disposal—to punish its powerful trad-
ing partner thus hardly guarantees that this right will be used. Thus, the WTO’s
system of remedies, including the authorized retaliation, rarely offers an avenue
for foreign governments to effectively constrain the EU.
The WTO’s ability to constrain the Brussels Effect is further limited by its
restricted mandate. The WTO bans discrimination between importers and
domestic producers.164 To successfully challenge EU regulations before the
WTO, foreign governments would need to show that EU regulations are dis-
criminatory. Yet many of the EU regulations, while perhaps costly to foreign pro-
ducers, are not discriminatory in their nature: EU companies are subject to the
same rules. If the EU regulations have no disparate impact on foreign producers,
allegations of discrimination are difficult to maintain, and the WTO can do little
to restrain them. Further, many areas—such as competition and privacy—do
not fall within the purview of the WTO.165 There have been several attempts to
include competition law, among other new issue areas, under the WTO frame-
work, but all those attempts have failed.166 Expanding the scope of the WTO
to new issue areas is even more unlikely today, as the consensus among over 160
member countries is increasingly beyond reach. The WTO therefore offers, at
best, a limited avenue for foreign governments to mitigate the costs they incur
because of the Brussels Effect.
Indeed, the WTO does not only fail to adequately constrain the Brussels
Effect; at times, it may even help to facilitate it. Exported EU regulations, global-
ized through the Brussels Effect, can be viewed as contributing to the WTO’s
underlying goal of facilitating international trade by harmonizing standards.167
The WTO rules also limit the ability of the EU’s trade partners to respond to
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the EU’s regulatory pursuits with unilateral retaliation.168 Had the United States,
for instance, imposed trade sanctions on the EU when faced with the EU’s data
transfer ban, it would have violated the WTO rules and subjected itself to a
WTO complaint by the EU. In this sense, the WTO can also provide a shield for,
and not only a limitation to, the Brussels Effect.169
In theory, the EU’s increasing regulatory clout and its impact on US busi-
nesses may, or at least should, lead the United States to support greater market
oversight by international institutions. Though often skeptical of international
institutions’ ability to regulate the markets, an enhanced understanding of the
Brussels Effect should awaken the United States to the benefits of international
cooperation. Such cooperation would offer the United States an opportunity to
play a shared, rather than obsolete, role in the regulation of global commerce
in many industries. This resembles the idea of “preemptive federalism,” whereby
the United States could seek international regulation as a means to preempt the
Brussels Effect. Having some influence over regulatory standards would be better
than ceding influence to the EU altogether.170 The regulation of aviation emis-
sions provides an illustrating example. Faced with the EU’s unilateralism in the
ETS, the United States was among the countries that supported the conclusion
of an international agreement—the Carbon Offsetting and Reduction Scheme
for International Aviation (CORSIA)171—to address the issue in a multilateral
setting, which ultimately gave the United States considerably more say over how
its aviation industry is regulated.
Given that international regulatory cooperation should typically serve US
interests more than any unilateral regulatory measure by the EU, it is surpris-
ing that the United States has deliberately turned its back to international
trade deals, including the Transatlantic Trade and Investment Partnership
(TTIP).172 Existing transatlantic disagreements about regulatory standards
were always the greatest stumbling block for the negotiations.173 At the same
time, the possibility to overcome those disagreements presented the greatest
opportunity for economic gains from the TTIP for both parties. The United
States should have welcomed the chance to address divergent regulations
jointly with the EU, in particular given the alternative of the EU setting those
standards alone. The EU may also have been willing to forgo unilateralism
in certain regulatory contexts in favor of a bilateral deal. The threat of the
Brussels Effect certainly would have enhanced the EU’s bargaining power in
any such negotiations, allowing it to extract valuable gains from the United
States in return for modifying its stance on some areas of regulatory policy.
Regardless, it seems evident that making no bargain with the EU has under-
mined US interests in establishing advantageous global standards, further ced-
ing ground to the EU in this regard.
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Even a powerful country such as the United States typically gains nothing
from defending its regulatory standard, even if that country’s standard is viewed
by many as being a more desirable one than the EU’s. As a less-stringent regula-
tor, the US position simply becomes irrelevant in the fields where the de facto
Brussels Effect takes place.174 Yet still, the United States is unlikely to adopt an
EU standard domestically as a regular course of action. Regulatory change always
entails costs. Firms need to reorganize their production processes or practices in
order to comply with new and different standards.175 Governments incur costs
relating to legislating and retraining its regulators.176 And most importantly, the
United States must forgo the efficiencies that its preferred regulation would gen-
erate. When holding onto its own domestic standards, the United States can at
least ensure that its standard governs the activity that is purely domestic in nature.
And given how large the US market is, this often provides an adequate incentive
to retain its preferred regulation domestically, absent overwhelming lobbying by
domestic export-oriented industries to the contrary.
However, in some cases, even initially reluctant governments come to embrace
EU regulations with time and adopt domestic rules that resemble those of the
EU. Once they fail to prevent the EU from furthering its regulatory agenda,
the domestic political economy may change as well, as explained earlier in the
context of discussing the de jure Brussels Effect across the many products and
services discussed herein. These governments may now face lobbying from their
own export-oriented companies to follow the EU’s lead, offering domestic politi-
cal gains from emulating EU regulations. Sometimes EU rules also give them no
choice but to adapt. For example, in the data protection domain, governments
have the incentive to emulate EU rules to obtain adequacy decisions and hence
a reassurance that data can flow freely between countries. The governments’ eco-
nomic interests, dictated by the needs of their companies, may thus push them
toward EU rules—even if reluctantly.
The Brussels Effect produces both costs and benefits, and there is no
unambiguous answer to the question of whether it is, overall, desirable. It imposes
economic costs on individual consumers in the EU and abroad by, at times, rais-
ing prices and preventing access to products and services that some segment of
the population would value. It may also impose political costs by constraining the
regulatory space of foreign governments and hence their ability to respond to the
demands of their citizens to whom they are politically accountable. Finally, the
Brussels Effect may, at times, impose distributional costs by transferring wealth
from new entrants to powerful incumbents that are in a better position to absorb
the costs of burdensome regulations.
Acknowledging these various costs associated with the Brussels Effect might
lead to renewed efforts to seek to mitigate them—some of those efforts might
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This book has described the origin and conditions that have led to the
Brussels Effect, and shown how these conditions have established the EU as a
global regulatory hegemon with extraordinary regulatory influence over the
rest of the world. Given the significant impact that the Brussels Effect has on
the global marketplace, one remaining and important question is whether the
Brussels Effect will last, or whether it will be likely to change or diminish as the
underlying conditions evolve over time.
Several external and internal challenges to the EU’s regulatory hegemony
loom on the horizon. Among the external challenges to the Brussels Effect
include the continuing rise of China and other emerging powers, which will
gradually diminish the relative size of the EU market, thus likely challenging the
fundamental precondition for the de facto Brussels Effect. At the same time, the
growing backlash to globalization and the accompanying decline in international
cooperation has the potential to contribute toward the erosion of the de jure
Brussels Effect. With that, the EU risks losing its ability to export regulations
through multilateral treaties and institutions, further diminishing the EU’s role
as the global regulatory hegemon. Further, innovative new technologies, such
as additive manufacturing, may revolutionize industrial processes, allowing for
greater customization and localization of production. Should this happen, fewer
industries would be characterized by the non-divisibility of production that is
critical to the de facto Brussels Effect.
In parallel with these external developments, a set of internal challenges
risk undermining the Brussels Effect from within. Among them is the impend-
ing departure of the United Kingdom from the EU—known as Brexit—which
threatens to reduce the EU’s regulatory influence. With the United Kingdom
leaving, both the EU’s market size and its regulatory capacity will diminish, weak-
ening the first two conditions sustaining the de facto Brussels Effect. Internal
challenges are compounded by the EU’s growing political struggles with the rise
The Brussels Effect. Anu Bradford, Oxford University Press (2020). © Oxford University Press.
DOI: 10.1093/oso/9780190088583.001.0001
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External Challenges
Various external challenges have the potential to undermine the de facto and de
jure Brussels Effect in the near future. In particular, the relative decline of the
EU’s market size, the rising antiglobalization sentiment, and the emergence of
new technologies may each undercut the influence the EU exercises through the
Brussels Effect. These developments will be discussed in turn.
choose to forgo trade in Europe in order to avoid the need to comply with EU
regulations. But as demand in places like China grows, businesses’ dependence on
their access to the EU market will inevitably diminish.1
Even the most optimistic economic forecasts acknowledge that the EU’s rela-
tive share of the global GDP will significantly decline in the coming decades.
As the EU’s economic might is gradually waning, economic power is increas-
ingly shifting to fast-growing Asia. The most significant economic growth will
occur in highly populated developing nations, such as China and India, which
have the ability to leverage their supply of lower-cost human capital. In the after-
math of the financial crises, the EU’s GDP growth has been slow. In the period
from 2010–2018, the EU’s growth substantially trailed behind that of the United
States.2 When compared to large developing countries such as China, the differ-
ence in growth rates becomes even more apparent.3 For example, while in 2017
the EU’s economy grew by 2.4%, China’s economy grew by 6.9%.
These trends will likely continue, gradually undermining the EU’s global mar-
ket position. For example, according to a 2010 estimate by a leading French research
institute—The Centre d’Études Prospectives et d’Informations Internationales
(CEPII)—the EU’s share of the global nominal GDP will dwindle down from
30% in 2008 to 24% by 2025, and to 16% by 2050.4 However, even those numbers
may be too optimistic. According to the IMF, the EU’s share of the global nomi-
nal GDP had already declined to 21.3% as of 2017,5 surpassing CEPII’s projection
for 2025 by a substantial margin. The EU’s relative economic decline is even more
evident when measured in terms of PPP-adjusted GDP. Private accountancy firm
PwC predicts that the EU’s share of global PPP-adjusted GDP will fall to 9% by
2050, compared to China’s 20% and India’s 15%.6 According to the CEPII projec-
tion, “the Chinese and Indian economies could grow 13-fold between 2008 and
2050 at constant relative prices. Over the same period, the US economy would
double and Europe’s economy would inflate by 60%.”7 Regardless of the measure
used—nominal or PPP-adjusted GDP—or the particular institution projecting
growth forecasts, it is clear that the EU will experience a substantial reduction in
its market power.
EU institutions are well aware of the relative decline of Europe’s economic
power in the coming decades. The European Commission’s “Global Europe
2050” report contemplates three potential futures for Europe: a Europe under
threat, a Europe where “nobody cares,” and a resurgent Europe experiencing a
renaissance. The most optimistic “European renaissance” scenario envisions an
EU that continues to enlarge and become stronger, consolidating its political,
fiscal, and military integration.8 Even under this positive scenario, the EU’s share
of the global GDP is projected to be almost halved between now and 2050. The
European Parliament’s predictions for 2030 portray a similar picture, projecting
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that the EU’s market power will experience a steady decline, leaving it with a 17–
18% share of global nominal GDP by 2030.9
Given that the possession of large relative market size is critical to exercis-
ing unilateral regulatory influence, most would agree that the EU’s relative eco-
nomic decline has the potential to significantly undermine the Brussels Effect. As
opportunities to trade outside the EU grow, forgoing the EU market and divert-
ing trade elsewhere may become more viable. This will, inevitably, constrain the
EU’s ability to set global standards. New economic powers can therefore curtail
the EU’s rule-setting power simply by growing, thereby offering an alternative
destination for goods and services. However, while these countries may be able
to rein in the Brussels Effect, it does not necessarily follow that they will become
sources of global standards themselves.
There is some evidence that China has increased its willingness to regulate
over the past two decades. During this time, there has been a sharp increase in
the level of regulations in competition law, consumer protection, environmental
protection, financial regulations, and food safety. In many of these areas, new
comprehensive laws have been passed in the last decade, including the Anti-
Monopoly Law (2007),10 a revised food safety law (2015),11 a comprehensive
cybersecurity law (2016),12 and new rules surrounding environmental disclosure
(2014).13 Academics have disagreed over the cause for such an increase in regula-
tory activity, with some pointing out that much of the increase in regulations
has coincided with China’s accession to the WTO.14 Others have emphasized
several domestic scandals that have prompted China to regulate, explaining for
instance the emergence of stringent food safety standards. Greater citizen access
to information has also been cited as a motivation for the increase in China’s
willingness to promulgate new regulations.15 Some further question whether the
laws are applied equally to foreign and Chinese enterprises,16 raising questions of
industrial policy and trade protectionism as a motive driving regulatory reforms.
Nevertheless, even though China will occupy a higher share of the global
GDP in the coming decades and has moved to regulate some policy areas, the
country is unlikely to replace the EU as a source of global standards anytime
soon. China’s regulatory capacity and the willingness to elevate the protection
of consumers and the environment over the pursuit of economic growth are not
increasing at the same rate as its GDP. While China has engaged in recent efforts
to build regulatory capacity in areas such as competition law, it has by no means
overtaken the European Commission as the most ardent guardian of competitive
markets. Chinese institutions have a long way to go before they can generate and
enforce the type of regulatory policies that the EU pursues. Also, in most policies
outside competition law, the Chinese government’s enforcement mechanisms for
its regulatory measures remain underdeveloped.
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In addition, while China may soon be the largest consumer market, GDP per
capita—which is a better prediction of a country’s regulatory propensity than is over-
all GDP17—suggests that EU member states continue to fare much better against
the rising economic might of China. According to an HSBC report, in 2050, China’s
income per capita (in year 2000 USD) will be $17,372. This will remain well short
of the figure for many, if not all, EU member states, including Germany ($52,683),
France ($40,643), and Spain ($38,111).18 Affluence and social regulation are often
correlated, suggesting that domestic demand for high levels of regulation is likely to
be weak in China for some time to come.19 As long as Chinese consumers are not as
wealthy on a per capita basis, they are likely to have a lower appetite for high levels of
regulation that might compromise growth and economic development. This, how-
ever, is likely to change as China continues to grow and individual Chinese citizens
become wealthier. Yet overall GDP growth in China will also inevitably continue to
slow down, as it has done in the past several years. This may dampen China’s enthusi-
asm for burdensome regulation. As a manifestation of this, Chinese authorities have
already loosened their pollution regulations aimed at improving air quality in 2018
in an effort to reverse the economic slowdown.20
Pressures to deregulate are likely to build even more if China falls short of
the lofty projections of China’s future economic success. Capital Economics, an
independent research firm, argues that China’s past high-paced economic growth
cannot be sustained.21 Several fundamentals underlying the Chinese economy
contribute toward the prediction that China’s economic outperformance will
come to an end.22 These include excessive debt accumulation and an unsustain-
ably high investment rate. These factors, together with the aging population, the
increasingly autocratic political system, and hostility toward reforms, may pave
the way for a sharp deceleration. Should that happen, few would expect China’s
appetite for introducing new regulations to outpace that of the EU if those regu-
lations may further dampen economic growth in China.
Yet even if the robust Chinese economic growth continues, the “Beijing
Effect” is unlikely to replace the Brussels Effect as long as Chinese growth relies
primarily on exports. The key to the EU’s regulatory influence is the dependence
of foreign firms on access to the EU market and hence the importance of the EU
as an import destination. To date, exports have fueled China’s growth, leading
to a significant trade surplus—exceeding $500 billion in 2016.23 For this reason,
relatively fewer foreign companies have had to tailor their products to Chinese
standards, instead worrying whether Chinese imports meet their domestic stan-
dards. Of course, over time, China’s importance as a large consumer market will
also grow. But until a higher GDP per capita leads to the emergence of a mass-
consumer market in China, the country is unlikely to become a significant source
of global standards.
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standards,” which could then form a blueprint for future negotiations at both
multilateral and bilateral fora. Early on, the then-vice president of United States,
Joe Biden, stated that the “goal is for high standards of Trans-Pacific Partnership
to enter the blood stream of the global system and improve the rules and norms.”27
Stephen Harper, former prime minister of Canada, similarly hailed the TPP as a
model for future 21st-century trade agreements,28 while Mexico’s foreign minister
Luis Videgaray recently stated that the standards and rules negotiated in the TPP
could be integrated into other regional trade agreements.29
Geographical Indications (GIs) provide an example of TPP’s proposed reg-
ulatory standards that could have potentially mitigated the Brussels Effect, had
those standards been widely accepted by countries around the world follow-
ing the success of the TPP. GIs refer to signs attached on goods that indicate
their geographic origin—such as Parma ham, champagne from Champagne,
or Roquefort cheese—which convey important information on the quality
of the product that is tied to certain local or regional conditions. Such pro-
tections are especially important for spirits and other alcohol, as the EU has
ensured globally that terms such as “scotch,” “ouzo,” and “cognac” are restricted
to products made in their appropriate home countries (Scotland, Greece, and
France, respectively). The EU and United States hold starkly different views
on GIs. The EU emphasizes the supremacy of GIs over trademarks by expressly
providing that parties should refuse to register a trademark if the trademark is
confusingly similar to a protected GI.30 In contrast, the United States seeks to
protect GIs through its trademark system.31 To date, the EU has been successful
in exporting its regulation of GIs outside its jurisdiction. For instance, the EU’s
recent trade agreement with Canada includes protections for Italian Asiago
cheese, Greek Kalamata olive oil, and over 150 other food products from across
the EU.32 The EU’s recent agreement with Vietnam extended GI protection to
169 products.33
The TPP offered a potential vehicle for the United States to counter the EU’s
influence by exporting its preferred regulatory model on GIs.34 Although the TPP
recognized that GIs could be protected through the trademark system (following
the US approach) or the sui generis system (following the EU approach), the TPP
reflected an emphatic shift in favor of trademarks over GIs. For example, the TPP
allowed for cancellation or opposition of a GI in cases where the “geographical
indication is likely to cause confusion with a trademark that is the subject of a
pre-existing good faith pending application or registration.”35 This represented
a departure from the EU’s approach. Had the United States not withdrawn its
participation from the TPP, this relegation of GIs in favor of trademarks could
have gained broader international traction, offering a rival standard to the one
favored by the EU.
273
274 Assessmen t
276 Assessmen t
physical delivery.47 The EU also actively enforces its regulation in this area. In
2018, the European Commission fined the clothing retailer Guess €40 million
for blocking retailers from advertising and selling across borders in other EU
member states, maintaining artificially high retail prices.48 Third, the existence
of competition limits the utility derived from geo-blocking. Price discrimination
is compromised in instances where alternative providers exist, ready to under-
cut the supra-competitive price charged in a geo-blocked market. Thus, com-
panies are less likely to resort to geo-blocking when doing so would only hand
over the blocked market to their competitors. Finally, it is unlikely that devel-
oping technologies to accomplish divisibility is the best use of company talents
and resources. While many of the world’s renowned high-tech companies would
likely have the engineering capacity to make products divisible, these companies
prefer to focus on innovating forward rather than using their talents to develop
technologies that allow them to take advantage of lower regulations in some
markets.49
A third example of an emerging technological development that has the
potential to increase the divisibility of production and thereby undermine the
Brussels Effect relates to the cultivation of GMOs. The development of “Genetic
Use Restriction Technologies” (GURTs)—also known as “terminator seeds”
or “suicide seeds”—is a technology that might be able to prevent adventitious
presence of even the smallest amounts of GMOs.50 As discussed in chapter 6,
“adventitious presence” refers to GMO content that is accidental and hence
unavoidable due to commingling of GMO and non-GMO varieties in various
stages of cultivation and processing. The risk of adventitious presence has made
it difficult to produce both GMO and non-GMO crops as cross-contamination
can rarely be eliminated in its entirety. This non-divisibility of GMO produc-
tion has prompted many farmers and food processors to adhere to EU’s stringent
GMO standards, as the Brussels Effect would predict.
However, GURTs seeds have specific genetic switch mechanisms that
restrict the unauthorized use of genetic material by hampering reproduction or
the expression of a trait in a genetically modified (GM) plant. The technology is
geared precisely to avoid concerns related to commingling of different seed vari-
eties.51 Thus, GURTs may help farmers and food processors to produce to divis-
ible standards and cater to both GMO-and non-GMO markets. Specifically,
“GURTs could reduce or remove the need for buffer zones for gene containment
and drastically limit the eventuality of volunteer plants by preventing volun-
teer seeds from germinating . . . or from expressing the GM-trait.”52 Sygenta—a
global agribusiness that produces agrochemicals and seeds—has experimented
with this technology.53 However, to date, GURTs seeds are still in the experi-
mental phase. and it is unclear when and to what extent they will transform the
27
GMO industry and hence contain the Brussels Effect’s influence on agribusiness
in the future.
The examples discussing additive manufacturing, geo-blocking, and GURTs
seeds illustrate how modern technology can be harnessed to revolutionize indus-
trial processes, the provision of services online, and farming technologies. If
widely adopted, they have the potential to make products more divisible, thereby
compromising the EU’s ability to globalize its standards through the erosion of
the “non-divisibility” condition that has been critical in sustaining the Brussels
Effect. However, the discussion also shows the limits, risks, and uncertainties
associated with these technologies, suggesting that their ability to counter the
Brussels Effect will be deferred and likely limited to certain producers, markets,
and industries.
Internal Challenges
In addition to the external challenges discussed, the Brussels Effect faces another
set of challenges that are internal to the EU. Brexit presents the most visible chal-
lenge in this regard. Yet there are broader anti-EU sentiments that may contribute
toward the erosion of the Brussels Effect due to the crises and challenges that,
many would say, are the EU’s own making. These include the rise of populist
anti-EU parties and the general turn away from integration in an effort to restore
national sovereignty and rein in the powers of the EU. Thus, as much as the emer-
gence of the Brussels Effect was initially a product of the EU’s internal regulatory
ambitions, the greatest threat to the resilience of the Brussels Effect may, in the
end, come from within the EU itself.
278 Assessmen t
a range of policy areas. Despite this decline in the EU’s market size and regulatory
capacity following Brexit, however, Brexit will be unlikely to dampen the Brussels
Effect. If anything, it may have the potential to make the Brussels Effect even
more salient.
The anti-EU forces in the United Kingdom that campaigned for Brexit argued
that the departure from the EU would finally liberate the United Kingdom
from the EU’s excessive regulations, reinstating the UK’s regulatory sovereignty.
Compared to other EU member states, the United Kingdom has always been
more skeptical of regulation, emphasizing the virtues of markets and the need
to preserve the competitiveness of European firms.55 The United Kingdom has
fiercely fought against many regulations in the Council only to be outvoted by
other member states.56 This has, understandably, nurtured resentment and con-
tributed to the critics’ narrative that the EU has overreached, encroaching on
UK’s sovereignty.
Yet the dynamics driving the Brussels Effect show that the promise of restor-
ing the UK’s regulatory sovereignty post-Brexit constitutes a false campaign
promise that the government will not be able to deliver. Instead, EU regulations
will continue to govern critical aspects of the UK’s economy. Roughly half of the
UK’s exports are destined for the EU, with little expectation of change.57 The
United Kingdom will therefore continue to rely on access to the EU’s large con-
sumer market long after Brexit. The EU is the number one destination for its
exports at least in the following key industries: pharmaceuticals (48% exports to
EU), aircraft (51%), petroleum fuels (64%), and machinery (37%).58 This high
degree of dependence on the access to the EU market means that UK companies
will continue to adhere to EU rules in the future, as the de facto Brussels Effect
suggests. While British companies could, in principle, adopt one set of standards
for the European market and multiple other sets of standards for the rest of the
world post-Brexit, scale economies and other benefits of uniform production
make this unlikely. Thus, the Brussels Effect shatters the illusion of the regulatory
freedom that Brexit is meant to deliver to the United Kingdom.
In addition to this de facto Brussels Effect, the post-Brexit UK will also likely
witness a significant de jure Brussels Effect. In areas such as financial regulation
and data privacy, the UK government will have a substantial incentive to retain
close regulatory alignment to ensure “equivalence” or “adequacy” of its regula-
tory regime, which remains a precondition for UK companies to do business in
the EU.59
Several key policy areas illustrate the interconnectedness of the United
Kingdom and EU economies and the incentives that this creates for UK compa-
nies and the UK government to follow the EU regulations even after the United
Kingdom leaves the EU. The following discussion describes this dynamic with
279
280 Assessmen t
be left disappointed with the UK’s inability to disentangle itself from the GDPR
post-Brexit on purely economic grounds. However, the de jure Brussels Effect
on data protection will likely have consequences that extend beyond economic
considerations. A particular concern for many in the United Kingdom is that
the EU’s data protection rules may be in tension with the UK’s national security
interests. The UK’s 2016 Investigatory Powers Act contains provisions on data
retention and surveillance for national security purposes.69 The UK Information
Commissioner recently acknowledged this tension, noting that “it seems likely
that the UK’s surveillance and data retention regime would be a risk for a positive
adequacy finding.”70
While EU member states can invoke the GDPR’s national security excep-
tions to justify some data collection and retention for national security purposes,
the same article is not automatically available for non-member states that seek
positive adequacy finding by the Commission.71 To overcome this, some com-
mentators have argued that the United Kingdom could potentially obtain a
partial adequacy finding, whereby the UK rules would be found to be adequate
with respect to commercial data but not with respect to data protection in law
enforcement. Canada provides an example of a jurisdiction that has obtained an
adequacy finding from the EU just for its commercial sector. Commenting on this
option, the UK Information Commissioner noted that while “partial adequacy
is better than no adequacy,” the best way forward was to have a “unified, harmo-
nized approach across all sectors.”72 This suggests that the United Kingdom may
choose to seek full adequacy even if this potentially entails a need to change UK
surveillance and security rules.
Another example of the Brussels Effect’s constraining influence post-Brexit
is the financial services industry. The United Kingdom is the world’s second
largest financial center.73 The industry relies heavily on access to the EU’s single
market, with 44% of the UK’s financial service exports currently going to the
EU.74 Unhindered access to the EU market has also made the United Kingdom
an attractive base for operations for non-UK financial institutions. In 2017, 49%
of bank assets in the United Kingdom were related to non-UK banks. 75 For these
foreign banks, the United Kingdom serves as an access point from which they
can serve the broader European market.
Financial institutions’ access to the EU market rests on an existing regime
known as “financial passporting.”76 Passporting refers to a mechanism that allows
banks to operate across the entire EU and the broader European Economic Area
(EEA) as long as they are regulated and supervised by one member state—such as
the United Kingdom. This mutual recognition of individual member state regu-
lations rests on all EU members’ commitment to abide by a “single rulebook,”
which provides a unified regulatory framework for the EU financial sector.77
281
Thus, alignment with the EU’s regulations is critical in sustaining the UK’s finan-
cial services industry, providing a gateway for the large EU market and thereby
allowing the United Kingdom to act as a financial capital of the world.
Upon exiting the EU, UK banks and the foreign banks registered in the
United Kingdom will lose their passporting rights.78 To retain those rights, they
would need to establish a separate subsidiary in another EU member state and
subject themselves to that member state’s regulatory regime. Alternatively, these
banks could continue to serve the EU market from the United Kingdom based
on a legal concept knows as an “equivalence regime.”79 An equivalence regime
entails the EU recognizing the UK’s regulatory regime as comparable with
that of the EU, achieving the same results as the corresponding EU rules.80 An
equivalence regime is, however, clearly an inferior regime compared to passport-
ing, offering fewer rights and greater legal risks.81 The Commission makes the
decision on equivalence in consultation with other key EU institutions such as
the European Banking Authority (EBA) and European Securities and Markets
Authority (ESMA).82 The United Kingdom would further need to keep adjust-
ing its legal framework to the European one in subsequent years, or else the
Commission could unilaterally revoke the equivalence decision. This entails that,
post-Brexit, the UK financial industry would not be able to break free from the
EU’s financial regulations but would need to retain the “equivalence” with the
EU’s single rulebook going forward as well.
Another potential manifestation of UK-based financial institutions’ procliv-
ity to gravitate toward EU regulation is the prospect of them relocating to the
EU altogether. Even in the absence of a mass exodus that some media reports
predicted,83 some banks and other financial institutions have relocated personnel
to other financial centers in the EU, including to Frankfurt, due to the relative
elasticity of capital.84 A decision to relocate is partly motivated by the uncertainty
associated with the entire Brexit, including the ambiguity underlying any equiva-
lence regime that is subject to a threat of a sudden revocation. Regardless, it is
evident that the financial industry in the United Kingdom is not able to escape
the Brussels Effect. Instead, it is actively opting for the EU regime—whether
through regulatory equivalence or relocation—showing once again the difficulty
of implementing the promised post-Brexit regulatory freedom in practice.
Yet another example of the continuing regulatory influence that the EU will
have over the United Kingdom post-Brexit comes from chemical regulation.
The EU’s Registration, Evaluation, Authorization, and Restriction of Chemicals
(REACH) regulation governs not just the trade in chemicals but also the trade
in downstream industries that use chemicals within their products.85 As dis-
cussed in chapter 6, EU laws set the highest and hence the most burdensome
regulatory standards on the safety of chemicals in the world, impacting the global
28
282 Assessmen t
of the Brussels Effect. The departure of the United Kingdom will remove the
biggest internal constraint on the EU’s regulatory rule-making, opening the
door for more interventionist standards as the UK’s exit may allow Germany and
France to gain more influence.93 Typically, the United Kingdom has been the
voice for moderation in the EU’s regulatory pursuits, calling for restraint and
the need to balance regulation with considerations of competitiveness. After
Brexit, that important pro-market voice will be gone, shrinking the coalition of
the pro-market member states and possibly opening a door for pro-regulation
states to push through an increasingly ambitious European regulatory agenda.94
This will have an effect not only on the United Kingdom itself but also on the
world beyond.
In reality, the United Kingdom’s departure from the EU will not liberate the
country from the EU’s regulatory leash, despite the belief and campaign rhetoric
of Leave campaigners. Instead, the United Kingdom may soon find itself in the
position of being bound by EU regulations without any ability to influence the
content of those regulations. As a result, with Brexit, the United Kingdom will
be ceding its role as a rule maker in return for becoming a voiceless rule taker in
an even more tightly regulated Europe.
284 Assessmen t
Yet it is unclear if the courts will have a final say if political pressures for legislative
change build among the member states.
However, despite these risks, it is also plausible that the EU’s regulatory
agenda could remain largely unaffected by anti-EU sentiments and the ongoing
crises. The broader anti-EU sentiment is not generally focused on the regulation
of the single market. The populist parties reigning across the EU are most con-
cerned about their budgetary sovereignty, their right to organize their judiciary,
their right to control domestic media, or their ability to exert control over their
intake of refugees.103 The EU’s pursuit of tough competition policy, data protec-
tion, or food safety remain well outside their populist agendas. Thus, even if the
EU is otherwise forced to scale back on controversial issues such as Eurozone
architecture, curtailment of rule-of-law backsliding in Hungary and Poland, or
its role in the management of migration, the Brussels Effect may remain largely,
or even entirely, unaffected, since these are not direct threats to the EU’s regula-
tory agenda.
There is, however, a risk of collateral damage on the EU’s regulatory agenda
due to anti-EU sentiment, even in the absence of any direct attacks on the regula-
tions underlying the Brussels Effect. This could happen if the anti-EU parties gain
significant leverage over the European Parliament and Council decision-making,
and adopt a general strategy to vote against anything that vests EU institutions
with power at the expense of national sovereignty. Still, any such collateral dam-
age is likely to be mitigated in areas where the Commission can govern through
non-legislative acts—and those powers are both vast and well entrenched.
The EU’s regulatory activity may hence continue in all policy areas where the
Commission is engaged in non-legislative rule-making through implementation
acts or delegated rule-making. At the same time, it is possible that there will be
a slowdown in legislative acts that require the support of the Council and the
EP—in the event those institutions will increasingly be captured by parties with
an anti-EU platform. However, given the relative prevalence of regulatory activ-
ity undertaken by the Commission alone, even this might not lead to a significant
curtailment of the Brussels Effect.104 In 2018, there were 423 legislative acts in
total, consisting of regulations, directives, or decisions promulgated either by the
Council or by the Council and the European Parliament jointly in a legislative
process. That figure was dwarfed by the total of 1570 non-legislative acts adopted,
of which 1417 were Commission regulations, directives, and decisions.105
The technocratic nature of EU rule-making may further contribute to
the resilience of the Brussels Effect. The Commission bureaucracy consists of
technocrats who remain focused on their assigned regulatory domain and are
unlikely to become distracted by the broader crises. This tendency insulates
many of the EU regulations from political crises raging around it. For example,
286
286 Assessmen t
the Commission met the day after the Brexit vote in 2016 to vote on a pesticide
(glyphosates) regulation. Some news commentators attributed this vote to the
Commission’s desire to keep the appearance of “implacable calm” when con-
fronted with the biggest crisis of its history.106 This may be true but it also shows
how the technocratic rule-making simply follows its own timetable and proce-
dures regardless of the political realities that surround it. The need to decide
on the extension of the glyphosate license was brought before the Commission
as part of the comitology proceedings where the Commission has little con-
trol over the timing. Hence, the Commission soldiers on with its technocratic
agenda even when a major political shock hits the core of its economic and
political system.
More broadly, the regulation of the single market—including high-profile
regulations such as the GDPR or large competition law fines against US tech
giants—provides a welcome distraction and comfort to the public in the midst
of the crises. The EU’s ability to promulgate new regulations, at least, gives the
public a sense of normalcy and shows that Brussels is, still, fully in business. It
also gives the EU institutions the opportunity to show that they can still deliver
tangible gains to European citizens.
Finally, the result of the current crises discussed may not only be that
the Brussels Effect remains intact—the Brussels Effect may even become
strengthened. Throughout its history, the EU’s solution to many crises has
typically been the pursuit of “more Europe,” as shown by increasing the role
of Frontex—the EU’s Border and Coast Guard Agency—in managing migra-
tion or ambitious expansions of Eurozone governance in response to the Euro
crises, instead of increasing the sovereign powers of member state govern-
ments.107 Thus, the EU’s expansive regulatory agenda may not only persist,
but might even grow despite the growing anti-EU sentiment, as many of the
EU’s existing problems can be best resolved through further integration and
additional regulations.
In the same vein, the relative significance of the Brussels Effect may also grow
when compared to the EU’s other tools of global influence. As governments with
populist agendas gain prominence across the EU member states, the EU’s global
role as a “normative power” could increasingly be called into question. The EU
has traditionally assumed a prominent role in promoting human rights and rule
of law abroad. However, these efforts are now undermined by blatant violations
of those same rights among EU member states themselves, in particular by the
defiant governments in Hungary and Poland. This leaves the EU with an ever-
greater need to rely on its regulatory power, which can more easily be insulated
from its internal struggles and therefore be employed to project the EU’s power
and relevance, at home and abroad.
287
288 Assessmen t
Notes
P r efac e
1. The European Commission support for the production of this publication does not con-
stitute an endorsement of the contents, which reflects the views only of the author, and the
Commission cannot be held responsible for any use that may be made of the information
contained therein.
Introduction
1. Walter Russell Mead, Incredible Shrinking Europe: The Continent’s Grand Unity Project is
Failing, and its Global Influence is Fading, Wall St. J. (Feb. 12, 2019), https://www.wsj.
com/articles/incredible-shrinking-europe-11549928481 (on file with author).
2. Ana Palacio, The European Unraveling? La Nacion (Feb. 16, 2017), https://
w w w. n a c i o n . c o m / o p i n i o n / i n t e r n a c i o n a l / t h e - e u r o p e a n - u n r a v e l i n g /
PY5GRBN4PVDRXOXYXJBTUVH6NY/story/ [https://perma.cc/2LUT-BAPX].
3. Richard Youngs, Europe’s Decline And Fall: The Struggle Against Global
Irrelevance 1 (2010).
4. Stephen Walt, The Coming Erosion of the European Union, Foreign Policy (Aug. 18,
2011), https://foreignpolicy.com/2011/08/18/the-coming-erosion-of-the-european-union/
[https://perma.cc/TQ3Y-JPX3].
5. Richard Haas, Why Europe No Longer Matters, Wash. Post ( June 17, 2011), https://
www.washingtonpost.com/opinions/why-europe-no-longer-matters/2011/06/15/
AG7eCCZH_story.html?utm_term=.9bc86c66d9b4 (on file with author).
6. Tony Barber, The Decline of Europe is a Global Concern, Fin. Times, Dec. 21, 2015, at 1 (on
file with author).
7. Theodore R. Bromund, Europe Paves the Way for Its Decline, Heritage Foundation
(Oct. 9, 2018), https://www.heritage.org/europe/commentary/europe-paves-the-way-its-
decline [https://perma.cc/5F49-75DN].
8. See, e.g., Jed Rubenfeld, Commentary, Unilateralism and Constitutionalism, 79 N.Y.U.
L. Rev. 1971, 1975‒76, 2005‒06 (2004); see also Eva Pejsova, Europe: A New Player in the
Indo-Pacific, Diplomat ( Jan. 19, 2019), https://thediplomat.com/2019/01/europe-a-new-
player-in-the-indo-pacific/ [https://perma.cc/LNU2-942W].
290
9. See Anu Bradford & Eric A. Posner, Universal Exceptionalism in International Law, 52
Harv. Int’l L.J. 1, 53 (2011).
10. See Leslie H. Gelb, GDP Now Matters More than Force: A U.S. Foreign Policy for the Age of
Economic Power, Foreign Aff., Nov./Dec. 2010, at 35, https://www.foreignaffairs.com/
articles/united-states/2010-10-21/gdp-now-matters-more-force (on file with author).
p r efac e to Pa rt O n e
1. See generally David Vogel, Trading Up: Consumer and Environmental
Regulation in a Global Economy (1995).
2. Robert Howse & Donald Regan, The Product/Process Distinction—An Illusory Basis for
Disciplining “Unilateralism” in Trade Policy, 11 Eur. J. Int’l. L. 249 (2000); Douglas
A. Kysar, Preferences for Processes: The Process/Product Distinction and the Regulation of
Consumer Choice, 118 Harv. L. Rev. 525 (2004).
3. See, e.g., Daniel W. Drezner, Globalization, Harmonization, and Competition: The
Different Pathways to Policy Convergence, 12 J. Eur. Pub. Pol’y 841, 841–59 (2005);
Beth Simmons, The International Politics of Harmonization: The Case of Capital Market
Regulation, in Dynamics of Regulatory Change (David Vogel & Robert A. Kagan
eds., 2004), at 42, 50–52; Bruce Carruthers & Naomi Lamoreaux, Regulatory Races: The
Effects of Jurisdictional Competition on Regulatory Standards, 54 J. Econ. Lit. 52 (2016).
4. See, e.g., Ralph Nader, Preface to Lori Wallach & Michelle Sforza, Whose
Trade Organization?: Corporate Globalization and the Erosion of
Democracy, at ix, xi (1999).
5. See Alan Tonelson, The Race to the Bottom: Why a Worldwide Worker
Surplus and Uncontrolled Free Trade Are Sinking American Living
Standards 14–15 (2002). For a general discussion of this dynamic, see Dale D.
Murphy, The Structure of Regulatory Competition: Corporations and
Public Policies in a Global Economy (2004), in particular Parts I, II, and V.
6. See David Vogel & Robert A. Kagan, Introduction to Dynamics of Regulatory
Change: How Globalization Affects National Regulatory Policies 4–5
(David Vogel & Robert A. Kagan eds., 2004).
7. See Debora L. Spar & David B. Yoffie, A Race to the Bottom or Governance from the Top?,
in Coping With Globalization 31, 31–51 (Aseem Prakash & Jeffrey A. Hart eds.,
2000); David Vogel, Trading Up and Governing Across: Transnational Governance and
Environmental Protection, 4 J. Eur. Pub. Pol’y 556, 563 (1997); Vogel & Kagan, supra note
6, at 2–8; see also Elizabeth R. DeSombre, Flagging Standards: Globalization
and Environmental, Safety, and Labor Regulations at Sea (2006).
8. See John C. Coffee, Jr., The Future of Corporate Federalism: State Competition and the New
Trend Toward De Facto Federal Minimum Standards, 8 Cardozo L. Rev 759, 761–63 (1987).
9. Vogel, supra note 1.
10. Vogel & Kagan, supra note 6, at 9.
11. Vogel, supra note 6, at 562 (1997).
12. See John Braithwaite & Peter Drahos, Global Business Regulation 518–19
(2000); Beth Simmons, supra note 3, at 42, 50–52; Vogel & Kagan, supra note 6, at 14.
13. See Drezner, supra note 3, at 841.
14. Id. at 850.
C h a p t er 1
1. See Margot Horspool & Matthew Humphreys, European Union Law 39–70
(6th ed. 2010) (providing an overview of the various institutions of the European Union);
291
Traceability of Food and Feed Products Produced from Genetically Modified Organisms
and Amending Directive 2001/18/EC, 2003 O.J. (L 268) 24.
19. See, e.g., Letter from Friends of the Earth Europe, ARGE, Coop Italy, EuroCoop,
Greenpeace EU, VLOG, to Tonio Borg Commissioner Health and Consumer Policy,
European Commission ( July 8, 2013), https://gmwatch.org/en/news/archive/2013/14644-
keep-zero-tolerance-of-unapproved-gmos [https://perma.cc/2P2C-6N47].
20. UK House of Commons, The Extension of Qualified Majority Voting
from the Treaty of Rome to the European Constitution, 2004, https://
researchbriefings.parliament.uk/ResearchBriefing/Summary/RP04-54 [https://perma.
cc/Y6HH-JBUN].
21. Daniel Kelemen, The Rules of Federalism: Institutions and Regulatory
Politics in the EU and Beyond 29–30 (2009); see R. Daniel Kelemen et. al., Wider
and Deeper? Enlargement and Integration in the European Union, 21 J. Eur. Pub. Pol’y
647, 657 (2014).
22. See Gerald Schneider et al., Bargaining Power in the European Union: An Evaluation of
Competing Game-Theoretic Models, 58 Pol. Stud. 85, 98–99 (2010).
23. See Andreas Warntjen, Do Votes Matter? Voting Weights and the Success Probability of
Member State Requests in the Council of the European Union, 39 J. Eur. Integration
673, 676 (2017).
24. See Åse Gornitzka & Ulf Sverdrup, Access of Experts: Information and EU Decision-
making, 34 West Eur. Pol. 48, 64 (2011).
25. The Ministry: Tasks and Structure, German Ministry for the Environment,
Nature Conservation and Nuclear Safety (last updated Mar. 25, 2019), https://
www.bmu.de/en/ministry/tasks-and-structure/ [https://perma.cc/HVK6-9UC2]; About
Us, Umwelt Bundesamt (last updated Mar. 7, 2018), https://www.umweltbundesamt.de/
en/the-uba/about-us [https://perma.cc/TZU3-E4QP]; About RIVM, Dutch National
Institute for Public Health and the Environment (last updated May 13, 2019), https://
www.rivm.nl/en/about-rivm/rivm [https://perma.cc/83JF-6XE2].
26. See, e.g., Vogel, Politics, supra note 5, at 242. However, counter-examples of bargain-
ing failures exist as well. See, e.g., Paul Copeland, The Negotiation of the Revision of the
Working Time Directive, in EU Enlargement, the Clash of Capitalisms and the
European Social Dimension 72, 87–93, (2014).
27. See Raya Kardasheva, Package Deals in EU Politics, 57 Am. J. Pol. Sci. 858, 858 (2013).
28. See id. at 861.
29. Id.
30. See Manuele Citi & Mogens Justesen, Measuring and Explaining Regulatory Reform in
the EU: A Time-Series Analysis of Eight Sectors, 1984–2012, 53 Eur. J. Pol. Res. 709, 723
(2014).
31. Tanja Börzel, Pace-Setting, Foot-Dragging, and Fence-Sitting: Member State Responses to
Europeanization, 40 J. Common Mkt. Stud. 193, 200 (2002).
32. Simon Hix, The European Union as a Polity, in Handbook of European Union
Politics, 141 (Knud Erik Jørgensen et al. eds., 1st ed. 2006); Mark A. Pollack,
The Engines of European Integration: Delegation, Agency, and Agenda
Setting in the EU 384–85 (2003). But see, e.g., Simon Hug, Endogenous Preferences and
Delegation in the European Union, 36 Comp. Pol. Stud. 41, 67 (2003).
33. Giandomenico Majone, From the Positive to the Regulatory State: Causes and Consequences
of Changes in the Mode of Governance, 17 J. Pub. Pol’y 139, 157 (1997) [hereinafter Majone,
Causes and Consequences].
34. Giandomenico Majone, The European Commission as Regulator, in Regulating
Europe 61, 64 (Giandomenico Majone ed., 1996) [hereinafter Majone, Commission as
293
Regulator]; James A. Caporaso et al., Still a Regulatory State? The European Union and the
Financial Crisis, 22 J. Eur. Pub. Pol’y 889, 901 (2015).
35. See Fact Check on the EU Budget, Europa, https://ec.europa.eu/info/about-european-
commission/eu-budget/how-it- works/fact-check_en (last visited May 15, 2019) [https://
perma.cc/RA53-4EFR]; EU Budget 2017: Strengthening the Economy and Responding to
Migration Challenges, Europa, http://ec.europa.eu/budget/library/biblio/documents/
2016/factsheet-on-eu-%20budget-2017_en.pdf (last updated Dec. 10, 2016) [https://
perma.cc/TCW5-Y8ZC].
36. See Graphics, Congressional Budget Office, https://www.cbo.gov/publication/most-recent/
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37. Majone, Causes and Consequences, supra note 33, at 150–51.
38. Id. at 150.
39. Majone, Commission as Regulator, supra note 34, at 64.
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41. Majone, Commission as Regulator, supra note 34, at 63–64; Giandomenico Majone, From
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42. Consolidated Version of the Treaty on the Functioning of the European Union arts.
23–25, Mar. 30, 2010, 2010 O.J. (C 83) 47, 58 [hereinafter TFEU].
43. See id.
44. See id. art. 3(3); Single European Act art. 6, Feb. 17, 1986, 1987 O.J. (L 169) 1.
45. Pollack, supra note 32, at 14–15.
46. Id. at 384–85.
47. European Union, European Parliament, Future of Europe: European
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48. Case C-507/17, Google v. CNIL, Request for a Preliminary Ruling from the Counseil
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49. See, e.g., Consolidated Version of the Treaty on European Union art. 3, ¶ 5, May 9, 2008,
2008 O.J. (C 115) 13 [hereinafter TEU].
50. See, e.g., Case C-300/89, Comm’n v. Council (Titanium Dioxide Case), 1991 E.C.R. I-02867;
Case C-155/91, Comm’n v. Council (Directive on Waste—Legal Basis), 1993 E.C.R. I-00939.
51. See Vogel, Politics, supra note 5, at 237.
52. Council Regulation 1907/2006 of Dec. 18, 2006, Concerning the Registration,
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53. Commission White Paper: Strategy for a Future Chemicals Policy, 7, COM (2001) 88 final
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54. Political Agreement for a Council Common Position (EC) No. 15921/2005 of Dec. 19,
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55. Gloria González Fuster, The Emergence of Personal Data Protection as
a Fundamental Right of the EU 126 (2014).
56. Commission Recommendation 81/679 of July 29, 1981, Relating to the Council of Europe
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294
58. Commission White Paper: Europe and the Global Information Society, at 22 ( June 24,
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59. Proposal for A Comprehensive Approach on Personal Data Protection in the European
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61. See c hapter 9 discussing regulatory imperialism and other criticism of the Brussels Effect.
62. See Sieglinde Gstöhl, Political Dimensions of an Externalization of the EU’s Internal
Market 4‒5 (Dep’t of EU Int’l Relations & Diplomacy Studies, EU Diplomacy Papers No.
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63. According to polls, 70% of Europeans want Europe to assume this role. See Benita Ferrero-
Waldner, European Comm’r for External Relations & European Neighbourhood Pol’y,
Speech at George Bush Presidential Library Foundation and Texas A&M University EU
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&aged=1&language=EN&guiLanguage=en [https://perma.cc/JWT3-RMN6]; see also
European Comm’n, Taking Europe to the World 59 (2004); Alasdair R. Young
& John Peterson, The EU and the New Trade Politics, in The European Union and
the New Trade Politics 1, 2 ( John Peterson & Alasdair R. Young eds., 2007).
64. See Commission White Paper: Completing the Internal Market, at 22 COM (85) 310
final ( June 28, 1985), https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=
CELEX%3A51985DC0310 [https://perma.cc/SXF6-GYS3]; Commission on The Impact
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publications.europa.eu/en/publication-detail/-/publication/84e25462-8584-43db-bcca-
da3aee83522f/language-en [https://perma.cc/P6YR-VB69].
65. Commission Staff Working Document on The External Dimension of the Single Market
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66. Id. at 8.
67. Communication on A Single Market for 21st Century Europe, at 7, COM (2007) 725 final
(Nov. 20, 2007) [hereinafter A Single Market for 21st Century Europe].
68. Communication on A Single Market for Citizens, at 7, COM (2007) 60 final (Feb. 21, 2007);
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69. Communication on An Area of Freedom, Security and Justice Serving the Citizen, at 9,
COM (2009) 262 final ( June 10, 2009).
70. Communication on A Comprehensive Approach on Personal Data Protection in the EU, at
19, COM (2010) 609 final (Nov. 4, 2010).
71. Id. at 16 (original emphasis removed).
72. Mark Scott and Laurens Cerulus, Europe’s New Data Protection Rules Export Privacy
Standards Worldwide, Politico ( Jan. 31, 2018), https://www.politico.eu/article/
europe-data-protection-privacy-standards-gdpr-general-protection-data-regulation/
[https://perma.cc/PKM3-BA3V].
73. European Commission, Trade for All—Towards a More Responsible Trade and Investment
Policy, 14 October 2015, https://publications.europa.eu/en/publication-detail/-/
publication/84e25462-8584-43db-bcca-da3aee83522f [https://perma.cc/48EY-35SX].
295
74. European Council, Promoting EU Value Through Trade (last updated Nov. 14, 2017),
http://www.consilium.europa.eu/en/policies/trade-policy/promoting-eu-values/
[https://perma.cc/B6X3-XAW9].
75. See TEU art. 3 ¶5, art. 21 ¶1.
76. A Single Market for 21st Century Europe, supra note 67, at 3.
77. See, e.g., Emma Tucker, Plastic Toy Quandary that EU Cannot Duck, Fin. Times, Dec. 9,
1998, at 3.
78. Vogel, Politics, supra note 5, at 13.
79. See Jan Zielonka, Europe as a Global Actor: Empire by Example?, 84 Int’l Aff. 471, 475
(2008).
80. See Zaki Laïdi, The Unintended Consequences of European Power 5 (Les Cahiers Européens
de Sciences Po. No. 5, 2007), http://www.cee.sciences-po.fr/erpa/docs/wp_2007_5.pdf
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C h a p t er 2
1. See, e.g., Daniel W. Drezner, Globalization, Harmonization, and Competition: The
Different Pathways to Policy Convergence, 12 J. Eur. Pub. Pol’y 841, 847 (2005) [herein-
after Drezner, Different Pathways]; see also, e.g., David A. Wirth, The EU’s New Impact on
U.S. Environmental Regulation, 31 Fletcher F. World Aff. 91, 96 (2007).
2. See Drezner, Different Pathways, supra note 1, at 843.
3. Daniel W. Drezner, All Politics is Global: Explaining International
Regulatory Regimes 33–62 (2008).
4. Chad Damro, Market Power Europe, 19 J. Eur. Pub. Pol’y 682, 683 (2012).
5. Id. at 687.
6. See David Vogel & Robert A. Kagan, Dynamics of Regulatory Change: How
Globalization Affects national Regulatory Policies 13 (David Vogel &
Robert A. Kagan eds., 2004).
7. See Alasdair R. Young, Political Transfer and “Trading Up”? Transatlantic Trade in
Genetically Modified Food and U.S. Politics, 55 World Pol. 457, 459 (2003).
8. European Union, CIA World Factbook, https://www.cia.gov/library/publications/
the-world-factbook/geos/ee.html (last visited Sept. 24, 2018) [https://perma.cc/23LD-
7NEU]. The GDP figure is the nominal GDP.
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11. United States, CIA World Factbook, https://www.cia.gov/library/publications/the-
world-factbook/g eos/us.html (last visited Sept. 24, 2018) [https://perma.cc/4CYP-
SC63]; China, CIA World Factbook, https://www.cia.g ov/library/publication
s/the-world-factbook/g eos/ch.html (last visited Sept. 24, 2018) [https://perma.cc/
B9YW-6X6E]; Japan, CIA World Factbook, https://www.cia.g ov/library/publi
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cc/E5SG-J8U8]. The GDP figures are the nominal GDP.
296
12. European Union, supra note 8; United States, supra note 11; China, supra note 11; India,
CIA World Factbook, https://www.cia.gov/library/publications/the-world-factboo
k/geos/in.html (last visited Sept. 24, 2018) [https://perma.cc/CAR8-PYX9].
13. Statistics Relating to Enlargement of the European Union, Wikipedia, https://
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trade/policy/countries-and-regions/negotiations-and-agreements/ (last visited Sept. 24,
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15. See generally Alberto Alesina & Enrico Spolaore, The Size of Nations (2003).
16. Bilateral trade between European Union (EU 28) and United States of America, ITC,
https://www.trademap.org/Bilateral_TS.aspx?nvpm=1||14719|842||TOTAL|||2|1|1|1
|2|1|1|1|1 (last visited Sept. 24, 2018) [https://perma.cc/N795-4LSR]; Bilateral trade
between European Union (EU 28) and Russian Federation, ITC, https://www.trademap.
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28) and South Africa, ITC, https://www.trademap.org/Bilateral_TS.aspx?nvpm=1||147
19|710||TOTAL|||2|1|1|1|2|1|1|1|1 (last visited Sept. 24, 2018) [https://perma.cc/AS76-
E5GL]; Bilateral trade between European Union (EU 28) and China, ITC, https://www.
trademap.org/Bilateral_TS.aspx?nvpm=1||14719|156||TOTAL|||2|1|1|1|2|1|1|1|1 (last vis-
ited Sept. 24, 2018) [https://perma.cc/KJ9R-FAAU]; Bilateral trade between European
Union (EU 28) and Canada, ITC, https://www.trademap.org/Bilateral_TS.aspx?nvpm
=1||14719|124||TOTAL|||2|1|1|1|2|1|1|1|1 (last visited Sept. 24, 2018) [https://perma.cc/
P663-8XA6]; Bilateral trade between European Union (EU 28) and Japan, ITC, https://
www.trademap.org/Bilateral_TS.aspx?nvpm=1||14719|392||TOTAL|||2|1|1|1|2|1|1|1|
1 (last visited Sept. 24, 2018) [https://perma.cc/2SER-6HFN]; Bilateral trade between
European Union (EU 28) and India, ITC, https://www.trademap.org/Bilateral_TS.asp
x?nvpm=1||14719|699||TOTAL|||2|1|1|1|2|1|1|1|1 (last visited Sept. 24, 2018) [https://
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ITC, https://www.trademap.org/Bilateral_TS.aspx?nvpm=1||14719|076||TOTAL|||2
|1|1|1|2|1|1|1|1 (last visited Sept. 24, 2018) [https://perma.cc/689M-BNEY]; Bilateral
trade between European Union (EU 28) and Australia, ITC, https://www.trademap.org/
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2018) [https://perma.cc/P9LS-QDCA]; Bilateral trade between European Union (EU
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1||14719|410||TOTAL|||2|1|1|1|2|1|1|1|1 (last visited Sept. 24, 2018) [https://perma.cc/
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17. United States, supra note 16; Russia, supra note 16; China, supra note 16; India, supra note
16; Brazil, supra note 16; Canada, supra note 16; Australia, supra note 16; Korea, supra note
16; Japan, supra note 16; South Africa, supra note 16.
18. Sorin Burnete & Pilasluck Choomta, The Impact of European Union’s Newly-Adopted
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quoting Jan Ahlen, The “EU Effect” and the Export of Environmental Standards to the
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19. Facebook, Inc., Annual Report (Form 10-K) 35–38 (Feb. 1, 2018).
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297
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to Green?, in Dynamics of Regulatory Change, 156, 156–58 (David Vogel & Robert
A. Kagan eds., 2004).
25. See id. at 156–58.
26. See Jan Zielonka, Europe as a Global Actor: Empire by Example?, 84 Int’l Aff. 471, 477–
80 (2008).
27. See Emilie M. Hafner-Burton, Trading Human Rights: How Preferential Trade Agreements
Influence Government Repression, 59 Int’l Org. 593 (2005).
28. See David Bach & Abraham L. Newman, The European Regulatory State and Global Public
Policy: Micro-Institutions, Macro-Influence, 14 J. Eur. Pub. Pol’y 827, 831 (2007).
29. See id. at 832.
30. See David Bach & Abraham L. Newman, Domestic Drivers of Transgovernmental
Regulatory Cooperation, 8 Reg. & Governance 395 (2014).
31. See Colin Kirkpatrick & David Parker, Infrastructure Regulation: Models for Developing
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33. See Sophie Meunier & Kalypso Nicolaïdis, The European Union as a Conflicted Trade
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34. See Giandomenico Majone, The Rise of the Regulatory State in Europe, in A Reader on
Regulation 77, 83–101 (1998).
35. See Bach &. Newman, supra note 28, at 831.
36. See Andreja Pegan, The Bureaucratic Growth of the European Union, 13 J. Contemp. Eur.
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37. See id. at 1210.
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29
57. Consolidated Version of the Treaty on the Functioning of the European Union, June 7,
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61. TFEU art. 294.
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74. See, e.g., Ragnar E. Löfstedt & David Vogel, The Changing Character of Regulation: A
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75. See David Vogel, The Politics of Precaution: Regulating Health, Safety,
and Environmental Risks in Europe and the United States 10 (2012) [here-
inafter Vogel, Politics].
76. See R. Daniel Kelemen & David Vogel, Trading Places: The US and the EU in International
Environmental Politics, 43:4 Comp. Pol. Stud. 427.
77. See supra note 75 at 22–42.
78. See supra note 75 at 34–42, 235–36.
79. Single European Act, Feb. 17, 1986, 1987 O.J. (L169) [hereinafter SEA].
80. See Ian Bache & Stephen George, Politics in the European Union 160 (1st ed.
2006).
81. Mitchell P. Smith, Environmental and Health Regulation in the United
States and the European Union: Protecting Public and Planet 2 (2012).
30
82. Paulette Kerzer, Transatlantic Risk Perceptions, Public Health, and Environmental
Concerns: Coming Together or Drifting Apart?, in The State of the European Union
Vol. 7: With US or Against US? European Trends in American Perspective
(2006).
83. Ben Clift, Comparative Capitalism, Ideational Political Economy and French Post-Dirigiste
Responses to the Global Financial Crisis, 17 J. New Pol. Econ. 565 (2012); Ulrich Witt,
Germany’s “Social Market Economy”: Between Social Ethos and Rent Seeking, 6 Indep.
Rev. 365 (2002).
84. See Clift, supra note 83, at 565; Witt, supra note 83, at 365.
85. Stein Kuhnle, The Beginnings of the Nordic Welfare States: Similarities and Differences, 21
Acta Sociologica 9 (1978).
86. Veit Koester, Nordic Countries’ Legislation on the Environment with
Special Emphasis on Conservation—A Survey, (1979); Konrad Adenauer
Stiftung, History of Energy and Climate Energy Policy in Germany: CUD
Perspectives 1958–2014 (2014).
87. Commission Institutional Paper on State-Owned Enterprises in the EU: Lessons Learnt and
Ways Forward in a Post-Crisis Context, No. 031, COM ( July 2016), https://ec.europa.eu/
info/sites/info/files/file_import/ip031_en_2.pdf [https://perma.cc/QSC8-83ZZ].
88. See Peter A. Hall & David Soskice, Varieties of Capitalism: The
Institutional Foundations of Comparative Advantage (2001).
89. Treaty of Lisbon, supra note 60, art. 1(4).
90. Katharina Pistor, Legal Ground Rules in Coordinated and Liberal Market Economies,
ECGI—Law Working Paper No. 30/2005 (2005), https://ecgi.global/sites/default/
files/working_papers/documents/SSRN-id695763.pdf [https://perma.cc/FW5U-Z98N].
91. Kira Brecht, How US and EU Capital Markets are Different, Open Market (Oct. 29,
2015), http://openmarkets.cmegroup.com/10431/how-u-s-and-eu-capital-markets-are-
different [https://perma.cc/2K4Y-BUB7]; Ines Goncalves Raposo & Alexander Lehmann,
Equity Finance and Capital Market Integration in Europe, European Union ( Jan. 2019),
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B5XV-SMYJ].
92. See Jonathan B. Wiener & Michael D. Rogers, Comparing Precaution in the United States
and Europe, 5:4 J. of Risk Research 317, 336 (2002), https://scholarship.law.duke.
edu/cgi/viewcontent.cgi?article=1985&context=faculty_scholarship [https://perma.cc/
Z2HJ-DWJC].
93. Andreas Ladner, The Polarization of the European Party System—New Data, New Approach,
New Results 7 (Sept. 5, 2014) (paper presented in panel P361—“The Methodological
Challenges of Designing Cross-National Voting Advice Applications” at the ECPR
General Conference), https://ecpr.eu/Filestore/PaperProposal/f989009a-d679-465d-
aff7-f6573671fd16.pdf [https://perma.cc/W4UQ-PBQU].
94. Jean-Claude Juncker, Candidate for President, Eur. Comm’n, Opening Statement in the
European Parliament Plenary Session, A New Start for Europe: My Agenda for Jobs,
Growth, Fairness and Democratic Change §6 ( July 15, 2014).
95. Susan Rose-Ackerman, Regulation and the Law of Torts, 81 Am. Econ. R. 54, 54 (1991).
96. See W. K. Viscusi, Structuring anEffective Occupational Disease Policy: Victim
Compensation and Risk Regulation, 2 Yale J. Reg. 53 (1984); Richard Posner, Regulation
(Agencies) versus Litigation (Courts): An Analytical Framework, in Regulation vs.
Litigation: Perspectives from Economics and Law 11, 20 (2011).
97. See Steven Shavell, Liability for Accidents, in Handbook for Law and Economics
142, 176 (Vol. 1, 2007).
98. See Steven Shavell, Liability for Harm versus Regulation of Safety, 13 J. L. Stud. 357, 369
(1984) [hereinafter Shavell, Liability for Harm].
301
120. Ragnar E. Löfstedt, The Swing of the Regulatory Pendulum in Europe: From Precautionary
Principle to (Regulatory) Impact Analysis, 28 J. Risk & Uncertainty 237, 243–44 (2004).
121. Maastricht Treaty: Treaty on European Union, art. 1, 7 February 1992, 1992 O.J. (C191)
1, 31 I.L.M. 253.
122. See Löfstedt, supra note 120, at 243–45.
123. See Yves Tiberghien, Competitive Governance and the Quest for Legitimacy in the EU: The
Battle over the Regulation of GMOs since the mid-1990s, 31 J. Eur. Integration 389,
404–05 (2009); Giandomenico Majone, Political Institutions and the Principle of
Precaution, in The Reality of Precaution: Comparing Risk Regulation in
the United States and Europe 377, 414 ( Jonathan Wiener et al. eds., 2011).
124. Communication from the Commission on the Precautionary Principle, COM (2000) 1
final (Feb. 2, 2000); The Precautionary Principle in the 20th Century: Late
Lessons from Early Warnings 5 (Harremoes et al. eds., 2013).
125. See Vogel, Politics, supra note 75, at 268–69. See also Giandomenico Majone,
Dilemmas of European Integration 125–26 (2005).
126. See David Vogel, The Hare and the Tortoise Revisited: The New Politics of Consumer and
Environmental Regulation in Europe, 33 Brit. J. Pol. Sci. 557, 566 (2003).
127. See Vogel, Politics, supra note 75, at 271.
128. See Kenisha Garnett & David Parsons, Multi-Case Review of the Application of the
Precautionary Principle in European Union Law and Case Law, 37 Risk Analysis 502,
511 (2017).
129. See, e.g., Case T-70/99, Alpharma v. Council, 2002 E.C.R. II-3506; Joined Cases T-74,
T-76, T-83, T-84, T-85, T-132, T-137, T-141/00, Artegodan GmbH v. Comm’n, 2002
E.C.R. II-4948; Case T-13/99, Pfizer Animal Health, 2002 E.C.R. II-3318.
130. Joined Cases T-74, T-76, T-83, T-84, T-85, T-132, T-137, T-141/00, Artegodan GmbH
v. Comm’n, 2002 E.C.R. II-4948, ¶ 184.
131. For an overview of the different regimes applied across the EU (14 countries), see
European Online Gambling Outlook 2017, Gambling Compliance ( Jan. 17, 2017),
https://gamblingcompliance.com/premium-content/research_report/european-
online-gambling-outlook-2017 [https://perma.cc/TF5K-X65N].
132. Loi 2010-476 du 12 mai 2010 relative à l’ouverture à la concurrence et à la régulation
du secteur des jeux d’argent et de hasard en ligne [Law 2010-476 of May 12, 2010 on
the Opening Up to Competition and Regulation of the Online Gambling Industry],
https://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000022204510
[https://perma.cc/MY8J-LNA4]; Taylor Wessing, Gambling Law in Germany,
Lexology ( June 7, 2017), https://www.lexology.com/library/detail.aspx?g=6111b061-
3533-4573-97a9-70bfd7f46d2b [https://perma.cc/9B8G-UJLV].
133. A similar issue plays out when the EU must garner some level of external regulatory con-
sensus before it can begin to export its preferred regulation. See, e.g., AR Young, Europe
as a Global Regulator: The Limits of EU Influence in International Food Safety Standards,
21 J. Eur. Pub. Pol’y 904 (2014).
134. See Stephen Castle, Europeans Introduce Corporate Tax Plan, N.Y. Times, Mar. 17, 2011,
at B5; EU Corporate Tax Plan Deals Blow to Irish, EurActiv.com (Mar. 16, 2011),
https://www.euractiv.com/section/euro-finance/news/eu-corporate-tax-plan-deals-
blow-to-irish/ [https://perma.cc/M7SM-EKRM]; see also Tax Wars: New Versus Old
Europe, Economist, July 24, 2004, at 61.
135. See Common Consolidated Corporate Tax Base (CCCTB) European Comm’n,
https://ec.europa.eu/taxation_customs/business/company-tax/common-consoli-
dated-corporate-tax-base-ccctb_en [https://perma.cc/GK4W-VQV6]; Press Release,
European Comm’n, Commission Proposes Major Corporate Tax Reform for the EU
30
149. The Personal Data Protection Bill 2018 (Draft) (India), art. 4, https://meity.gov.in/
writereaddata/files/Personal_Data_Protection_Bill%2C2018_0.pdf [https://perma.
cc/8ZTN-6YAX].
150. Id. at art. 3(13).
151. Id. at art 40.
152. Id. at art 40.
153. Note that this book takes some liberties in its use of the concepts “elastic” and “inelas-
tic” and departs somewhat from their traditional use in economics, such as the use of
the concept of demand elasticity (which refers to how sensitive demand of a good is to
changes in other economic variables such as price).
154. Regulation (EC) 1907/2006, of the European Parliament and of the Council of
18 December 2006 Concerning the Registration, Evaluation, Authorisation and
Restriction of Chemicals (REACH), Establishing a European Chemicals Agency, 2007
O.J. (L 136) 3 [hereinafter REACH].
155. Directive 2002/95/EC, of the European Parliament and of the Council of 27 January
2003 on the Restriction of the Use of Certain Hazardous Substances in Electrical and
Electronic Equipment, 2003 O.J. (L 37) 19 [hereinafter RoHS Directive].
156. Regulation 2016/679, of the European Parliament and of the Council of 27 April 2016
on the protection of natural persons with regard to the processing of personal data and
on the free movement of such data, and repealing Directive 95/46/EC (General Data
Protection Regulation) 2016 O.J. (L 119) 32, 33 [hereinafter GDPR].
157. Kalyanpur & Newman, supra note 32.
158. Paul L. Davies, Financial Stability and the Global Influence of EU Law, in EU Law
Beyond EU Borders: The Extraterritorial Reach of EU Law (Marise
Cermona & Joanne Scott eds.2019).
159. Yesha Yadav & Dermot Turing, The Extraterritorial Regulation of Clearinghouses, 2 J.
Fin. Reg. 21, 22 (2016).
160. Id. at 23.
161. Id.
162. Id. at 26.
163. International capital mobility is contingent on numerous factors and assumes limited
exchange controls and the ability of foreign corporations and individuals to engage in
foreign direct investment (FDI) and invest in foreign stock markets.
164. Commission Proposal for a Council Directive on a Common System of Financial Transaction
Tax and Amending Directive 2008/7/EC, COM (2011) 594 final (Sept. 28, 2011).
165. See Joshua Chaffin et al., Business Lashes Out at Trading Tax Plans, Fin. Times (London),
Sept. 29, 2011, at 1. Press Release, European Comm’n, Common Rules for a Financial
Transaction Tax—Frequently Asked Questions (Sept. 28, 2011), http://europa.eu/rapid/
pressReleasesAction.do?reference=MEMO/11/640 [https://perma.cc/9A4V-AG63].
166. Boris Groendahl & Alexander Weber, Austria Says EU Financial Transaction Tax is on
Wrong Track, Bloomberg (Sept. 5, 2018), https://www.bloomberg.com/news/arti-
cles/2018-09-05/austria-says-europe-s-push-for-transaction-tax-is-on-wrong-track (on
file with author).
167. See European Comm’n, supra note 165. The financial transaction tax is an example where
the other conditions for the Brussels Effect are also missing: the EU currently lacks the
regulatory competence (or capacity) to impose this tax; the required regulatory propen-
sity is also missing, as some member states oppose the proposal. There are also alternative
markets for trading activity, reducing the EU’s leverage. Finally, the tax is also divisible in
the sense that all jurisdictions do not have to apply the same tax, but instead retain their
autonomy to regulate trade in their jurisdictions.
305
168. However, a narrower proposal made by Germany and France during 2018, based on a
tax levy implemented in France, showed promise during an early 2019 meeting of the
finance ministers involved. See Alexander Weber, Germany, France Try to Jump-Start EU
Financial-Transaction Tax, Bloomberg (Dec. 3, 2018), https://www.bloomberg.com/
news/articles/2018-12-03/germany-france-try-to-jump-start-eu-financial-transaction-
tax (on file with author).
169. Parliament and Council Directive 2013/36/EU, OnAccess to the Activity of Credit
Institutions and the Prudential Supervision of Credit Institutions and Investment Firms,
2013 O.J. (L 176) 338.
170. Jim Brunsden, Brussels Proposes Europe-Wide Corporate Tax System, Fin. Times (Oct.
25, 2016), https://www.ft.com/content/4bfe986c-9ac4-11e6-b8c6-568a43813464 (on
file with author).
171. Mehreen Khan et. al., Google, Facebook and Apple Face ‘Digital Tax’ on EU Turnover,
Fin. Times (Mar. 15, 2018), https://www.ft.com/content/e38b60ce-27d7-11e8-b27e-
cc62a39d57a0 (on file with author); Commission Proposal for a Council Directive on
Laying Down Rules Relating to the Corporate Taxation of a Significant Digital Presence,
COM (2018) 147 final (Mar. 21, 2018).
172. Case C-34/10, Brüstle v. Greenpeace eV., EUR-Lex62010CJ0034 (Oct. 18, 2011).
173. See Scientists Fear Stem Cell Ruling Deals Blow to EU Research, EurActiv.com (Oct.
19, 2011), https://www.euractiv.com/section/health-consumers/news/scientists-fear-
stem-cell-ruling-deals-blow-to-eu-research/ [https://perma.cc/275L-3M9Z].
174. Mary Beth Warner, ‘German Reasoning Won Out’ in Stem Cell Ruling, Spiegel (Oct. 19,
2011) http://www.spiegel.de/international/the-world-from-berlin-german-reasoning-
won-out-in-stem-cell-ruling-a-792721.html [https://perma.cc/E4UB-M2ZR].
175. Until recently, China received and repurposed approximately 14% of the EU’s paper
waste and 20% of the EU’s plastic waste. See Paola Tamma, China’s Trash Ban Forces
Europe to Confront its Waste Problem, Politico (Feb. 21, 2018), https://www.politico.
eu/article/europe-recycling-china-trash-ban-forces-europe-to-confront-its-waste-
problem/ [https://perma.cc/ARB9-634U].
176. Eur. Envtl. Agency Report, Movements of Waste Across the EU’s
Internal and External Borders (2012), EU Exporting More Waste, Including
Hazardous Waste, Eur. Env’t Agency (Nov. 6, 2012), https://www.eea.europa.
eu/highlights/eu-exporting-more-waste-including [https://perma.cc/96PT-J9G8];
Sandra Laville, UK Worst Offender in Europe for Electronic Waste Exports—Report,
Guardian (Feb. 7, 2019), https://www.theguardian.com/environment/2019/
feb/07/uk-worst-offender-in-europe-for-electronic-waste-exports-report [https://
perma.cc/XAJ7-WAHJ].
177. For an overview of this literature, see Bruce Carruthers & Naomi Lamoreaux, Regulatory
Races: The Effects of Jurisdictional Competition on Regulatory Standards, 54 J. Econ. Lit.
52 (2016); Vogel & Kagan, supra note 6.
178. Daniel Drezner, Globalization and Policy Convergence, 3 Int’l Studies Rev. 53, 57–58
(2001) [hereinafter Drezner, Globalization and Policy].
179. Id. at 69, 75.
180. Vogel & Kagan, supra note 6.
181. Bruce Carruthers & Naomi Lamoreaux, supra note 177, at 89–90.
182. Id. at 54. See also Charles M. Tiebout, A Pure Theory of Local Expenditures, 64 J. Pol.
Econ. 416 (1956).
183. See Drezner, Different Pathways supra note 1, at 844–45; David Lazer, Regulatory
Interdependence and International Governance, 8 J. Eur. Pub. Pol’y 474, 476–78
(2001).
306
203. Nat’l Research Council, State and Federal Standards for Mobile-
Source Emissions 140 (2006), https://www.nap.edu/read/11586/chapter/7#140; see
also Fiona Miller, The Advantages of Selling a Standardized Product Bizfluent (Sept.
26, 2017), https://bizfluent.com/info-8788551-advantages-selling-standardized-
product.html [https://perma.cc/FF9P-6BWX].
204. Mark Casson, Multinationals and World Trade 56–57 (2012).
205. Lazer, supra note 183, at 477.
206. Wirth, supra note 1, at 104.
207. See Mitchener, supra note 201.
208. See Mike Colias, General Motors Will Stop Selling Cars in India, Wall St. J. (May
18, 2017), https://www.wsj.com/articles/general-motors-will-stop-selling-cars-in-
india-1495092601 [https://perma.cc/QY5E-SGW8].
209. Vogel, Politics, supra note 75, at 16.
210. Warren J. Keegan, Multinational Product Planning: Strategic Alternatives, 33 J.
Marketing 58, 59 (1969).
211. Aref A. Alashban et. al., International Brand-Name Standardization/Adaptation: Antecedents
and Consequences, 10 J. Int’l Marketing 22, 29 (2002).
212. See Marriott Set To Standardize On HSIA, Hotel Business (Dec. 7, 2002), https://www.
hotelbusiness.com/marriott-set-to-standardize-on-hsia/ [https://perma.cc/T6XM-3ZAR].
213. Vogel, Politics, supra note 75, at 16
214. See, e.g., Joe Sandler Clarke, Child Labour on Nestle Farms: Chocolate Giant’s Problems
Continue, Guardian (Sept. 2, 2015), https://www.theguardian.com/global-develop-
ment-professionals-network/2015/sep/02/child-labour-on-nestle-farms-chocolate-
giants-problems-continue [https://perma.cc/NH69-6H6Z].
215. Scott, supra note 195, at 923.
216. Vogel, Politics, supra note 75, at 217.
217. Of course, labor standards may be successfully exported to other jurisdictions through other
means. The argument here is only that to the extent that they are divisible, labor standards
are not amenable to the Brussels Effect. See, e.g., Brian Greenhill et al., Trade-Based Diffusion
of Labor Rights: A Panel Study, 1986–2002, 103 Am. Pol. Sci. Rev. 669, 678‒80 (2009).
218. See Emil Protalinski, Windows 7 to Be Shipped in Europe Without Internet Explorer,
Arstechnica ( June 11, 2009, 2:57 PM), http://arstechnica.com/microsoft/
news/2009/06/windows-7-to-be-shipped-in-europe-sans-internet-explorer.ars
[https://perma.cc/TY63-UTY5].
219. Aiofe White, Google to Create Shopping Service Unit to Satisfy EU (Sept. 26, 2017),
https://www.bloomberg.com/news/articles/2017-09-26/google-said-to-split-off-shop-
ping-service-to-meet-eu-demands (on file with author);
220. Vlad Savov, Google News Quits Spain in Response to New Law, The Verge (Dec.11,
2014), https://www.theverge.com/2014/12/11/7375733/google-news-spain-shutdown
[https://perma.cc/FL2M-D9YF].
221. European Commission Report on The Single Market Review: Impact on Competition and
Scale Effects, Economies of Scale, at 15 (1997) (on file with the author) [hereinafter EU
Single Market Review].
222. See Daniel Schwartz, Why Coke is Lowering its Sugar Levels in Canada, CBC News
(Mar. 1, 2015), https://www.cbc.ca/news/health/why-coke-is-lowering-its-sugar-levels-
in-canada-1.2961029 [https://perma.cc/7FGB-JFFN].
223. EU Single Market Review, supra note 221, at 15; Maria Doriza Loukakou & Nampungwe
Beatrice Membe, Product Standardization and Adaptation in International
Marketing: A Case of McDonalds (2012) (Master’s thesis in Business Administration,
University West), http://hv.diva-portal.org/smash/get/diva2:543563/FULLTEXT01.
pdf [https://perma.cc/AWH4-PD8Y].
308
C h a p t er 3
1. Joanne Scott, Extraterritoriality and Territorial Extension in E.U. Law, 62 Am. J. Comp.
L. 87, 88–90 (2014).
2. Id. at 94.
3. Id.
4. Id. at 90.
5. Id. at 124.
6. Id. at 98.
7. Surely, the three forms of influence discussed here are not the only ways in which EU
rules become entrenched outside the EU. See, e.g., Katerina Linos, Diffusion Through
Democracy, 55 Am. J. Pol. Sci. 678 (2011); see also Charles F. Sabel & Jonathan
Zeitlin, Learning from Different: The New Architecture of Experimentalist Governance
in the European Union, 14 Euro. L.J. 271 (2008); Jonathan Zeitlin, Extending
Experimentalist Governance?: The European Union and Transnational
Regulation (2015).
8. See Communication from the Commission to the Council and the European
Parliament: Wider Europe—Neighbourhood: A New Framework for Relations with Our
Eastern and Southern Neighbours, at 5, COM (2003)104 final (Mar. 11, 2003).
9. Sophie Meunier & Kalypso Nicolaidis, The European Union as a Trade Power, in
International Relations and the European Union 275, 279 (Christopher
Hill & Michael Smith eds., 2011).
10. See EU Enlargement Factsheet, European Commission, https://ec.europa.eu/neigh-
bourhood-enlargement/sites/near/files/pdf/publication/factsheet_en.pdf [https://
perma.cc/Q3CF-YCGD].
11. See Communication from the Commission to the Council and the European
Parliament: Wider Europe—Neighbourhood: A New Framework for Relations with Our
Eastern and Southern Neighbours, at 5, COM (2003)104 final (Mar. 11, 2003)
12. See Sophie Meunier & Kalypso Nicolaides, The European Union as a Conflicted Trade
Power, 13:6 J. EU Pub. Pol’y 906, 913 (2006).
13. Negotiations and Agreements, European Commission, available at http://ec.europa.
eu/trade/policy/countries-and-regions/negotiations-and-agreements/ [https://perma.
cc/BAS2-QNTA].
14. See generally Legislative Approximation and Application of EU Law in the
Eastern Neighbourhood of the European Union: Towards a Common
Regulatory Space? (Peter van Elsuwge & Roman Petrov eds., 2014); Nariné
Ghazaryan, The European Neighbourhood Policy and the Democratic
Values of the EU (2014).
15. “European Neighbourhood Policy (ENP),” European Union External
Action (21 Dec. 2016, 4:25 PM), https://eeas.europa.eu/diplomatic-network/
309
european-neighbourhood-policy-enp/330/european-neighbourhood-policy-enp_en
[https://perma.cc/NZ6J-NFT2].
16. Consolidated Version of the Treaty on the Functioning of the European Union arts. 3(5)
& 21(1), Mar. 30, 2010, 2010 O.J. (C 83) 47, 88–89 [hereinafter TFEU].
17. See Treaty of Lisbon Amending the Treaty on European Union and the Treaty Establishing
the European Community, Dec. 13, 2007, 2007 O.J. (C 306) 1, art. 8 [hereinafter Treaty
of Lisbon]; Christophe Hillion, The EU Neighborhood Competence under Article 8 TEU,
in Thinking Strategically about EU’s External Action 204 (Elvire Fabry ed.,
2011).
18. Johannes Hahn, First Vice President of the European Commission (2010–2014), Address
at Chatham House Conference: Beyond Berlin: What Does the Next Decade Hold for
the Western Balkins? ( July 10, 2018).
19. Communication from the Commission to the Council and the European Parliament: Wider
Europe—Neighbourhood: A New Framework for Relations with our Eastern and Southern
Neighbours, at 10, COM (2003) 104 final (Mar. 11, 2003).
20. Eduard Soler i Lecha & Elina Villup, Reviewing the European Neighbourhood Policy: A
Weak Response to Fast Changing Realities, Barcelona Centre for Int’l Affairs
( June 2011), https://www.cidob.org/en/publications/publication_series/notes_interna-
cionals/n1_36/reviewing_the_european_neighbourhood_policy_a_weak_response_to_
fast_changing_realities [https://perma.cc/U84X-79LT].
21. Judy Dempsey, Judy Asks: Is the European Neighborhood Policy Doomed?, Carnegie
Europe (May 20, 2015), https://carnegieeurope.eu/strategiceurope/60138?lang=en
[https://perma.cc/FLF3-QZ7M].
22. Euro Comm’n, Report on Implementation of EU Free Trade Agreements 7
(2018).
23. Raymond J. Ahearen, Europe’s Preferential Trade Agreements: Status,
Content, and Implications, Congressional Research Service 2 (2011),
https://fas.org/sgp/crs/row/R41143.pdf [https://perma.cc/22UG-R8TW].
24. Emilie M. Hafner-Burton, Trading Human Rights: How Preferential Trade Agreements
Influence Government Repression, 59 Int’l Org. 593 (2005); Sophie Meunier & Kalypso
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25. Billy A. Melo Araujo, The EU Deep Trade Agenda: Law and Policy 2
(2016).
26. Todd Allee & Manfred Elsig, Are the Contents of International Treaties Copied-and-Pasted?
Evidence from Preferential Trade Agreements 11–12 (NCCR Working Paper No. 8, 2016),
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perma.cc/2JB4-W9YR].
27. Annalisa Savaresi, The EU External Action on Forests: FLEGT and the Development of
International Law, in External Environmental Policy of the European
Union: EU and International Law Perspectives 149 (Elisa Morgera ed., 2012).
28. Billy A. Melo Araujo, The EU Deep Trade Agenda: Law and Policy 226
(2016).
29. Id.
30. Fisheries: Bilaterial Agreements With Countries Outside the EU, European Com
mission, https://ec.europa.eu/fisheries/cfp/international/agreements_en [https://
perma.cc/2XRB-L939].
31. External Aviation Policy—A Common Aviaion Area with the EU’s neighbours, European
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aviation_policy/neighbourhood_en [https://perma.cc/5Y47-CCRS].
310
54. Agreement on Andean Subregional Integration, art. 29, May 26, 1969, 8 I.L.M. 910; Karen
J. Alter & Laurence Helfer, Transplanting International Courts: The
Law and Politics of the Andean Tribunal of Justice 10 (2017).
55. Alter & Helfer, supra note 54.
56. Karen J. Alter et. al., Transplanting the European Court of Justice: The Experience of the
Andean Tribunal of Justice, 60 Am. J. of Comp. L., 629, 631 (2012).
57. See ATJ Case 2-IP-1988 point 2, at 2–3 (May 25, 1988).
58. See, e.g., ATJ Case 2-IP-1988 (May 25, 1988); ATJ Case 3-AI-1996 (Mar. 24, 1997); ATJ
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(Nov. 12, 1999); ATJ Case 16-AI-1999 (Mar. 22, 1999); ATJ Case 51-AI-2000 (Nov. 16,
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63. Id. at 644.
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314
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C h a p t er 4
1. European Commission Press Release IP/18/4581 Antitrust: Commission Fines Google
€4.34 Billion for Illegal Practices Regarding Android Mobile Devices to Strengthen
Dominance of Google’s Search Engine ( July 18, 2018), http://europa.eu/rapid/press-
release_IP-18-4581_en.htm [https://perma.cc/L8NT-8U9W]. Google has appealed the
case before the European Courts. See Case T-604/18, Google & Alphabet v. Comm’n,
2018 O.J., (C 445) 21.
2. Commission Decision in Case No. AT.39740 (Google Search—Shopping), C(2017)
4444 final ( June 27, 2017) cited in 2018 O.J. (C 9) 11, http://ec.europa.eu/competi-
tion/antitrust/cases/dec_docs/39740/39740_14996_3.pdf [https://perma.cc/6XA3-
34ND]. Google has appealed the case before the European Courts. See Case T-612/17,
Google & Alphabet v. Comm’n, 2017 O.J. (C 369) 37.
315
21. See Anu Bradford, Antitrust Law in Global Markets, in Research Handbook on the
Economics of Antitrust Law 283, 310 (Einer Elhauge ed., 2012).
22. Id.
23. Id. at 309.
24. See Gunnar Niels & Adriaan ten Kate, Introduction: Antitrust in the U.S. and the EU—
Converging or Diverging Paths?, 49 Antitrust Bull. 1, 11‒15 (2004).
25. See, e.g., Deborah Platt Majoras, Deputy Assistant Attorney Gen., Antitrust Div., US
Dep’t of Justice, Remarks on GE‒Honeywell: The U.S. Decision Before the Antitrust
Law Section, State Bar of Georgia 16 (Nov. 29, 2001), http://www.justice.gov/atr/public/
speeches/9893.pdf [https://perma.cc/7MXL-84YB].
26. Maureen K. Ohlhausen, Federal Trade Commissioner, U.S.-E.U. Convergence: Can we
bridge the Atlantic?, Remarks at the 2016 Georgetown Global Antitrust Symposium
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ments/985133/ohlhausen_dinner_speech_09192016.pdf [https://perma.cc/99DA-
2LZK]; Roger D. Blair & D. Daniel Sokol, Welfare Standards in U.S. and E.U. Antitrust
Enforcement, 81 Fordham L. Rev. 2497, 2501–02 (2013).
27. Fox, supra note 17, at 340; see also Blair & Sokol, supra note 26, at 2502.
28. Stephanie Honnefelder, European Parliament Fact Sheet on the
European Union—Competition Policy (2018), http://www.europarl.europa.eu/
ftu/pdf/en/FTU_2.6.12.pdf [https://perma.cc/UYT7-RTA4].
29. Commission Guidelines on the Application of Article 81(3) of the Treaty, ¶ 33, 2004 O.J.
(C 101) 97, 102; Commission Guidance on the Commission’s Enforcement Priorities in
Applying Article 82 of the EC Treaty to Abusive Exclusionary Conduct by Dominant
Undertakings, ¶ 19, 2009 O.J. (C 45) 7, 9; see also Case C-94/00, Roquette Frères SA
v. Comm’n [2002] ECR I-09011, ¶ 42; Case C-52/09 Konkurrensverket v. TeliaSonera
Sverige AB [2011] ECR I-527, ¶ 22.
30. Commission Guidelines on the Application of Article 81(3) of the Treaty, ¶ 13, 2004 O.J.
(C 101) 97, 98; Commission Guidance on the Commission’s Enforcement Priorities in
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General for Competition, Fighting Cartels in Europe and the US: Different Systems,
Common Goals, Address to the Annual Conference of the International Bar Association
(Oct. 9, 2013), http://ec.europa.eu/competition/speeches/text/sp2013_09_en.pdf
[https://perma.cc/EC8A-F3PV]; Nicholas Levy, Mario Monti’s Legacy in EC Merger
Control, 1 Competition Pol’y Int’l 99 (2005); see generally Ariel Ezrachi, EU
Competition Law Goals and the Digital Economy (Aug. 2018) (BEUC Discussion Paper),
https://www.beuc.eu/publications/beuc-x-2018-071_goals_of_eu_competition_law_
and_digital_economy.pdf ? [https://perma.cc/GN4T-H3MF].
32. Article 102 prohibiting abuses of dominant position contains in its illustrative list of
abuses a reference to “directly or indirectly imposing unfair purchase or selling prices
or other unfair trading conditions” (emphasis added). TFEU art. 102. The reference to
fairness is also found in relation to anticompetitive agreements: companies violating the
prohibition of Article 101(1) TFEU can clear the violation by demonstrating that their
conduct generates efficiencies, and that customers received a fair share of the benefits
(emphasis added). TFEU art. 101(3).
33. Blair & Sokol, supra note 26, at 2504–05.
34. Council Regulation 1/2003 of Dec. 16, 2002 on the Implementation of the Rules on
Competition Laid Down in Articles 81 and 82 of the Treaty, Recitals ¶ 9, 2003 O.J.
(L 1) 1, 2 (EC); Commission Green Paper on Vertical Restraints in EC Competition Policy,
¶ 180, COM(96) 721 final ( Jan. 22, 1997); Case C-8/08 T-Mobile Netherlands BV v. Raad
317
van bestuur van de Nederlandse Mededingingsautoriteit [2009] ECR I-4529, ¶ 38; Case
C-501/06 P GlaxoSmithKline Services Unlimited v. Comm’n [2009] ECR I-9291, ¶ 63.
35. Fox supra note 17, at 340.
36. See D. Daniel Sokol, Troubled Waters Between U.S. and European Antitrust, 115 Mich
L. Rev 955, 958 (2017). See also William E. Kovacic, U.S. Fed. Trade Comm’n Chairman,
Competition Policy in the European Union and the United States: Convergence or
Divergence?, Remarks at Bates White Fifth Annual Antitrust Conference ( June 2, 2008),
https://www.ftc.gov/sites/default/files/documents/public_statements/competition-
policy-european-union-and-united-states-convergence-or-divergence/080602bateswhite.
pdf [https://perma.cc/NE9D-RTR5].
37. See Anu Bradford et al., Is E.U. Merger Control Used for Protectionism? An Empirical
Analysis, 15 J. Empirical Legal Stud. 165 (2018); Anu Bradford, International Antitrust
Enforcement and the False Hope of the WTO, 48 Harv. Int’l L.J. 383 (2007).
38. Commission Decision in Case No. COMP/M.2220 (General Electric/Honeywell), 2004
O.J. (L 48) 1.
39. John Wilke, U.S. Antitrust Chief Chides EU for Rejecting Merger Proposal, Wall St. J.
( July 5, 2001, 12:01 AM ET), https://www.wsj.com/articles/SB99428227597056929 (on
file with author).
40. Id.
41. Commission Decision in Case No. IV/M.877 (Boeing/McDonnell Douglas), 1997 O.J.
(L 336) 16; Commission Decision in Case No. COMP/M.1741 (MCI WorldCom/
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COMP/M.6570 (UPS/ TNT Express), C(2013) 431 final ( Jan. 30, 2013) cited in 2014
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42. Tobias Buck, How the European Union Exports Its Laws, Fin. Times ( July 9, 2007),
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author).
43. Mark Scott, E.U. Commission Opens Inquiry Into E-Commerce Sector, N.Y. Times (May
6, 2015), https://www.nytimes.com/2015/05/07/business/international/european-
commission-e-commerce-inquiry-american-tech-companies.html (on file with author).
44. Julia Fioretti, Apple Appeals Against EU Tax Ruling, Brussels Says No Cause For Lower Tax
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46. Adam Satariano & Jack Nicas, E.U. Fines Google $5.1 Billion in Android Antitrust Case,
N.Y. Times ( July 18, 2018) https://www.nytimes.com/2018/07/18/technology/google-
eu-android-fine.html (on file with author).
47. John Cassidy, Why Did the European Commission Fine Google Five Billion Dollars?
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(May 24, 2016).
50. Bradford et al., supra note 37.
51. Pierre Cremieux & Edward A. Snyder, Enforcement of Anticollusion Laws against Domestic
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318
52. See Press Release, Alstom, Siemens and Alstom Join Forces to Create a European
Champion in Mobility (Sept. 26, 2017), https://www.alstom.com/press-releases-
news/2017/9/siemens-and-alstom-join-forces-to-create-a-european-champion-in-mobil-
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53. See Commission Decision of 6 February 2019 in case M. 8677 Siemens/Alstom (not yet
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IP/19/881, Merger: Commission Prohibits Siemens’ Proposed Acquisition of Alstom
(Feb. 6, 2019), http://europa.eu/rapid/press-release_IP-19-881_en.htm [https://perma.
cc/5FQY-8TCD]; Rochelle Toplensky, EU Blocks Planned Siemens-Alstom Rail Deal in
Landmark Decision, Fin. Times (Feb. 6, 2019), https://www.ft.com/content/6e344f6a-
29fd-11e9-88a4-c32129756dd8 (on file with author).
54. Commission Decision of 6 February 2019 in case M. 8677 Siemens/Alstom (not yet pub-
lished since last verified on Apr. 14, 2019).
55. Foo Yun Chee & John Revill, EU Antitrust Policy Under Fire After Siemens-Alstom Deal
Blocked, Reuters (Feb 6, 2019, 5:51 AM), https://www.reuters.com/article/us-alstom-
m-a-siemens-eu/eu-antitrust-policy-under-fire-after-siemens-alstom-deal-blocked-
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56. Mehreen Khan, A Clash of EU’s Titans Over China, Fin. Times (Apr. 2, 2019), https://
www.ft.com/content/abd1ef0c-54ce-11e9-a3db-1fe89bedc16e (on file with author).
57. See Council Regulation 1/2003 of December 16, 2002, on the Implementation of
the Rules on Competition Laid Down in Articles 81 and 82 of the Treaty, O.J. (2003)
(L 1) 1 (EC); and Council Regulation 139/2004 of Jan. 20, 2004, on the Control of
Concentrations Between Undertakings, 2004 O.J. (L 24) 1 (EC). See also Nicolas Petit
& Norman Neyrinck, A Review of the Competition Law Implications of the Treaty on the
Functioning of the European Union, Competition Pol’y Int’l Antitrust J. ( Jan.
2010), at 7, http://www.emulation-innovation.be/wp-content/uploads/2013/09/Petit-
Neyrinck-102-2-Lisbon.pdf [https://perma.cc/8SZE-5MVU].
58. See Council Regulation 1/2003 of 16 December 2002 on the Implementation of the Rules
on Competition Laid Down in Articles 81 and 82 of the Treaty, O.J. (2003) (L 1) 1 (EC).
59. See, e.g., Competition Policy: Prosecutor, Judge and Jury, Economist (Feb. 18, 2010),
https://www.economist.com/leaders/2010/02/18/prosecutor-judge-and-jury [https://
perma.cc/B5J5-A9AK];; Tom Fairless, EU Displaces U.S. as Top Antitrust Cop, Wall St.
J. (Sept. 3, 2015, 5:04 PM ET), https://www.wsj.com/articles/eu-displaces-u-s-as-top-
antitrust-cop-1441314254 (on file with author).
60. Bradford et al., supra note 37, at 191.
61. See, e.g., Foreign Trade Antitrust Improvements Act of 1982 (FTAIA), 15 U.S.C. § 6a
(2018); United States v. Aluminum Co. of Am., 148 F.2d 416, 444 (2d Cir. 1945); Case
T-102/96, Gencor Ltd v. Comm’n, 1999 E.C.R. II-759, ¶¶ 73, 92, 96; see also Eleanor M.
Fox, National Law, Global Markets, and Hartford: Eyes Wide Shut, 68 Antitrust L.J.
73, 79‒86 (2000); Damien Geradin et al., Extraterritoriality, Comity, and Cooperation in
EU Competition Law, in Cooperation, Comity, and Competition Policy 21,
24‒29 (Andrew T. Guzman ed., 2011).
62. See Commission Decision of 24 May 2004, Case COMP/C-3/37.792 (Microsoft), 2007
O.J. (L 32) 23; Commission Decision of 24 March 2004, Case COMP/C-3/37.792
(Microsoft), 3‒4, C (2004) 900 final (Apr. 21, 2004).
63. See Steve Lohr, Antitrust Cry from Microsoft, N.Y. Times, Mar. 31, 2011, at B1, https://
www.nytimes.com/2011/03/31/technology/companies/31google.html?mtrref=www.
google.com&gwh=A598C6EBBF881EE0FCBA67C3037A8078&gwt=pay&assetTyp
e=PAYWALL (on file with author); Brad Smith, Adding Our Voice to Concerns About
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319
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64. Vlad Savov, What is Fair Search and Why Does It Hate Google So Much?, The Verge
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65. European Commission Press Release IP/17/1784, Antitrust: Commission Fines Google
€2.42 Billion For Abusing Dominance as Search Engine by Giving Illegal Advantage
to Own Comparison Shopping Service ( June 27, 2017), https://europa.eu/rapid/press-
release_IP-17-1784_en.htm [https://perma.cc/BEX2-FPRZ]; European Commission
Press Release IP/18/4581, Antitrust: Commission Fines Google €4.34 Billion for Illegal
Practices Regarding Android Mobile Devices to Strengthen Dominance of Google’s
Search Engine ( July 18, 2018), https://europa.eu/rapid/press-release_IP-18-4581_en.htm
[https://perma.cc/BEX2-FPRZ]; European Commission Press Release IP/19/1770,
Antitrust: Commission Fines Google €1.49 Billion for Abusive Practices in Online
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66. See Council Regulation 139/2004 of Jan. 20, 2004, on the Control of Concentrations
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68. See Commission Decision in Case No. COMP/M.2220 (General Electric/Honeywell),
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69. Commission Decision in Case No. IV/M.053 (Aerospatiale-Alenia/de Havilland), 1991
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431 final ( Jan. 30, 2013) cited in 2014 O.J. (C 137) 8.
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( Jan. 8, 2016) cited in 2016 O.J. (C 450) 12.
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74. Boeing Co. et al., Joint Statement Closing Investigation of the Proposed Merger, 5 Trade
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C h a p t er 5
1. Regulation 2016/679, of the European Parliament and of the Council on the Protection
of Natural Persons with regard to the Processing of Personal Data and on the Free
Movement of Such Data, and Repealing Directive 95/46/EC, 2016 O.J. (L 119) 1 [here-
inafter GDPR].
2. Code of Conduct on Countering Illegal Hate Speech Online, European Commission
2 (May 31, 2016), http://ec.europa.eu/justice/fundamental-rights/files/hate_speech_
code_of_conduct_en.pdf [https://perma.cc/RD57-XXCF] [hereinafter The Code].
3. Kevin Granville, Facebook and Cambridge Analytica: What You Need to Know as Fallout
Widens, N.Y. Times (Mar. 19, 2018), https://www.nytimes.com/2018/03/19/tech-
nology/facebook-cambridge-analytica-explained.html?register=google (on file with
author); Paul Mozur, A Genocide Incited on Facebook, With Posts From Myanmar’s
Military, N.Y. Times (Oct. 15, 2018), https://www.nytimes.com/2018/10/15/technol-
ogy/myanmar-facebook-genocide.html (on file with author).
4. The fundamental right to privacy can be traced back to The European Convention of
Human Rights (ECHR), a treaty document drafted by the Council of Europe, which
guarantees a fundamental right to privacy; see Council of Europe, European Convention
for the Protection of Human Rights and Fundamental Freedoms, art. 8, opened for signa-
ture Nov. 4, 1950, ETS 5 [hereinafter ECHR]. The European Court of Human Rights,
which is vested with the task of enforcing the ECHR, has extended the right to privacy
to data protection; see Copland v. United Kingdom, 253 Eur.Ct.H.R. (2007). All EU
327
member states are among the 47 signatories of the ECHR, making all Europeans benefi-
ciaries of its privacy rules.
5. See Treaty on the Functioning of the European Union art. 16, Oct. 26, 2012, 2012 O.J. (C
326) 1 [hereinafter TFEU].
6. Charter of Fundamental Rights of the European Union, arts. 7–8, Dec. 12, 2007, 2007
O.J. (C 303) 1 [hereinafter Charter of Fundamental Rights].
7. Orla Lynskey, The Foundations of EU Data Protection Law 11 (2015).
8. Regulation 2016/679, of the European Parliament and of the Council on the Protection
of Natural Persons with regard to the Processing of Personal Data and on the Free
Movement of Such Data, and Repealing Directive 95/46/EC, 2016 O.J. (L 119) 1 [herein-
after GDPR].
9. Council Directive 95/46, On the Protection of Individuals with Regard to the Processing
of Personal Data, 1995 O.J. (L 281) 31 [hereinafter Data Protection Directive].
10. GDPR, supra note 1, at art. 5(1)(a).
11. Id. at arts. 5(1)(b)–1(c).
12. Id. at art. 5(1)(d), (5)(1)(f ).
13. Id. at art. 17.
14. Id. at art. 25.
15. Id. at arts. 51, 68.
16. Id. at art. 83.
17. Slaughter and May, “New Rules, Wider Reach: the Extra-Territorial
Scope of the GDPR” (2016), https://www.slaughterandmay.com/media/2535540/
new-rules-wider-reach-the-extraterritorial-scope-of-the-gdpr.pdf [https://perma.cc/
C9RK-CHW7]; see also Deloitte, “GDPR Top Ten: #3 Extraterritorial appli-
cability of the GDPR” (Apr. 3, 2017), https://www2.deloitte.com/nl/nl/pages/risk/
articles/cyber-security-privacy-gdpr-top-ten-3-extraterritorial-applicability-of-the-gdpr.
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18. See GDPR, supra note 1, at art. 45.
19. Proposal for a Regulation of the European Parliament and of the Council concerning the
respect for private life and the protection of personal data in electronic communications and
repealing Directive 2002/58/EC (Regulation on Privacy and Electronic Communications),
COM (2017) 10 final ( Jan. 10, 2017).
20. Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002
Concerning the Processing of Personal Data and the Protection of Privacy in the
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a Regulation on Privacy and Electronic Communications (ePrivacy Regulation), 2017 O.J.
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Respect for Private Life and the Protection of Personal Data in Electronic Communications and
Repealing Directive 2002/58/EC (Regulation on Privacy and Electronic Communications)—
Examination of the Presidency text, (COD) 2017/0003 10975/18 ( July 10, 2018), https://
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328
25. Case C-131/12, Google Spain SL v. Agencia Española de Protección de Datos,
ECLI:EU:C:2014:317, http://curia.europa.eu/juris/document/document.jsf ?docid=
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26. Id. at 91–99.
27. Id. at 56.
28. Id. at 51–60.
29. Jennifer Daskal, Borders and Bits, 71 Vand. L.R. 179, 212 (2018).
30. Mark Scott, Google Will Further Block Some European Search Results, N.Y. Times (Feb.
11, 2016), https://www.nytimes.com/2016/02/12/technology/google-will-further-block-
some-european-search-results.html (on file with author).
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32. Daskal, supra note 29, at 214.
33. See Transparency Report—Search Removals Under European Privacy Law, Google (May
29, 2014), https://transparencyreport.google.com/eu-privacy/overview [https://perma.
cc/ZF5L-KMEA] (these numbers are accurate of May 14, 2019. Google updates the fig-
ures periodically).
34. David F. Katz & Elizabeth K. Hinson, Germans Fine U.S. Companies for
Unlawful Data Transfers to States, Lexology (2016), https://www.lexology.
com/library/detail.aspx?g=743c9b6f-fc67-4479-893c-3a4384f9296e [https://perma.cc/
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35. Duncan Robinson, Facebook Fined by French Regulator Over Data Protection Rules,
Fin. Times (May 16, 2017), https://www.ft.com/content/10f558c6-3a26-11e7-821a-
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36. See, e.g., Gregory Shaffer, Globalization and Social Protection: The Impact of EU and
International Rules in the Ratcheting Up of U.S. Privacy Standards, 25 Yale J. Int’l L. 1,
43 (2000).
37. Cecilia Kang, Promise by Google Ends FTC’s Privacy-Breach Probe, Wash. Post, Oct. 28,
2010, at A15.
38. Robinson, supra note 35.
39. Thomas Shaw, Privacy Law and History: WWII-Forward The Privacy
Advisor (Mar. 1, 2013), https://iapp.org/news/a/2013-03-01-privacy-law-and-history-
wwii-forward/ [https://perma.cc/6XE2-8SWA].
40. Alvar C.H. Freude and Trixy Freude, Echoes of History: Understanding German
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41. Lynskey, supra note 7, at 46–47.
42. Communication on A Comprehensive Approach on Personal Data Protection in the EU, at 19
(COM) (2010) 609 final (Nov. 4, 2010).
43. Interview with Bruno Gencarelli, Head of the International Data Flows and Protection
Unit, European Commission, Directorate General Justice and Consumers, in Brussels,
Belgium ( Jul. 17, 2018).
44. Id.
45. Id. at 47.
46. Id.
47. Shaw, supra note 39.
48. Henry Farrell & Abraham L. Newman, Of Privacy and Power: The
Transnational Struggle over Freedom and Security 52 & 108 (2019).
329
66. See David Bach & Abraham L. Newman, The European Regulatory State and Global Public
Policy: Micro-Institutions, Macro-Influence, 14 J. Eur. Pub. Pol’y 827, 833 (2007).
67. Id.
68. Samuel W. Royston, The Right to be Forgotten: Comparing the US and European
Approaches, 48 St. Mary’s L.J. 253 (2016).
69. 15 U.S.C. § 45 (a) (1) (2012).
70. Paul M Schwartz & Karl-Nikolaus Peifer, Transatlantic Data Privacy Law, 106 Geo. L. J.
115, 119 (2017).
71. Constance Chevallier-Govers, Personal Data Protection: Confrontation Between the
European Union and the United States, in The European Union and the United
States: Processes, Policies, and Projects 150 (Yann Echinard et al. eds., 2013)
(quoting Alex Turk).
72. Jack Goldsmith, Emerging Threats, The Failure of Internet Freedom,
Knight First Amendment Institute at Columbia(2018),https://knightcolumbia.org/
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JX3U].
73. Id.
74. Franz-Stefan Gady, EU/U.S. Approaches to Data Privacy and the “Brussels Effect”: A
Comparative Analysis, 4 Geo. J. Int’l Aff. 12–23 (2014).
75. Duncan Robinson, EU Removes Carrot but Keeps Stick in Data Laws, Fin. Times ( Jan.
20, 2016), https://www.ft.com/content/9d774734-a4b1-11e5-a91e-162b86790c58 (on file
with author).
76. There was a total of 252,070,00 users in the EU28 as of June 30, 2017; see Internet World
Stats, http://www.internetworldstats.com/stats4.htm [https://perma.cc/H8SU-ZYXM].
77. Shona Ghosh, Facebook in Europe is About to Get Massively Disrupted by New Laws Meant
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3
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35
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36
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37
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38
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219. Eugene Volokh, No, There’s No “Hate Speech” Exception to the First Amendment,
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volokh-conspiracy/wp/2015/05/07/no-theres-no-hate-speech-exception-to-the-first-
amendment/?utm_term=.e96978325c4d (on file with author).
220. Id.
221. See, e.g., Snyder v. Phelps, 562 U.S. 443, 458 (2011).
222. Ira Steven Nathenson, Super-Intermediaries, Code, Human Rights, St. Thomas University
School of Law Legal Studies Research Paper No. 2014-09, 96–97; Senate Comm. on
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223. Case C-247/99, P Bernard Connolly v. Comm’n, 2001 E.C.R. I-1611
224. Case C-54/07, Centrum voor gelijkheid van kansen en voor racismebestrijding v. Firma
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225. TFEU, supra note 5.
226. Advocate General’s Opinion in Case Case C-54/07, Centrum voor Gelijkheid van
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227. Erbakan v Turkey, No. 59405/00, 56 (Eur. Ct. H.R. July 6, 2006).
228. Id.
229. European Court of Human Rights, Fact sheet on Hate Speech, 1 (Mar. 2019),
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230. Council Framework Decision, supra note 217.
231. Directive 2010/13/EU of the European Parliament and of the Council of 10 March 2010
on the coordination of certain provisions laid down by law, regulation or administra-
tive action in Member States concerning the provision of audiovisual media services
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232. Art. 137(c) & Art. 137(d), para. 1, Sr.(Neth.).
233. See, e.g., Sheena McKenzie, Geert Wilders guilty of ‘insulting a group’ after hate speech
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235. Jeffrey Eisenach, Don’t Make the Internet a Public Utility, N.Y. Times (Oct. 28, 2016),
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237. European Commission Press Release IP/18/1169, A Europe that protects: Commission
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340
253. Mark Scott, What U.S. Tech Giants Face in Europe in 2017, N.Y. Times ( Jan. 1, 2017),
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254. There was a total of 253,480,00 users in the EU28 as of Dec 31, 2017; see Internet
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256. Facebook Inc. (FB) Third Quarter 2017 Results Conference Call (Nov. 1, 2017),
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257. There was a total of 141.2 million users in the United Kingdom, Germany, France, Poland,
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260. Id.
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262. The EU code of conduct on countering illegal hate speech online, European Commission,
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269. Id.
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272. The exact time period was November 5 to December 14 2018 (6 weeks); see European
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273. European Commission Press Release IP/19/805, Countering illegal hate speech online—
EU Code of Conduct ensures swift response (Feb. 4, 2019).
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275. European Commission Press Release IP/18/261, Countering illegal hate speech online—
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276. European Commission Daily News, Snapchat joins the EU Code of Conduct to fight illegal
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278. Ammori, supra note 267, at 2279.
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280. Ammori, supra note 267, at 2279.
281. Angwin & Grassegger, supra note 271.
282. Nathenson, supra note 222, at 127.
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285. Eva Galperin, Twitter Steps Down from the Free Speech Party, Electronic Frontier
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286. In May 2017, an Austrian court ordered Facebook to remove posts not just within
Austria, but globally, as merely blocking the messages in Austria, without removing
them for users abroad was not sufficient; see generally BBC News, Facebook Must Delete
Hate Postings, Austria Court Rules, BBC News (May 9, 2017), http://www.bbc.com/
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287. Ammori, supra note 267, at 2276.
34
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C h a p t er 7
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36
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111. David Mahoney, Zuchtvieh-Export GmbH v. Stadt Kempten: The Tension Between
Uniform, Cross-Border Regulation and Territorial Sovereignty, 40 B.C. Int’l & Comp.
L. Rev. 363, 364–66, 371 (2017).
112. Clair Gammage, A Critique of the Extraterritorial Obligations of the EU in Relation to
Human Rights Clauses and Social Norms in EU Free Trade Agreements, Eur. & World,
Oct. 10, 2018, at 12.
113. Joanne Scott, Extraterritoriality and Territorial Extension in EU Law, 62 Am. J. Comp.
L. 87
114. Id. at 89.
115. Directive 2003/87/EC, of the European Parliament and of the Council of 13 October
2003 Establishing a Scheme for Greenhouse Gas Emission Allowance Trading Within
the Community and Amending Council Directive 96/61/EC, 2003 O.J. (L 275) 32
[hereinafter Directive 2003/87/EC].
116. See Directive 2008/101/EC, of the European Parliament and of the Council of 19
November 2008 Amending Directive 2003/87/EC So as to Include Aviation Activities in
the Scheme for Greenhouse Gas Emission Allowance Trading Within the Community,
2009 O.J. (L 8) 3 [hereinafter Directive 2008/101/EC].
117. Kati Kulovesi, Climate Change in EU External Relations: Please Follow My Example (or
I Might Force You to), in The Eternal Environmental Policy of the European
Union: EU and International Law Perspectives 115, 117 (Elisa Morgera ed.,
2012); Delreux & Happaerts, supra note 43, at 246.
118. Kulovesi, supra note 117.
119. The European Union’s Emissions Trading Scheme: A Violation of International
Law: Hearing Before the Subcomm. on Aviation of the H. Comm. on Transp. &
Infrastructure, 112th Cong. 34-36 (2011) (statement of Hon. Nancy N. Young, vice presi-
dent of Environmental Affairs, Air Transport Association of America, Inc.).
120. Id. at 4–5.
121. See Directive 2008/101/EC, supra note 116, ¶17; see also Joanne Scott & Lavanya
Rajamani, EU Climate Change Unilateralism, 23 Eur. J. Int’l L. 469, 482‒83 (2012).
122. See Scott & Rajamani, supra note 121, at 475.
123. Id.
124. See Case C-366/10, Air Transp. Ass’n of Am. v. Sec’y of State for Energy & Climate
Change, EUR-Lex 62010CJ0366 (Dec. 21, 2011).
125. See US Aviation Sector Finally Challenges EU Emissions Scheme, CAPA ( July 6, 2011),
https://centreforaviation.com/analysis/reports/us-aviation-sector-finally-challenges-
eu-emissions-scheme-54825 [https://perma.cc/D9U9-LP5D]. According to the
plaintiffs, the ETS Directive violates a number of international agreements, including
the Convention on International Civil Aviation (Chicago Convention), the Kyoto
Protocol to the United Nations Framework Convention on Climate Change, and the
Air Transport Agreement between the United States and the EU and its member states
(Open Skies Agreement).
126. Press Release No. 139/11, Court of Justice of the European Union, The Directive
Including Aviation Activities in the EU’s Emissions Trading Scheme is Valid 2 (Dec. 21,
2011), http://curia.europa.eu/jcms/upload/docs/application/pdf/2011-12/cp110139en.
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127. Kulovesi, supra note 117, at 143; Torney, supra note 2, at 134.
364
128. Torney, supra note 2, at 134; Delreux & Happaerts, supra note 43, at 215.
129. Torney, supra note 2, at 134.
130. Id. at 158.
131. Id. at 134.
132. Delreux & Happaerts, supra note 43, at 215.
133. Historic Agreement Reached to Mitigate International Aviation Emissions, ICAO (Oct.
6, 2016), https://www.icao.int/Newsroom/Pages/Historic-agreement-reached-to-
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134. Id.
135. ICAO Council Adopts New CO2 Emissions Standard for Aircraft, ICAO (Mar. 6, 2017),
https://www.icao.int/Newsroom/Pages/ICAO-Council-adopts-new-CO2-emissions-
standard-for-aircraft.aspx [https://perma.cc/G6RJ-VTDW].
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ec.europa.eu/clima/policies/transport/aviation_en#tab-0-0 [https://perma.cc/ZKK6-
5LLW]; See also Regulation (EU) 2017/2392, of the European Parliament and of the
Council of 13 December 2017 Amending Directive 2003/87/EC to Continue Current
Limitations of Scope for Aviation Activities and to Prepare to Implement a Global
Market-Based Measure from 2021, 2017 O.J. (L 350) 7.
137. Janina Scheelhaase et. al, EU ETS Versus CORSIA—A Critical Assessment of Two
Approaches to Limit Air Transport’s CO2 Emissions by Market-Based Measures, 67 J. Air
Transport Mgmt. 55, 58 (2018).
138. European Parliament, Environmental Policy: General Principles and Basic Framework,
Fact Sheets on Eur. Union, http://www.europarl.europa.eu/factsheets/en/
sheet/71/environment-policy-general-principles-and-basic-framework [https://perma.
cc/3KZT-R4M4].
139. Biedenkopf, supra note 16, at 194.
140. Id.
141. Proposal for a Directive of the European Parliament and of the Council Amending Directive
2011/65/EU on the Restriction of the Use of Certain Hazardous Substances in Electrical and
Electronic Equipment, at 2, COM (2017) 38 final ( Jan. 26, 2017). See also, Henrik Selin
& Stacy D. VanDeveer, Raising Global Standards: Hazardous Substances and E-Waste
Management in the European Union, Environment, Dec. 2006, at 6, 14–15.
142. Biedenkopf, supra note 16, at 194.
143. Id. at 194–95.
144. Id. at 202.
145. The United States introduced federal legislation that would amend the Toxic Substances
Control Act of 1976 to establish uniform national standards similar to RoHS in 2009
in the Environmental Design of Electrical Equipment Act (EDEE Act), but that bill
did not leave the subcommittee. Environmental Design of Electrical Equipment Act
(EDEE) Act, H.R. 2420, 111th Cong. (2009).
146. Cal. Health & Safety Code §§ 25214.9–.10.2 (West 2003); see also Restrictions
on the Use of Certain Hazardous Substances (RoHS) in Electronic Devices, Cal.
Department Toxic Substances Control, https://dtsc.ca.gov/restrictions-on-
the-use-of-certain-hazardous-substances-rohs-in-electronic-devices/ (last visited Feb. 1,
2017) [hereinafter What is RoHS] [https://perma.cc/8YV9-58F9].
147. On September 23, 2003 the California Electronic Waste Recycling Act of 2003
was signed into law. Cal. Pub. Res. Code §§ 42460‒42486 (West 2004) The
Electronic Waste Recycling Act establishes a specialized program for recycling such
devices by charging consumers a fee upon purchase. See E-Waste More Information,
Cal. Department Toxic Substances Control, https://dtsc.ca.gov/
365
185. Council Directive 1999/74/EC, of 19 July 1999 Laying Down Minimum Standards for
the Protection of Laying Hens, 1999 (L 203) 53.
186. European Parliament Directorate-General for Internal Policies, supra note 108, at 31.
187. Council Directive 2008/120/EC, of 18 December 2008 Laying Down Minimum
Standards for the Protection of Pigs, 2009 (L 47) 5.
188. 40 Years of Animal Welfare, supra note 20.
189. Wayne Pacelle, Brazil Adds Its Might to the Movement to End Gestation Crates, Humane
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190. Id.
191. Call to Follow NZ Lead in Banning Sow Stalls, Sydney Morning Herald (Dec. 6,
2012), https://www.smh.com.au/environment/conservation/call-to-follow-nz-lead-in-
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193. Nat’l Animal Welfare Advisory Comm., Animal Welfare (Pigs) Code of
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194. Pacelle, supra note 189.
195. Lindsay Patton, 9 States That Have Banned Cruel Gestation Crates for Pigs, One Green
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196. Interview with Peter Zapfel, European Comm’n DG Climate Action, in Brussels, Belg.
( July 17, 2018).
197. Mirabelle Muûls et al., Evaluating the EU Emissions Trading System: Take it or Leave
It? An Assessment of the Data after Ten Years 3 (Grantham Inst., Briefing Paper No.
21, 2016), https://www.imperial.ac.uk/media/imperial-college/grantham-institute/
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198. Delreux & Happaerts, supra note 43, at 213.
199. Jan H. Jans & Hans H.B. Vedder, European Environmental Law: After
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200. Id.
201. Nicolas Koch et al., Causes of the EU ETS Price Drop: Recession, CDM, Renewable
Policies or a Bit of Everything?—New Evidence, 73 Energy Pol’y 676 (2014), https://
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202. Interview with Peter Zapfel, supra note 196.
203. Kulovesi, supra note 117, at 135.
204. See, e.g., EU and Switzerland Sign Agreement to Link Emissions Trading Systems, Eur.
Commission (Nov. 23, 2017), https://ec.europa.eu/clima/news/eu-and-switzerland-
sign-agreement-link-emissions-trading-systems_en [https://perma.cc/G4VP-HRAP].
205. Directive 2003/87/EC, supra note 115, art. 25(1).
206. Justin Dabner, Fiscal Responses to Climate Change in Australia: A Comparison with
California, 31 Australian Tax Forum 131 (2016).
207. Act on the Allocation and Trading of Greenhouse Gas Emissions Permits (온실가스
배출권의 할당 및 거래에 관한 법률), Act. No. 11419, enacted on May 14, 2012, enforced
on November 15, 2012, as amended (S. Kor.); Enforcement Decree on the Allocation and
Trading of Greenhouse Gas Emission Permits (온실가스 배출권의 할당 및 거래에
관한 법률 시행령), Presidential Decree. No. 24180, enacted and enforced on Nov 15,
2012, as amended (S. Kor.). For more details on K-ETS in English, see also, Republic of
368
C h a p t er 8
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119. Id. (data filtered according to non-EU countries).
120. Adam Satariano, G.D.P.R., a New Privacy Law, Makes Europe World’s Leading Tech
Watchdog, N.Y. Times (May 24, 2018), https://www.nytimes.com/2018/05/24/
technology/europe-gdpr-privacy.html. (on file with author).
121. Emilia Korkea-aho, ‘Mr. Smith Goes to Brussels’: Third Country Lobbying and the Making
of EU Law and Policy, 18 Cambridge Y.B. Eur. Legal Stud. 45, 48, 57 (2016). This
commitment is manifested in Article 11 of the TEU, which places a proactive duty on the
Commission to consult the affected parties. Third party actors subject to, or affected by,
EU rules are seen as stakeholders in this process, falling under the TEU Article 11 duty
for consultation.
122. Id. at 52.
123. See generally Bill Wirtz, EU-Funded Lobbying is Expensive and Undemocratic,
EUObserver (Sept. 21, 2017), https://euobserver.com/opinion/139093 [https://
perma.cc/32XB-BA4V]; Rinus van Schendelen, More Machiavelli in
Brussels: The Art of Lobbying the EU 319–20 (2002).
124. Eric Lipton & Danny Hakim, Lobbying Bonanza as Firms Try to Influence European
Union, N.Y. Times (Oct. 18, 2013), https://www.nytimes.com/2013/10/19/world/
37
application for a preemption waiver. See Letter from Stephen L. Johnson, Administrator,
EPA, to Arnold Schwarzenegger, Governor of California (Dec. 19, 2007), https://www.
epa.gov/sites/production/files/2016-10/documents/20071219-slj.pdf [https://perma.
cc/5RLR-PSNP].
145. See Adam Liptak, Trump v. California: The Biggest Legal Clashes, N.Y. Times (Apr. 5, 2018),
https://www.nytimes.com/2018/04/05/us/politics/trump-california-lawsuits.html
(on file with author).
146. See Hiroko Tabuchi, Brad Plumer and Coral Davenport, E.P.A. Readies Plan to Weaken
Rules That Require Cars to Be Cleaner, N.Y. Times (Apr. 27, 2018), https://www.nytimes.
com/2018/04/27/climate/epa-emissions-california.html (on file with author); see also
David Sloss, California’s Climate Diplomacy and Dormant Preemption, 56 Washburn
L.J. 507 (2017).
147. See Young, supra note 98, at 458–59.
148. See, e.g., Brian Coleman, Clinton Hints at U.S. Retaliation If EU Blocks Boeing Merger,
Wall St. J., July 18, 1997, at A2, https://www.wsj.com/articles/SB86915484794977500
(on file with author).
149. Deborah Platt Majoras, Deputy Asst. Att’y Gen., Antitrust Div., U.S. Dep’t of Justice,
Remarks Before the Antitrust Law Section State Bar of Georgia: GE–Honeywell: The
U.S. Decision 14 (Nov. 29, 2001), http://www.justice.gov/atr/public/speeches/9893.pdf
[https://perma.cc/GRN2-3FY9].
150. Daniel Michaels, Chinese Envoy Backs Shunning of Airbus, Wall St. J. (Mar. 9, 2012),
https://www.wsj.com/articles/SB10001424052970204781804577271312775663108
(on file with author). However, the EU insisted it would not back down. See Joshua
Chaffin, EU Defies Carbon Trade War Threats, Fin. Times (Mar. 20, 2012), https://
www.ft.com/content/10aebc46-72b6-11e1-ae73-00144feab49a#axzz263rsQIP5 (on file
with author).
151. Tom Delreux & Sandra Happaerts, Environmental Policy and Politics
in the European Union 133, 215 (2016).
152. Jim Brunsden, EU Seeks to End Long-Running Row over Curbs on US Beef, Financial
Times (Sept. 3, 2018), https://www.ft.com/content/03ec6d4c-af85-11e8-99ca-
68cf89602132 (on file with author).
153. General Agreement on Tariffs and Trade art. XX, Oct. 30, 1947, 61 Stat. A-11, 55 U.N.T.S.
194 [hereinafter GATT].
154. See Appellate Body Report, European Communities—Measures Concerning Meat
and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R ( Jan. 16,
1998) (adopted Feb. 13, 1998), https://www.wto.org/english/tratop_e/dispu_e/hormab.
pdf [hereinafter Appellate Body Report] [https://perma.cc/847R-TC3T].
155. Appellate Body Report, supra note 154, at 28.
156. See id. at 20–23.
157. Id. at 7.
158. Appellate Body Report, supra note 154.
159. See Press Release, Office of the U.S. Trade Rep., U.S. Files WTO Case Challenging
EU Restrictions on U.S. Poultry Exports ( Jan. 16, 2009), https://ustr.gov/about-us/
policy-offices/press-office/press-releases/2009/january/us-files-wto-case-challenging-
eu-restrictions-us-p [https://perma.cc/SZG9-D4HL].
160. John H. Jackson et al., Legal Problems of International Economic
Relations 367 (5th ed. 2008).
161. Id.
162. See Renée Johnson & Charles E. Hanrahan, Cong. Research Serv., R40449,
The U.S.-EU Beef Hormone Dispute (2010). The EU has further continued to
gather scientific evidence to justify its import ban and challenge US retaliation. After
379
another round of WTO litigation and a mixed and inconclusive Appellate Body rul-
ing, both the EU’s import ban and the United States’ retaliation remain in force. See
also Press Release, Office of the U.S. Trade Representative, WTO’s Appellate Body
Vindicates Continued U.S. Imposition of Sanctions After the EU Claimed Compliance
in the EU–Hormones Dispute (Oct. 16, 2008), https://ustr.gov/archive/assets/
Document_Library/Press_Releases/2008/October/asset_upload_file626_15173.pdf
[https://perma.cc/3J6J-E2MG].
163. See Johnson & Hanrahan, supra note 162. And even if the EU were to comply, access of
GMOs to its markets would remain limited. The WTO only ruled on the EU’s mora-
torium for authorization of GMOs. The EU’s strict requirements on traceability and
labeling of GMO products remain intact, considerably limiting the producers’ ability to
penetrate the European market, given EU consumers’ distrust of GMO foods.
164. See GATT, supra note 153, art. III.
165. However, on privacy, see the general exception clause in Article XIV of GATT, which
explicitly authorizes states to restrict trade to “protection of the privacy of individu-
als.” See Gregory Shaffer, Globalization and Social Protection: The Impact of EU and
International Rules in the Ratcheting Up of U.S. Privacy Standards, 25 Yale J. Int’l L. 1,
50 (2000) (quoting GATT, supra note 153, art. XIV).
166. See Anu Bradford, International Antitrust Negotiations and the False Hope of the WTO,
48 Harv. Int’l L.J. 383 (2007).
167. Dominique Sinopoli and Kai Purnhagen, Reversed Harmonization or Horizontalization
of EU Standards?: Does WTO Law Facilitate or Constrain the Brussels Effect? 34 Wisc.
Int’l L.J. 92 (2016).
168. Understanding on Rules and Procedures Governing the Settlement of Disputes, Apr. 15,
1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 2, 1869
U.N.T.S. 401.
169. See Shaffer, supra note 165, at 54–55.
170. See Jonathan R. Macey, Regulatory Globalization as a Response to Regulatory Competition,
52 Emory L.J. 1353, 1359 (2003).
171. See generally, Carbon Offsetting and Reduction Scheme for International Aviation
(CORSIA), Int’l Civ. Aviation Org., https://www.icao.int/environmental-
protection/CORSIA/Pages/default.aspx [https://perma.cc/6U8Z-9LEA]. The US
commitment to CORSIA is less certain under the Trump administration. See, e.g.,
Allision Lampert & Victoria Bryan, U.S. Airlines Affirm Aviation Emissions Deal After
Trump’s Paris Pullout, Reuters ( June 6, 2017), https://www.reuters.com/article/us-
airlines-iata-climatechange-idUSKBN18X2WX [https://perma.cc/6G9S-KQ35].
172. Philip Blenkinsop, EU Deeply Disagrees with U.S. on Trade Despite Détente, Reuters
(Aug. 30, 2018), https://www.reuters.com/article/us-usa-trade-eu/eu-deeply-disagrees-
with-u-s-on-trade-despite-detente-idUSKCN1LF1E0 [https://perma.cc/7VU2-4N63].
173. Sewell Chan, Greenpeace Leaks U.S.-E.U. Trade Deal Documents, N.Y. Times (May 2, 2016),
https://www.nytimes.com/2016/05/03/world/europe/ttip-greenpeace-leak-trade-
deal.html (on file with author).
174. At times, the United States may therefore concede and adopt the EU standard, in par-
ticular if it faces domestic demand to do so following any lobbying activity by its own
export-oriented companies that are already subject to EU rules and that therefore seek
to level the playing field domestically.
175. See Daniel W. Drezner, Globalization, Harmonization, and Competition: The Different
Pathways to Policy Convergence, 12 J. Eur. Pub. Pol’y 841, 845 (2005).
176. See id.
177. See discussion of the “Better Regulation Agenda” in chapter 2.
178. Id.
380
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4. Jean Fouré, Agnès Bénassy-Quéré & Lionel Fontagné, The World Economy in 2050: A
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[People’s Republic of China Cybersecurity Law] (promulgated by the Standing Comm.
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chile-ministers-meet-again-apec (on file with author).
30. European Union Intellectual Prop. Office, Guidelines for Examination
of European Union Trade Marks (2017), https://euipo.europa.eu/tunnel-web/
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33. EU-Vietnam Free Trade Agreement, Annex 12-A, unsigned.
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35. See TPP Final Text, supra note 34, art. 18.32.
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37. See The Third Industrial Revolution, Economist, Apr. 21, 2012, at 15.
38. Additive manufacturing is an industrial production technology that builds 3D objects by
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While traditional manufacturing often requires removing material through milling or
carving, additive manufacturing lays down or adds material to create a 3D object.
39. Richard Kelly & Jörg Bromberger, Additive Manufacturing: A Long-Term Game Changer
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40. Kelly & Bromberger, supra note 39.
41. Id.
42. Id.
43. Id.
44. Regulation (EC) 2018/302, 2018 O.J. (L 060I).
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ble prices for IT products, ABC (July 30, 2013, 12:14 AM), https://www.abc.net.au/news/2013-
07-29/geo-blocking-mps-committee-price-report-apple-adobe-microsoft/4850484
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47. Regulation 2018/302 supra note 44, paras. 22–26.
48. European Commission Press Release IP/18/6844, Antitrust: Commission fines Guess
€40 million for anticompetitive agreements to block cross-border sales, (Dec. 17, 2018).
49. Interview with John Frank, Vice President, Microsoft, in Brussels, Belg. ( July 16, 2018).
50. Luca Lombardo, Genetic Use Restriction Technologies: A Review, 12 Plant
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38
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92. The Future of Chemicals Regulation, supra note 86, at 5–6.
93. See Charles Grant, How Brexit is Changing the EU, Centre for European Reform
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96. See William A. Galston, The rise of European populism and the collapse of the center-left,
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97. See, e.g., Gains and losses of political parties at the German general election on September
24, 2017 in comparison to the previous election, Statista, https://www.statista.com/
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QNPG].
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onid=BF72E2C1162C7C49D52DE78D65BEF5B4.tpdila07v_2?idSectionTA=LEG
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[https://perma.cc/AJ5V-ZTQM].
102. See, e.g., Joined Cases C‑203/15 and C‑698/15, Tele2 Sverige AB v. Post-och telestyrelsen,
Secretary of State for the Home Department v. Tom Watson, ECLI:EU:C:2016:970,
(Dec. 21, 2016).
103. See Piotr Buras, Poland, Hungary, and the slipping façade of democracy European
Council on Foreign Relations ( Jul. 11, 2018), https://www.ecfr.eu/article/
commentary_poland_hungary_slipping_facade_of_democracy [https://perma.
cc/8MMB-2TKS]; Italy budget: Parliament passes budget after EU standoff, BBC
(Dec. 29, 2018), https://www.bbc.com/news/world-europe-46710472 [https://perma.
cc/37B8-7MR7]; Katya Adler, Europe’s migration crisis: Could it finish the EU?, BBC
( June 28, 2018), https://www.bbc.com/news/world-europe-44632471 [https://perma.
cc/DM3Y-3UCH].
386
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