Exporting standards: The externalization of the EU's regulatory power via markets

Abstract

This Article examines the unprecedented and deeply underestimated global power that the EU is exercising through its legal institutions and standards, and how it successfully exports that influence to the rest of the world. Introducing the notion of “the Brussels Effect,” the Article shows how market forces alone are sufficient to convert EU standards into global standards. Without the need to use international institutions or seek other nations’ cooperation, the EU has a strong and growing ability to promulgate regulations that become entrenched in the legal frameworks of developed and developing markets alike, leading to a notable “Europeanization” of many important aspects of global commerce. This Article identifies and explains the precise conditions for and the specific mechanism through which this externalization of EU's standards unfolds. Enhanced understanding of this dynamic explains why the EU is currently the only jurisdiction that can wield unilateral influence across a number of areas of law, ranging from competition and privacy to health and environmental regulation. This understanding also helps explain why certain regulations can be externalized via markets while others rely on the EU's ability to exert influence through its political agency. The Article further disputes the notion that the EU's ability to externalize its rules would reflect “regulatory imperialism,” as critics have suggested. Instead, it argues that the EU's external regulatory influence has emerged largely as an inadvertent byproduct of its internal goal to create and strengthen the single market. The EU's regulatory authority has been further solidified as the markets, other states, and international institutions have been able to do little to constrain Europe's global regulatory power. In the end, as much as the rise of the EU's regulatory power is a product of its pursuit of internal goals, any limits to this power are likely to stem from within the EU itself.