Transnational Private Regulation Research Articles

Shifting between Public and Private: The Reconfiguration of Global Environmental Regulation

Over the past two centuries, public environmental regulation (PER) has been progressively supplemented by private transnational regulation (PTR), creating a hybrid environmental governance regime. A five-category typology is developed to describe the ways in which international and national PER interact with private forms of environmental regulation. We then analyze the policy considerations that are relevant to the design of such hybrid regimes and various forms of interaction. Next, we describe two case studies that demonstrate the diversity of interactions between PER and PTR in a single regime. The case of sustainability reporting illustrates how public law builds on the expertise developed by private organizations as gradually more reporting obligations are incorporated into public law. The case of sustainable forest management regulation is somewhat more mixed, reflecting a tendency for increased state intervention, which led to partial suppression of PTR.

Shifting Between Public and Private: The Reconfiguration of Global Environmental Regulation

Over the past two centuries, public environmental regulation (PER) has been progressively supplemented by private transnational regulation (PTR), creating a hybrid environmental governance regime. A five-category typology is developed to describe the ways in which international and national PER interact with private forms of environmental regulation. We then analyze the policy considerations that are relevant to the design of such hybrid regimes and various forms of interaction. Next, we describe two case studies that demonstrate the diversity of interactions between PER and PTR in a single regime. The case of sustainability reporting illustrates how public law builds on the expertise developed by private organizations as gradually more reporting obligations are incorporated into public law. The case of sustainable forest management regulation is somewhat more mixed, reflecting a tendency for increased state intervention, which led to partial suppression of PTR.

Transnational Business Governance Interactions in Food Safety Regulation: Exploring the Promises and Risks of Enrolment

Transnational private regulation has been woven into the fabric of modern food safety governance. In this paper we explore the question of how domestic state actors respond to this development. We address this question in a detailed case study on the Global Food Safety Initiative (GFSI) and domestic food safety authorities in Canada, China, the Netherlands and the US. Why and to what extent do these domestic actors engage with GFSI in their regulatory activities, and what are the effects? To develop a better understanding of the how and why of this interaction, the paper builds on the concept of ‘regulatory enrolment’ developed by Black (2003). As will be argued, enrolment offers a proper analytical lens through which the nature of interplay between various actors in a regulatory regime can be better appreciated and the capacity of that regime as a whole can be enhanced in smart and innovative ways.

The Future of Transnational Self-Regulation Enforcement and Compliance in Professional Services

The increased expansion of economic activity beyond national borders leads to a shift of regulatory power. Public authorities concede power, explicitly or tacitly, to private bodies, whereas the multilayered ecology of global governance inevitably increases the role of transnational institutional structures. This article examines such developments in the area of professional services. It starts by analyzing the self-regulation phenomenon in professional services and points to examples where professional associations accentuate their unique nature to justify the importance of nonintervention in their internal affairs. Powerful professional associations have been thereby created, which, depending on the services subsector (e.g. legal, engineering or advertising services), are the final masters of access to and practice of a given profession. After a critical review of the most important professional associations at the global level, the article focuses on instances of private enforcement and goes on to examine the role of courts in reviewing such enforcement. In this regard, constitutionality of private enforcement is also examined. Finally, the article refers to the role of antitrust rules in harnessing distortive business practices that professional associations may adopt. The article focuses in particular on instances of private, decentralized enforcement. Whereas no truly transnational private regulation in professional services has yet emerged, it is submitted that the foundations for such a development are being built progressively as a result of borderless activities in this sector and a relatively deferential stance on the side of the State.

A field-level perspective on government involvement in private regulation

This paper addresses recent calls by various scholars to study the interaction between public and private forms of regulation and the need to bring the state back into transnational private regulation. To date, the involvement of government has generally been conceptualized in the singular – one government with numerous non- state actors. This conceptualization fails to capture the dynamics of the regulatory pluralism that can be witnessed empirically. In many industries the transnational regulatory field is characterized not by one but numerous government actors, often in the pursuit of contradictory policy goals. The present study contributes to the literature on “bringing the state back in to private regulation” by examining and tracing the efforts by numerous governments to shape private regulatory schemes and the consequences of their doing so at the level of the regulatory field.

The Application of Audit Standards in ECA's Work

External auditors, both in the private and in the public sector, are in the business of providing information to citizens and other stakeholders, to decide whether and in how far they can trust in what the audited bodies claim has been achieved. Audits of these auditors are governed by standards which concern the different aspects of professionalism of auditors and their audits. This raises the question how these standards fit into a regulatory framework under which an external auditor operates. So far, there is little published research on the role and structure of standards that govern audits of the European Court of Auditors (ECA). By drawing a structure of these standards and investigating them vis-a-vis the EU legal framework, we argue that the ECA, which is based on constitutional law and EU law, is mainly following the private sector standards and private sector standards are more or less copied, as far as financial audit is concerned. For issues more exclusively covered by public sector auditors, such as performance audits, public sector auditors have developed themselves standards and guidelines. The fact that there are no uniform general audit principles which would govern the work of the ECA raises a concern to what extent public external auditors pay attention to the difference between the public and private auditing. The paper aims to enhance our understanding of the institutional complementarity between transnational private regulation and public regimes.

The Internal Challenges of Associational Governance

This essay describes the normative dynamics within industry associations that affect their contributions to private transnational legal ordering. It asserts that even the most powerful associations possess characteristics that undermine their autonomy to rulemake for their industries, and so, their ability to govern. Examining the relationships between associations and their members helps us identify the forces that impede the effectiveness of associational governance, an important source of transnational private regulation.

Why Domestic Enforcement of Private Regulation Is (Not) the Answer: Making and Questioning the Case of Corporate Social Responsibility Codes

Why Domestic Enforcement of Private Regulation Is (Not) the Answer:Making and Questioning the Case of Corporate Social Responsibility Codes Anna Beckers and Mark T. Kawakami I. Global Private Regulation and the Domestic State Globalization has been commonly understood as a phenomenon that leads to the dissolution of territorial borders and the growing interdependence of social and economic activities that remain spatially remote.1 The law, in this regard, has not been spared from the impacts of globalization either. There is a constant interest in grasping the evolving legal system under the effects of globalization in terms such as transnational law,2 global law without3 or beyond4 the state, global legal pluralism,5 or transnational regulation.6 Certainly, much can be gained from a conceptualization of global ordering structures as autonomous global law that function independently of the state legal system. [End Page 1] Nevertheless, the enthusiasm for the effective functioning of these global ordering structures has recently waned. In particular, private regulatory processes have experienced various instances of functional ineffectiveness at the global level.7 Moreover, these private regulatory processes may face serious problems in terms of legitimacy and accountability,8 which, in turn, provide a justification to reconsider the role of domestic legal systems. In this context, it is equally important to note that the state and its formal legal system have never been irrelevant for global legal processes. To the contrary, the functions of domestic courts and legislators remain significant and relevant—as much as the global processes—and should continue to be so. The true global "delocalized" law has rightly been labeled as a utopia.9 Against this background emerges the question of whether domestic legal systems can and should play a role in administering and enforcing these global rules against private actors. In other words, is a stronger regulatory role of domestic law an appropriate response to the risks associated with the processes of economic globalization? In response, legal research seems to have already initiated a change in focus from the characteristics of this transnational ordering to investigating the interaction of global rules with state legal systems.10 One important element in this discussion is the renewed focus on the [End Page 2] enforcement of global private regulation through private law. Shifting the attention from the less tangible social pressures to legal enforcement, scholars have identified a variety of substantive areas in which the legal enforcement of private regulation could play a role,11 such as advertising and food safety,12 labor standards,13 and financial markets.14 In that respect, it is also normatively postulated that the national legal and political systems should play a more significant role in order to reinforce the potential rather than undermining the regulatory efforts on a global scale.15 This issue aims to contribute to this debate by providing different perspectives on whether and how domestic enforcement of transnational private regulation through private law can and should be furthered, if at all. This is accomplished by narrowing the broader topic and focusing on the investigation of one particular area: the starting point of all the contributions will be the debate over private corporate social responsibility (CSR) codes and the case for or against their enforcement under domestic private law. These CSR codes are understood as codes of conduct developed and published by transnational corporations to show their globally applicable commitment to respect human rights, improve fundamental labor standards, protect the natural environment, and prevent corruption. [End Page 3] The focus on private corporate social responsibility initiatives seems, for that debate, a particularly suitable example: First, unlike in other forms of private self-regulation, domestic enforcement is critical for corporate social responsibility because separate enforcement institutions have not evolved on a global level. In relation to the lex mercatoria, arbitral tribunals are primarily called upon to provide for juridification. For private internet governance, the Internet Corporation for Assigned Names and Numbers (ICANN) has evolved as a core player. The Court of Arbitration (CAS) has been dominant in shaping and enforcing the lex sportiva. Similar international courts or private arbitral institutions, although recently considered,16 have not been realized for corporate social responsibility...

Does Compliance Pay? Firm-Level Trade and Social Institutions

How does international trade shape social institutions in the developing world? The research literature is conflicted: importing firms may demand their trading partners adhere to higher labor and environmental standards, or they may penalize higher standards that raise costs. This study offers the first large-scale analysis of how firm-level trade responds to information about social standards. Contrary to the race to the bottom hypothesis, it finds that importers reward exporters for complying with labor and environmental standards. In difference-in-differences estimates from over two thousand manufacturing establishments in 36 countries, achieving compliance is associated a 4% [1%, 7%] average increase in annual purchasing. The effect is robust to controlling for manufacturing performance and reflects both rewards for reaching compliance and penalties for falling out of compliance. The results suggest that activist campaigns and transnational private regulation have created economic incentives for higher social standards in certain trade relationships.

TRANSNATIONAL ARENAS, PUBLIC POLICIES AND THE ENVIRONMENT: THE CASE OF PALM IN THE AMAZON

Abstract This paper discusses the emergence of non-state actors involved in developing rules on environmental and social standards in transnational arenas that are outside the control of governments and International Organizations. This work is the result of a field research conducted between January and March 2012 in the main palm producing region of Brazil, located in the state of Pará, encompassing the municipalities of Moju, Tailândia and Acará. It comprises a case study of a palm oil producing company based in the Amazon region. The synergy of this company with governmental policy has projected Brazil's soft power, not through foreign policy and diplomacy but by influencing transnational private regulation with the use of labels and certification schemes recognized by stakeholders engaged in the palm oil global chain. The authors use the academic literature on regulation and private governance to highlight the rise of non-state actors as rule-makers in contemporary international relations.

Horizontal Transformations in Administrative Norms and Procedures: An Introduction

This introduction explores the underlying question addressed in each of the contributions to this special issue: what impact does the use of general administrative governance principles and processes by hybrid and transnational private regulatory bodies have on ‘transnational administrative law doctrine’? The importance of this inquiry arises out of the growing role that such regulatory bodies play, despite their lack of formal competence, in introducing principles and procedures of general administrative nature into their respective sector. The hypothesis is that these ‘horizontal’ – due both to the absence of formal hierarchy as well as their cross-sector applicability – administrative norms and procedures undergo transformations as the regulatory bodies formulate them for their particular fields. By pursuing this hypothesis across a number of different case studies, the contributions to this special issue develop both transnational private regulation and global administrative law scholarship by mapping normative transformations that occur in their mutual intersections.

Prospects for Judicial Review of Transnational Private Regulation: Singapore and Canada

Transnational regulatory power is increasingly exercised by bodies with no formal accountability to states, although such bodies affect the way individuals, organizations, and states themselves conduct their affairs. As a general rule, courts have been reluctant to engage with these transnational private regulators. This article argues that courts in Singapore and Canada are gradually, if haltingly, fashioning public law principles that enable them to judicially review decisions of domestic private regulators. These principles tend to focus not on the formal status of the body exercising power but on the nature of that power, essentially articulating a functional test. The article argues further that, as it has developed in Singapore and Canada, administrative law contains within it legal tools and principles that would enable courts to judicially review the decisions of transnational private regulators and allow them to play an important role in shaping the emerging norms that govern transnational regulation.

Is Transnational Private Regulation Potentially an Effective Means of Promoting Collective Industrial Relations?

<p>This paper asks whether collective industrial relations can be promoted by means other than seeking change in public policy. Recent research points to the increasing significance of transnational private regulation (TPR) in developing economies. There is an emerging consensus that market incentives to improve wages and conditions of work can have a modest positive effect on measurable outcomes like hours of work, and health and safety. However, it appears that TPR has little impact on the capacity of workers to pursue such improvements for themselves via collective action. The paper takes a closer look at the potential of TPR to enhance worker voice and participation. It argues that this potential cannot be properly evaluated without understanding how local actors mobilise the social and political resources that TPR provides. The case studies presented show how different TPR schemes have been used by unions in Africa as a means to pursue the interests of members. The authors found that the scale of the impact of TPR in all of the contexts studied depended almost entirely on the existing capacities and resources of the unions involved. TPR led to the creation of collective industrial relations processes, or helped unions to ensure that certain enterprises participated in existing industrial relations processes, but did virtually nothing to enhance the political and organisational capacity of the unions to influence the outcomes of those processes in terms of wages and conditions of employment. The paper concludes that the potential of TPR to promote the emergence of collective industrial relations systems is very low.</p>

Enforcing Transnational Private Regulation – A Comparative Analysis of Advertising and Food Safety by Paul Verbruggen Cheltenham: Edward Elgar, 2014, 328 pp. € 133,93; Hardback

Enforcing Transnational Private Regulation – A Comparative Analysis of Advertising and Food Safety by Paul Verbruggen Cheltenham: Edward Elgar, 2014, 328 pp. € 133,93; Hardback

Production goes global, compliance stays local: Private regulation in the global electronics industry

AbstractPoor working conditions in global supply chains have led to private initiatives that seek to regulate labor practices in developing countries. But how effective are these regulatory programs? We investigate the effects of transnational private regulation by studying Hewlett‐Packard's (HP) supplier responsibility program. Using analysis of factory audits, interviews with buyer and supplier management, and field research at production facilities across seven countries, we find that national context – not repeated audits, capability building, or supply chain power – is the key predictor of workplace compliance. Quantitative analysis shows that factories in China are markedly less compliant than those in countries with stronger civil society and regulatory institutions. Comparative field research then illustrates how these local institutions complement transnational private regulation. Although these findings imply limits to private regulation in institutionally poor settings, they also highlight opportunities for productive linkages between transnational actors and local state and society.

The Many Features of Transnational Private Rule-Making: Unexlored Relationships between Custom, Jura Mercatorum and Global Private Regulation

Every-day life of businesses and consumers is pervaded by the references to global private standards: from the cars we drive to the computers we use, from the food we eat to the movies we watch. Private rule-making at the transnational level is increasingly gaining scope and traction, quickly expanding in both old and new territories. This is partly the result of weaknesses in conventional international public law and partly the result of the emergence of new modes of governance. Stimulated by the actions of states and private actors, these new modes of governance include public, private, and hybrid instruments.Private actors engage in transnational rulemaking in different forms depending on their objectives, the geographical and functional scope, and the effects of the regimes on the entities being regulated. The fields of application go well beyond those traditionally occupied by ‘jura mercatorum,’ including agriculture, human rights, social and labor regulation, environment, and the more conventional areas, such as finance, banking, professions, and trade, including e-commerce.These private regimes are sector specific but not self-contained. They presuppose the existence of international and domestic institutions that can support their functioning. They interact by both giving rise to conflicts or by mutually reinforcing one another. The premise of the analysis that follows is that of institutional complementarity rather than that of separate and autonomous private orderings. The conceptual puzzle concerns the definition of different types of complementarity between private and public actors. Is the expansion of transnational private rule making simply an evolution of more conventional forms of custom and jus mercatorum or does it depart from these forms of private rule-making? In the latter case is there a common denominator of current forms of transnational private rule-making? How does private rule making correlate with international and domestic public legal orders? Do they constitute separate private orderings? Do they complement, supplement or replace public legal orders? What is the combination between legal and non-legal norms? Not only these questions have theoretical relevance but they also shape important regulatory policy choices at the international level concerning legitimacy, compliance and enforcement of global private standards? Transnational private regulatory regimes – it is contended – do not represent an alternative to jus mercatorum since their functional focus is regulation driven by market failures rather than a set of prescriptions related to individual transactions between market participants. They integrate current public market regulation or contribute to the creation of new markets through market design. The multifarious forms of transnational private rule-making pose daunting questions concerning their origins, functions and scope. This article addresses the different forms of transnational private rule-making; it tries to examine their differences and the consequences for their normative foundations and policy objectives. After a brief historical overview, section I analyses transnational private regulation (TPR), and section II examines usages, customs and jura mercatorum. Section III presents a comparative assessment between TPR and custom. Section IV defines an agenda for future research and it is followed by the conclusion.

Transnational Private Regulation: Evidence from the Coffee Industry

Aims: The purpose of this paper is to analyse the self - coordination of private regulation and self regulation schemes in food industry to promote sustainability. Study Design: This study uses sustainable development to achieve a common goal for the business and public sectors. Different steering mechanisms and diversification emerge even though there is a need to achieve cohesion among them. Methodology: The study uses different theoretical viewpoints of regulatory governance, club theory and positioning following the methodology of theory triangulation. These theories and cohesion mechanisms will be discussed when the sustainability standards are analysed. The analysis is based on the evaluation of the emergence, implementation and enforcement of the best known certification schemes in the coffee industry. Place and Duration of Study: The empirical data of this study was collected in the international research project, ‘ Transnational private regulation and system level innovations in global food value chains’ at the Turku University of Applied Sciences from 2011 to 2014. Results: Positioning among customers is a very important marketing approach when there are several co mpeting certification schemes. The national aspects of consumer behaviour should be

A Comparative Analysis of Transnational Private Regulation: Legitimacy, Quality, Effectiveness and Enforcement

Transnational private regulation (TPR) is a growing phenomenon. It creates new markets and dissolves old ones. TPR contributes to the regulation of existing markets, it increases the protection of fundamental rights and it enables or disables communities to participate in global rule making. The standing of TPR and its role regulatory control continues to grow. TPR presents new characteristics departing from more conventional forms of domestic self-regulation. It reflects a transfer of regulatory power from the domestic to the transnational and from the public to the private sphere with significant distributional consequences. Such transfers modify but do not necessarily reduce the role of States especially in relation to standards’ implementation and enforcement. While there is a common core of similar features across regimes, the degree of sector specificity is high, determined by context-specific institutional and economic factors, different drivers and regulatory needs. The Report addresses the development of transnational private regulation in three macro-areas: financial markets, consumer protection and fundamental rights. It encompasses 11 case studies focusing on four dimensions: legitimacy, quality, effectiveness and enforcement. The 11 case study sectors are briefly outlined in Appendix 1. These case studies have been conducted in the context of the research project Transnational Private Regulation: Constitutional Foundations and Governance Design.

The Rise of Transnational Private Meta-Regulators

The emergence of transnational private regulation has also triggered the rise of private meta-regulation. Meta-regulation refers to the process through which a regulatory body oversees another regulatory body and sets standards for its activities, governance structure or performance. This article explains the emergence and functions of private meta-regulation by drawing on a comparative study of two transnational private meta-regulators: the Global Food Safety Initiative and the European Advertising Standards Alliance. By assessing the governance design of both meta-regulators, as well as the instruments and scope of meta-regulation, we argue that meta-regulation in this context is most prominently concerned with the bolstering of capacity, credibility and legitimacy of private regulatory regimes and convergence between such regimes.

The Rise of Transnational Private Meta-Regulators

In recent years scholars from various disciplines have turned their attention to transnational regimes of regulation that are chiefly developed outside state-driven frameworks. The rise of such “transnational private regulation” has also led to the emergence of private meta-regulation. The term ‘meta-regulation’ commonly refers to processes through which a regulatory body oversees another and sets standards for its activities or performance of regulation. In the public domain, meta-regulation has been associated with the devolution of regulatory activities by a statutory body to private actors with the view to enhance voluntary rule compliance, awareness of responsibilities among the regulated and reduce public enforcement costs. However, in the transnational private domain the rationale for meta-regulation appears to be a different one. We contend that meta-regulation in this domain is less concerned with the goal of enhancing rule compliance and efficiency in enforcement, but instead is more prominently concerned with the bolstering of the integrity, legitimacy and accountability of private regulatory regimes and the coordination between such regimes. To furnish this argument the paper develops a comparative analysis of two sectoral private meta-regulators involved in transnational private regulation: the Global Food Safety Initiative in the food industry and the European Advertising Standards Alliance in the advertising industry. These two organisations have developed guidelines, benchmarks and performance indicators for other private bodies involved in transnational regulatory activities. The comparative analysis is focused around four principled and interlinked questions: (i) What has driven the emergence of meta-regulation in the private regulatory domain?; (ii) What are the forms and functions of private meta-regulation?; (iii) What is its relationship with public regulation and regulators?; and (iv) How and to what extent does private meta-regulation contribute to the legitimization of transnational private regulation?The TBGI Project: Transnational initiatives to regulate business activities interact increasingly with each other and with official regulation, generating complex governance ensembles. Heterogeneous actors and institutions interact at multiple levels and in various ways, from mimicry and cooperation to competition and conflict. The TBGI Project investigates the forms, drivers, mechanisms, dynamics, outputs and impacts of transnational business governance interactions (TBGI) from diverse theoretical and methodological perspectives. It is funded by a Social Sciences and Humanities Research Council of Canada grant led by Professor Stepan Wood, Osgoode.