Transnational Private Regulation Research Articles

Measuring the Effectiveness of Transnational Private Regulation

Trans-national private regulation has become a prominent form of rulemaking in several domains, from advertising to financial services, food safety and environmental regulation, with alternate fortune so far. In some cases, private regulation emerges spontaneously, independently of any legislative or policy initiative. This report takes stock of the activities performed within the HIIL project on “Transnational private regimes – Constitutional Foundations and governance design”, and proposes a toolkit for the analysis of the effectiveness of private regulatory organizations from the standpoint of their members as well as society as a whole. The report aims to contribute to the current debate on the use of ex ante impact assessment and ex post evaluation of private regulatory schemes by academics, private regulatory organizations, non-governmental organizations and governments.

Fragmented or cohesive transnational private regulation of sustainability standards? A comparative study

AbstractLiterature on private regulation recognizes the proliferation of competing regulatory organizations and approaches in various industries. Studies analyzing why fragmentation arises so far focus on single‐case studies, the exploration of single variables, or variation in types of fragmentation. This article analyzes why in certain industries and for certain issues regulatory organizations proliferate, while in others a single regulatory organization emerges which covers the entire industry. Through a comparative case study of private regulation of sustainability standards in the forestry, clothing, IT‐electronics, and chemicals industries, we show how a combination of low industrial concentration, civil society involvement in governance, and stringent standards of a first‐moving regulator offer the strongest explanation for a fragmented private regulatory field, while high industrial concentration, business‐driven governance, and lenient standards of a first‐moving regulator lead to cohesive regulation.

The Architecture of Transnational Private Regulation

Conflicting interests among private actors constitute an important factor to explain why and how transnational private regulation has grown and the proliferation of standards and standard setting organizations that has followed. This essay provides a map of transnational regulatory space suggesting that the different levels are related to various governance responses to conflicts within the private sphere and between private and public actors. Three levels of the global regulatory space are considered: (1) the single global regulatory body, where interests are integrated into one organization, (2) the regime, in which multiple organizations operate, regulating within the same policy field, (3) multiple regimes often associated with different, often conflicting, policies that interplay cooperatively or competitively. In the last instance the conflict of interests translates into a conflict of norms. Unlike in the traditional multilevel governance literature, where ‘levels’ are primarily defined on the basis of a territorial metric, here the notion of regulatory space is functional and independent from the administrative boundaries of nation states. For the three levels, the choice of the key governance features are driven by the different forms of the relationship between regulators, regulatees and beneficiaries and how their conflicting interests are balanced at the organizational and/or regime level. Depending on how the interests of regulatees and beneficiaries are combined, different governance options will emerge: creating single or multiple regulators, defining the architecture of the whole regime, in particular the alternative between monopoly and plurality of private regulators, or creating independent regimes, each one representing the interests of a constituency with potentially policies’ interdependencies. The selection of the legal instruments, in particular the choice between contract and organization to coordinate conflicting interests is correlated to the level: organization law is more important in the first level while contract law becomes increasingly important moving up to the regime or inter-regime level. Two forms of governance are distinguished: micro-governance, operating primarily through organizations where judicial intervention by domestic courts is very limited; macro-governance, using transactional rather than organizational tools, deploying coordination mechanisms between organizations or regimes representing different interests (trade and environment, e-commerce and data protection, labour and consumer). In the latter case the role of domestic Courts increases to regulate conflicts and allocate ex post the regulatory space. The paper concludes arguing that the future of TPR and its effectiveness will depend on the choice among these different levels which will be partly driven by endogenous factors, and partly by exogenous legal and non legal factors, among which competition law is likely to play an important role.

One Step Forward or More Window-Dressing? A Legal Analysis of Recent CSR Initiatives in the Garment Industry in Bangladesh

The Bangladesh ready-made garment industry has recently been the scene of a number of major accidents, with the collapse of the Rana Plaza on 24 April 2013 as the deadliest garment-factory accident ever known. Under renewed international pressure for multinational corporations (MNCs) to take responsibility for working conditions in these factories, two initiatives have been adopted with the involvement of leading European and North-American brands. With these initiatives, the MNCs claim to improve their corporate social responsibility (CSR) vis-à-vis those factories. From a regulatory perspective, they represent cases of transnational private regulation (TPR). Although CSR and TPR are increasingly common, these initiatives have been received with mixed enthusiasm, as they exist in a legal vacuum raising questions about their legal status, legitimacy, implementation and compliance mechanisms. These questions will be addressed in this article about the Bangladesh initiatives, in order to ascertain whether they have the potential to contribute to safe working conditions in the Bangladeshi garment industry, or rather if they should be seen as window-dressing.

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

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

State and Knowledge Production: the Slow Development of Industrial Relations Field in China

The paper explores the professionalization process of Chinese social scientists interested in industrial relations. Content analysis of more than 7,000 publication records in two top Chinese-language academic journals during 1985-2011 suggests that the academic research on industrial relations in China has lagged behind rising labor problems. Additionally, IR research is less responsive to the state and transnational private regulation of labor standards. These general trends, however, differ between sociologists and management scholars. Sociologists are more likely to engage in IR research, especially on two important phenomena during China’s economic reform: those laid off by SOEs and migrant workers employed in private and foreign invested firms. In contrast, management scholars tend to examine motivational factors that improve team performance in semi-professional workplaces. I argue that an integration of both perspectives is important for the development of an IR field in China, especially given the recent state effort to establish stand-alone academic units devoted to IR research.

Supply chains, contractual governance and certification regimes

Contractual governance of the food supply chain is on the rise. In this paper we focus on a particular set of instruments for transnational governance of food supply chains: transnational contracts and agreements. Looking at transnational contracts as instruments for implementation of transnational private regulation, we compare different mechanisms for the enforcement of safety and sustainability standards in global food supply chains. We conclude that the regime of contractual remedies follows different logics from the ones of regulatory and certification regime. (1) The former aims at redressing the victim of the breach inducing compliance through a re-active approach; whereas the latter pro-actively tries to restore compliance with regulatory process in order to pursue regulatory objectives. (2) The former focuses mainly on products, the latter on process. (3) The former concentrates on individual transactions while the latter focuses on the interdependence of contractual relationships along the chain and creates collective governance mechanisms. This paper suggests that the combination of the two sets of remedies may reinforce coordination and cooperation along the chain, therefore improving the level of quality, safety or sustainability of certified production. A higher level of awareness about the impact of standards and certification on the contract rules on remedies can have other positive consequences: it may improve contract drafting, leading the parties to coordinate different remedial systems when addressing the consequences of the breach and the ones of certification remedies; it may help courts to better define the scope and preconditions of contractual remedies and their effects on transnational regulation; it may guide law makers and standard setting institutions, when providing principles, rules or guidance concerning the consequences of the breach within contracts and along the chain, particularly in the food sector. From this perspective, the current work conducted by Unidroit and Fao for the production of a Legal Guide on contract farming could represent an important opportunity to define the links between multiple remedial regimes in food chains.

International Regulatory Co-operation: Case Studies, Vol. 3: Transnational Private Regulation and Water Management

International Regulatory Co-operation: Case Studies, Vol. 3: Transnational Private Regulation and Water Management

Transnational private regulation and the transformation of labour rights organizations in emerging markets: new markets for labour support work in China

This article explores the emergence of transnational regimes of regulation governing labour standards and how these impact and articulate in China. Specifically, the article addresses how domestic non-governmental organizations (NGOs) in China communicate emergent regulatory norms and extend these into domestic domains, redefining how labour codes are developed and instantiated in local policy contexts and throughout the globalized value chains. It does so by adopting a qualitative case study approach to analyse how engagement with Corporate Social Responsibility (CSR) norms transforms labour-support organizations and their roles in labour negotiations, regulation and oversight. Using a case study approached focused in the Guangdong Province of China, the findings suggest that a transnational private regulation supports the development of local NGO activity and in turn transmits norms, modes of conduct and regulation that has a fundamental impact on how labour NGOs ensconce themselves and help transmit and construct regulatory practices that govern labour practices.

Gorillas in the closet? Public and private actors in the enforcement of transnational private regulation

AbstractThis paper examines to what extent the background presence of state regulatory capacity – at times referred to as the “regulatory gorilla in the closet” – is a necessary precondition for the effective enforcement of transnational private regulation. By drawing on regulatory regimes in the areas of advertising and food safety, it identifies conditions under which (the potential of) public regulatory intervention can bolster the capacity of private actors to enforce transnational private regulation. These involve the overlap between norms, objectives, and interests of public and private regulation; the institutional design of regulatory enforcement; compliance with due process standards; and information management and data sharing. The paper argues that while public intervention remains important for the effective enforcement of transnational private regulation, governmental actors – both national and international – should create the necessary preconditions to strengthen private regulatory enforcement, as it can also enhance their own regulatory capacity, in particular, in transnational contexts.

Transnational Private Regulation in the Advertising Industry - Case Study Report for the Research Project Constitutional Foundations of Transnational Private Regulation

This report presents the case study on transnational private regulation in the advertising industry as part of the research project ‘Private Transnational Regulation: Constitutional Foundations and Governance Design,’ funded by the Hague Institute for the Internationalization of Law (HiiL). The principle aim of this case study was to map the emergence and governance of existing transnational private regulatory regimes in the advertising industry and evaluate their success and failures in terms of legitimacy, enforcement, quality and effectiveness. To this end, the rapport builds on the General Case Study Template designed by the coordinators of the research project and engages in empirical analysis of existing regulatory regimes in the advertising industry.

The Role of Certification in the Enforcement of Transnational Private Regulation

This paper sets out the relevance of certification for the enforcement of transnational private regulation. It discusses the function of certification, offers a typology of certification schemes and analyses its relationship with regulatory enforcement. To illustrate these elements, the Chapter draws on three individual certification regimes, namely those administered by the Forest Stewardship Council, GlobalG.A.P, and the Green Building Council. In conclusion, the Chapter offers valuable insights on the benefits and risks associated with the use of certification as a means of regulatory enforcement. The paper forms part of a collection of texts to be published in a Casebook detailing the enforcement of transnational private regulation.

Distributional Consequences of Transnational Private Regulation: Institutional Complementarity as a Structural Source of Power in Global Product and Financial Markets

Transnational regulations, often established by private bodies, play a large and important role in the international political economy. This paper makes two contributions to the literature on transnational regulation. First, governments and international organization often legitimate the delegation of regulatory authority to transnational private bodies with efficiency gains. It is rare, however, that the alleged gains are empirically examined, which requires a comparative analysis vis-a-vis other regulatory regimes. I contrast rule-making for manufactured goods and financial reporting, where a single transnational private body is the clear focal point for rule-making at the international level, with purely domestic regulatory regimes and the prior attempts to establish international product and financial standards through negotiations between governments or public regulators. I show that the shift to transnational (private) regulation indeed brought real, substantial gains in the effectiveness and efficiency of rule-making. Second, I scrutinize the distributional consequences of transnational private regulation, which I submit are closely related to the efficiency gains. Here, the existing literature focuses on the distribution of the financial costs and benefits of specific rules among those who are the targets of such rules, given a particular regulatory regime. Institutional complementarity theory provides a powerful analytical framework for examining such distributional effects. In this paper, I push the framework further to examine the distributional consequences of the shift to transnational private regulation. I argue that this shift has persistent structural consequences for the relative power of a broad range of stakeholders (both within and across countries) and thus for their regulatory capabilities.

The Politics of Code Enforcement and Implementation in Vietnam’s Apparel and Footwear Factories

Summary What happens when transnational private regulation of labor standards is put into practice on the factory floor? This article addresses this question with field research data on Vietnam’s apparel and footwear industries. The Vietnamese case shows that code enforcement and implementation are highly political processes fraught with conflicts and attempts at evasion. The consequences, moreover, contradict the conventional wisdom of low regulatory effectiveness; heightened legal awareness and strengthened labor law enforcement may result from these processes. This study illustrates two mechanisms (conflict and ritualistic compliance) that can raise the effectiveness of private regulation.

The Increasing Influence of New Instruments of Regulation in International Arbitration and the Resource to Arbitration in Transnational Private Regulation

The Increasing Influence of New Instruments of Regulation in International Arbitration and the Resource to Arbitration in Transnational Private Regulation

‘In a Settled Country, Everyone Must Eat’: Four Questions About Transnational Private Regulation, Migration, and Migrant Work

First, I would like to acknowledge where this paper was presented and where the work of revising it into an article took place. I would like to acknowledge the territory, which is not just Toronto, Ontario, Canada, but also Tkaronto, a Mohawk or Kaniekehaka word (as are Ontario and Canada). This word is from one of the languages of the Six Nations that comprise the Haudenosaunee Confederacy (People of the Longhouse), perhaps better known in this symposium by the French colonial name of Iroquois. Toronto and its surrounding territory are traditionally of the Huron-Wendat people, the Seneca Nation of the Haudenosaunee, and with title most recently lying with the Mississaugas of New Credit (Anishinabe). I would like to acknowledge the territory and thank these hosts, as well as the conference organizers for their generous invitation to participate in these discussions on transnational private regulation (TPR).

Transnational Private Regulation and the Changing Media of Rules

The growth of transnational private regulation has involved a great many types of changes, including changes in the types of actors that make rules, in the degree of formality of rules, and in the spatial boundaries of rules. One type of change that merits more focused attention is in the media of rules. Historically a major shift was from rules that were communicated orally, to rules that were inscribed in physical objects. Changes in these objects, from stone or clay to paper and print media were also consequential, enabling rules to be created, preserved and disseminated in new ways. This shift was closely associated with the growth of public authority and its accompanying artefacts such as written constitutions, official documents, and paper money. Today further technological changes in information and communications media are widely recognized as associated with structural transformations of all types of institutions. These technologies facilitate the use of networks and transnational supply chains by business. They stimulate the growth of global social movements and undermine state censorship. They lead to experiments with e-Government and threaten the business models of newspapers and the music industry. But what exactly is the significance of these technological changes for the creation, preservation and dissemination of rules, and how do these changes in the media of rules interact with the growth of transnational private regulation?

Beyond Taxonomies of Private Authority in Transnational Regulation*

The emergence of private actors in setting standards and sometimes contributing to monitoring and enforcement functions is a key feature of contemporary transnational regulation. Transnational private regulation fills significant gaps in governmental and intergovernmental capacity, offering the potential of public goods which both provide some coordination for global markets and address some of the externalities associated with globalization such as environmental degradation and exploitation of workers.

Private Regulation and Industrial Organisation: The Network Approach

The paper investigates the relation between private transnational regulation through standards and the formation of transnational networks. More particularly, focusing on standards compliance, the analysis is intended to test whether private regulation induces the existence of networks able to: (a) enhance the efficiency and effectiveness of compliance coordination in accordance with a “whole-chain supply approach” to safety regulation; (b) contribute to monitoring along the chain, even when this function is in different ways performed by other players (public authorities, independent certifiers, etc.); (c) possibly and eventually redistribute costs of compliance along the chain. Starting from the observation of contractual practices, mainly within supply chains subject to international certification schemes (for example in the case of food supply chains), different models of networks will be compared depending on: (i) the allocation of monitoring and sanctioning powers (these being assigned to producers, traders or independent actors); (ii) the means of monitoring (peer monitoring v. more formalised monitoring duties); (iii) the types of sanctions (particularly, label/certificate suspension or revocation); (iv) the structure of the network (as based on merely linked contracts or on a mix of contractual and organizational relations).

Transnational Private Regulation in Professional Services

The objective of this study is to map the landscape of transnational private regulation (TPR) in professional services. Transnational private regulation in professional services examines the emerging body of rules created by private actors in a manner that leapfrogs national borders. Driven by the forces of globalization of business, these actors aim to offer handy solutions to global professionals through rule-making activities that take place ‘in the shadow of the law’ and the traditional forms of State regulatory making. Domestic self-regulated professional associations typically draw their legitimacy by an act transferring powers from public bodies to such associations. However, transnational professional associations claim legitimacy through the participation of domestic private bodies. This ‘derived legitimacy,’ which partly is the result of the willingness on the side of domestic professional associations of better serving global business, can be highly problematic, notably when it comes to enforcement. This study examines TPR in professional services through the use of four criteria: legitimacy, effectiveness, enforcement, quality.