A European Century After All?

• Author: Hernandez, Jorge Gonzalez-Gallarza

The Brussels Effect: How the European Union Rules the World By Anu Bradford 404 pp.; Oxford University Press, 2020

As the shape of regulation goes, the United States and the European Union aren't all that different. Both are customs unions with a single trade policy, with unimpeded internal commerce hinging on a large degree of internal regulatory harmonization. The extent to which member states can autonomously enact regulations is limited in both unions: by the U.S. government's constitutional power to regulate interstate commerce and by foundational treaties in the EU that codify the so-called "single market."

From that similar foundation, however, the two unions have followed very different pathways over the past half century. In the United States, state-level regulation has grown increasingly disharmonious. Intervention-friendly states such as California are blazing regulatory trails in environmental, labor, and digital privacy regulation through what has come to be called the "California effect" (a term coined by University of California, Berkeley economist David Vogel in a 1999 paper), while other states have adopted a light regulatory touch in order to attract jobs and investment in a strategy often called (appropriately or not) the "Delaware effect." Meanwhile, the EU has relentlessly pushed for increasingly harmonious regulation among its member countries.

Uniform standards are a precondition to any definition of a "single market" but the EU has gone beyond harmonization to stringency. At times, this has merely reflected a catch-up with individual member states whose tightening of regulations impeded trade flows--"upward harmonization" is the EU term of art--but more often stringent standards have been Brussel's initiative.

The building of this "European regulatory state"--to borrow European University Institute political theorist Giandomenico Majone's term--has been a political quest for higher standards in everything from food and product safety to digital privacy, aided by an opaque rulemaking process that fast-tracks them into law with nothing like the U.S. reliance on benefit-cost analysis and trust in the market's potential to correct its own failures. In the EU, the precautionary principle reigns: the sole prospect of market failure is enough grounds for ambitious rules whose costs policymakers often care not to tally up in advance. (See "The Paralyzing Principle," Winter 2002-2003.)

The EU's regulatory zeal has been egged...