Introduction
The study of regulation, once considered little more than arcane by political scientists, is
quickly becoming one of the most important areas of international political economy. Two
decades of domestic and international economic liberalization have transformed the character of
state/market relationships, placing regulation at the center of economic governance. The
domestic liberalization of sectors previously characterized by national champions and heavy
government intervention has given way to a governance philosophy based on arms-length
relationships between public regulators and private enterprise. This transformation in internal
market regulation is no longer purely a domestic matter, as rules set at home frequently affect
foreign jurisdictions. Likewise, international market liberalization – the reduction or elimination
of tariffs and formal dismantling of barriers for foreign direct investment – has transformed the
international competitive landscape. Where factor endowments and international trade rules used
to be decisive, domestic and international market regulation increasingly determine the terms of
trade as well as corporate and national economic fortunes. Who successfully exports domestic
regulation and who sets international market rules is thus not only an important question for
academics, but is also a critical concern of business leaders, consumer advocates, and
policymakers.
Perhaps because it began liberalizing industries before most other countries, or perhaps
because of the size of its domestic economy, the United States used to enjoy a decisive edge in
international market regulation. “Twenty years ago, if you designed something to U.S. standards
you could pretty much sell it all over the world. Now the shoe’s on the other foot,” says a
Brussels-based lobbyist for a leading U.S. manufacturing company.
1
Maja Wessels, a lobbyist for United Technology Corp., as quoted in Brandon Mitchener, “Increasingly, Rules of
Global Economy are set in Brussels,” The Wall Street Journal, 23 April 2002, A1..
1
Convention