closely intertwined with international regulatory dynamics. It was America’s conscious export of
SEC-style securities regulation and its pushing for regulatory cooperation that, paradoxically,
played an important catalytic role in European debates.
The two hypotheses capturing the essence of the effective market power argument –
stressing domestic regulatory capacity – fare better. In each case, reinforced by considerable
within-case variation, high regulatory capacity over a sizeable market is associated with effective
market power and significant international regulatory influence. Jurisdictions that successfully
exported domestic rules and standards – the U.S. in securities, the EU recently in securities, and
the EU in personal information – had domestic regulatory regimes characterized by high levels of
regulatory expertise, regulatory coherence, and statutory authority that included the ability to
deny access to the domestic market. In contrast, instances of limited international influence – the
U.S. in personal information and Europe in securities markets until fairly recently – have in
common relatively low degrees of regulatory capacity stemming from comparatively low levels
of expertise, a high degree of regulatory fragmentation, and insufficient statutory authority.
Likewise, the claim – captured by our second hypothesis – that effective market power
rooted in domestic regulatory capacity can overcome a size disadvantage or tip the balance when
there is relative size parity, is supported by the evidence. A relative transatlantic balance now
characterizes regulatory dynamics in international securities markets – symbolized by the new
“EU-US Financial Markets Regulatory Dialogue” launched at the 2002 EU/US summit – despite
continuing U.S. market dominance. Similarly, despite the U.S.’s sizably larger market for
information services, Europe has been able to dominate the international debate on data privacy
protection. The evidence suggests that large markets lacking regulatory capacity may be forced
into the position to merely resist change, as in the case of the Safe Harbor agreement between the
U.S. and Europe, unable to shape a proactive international regulatory alternative. Such politics of
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