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“Market Power without a Single Market:
The New Transatlantic Relations in Financial Services”
Elliot Posner
George Washington University
ABSTRACT
This paper argues that the “EU-US Financial Markets Regulatory Dialogue” of
May 2002, the Norwalk Agreement of September 2002 and other related new cooperative
efforts are products of a fundamental shift in the relative market power of US and
European regulators. Contrary to standard approaches emphasizing US financial
dominance, the primary cause of the new more balanced transatlantic relations is the
creation of an EU regulatory system for financial services, which is transferring authority
from the national to the European level. This regional development has increased the
relative market power of EU regulators. The more accommodative US regulatory stance
came in reaction to pressure from American companies that operated in Europe and had
much at stake in the shape of new EU financial regulations. The construction of a
European-level regulatory regime thus triggered new private sector political behavior and
US regulatory positions and altered transatlantic relations in financial services. The
argument challenges statist assumptions and standard conceptions of market power.
Convention