4
past. Transatlantic relations in financial services, in short, have entered a new stage
characterized by mutual accommodations.
What accounts for the cooperation in financial services at a moment when
transatlantic relations in general are under unusual stress? I argue that the “EU-US
Financial Markets Regulatory Dialogue” launched in May 2002,
2
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. The
primary cause of the new more balanced relations is the creation of an EU regulatory
system for financial services, which is transferring authority from the national to the
European level. This development, deeply rooted in the politics of regional integration
and itself a spillover of the euro’s introduction, has increased the relative market power
of EU regulators and thereby reshaped transatlantic relations. The more accommodative
US regulatory stance comes in reaction to pressure from American financial services
companies that operated in Europe and had much at stake in shape of the embryonic EU
financial regulatory regime. I thus emphasize how the construction of a European-level
regulatory regime triggered new private sector political behavior and US regulatory
positions and altered transatlantic relations in financial services.
This more balanced transatlantic relationship represents a curious turn. It is
difficult to find in the current scholarship on cross-border financial integration even a hint
that European-US financial relations were about to be transformed in this way, let alone
an explanation for it. Recent accounts expect continued US dominance in global
2
The Dialogue was part of the “Positive Economic Agenda” introduced at the US-EU Summit in May
2002.
Convention