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financial regulatory developments for two reasons:
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a conceptualization of market power
that emphasizes market size and the concentration of financial activity; and statist
assumptions that eliminate the possibility that supranational developments may transform
the international political economy.
Since the scale of national financial services industries in Europe does not rival
those in the US and a single European financial market remains still very much a goal,
analysts too readily dismiss the potential relative market power of the EU in its
interactions with US financial regulators. In so doing, they overlook the possibility that
the degree to which foreign firms participate in and rely on a regulator’s jurisdiction, not
just size or levels of financial activity, may be a source of relative market power. US
firms operating in Europe must increasingly comply with a single supranational
regulatory regime. This regional institutional reform is what has changed in the EU and
empowered it in its dealings with the US.
Two EU developments were chiefly responsible for shifting financial regulation
from the national to the European level and simultaneously netting US financial firms
under what is quickly becoming a single authority. The Financial Services Action Plan
(FSAP), proposed in May 1999 and endorsed by the European Council in March 2000, is
the almost complete list of the new regulations and regulatory principles with which
European and US firms operating in the EU will have to comply. The second is the
Lamfalussy Process, the new formal decision-making procedures that are expediting the
creation of new regulations and facilitating their implementation and enforcement. Both
EU initiatives, adopted to achieve internal goals and improve Europe’s international
competitiveness, have created a soon-to-be realized single regulatory regime that will
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Simmons (2001) is a leading example.
Convention