The (limited) role of regulatory harmonization in international goods and services markets

Journal of International Economic Law

Volumn 2, Issue 1, 1999, Pages 49-69

  Sykes, Alan O ^a  

^a UNIVERSITY OF CHICAGO LAW SCHOOL   (United States)

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[No Author keywords available]

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EID: 0040810951     PISSN: 13693034     EISSN: None     Source Type: Journal    
DOI: 10.1093/jiel/2.1.49     Document Type: Article

References (17)

1. Throughout this paper, I use the term 'regulation' as it is used in the WTO/GATT agreements, to refer to policies promulgated by governments with which compliance is mandatory. 'Standards', with which compliance is voluntary and which may result from either government or private sector activity, are to be distinguished. Nevertheless, much of what I have to say about regulations can also be applied to standards issues. For a more complete discussion, see A. O. Sykes, Product Standards for Internationally Integrated Goods Markets (Brookings 1995).
2. Indeed, the elimination of regulatory barriers to trade may often generate greater welfare gains than the elimination of other trade barriers. A. O. Sykes, 'Regulatory Protectionism and the Law of International Trade', Univ. of Chicago L. Rev. (forthcoming).
3. D. Leebron, 'Lying Down with Procrustes: An Analysis of Harmonization Claims', in J. Bhagwati and R. Hudec (eds), Fair Trade and Harmonization: Prerequisites for Free Trade? Vol. 1 (MIT Press: 1996), 41-117, at 43. Here, 'harmonization' is used in a strong sense to capture international agreements that would homogenize regulatory policy and largely eliminate national differences.
4. Much of the literature on these issues nevertheless reaches a conclusion similar to mine - that international harmonization is neither necessary nor desirable to avoid undue laxity in environmental, labor or competition policies. See generally J. Bhagwati and R. Hudec (eds), Fair Trade and Harmonization: Prerequisites for Free Trade?, Vols. 1-2 (MIT Press: 1996), especially the papers by Bhagwati and Srinivasan, and by Brown, Deardorff, and Stern; R. L. Revesz, 'Rehabilitating Interstate Competition: Rethinking the "Race to the Bottom" Rationale for Federal Environmental Regulation', 67 N.Y.U. L. Rev. 1210 (1992). For a contrary view, see D. C. Esty, 'Revitalizing Environmental Federalism', 95 Mich. L. Rev. 570 (1996).
5. Much of the literature on these issues nevertheless reaches a conclusion similar to mine - that international harmonization is neither necessary nor desirable to avoid undue laxity in environmental, labor or competition policies. See generally J. Bhagwati and R. Hudec (eds), Fair Trade and Harmonization: Prerequisites for Free Trade?, Vols. 1-2 (MIT Press: 1996), especially the papers by Bhagwati and Srinivasan, and by Brown, Deardorff, and Stern; R. L. Revesz, 'Rehabilitating Interstate Competition: Rethinking the "Race to the Bottom" Rationale for Federal Environmental Regulation', 67 N.Y.U. L. Rev. 1210 (1992). For a contrary view, see D. C. Esty, 'Revitalizing Environmental Federalism', 95 Mich. L. Rev. 570 (1996).
6. Much of the literature on these issues nevertheless reaches a conclusion similar to mine - that international harmonization is neither necessary nor desirable to avoid undue laxity in environmental, labor or competition policies. See generally J. Bhagwati and R. Hudec (eds), Fair Trade and Harmonization: Prerequisites for Free Trade?, Vols. 1-2 (MIT Press: 1996), especially the papers by Bhagwati and Srinivasan, and by Brown, Deardorff, and Stern; R. L. Revesz, 'Rehabilitating Interstate Competition: Rethinking the "Race to the Bottom" Rationale for Federal Environmental Regulation', 67 N.Y.U. L. Rev. 1210 (1992). For a contrary view, see D. C. Esty, 'Revitalizing Environmental Federalism', 95 Mich. L. Rev. 570 (1996).
7. A. Krueger has recently suggested that the continued adherence of the United States to the imperial system of measurement is the most important standards-related problem for American competitiveness. See A. Krueger, Testimony Before the Subcommittee on Technology and Competitiveness, U.S. House of Representatives Committee on Science, Space and Technology (4 March 1992), 102 Congress, 2nd session.
8. See, e.g., S. Peltzman, 'Toward a More General Theory of Regulation', 19 J. L. & Econ. 211 (1976); G. Stigler, 'The Theory of Economic Regulation', 2 Bell J. Econ. & Man. Sci. 3 (1971).
9. See, e.g., S. Peltzman, 'Toward a More General Theory of Regulation', 19 J. L. & Econ. 211 (1976); G. Stigler, 'The Theory of Economic Regulation', 2 Bell J. Econ. & Man. Sci. 3 (1971).
10. An extended review of each of the above-mentioned legal systems may be found in A. O. Sykes, above, ch. 4.
11. Each of these examples is drawn from a modern case before the European Court of Justice - see A. O. Sykes, above, 19-21.
12. Id. at 58-60.
13. Id. at 89.
14. See generally R. J. Herring & R. E. Litan, Financial Regulation in the Global Economy (Brookings: 1995).
15. A. O. Sykes, above at 89.
16. In this respect, international standards organizations can facilitate the attainment of what some have termed 'economies of scale' in regulation. See D. C. Esty, 'Revitalizing Environmental Federalism', 95 Mich. L. Rev. 570, 614-617.
17. To be sure, Europe has undertaken some efforts at harmonization as defined here under the 'old approach' to the approximation of national regulations. But successful efforts under the old approach were few and it was ultimately abandoned in favor of the 'new approach' and its 'essential requirements' directives. In the terminology of this paper, the 'new approach' is a blend between the reference to international standards principle of policed decentralization, and mutual recognition. For further discussion of the European experience, see A. O. Sykes, above at 87-92, and sources cited therein.