Anu Bradford - The Brussels Effect: How the European Union Rules the World
Summary
TLDRAnu Bradford, a professor at Columbia Law School, discusses the 'Brussels Effect' in an IAEA discussion, highlighting the EU's significant influence on global regulations. Despite perceptions of EU decline, Bradford illustrates how the EU's regulatory power shapes global practices across various industries. She addresses criticisms of the Brussels Effect, including concerns over innovation, protectionism, and regulatory imperialism, and speculates on the future of EU regulatory power post-Brexit.
Takeaways
- đ Anu Bradford discusses the 'Brussels Effect', which refers to the European Union's ability to regulate the global marketplace through its large and wealthy market.
- đ The EU's regulatory influence extends beyond its borders due to global companies complying with EU regulations to access its market and to streamline their operations worldwide.
- đ Examples of the Brussels Effect include the GDPR's impact on global data privacy policies and European definitions of hate speech influencing content moderation on American tech platforms.
- đą The discussion highlights how European regulations affect global industries, including technology, agriculture, and manufacturing.
- đ€ Bradford questions why there isn't a 'Washington Effect' or 'Beijing Effect', suggesting that regulatory power requires not just a large market but also sophisticated regulatory institutions and political will.
- đȘđș The EU's regulatory power is contrasted with the U.S.'s hesitance to intervene in markets and China's growing but not yet fully realized regulatory capacity.
- đĄ The talk addresses criticisms of the Brussels Effect, including concerns about regulation's cost, its impact on innovation, and accusations of protectionism.
- đ The potential for the Brussels Effect to spread protectionist policies is a concern, as other countries may mimic the EU's regulatory strategies.
- đŹđ§ Brexit's impact on the Brussels Effect is debated, with the potential for the EU to become more stringent in regulations without the UK's pro-market influence.
- âł The future of the Brussels Effect is uncertain, with considerations of economic power, regulatory capacity, and the evolving political landscape influencing itsæç»æ§ and scope.
Q & A
What is the 'Brussels Effect' as discussed by Anu Bradford?
-The 'Brussels Effect' refers to the European Union's unilateral ability to regulate the global marketplace due to its large and wealthy consumer market. Companies often comply with EU regulations not only within the EU but also extend these regulations globally to avoid the cost of complying with multiple regulatory regimes.
How does the EU's GDPR influence global companies like Google and Apple?
-Global companies such as Google and Apple follow the European General Data Protection Regulation (GDPR) for their privacy policies, not only when dealing with European data subjects but across the world, demonstrating the EU's regulatory influence on global practices.
Why does the EU's regulatory power extend beyond its borders?
-The EU's regulatory power extends beyond its borders because companies often find it more efficient to apply EU regulations globally rather than maintain separate standards for different markets, thus transplanting European regulations worldwide.
What are the necessary conditions for a large market to have regulatory influence like the EU, according to Anu Bradford?
-According to Anu Bradford, a large market needs to have not only the size but also the regulatory institutions and the political will to deploy that capacity in order to have regulatory influence like the EU.
How does Anu Bradford respond to the criticism that EU regulations are costly and deter innovation?
-Anu Bradford acknowledges that some regulations may be costly and dampen innovation, but she also points out that regulation can lead to more efficient and lower-cost products. She argues that the relationship between regulation and innovation is more nuanced than often thought.
What is Anu Bradford's view on the criticism that the EU targets American tech companies out of protectionism?
-Bradford counters this by noting that often it's American companies themselves that initiate complaints against their peers in the EU, and that EU actions have benefited other American companies. She suggests that the EU's actions are not necessarily driven by protectionism.
What is the potential risk if the EU were to use the 'Brussels Effect' as a tool for protectionism?
-If the EU uses the 'Brussels Effect' for protectionism, it could lead to a global spread of protectionist measures, with other countries copying the EU's approach and potentially hindering global trade and innovation.
How does Anu Bradford address the criticism that the 'Brussels Effect' is a form of regulatory imperialism?
-Bradford argues that the EU is only regulating its own market, which it has the sovereign right to do, and that companies choose to extend these regulations globally for efficiency. She also suggests that in some cases, EU regulations might be offsetting deficiencies in other countries' democratic processes.
What is the impact of Brexit on the 'Brussels Effect', as discussed by Anu Bradford?
-Anu Bradford suggests that Brexit might not undermine the 'Brussels Effect' as much as it underscores it. The UK, despite leaving the EU, will still be significantly influenced by EU regulations because of the EU's importance as a market for UK exports.
How does Anu Bradford foresee the future of the 'Brussels Effect' in relation to the rise of other economic powers like China?
-Bradford predicts that the 'Brussels Effect' may outlast the EU's economic power due to the high GDP per capita being a better predictor of regulatory willingness and ability. She suggests that China's regulatory influence may take longer to materialize due to its focus on economic growth over regulation.
Outlines
đ Opening Remarks and Introduction to the Brussels Effect
The video begins with Barry Colfer, the director of research at the IIA, welcoming viewers to a discussion on the Brussels Effect with Anu Bradford, a professor at Columbia Law School. They acknowledge the ongoing crisis in Ukraine and its impact on the global community. Professor Bradford is introduced as an expert in international trade law, EU law, and competition law. She has written 'The Brussels Effect', which challenges the notion that the EU is a declining power. Instead, she argues that the EU significantly influences global regulations, affecting companies worldwide, including tech giants like Google and Apple, which adhere to GDPR regardless of location. The discussion is set to cover the EU's regulatory power and its global impact.
đ The Phenomenon of the Brussels Effect
Anu Bradford explains the concept of the Brussels Effect, which describes the EU's ability to unilaterally regulate the global marketplace. The EU's large consumer market compels global companies to comply with its regulations, often extending these regulations worldwide to avoid the costs of multiple regulatory compliances. This phenomenon is not limited to tech; it influences various sectors, including agriculture, manufacturing, and more. The EU's regulatory power stems from its market size, sophisticated regulatory institutions, and the political will to use them. In contrast, other large markets like the US and China either lack the regulatory capacity or the political will to exert similar influence.
đ Criticisms and Considerations of the Brussels Effect
The discussion moves to common criticisms of the Brussels Effect. Critics argue that EU regulations are costly and stifle innovation, favoring consumer satisfaction over disruptive innovation. However, Bradford counters that some regulations, like those promoting energy efficiency, can also lead to cost-effective products. Another criticism is that the EU targets American tech companies out of protectionist motives, but Bradford points out that many complaints originate from American companies themselves. Lastly, there's the political critique of 'regulatory imperialism', where the EU is seen as imposing its regulatory choices on others. Bradford argues that the EU is merely regulating its own market, and it's the global companies' decision to extend these regulations worldwide.
đȘđș The Future of the Brussels Effect and Brexit's Impact
Bradford contemplates the future of the Brussels Effect, suggesting that the EU's regulatory power may outlast its economic power due to high GDP per capita driving regulatory demand. She also addresses Brexit, arguing that while the UK's departure may reduce the EU's market size and regulatory capacity, it could also lead to stricter regulations as pro-market UK influence is lost. Post-Brexit, the UK remains a 'rule taker' rather than a 'rule maker', still subject to EU regulations due to the EU's importance as a trading partner. This dynamic, she suggests, undermines the UK's promise of regulatory sovereignty.
Mindmap
Keywords
đĄBrussels Effect
đĄGDPR
đĄRegulatory Power
đĄMarket Incentives
đĄGlobal Companies
đĄEU Law
đĄProtectionism
đĄRegulatory Capacity
đĄPolitical Will
đĄStrategic Autonomy
đĄBrexit
Highlights
Introduction of the speaker, Anu Bradford, and her expertise in international trade law, EU law, and international competition law.
Recognition of the ongoing crisis in Ukraine and its impact on the global community.
Discussion on the concept of the 'Brussels Effect' and how the European Union regulates the global marketplace.
Examples of the EU's influence on global companies, such as GDPR's impact on privacy policies worldwide.
The EU's regulatory power extending beyond its borders due to the size of its market and the compliance of global companies.
Comparison of the EU's regulatory influence with that of the US and China, highlighting the necessity of market size, regulatory capacity, and political will.
Critique of the 'Brussels Effect' as being costly and potentially deterring innovation.
Argument that regulation can also promote competition and efficiency, contrary to the common belief that it stifles innovation.
Criticism of the EU's regulatory approach as a form of protectionism, particularly against American tech companies.
Discussion on the potential for the 'Brussels Effect' to be used as a tool for protectionism and the risks associated with it.
Concerns about the EU's regulatory power being seen as a form of 'regulatory imperialism', imposing European preferences on the rest of the world.
The role of Brexit in potentially undermining the 'Brussels Effect' and the continued influence of EU regulations on the UK.
The future of the 'Brussels Effect' and whether it will persist in the face of growing regulatory power in other regions.
The impact of Brexit on the UK's ability to influence EU regulations and the consequences of being a 'rule taker' rather than a 'rule maker'.
Conclusion on the enduring nature of the 'Brussels Effect' despite Brexit and the limitations it places on the UK's regulatory sovereignty.
Transcripts
[Music]
good afternoon everyone and i'm very
pleased to welcome you to this timely
iaea discussion my name is barry colfer
and i'm the director of research here at
the iia
we're delighted to be joined today by
anu bradford
henry l moses professor of law and
international organizations at columbia
law school
who's been generous enough to take time
out of her busy schedule to speak with
us
we host this meeting whilst being highly
conscious of the rapidly deteriorating
situation in ukraine and in some ways
i wonder if we should be talking about
anything other than this situation to
our east
it's not for today but we recognize the
situation and we think of those who are
suffering
professor bradford will speak to us for
about 20 minutes and then we'll go to
questions and answers with you our
audience
you will be able to join the discussion
using the q a function on zoom which you
should see on your screen please feel
free to send questions in throughout the
session as they occur to you and we'll
come to them once professor bradford has
finished her presentation
a reminder that today's presentation and
q a are both on the record
please also feel free to join the
discussion on twitter using the handle
at iiea
so
to introduce our speaker
anu bradford's research focuses on
international trade law european union
law and compare of an international
competition law
anu holds an sjd and llm from harvard
law school and a law degree from the
university of helsinki
prior to her academic career she
practiced competition and eu law in
brussels and was an advisor at the
finnish parliament and at the european
parliament professor bradford is the
author of the brussels effect how the
european union rules the world
and is currently working on her
forthcoming book entitled the battle for
the soul of the global internet
we're really delighted that you can be
with us today professor bradford and the
floor is yours
thank you so much barry and good
afternoon everyone i am delighted to
share this conversation with you and let
me also
add
my own uh thoughts uh
for reason and peace to to prevail i'm
extremely concerned about the events
unfolding i'm watching them from the
united states none of us are insulated
from them
so uh uh let me just recognize that and
uh it is part of when we discuss with
talking about one element of power today
but power comes in many forms and i did
not think that we would need to be
focusing as much on military power as we
need to be focusing on today but um i do
want to talk about a different type of
power today which is regulatory power
and let me first uh mention maybe why i
wrote the book called the brussels
effect how the european union rules the
world
and it was really my response to this
conversation that was increasingly
negative about the europe's role in the
world the idea that the european union
is inevitably a declining power
a a past power that has little ability
to shape the affairs of the world today
because that is not the kind of european
union that i encounter daily in my
research and teaching
so let me give you a few examples of
where we see the european union uh
exercising a tremendous global influence
so if we start from here in the united
states where i'm looking at the world
today and we go to silicon valley west
coast of the united states i think some
of the most powerful companies that are
headquartered in europe most of them in
dublin but that really originate from
silicon valley and operate across the
world
if you look at the privacy policies
of our companies such as google or apple
or facebook or microsoft they are
following the european general data
protection regulation the gdpr not only
when they are dealing with their data
users uh in data subjects in europe but
across the world
and if we stay within the technology
industry and think about for instance
the uh the hate speech so the kind of
speech content that these platforms are
taking down from their platforms they
are not looking at the first amendment
of u.s constitution but they are looking
at european definition of hate speech
and by day we are talking about facebook
so meta these days we're talking about
youtube uh we're talking about twitter
so american companies again getting
their cues from the european regulators
and this is not just the question of
american companies or the technology
industry
we also see the european law shape how
timber is harvested in indonesia what
kind of pesticides are used by farmers
are in africa
what kind of facilities chinese dairy
factories install in those factories
what kind of chemicals japanese toy
manufacturers use when manufacturing
toys
so these are really examples of the
european regulations shaping what we are
producing and what we are consuming
so these are examples of a phenomenon
that i have called the brussels effect
and by the brussels effect i i refer to
the european union's unilateral ability
to regulate the global marketplace so
the eu is one of the largest and
wealthiest consumer markets in the world
and there are very few global companies
that can afford not to trade uh in the
eu
so these companies need to comply with
european regulations as the price for
accessing the 450 million also
relatively wealthy consumers
that's not surprising
where it gets interesting that often
these companies conclude that it is in
their interest to extend the european
regulations across their global
production and they they they global uh
services and their global conduct
because they want to avoid the cost of
complying with multiple different
regulatory regimes in different places
so all the eu needs to do
is regulate the single market it is then
the global companies and they market
incentives that transplant the european
regulations across the world
so this is what i call influence and
what i call an element of power it is a
certain kind of power and part of the
book that i wrote that the conversation
was really to uh invite a discussion of
different forms of power so that we
cannot make a blanket assessment that
the european union is weak in some areas
european union is weak
today when dealing with ukraine european
union is operating on the territory
where it is substantially weaker than
when it operates in the territory where
it has the power and it can rely on the
markets to actually externalize that
power
um so that kind of power also matters it
does affect us every day everywhere in
the world it affects the food we eat the
air we breathe and the products we
produce and consume and to me that is
also influence and relevance and that is
one form of important power
so let me maybe now ask the question why
do we talk about the brussels effect and
north washington effect or beijing
effect
because european union is certainly not
the only large market in the world
so why do we then see europe have this
power because ultimately any large
economy could potentially have this
power if you have costa rica and you
decide to now be very stringent
regulator of the environment the
companies can just decide not to trade
in costa rica but it's much harder to
decide not to trade in european union
but china is big the u.s is big so why
no beijing effect and why no washington
so what i argue in the book that it's
not enough to have the large market that
is the necessary precondition but that
not that alone is not enough
you also need to have the regulatory
institutions that allow you to unleash
that power of the market and convert it
into tangible regulatory influence
so yes you have large markets
but for instance in china you do not yet
have the the sophistication the
expertise of the bureaucracy of brussels
that is able to generate the kind of
rules and apply them even across your
borders the way that european union is
able to do across the many different
domains china is in the process of
building that capacity but it still has
a way to go
the u.s on the other hand there is
plenty of regulatory capacity residing
in washington dc what is missing is the
political will to deploy it
so since about 1990s the u.s has whether
you have a democrat or a republican
running the white house you have had a
general hesitation to intervene in the
markets there has been a trend towards
the regulation across the board
americans like markets more there's been
much more skepticism of the government
to intervene so while the u.s has been
stepping back it has been seeding the
market for the europeans to then enter
and take that role of the global
regulator so the europe the americans
have not wanted to regulate so the
political will has not been there
let me offer a caveat though so when we
for instance talk about technology the
conversation is shifting and there is
now an increasing recognition where
americans are re-evaluating the kind of
techno libertarian foundations of the
american regulatory state and there's
certainly a different tone in the
congress debating whether we actually
would need to
uh rewrite our antitrust laws with
president biden nominating the kind of
enforcers to his administration that are
now willing to try the boundaries of
existing antitrust law there's a debate
whether finally the u.s should no longer
be an outlier and establish and adopt a
federal privacy law whether they should
be rewriting the so-called section 230
of communications decency act that would
start exercising more discipline over
the platforms when it comes to content
moderation that takes place on those
platforms so there's a different
conversation about regulation at least
in the domain of technology today in the
u.s but it's a different question
whether that would actually translate
into the kind of political will that
will be shown as actual concrete
legislations
so let's go back to you need to have the
large market you need to have the
regulatory capacity and you need to have
the political will to deploy that
capacity and currently
across the board european union has been
the only power that meets those criteria
so let me now say a few words on whether
this is a good thing or bad thing so my
main argument in the book is that the
brussels effect exists by explaining how
it happens how pervasive it is and i
leave it for the reader to decide
whether this is something we should be
celebrating or whether it is a matter of
concern and i don't think there's a
uniform answer to that but let me let me
uh run by you three common criticisms
that have been leveled against the
brussels effect
so one is this idea that regulation is
costly
and it also deters innovation we hear
that over and over again from the
companies um
and here i would pause and take this
criticism seriously because it may
indeed be that some regulations are
costly and they do dampen innovation i
remember when i was working on the book
i was talking to one uh tech executive
and i asked him what is the difference
when you deal with european and american
regulators
and he told me that well
what europeans want they want us to
satisfy the consumer need and what
americans want they want us to change
the world or allow the world to be
changed
and if every tech company innovated
towards satisfying the existing consumer
need as opposed to changing the world
yes some of the most disruptive
innovations that can be beneficial to
the humanity would never take place so i
do take it seriously
at the same time i'm not willing to say
that regulation every time leads to aaa
lack of innovation we have a lot of
energy efficient technologies for
instance that are good for the
environment but that also end up
creating more efficient products that
can be also lower cost products there's
a wonderful book by a french economist
thomas philippines who teaches at nyu
here in new york um called the great
reversal how america gave up on free
markets and he shows how the lack of
anti-trust the lack of competition
regulation in the u.s has led to
excessively concentrated markets to high
profits for the companies and high
prices for consumers whereas in europe
there is more regulation so there is
more competition that's why i pay a
fraction for my flight ticket from
brussels to madrid compared to when i
fly from new york to chicago that's why
my cell phone bills are so much less in
europe than they are in america because
there's more competition in europe
because there is more regulation
so this relationship being between
regulation and innovation and efficiency
is somewhat more nuanced than often
thought about
so let me now address the second
criticism that often you hear level
against the brussels effect and that is
this idea that this is just a
manifestation of european envy driven
protectionism
look who the europe is going after in
all these tech cases it's always the
american companies
10 billion in fines against google right
now there's a case open against apple
against amazon against meta and against
so it is really always the american
companies and europe is just not able to
generate its own tech companies so it's
trying to level the playing field and
bring down the ones you can actually
innovate
so here i would remind you of
there not being a european search engine
that europeans are trying to protect
they're not being really a competitive
social media websites
if you think about for instance google
which was the company that first brought
the complaint against google it was an
american company it was microsoft if you
think about another case that has been
recently in in headlines uh the intel
case who was the big winner when there
was a fine against intel it was another
american company amd
so when i was speaking to the u.s
ambassador under president obama he said
he never lobbied in these competition
cases
because there were american companies on
both sides of the dispute so often it's
the u.s companies fighting day civil war
in the european territory because
washington dc has not been willing to
extend anti-trust remedies to them
so it's not that clear that there would
have been protectionist impulse behind
these regulations but again here i want
to add the kind of caveat that i added
when i mention how the conversation
about regulation is shifting in the u.s
conversation is shifting in europe and
around the world about regulation and
the general political environment is now
much more hospitable to protectionism so
there are voices growing in europe who
are upset that the regulation has not
been protectionist enough and calling
for more industrial policy driven merger
control for instance this was a big
concern when the europeans blocked
the the uh the notified acquisition
attempt between siemens and austrian and
basically suggesting that this was
europe's opportunity to build a european
champion that could compete against the
chinese counterparts
well
commissioner festar basically said that
look we are here to protect consumers
this is not good for the consumers we
are not here to conduct industrial
policy
french and germans were not impressed
and they issued this manifesto calling
for more political veto and more
industrial policy considerations are
into the competition policy and there's
a broader conversation now about
strategic autonomy digital sovereignty
technological sovereignty there are
pressures towards leveraging the
brussels effect as a tool for
protectionism
but let me tell you one thing
brussels effect can be effective in
exporting regulations that are benign
but it can also work as a tool for
exporting protectionism should the eu
turn its regulation as an instrument of
protectionism i can tell you that also
would be spreading across the world
there will be then brazilian
uh agency copying from the eu's playbook
when european companies are trying to
acquire local companies and say look
that's what you are doing as well it's
national champions we do not let this
merger proceed so the you would need to
be careful at what uh that it may get
more than it actually bargained for
let me now address the last criticism
that you often hear and that is more of
a political criticism this idea that the
brussels attack is a manifestation of
european regulatory imperialism we are
writing the rules for the world and
making the rest of the world to
basically accept the trade-offs that
european consumers are making when it
comes to regulation
and again i wouldn't dismiss this
concern out of hand because the truth is
that we do have african farmers
refraining from using gmos even if they
probably would need
some of them those gmos to feed their
growing populations
we have a lot more environmentally
friendly products a lot more
a privacy for american consumers
probably even more than they at least
directly ask for so the question is
whether we are overriding the the
preferences of democratic governments in
other places who no longer can draft and
draft the rules that serve uh the the
will of failed populations
so here i would have two responses that
the european union can extend so one is
that
european union is only regulating its
single market
which it has the sovereign right
and even the sovereign obligation to do
it is not european decision if facebook
decides to extend european privacy
protections to other side of the world
as well because it is more beneficial
and efficient for them to have uniform
uh regulations so ultimately that's
different from regulatory imperialism
there's also another argument which i
think is more controversial but it's
also very interesting
which is that there are many in the u.s
who say that the current state of
regulation doesn't actually reflect our
democratic preferences if you look at
the leeway that consumer that the
corporations have through lobbying
influencing regulation this is not
how little privacy our consumers want
our internet users if you look at them
they want more privacy we just have not
been able to generate regulations so the
european regulations are offsetting some
of the deficiencies in the current uh
american
democratic processes
so let me return it to the q a but let
me just make two comments on the future
of the brussels effect so so one is that
we should probably talk about whether
this will last a long time even if i
convince you that european union right
now has this power
will beijing effect be there ten years
from now
so i'm happy to take that up uh in the q
a as well in the book i argued that the
gdp per capita is a better predictor of
the country's willingness and ability to
regulate than the gdp as such there's
going to be a long while before the
chinese gdp per capita the wealth is at
the level that there's demand and actual
willingness to regulate at that same
same level
and um that means that the european
regulatory power will likely outlive its
own regulatory uh its own uh economic
power as such
the second is that i i would mention
this is ireland so i think we we do
think about brexit a lot and uh so let
me end with the with the remark about
brexit and how that intersects with the
brussels effect so there was some
argument that brexit would undermine the
brussels effect and i understand the
argument because we just lost a big
chunk of the market share and the market
size is an important first condition for
the regulatory power that the eu can
exercise
um we also i would argue lost a lot of
good regulatory capacity i think the
braves were pretty good they were very
good uh
civil servants they were good judges i
wanted them to be part of those
conversations and they are gone
so they lost a market share it lost
market power and it lost some regulatory
capacity
what probably didn't lose was the idea
that the uk wasn't always willing to
support stringent regulations and that
voice is now gone
what it means for the proponents of
brexit though is that it doesn't mean
that the uk will no longer need to be
chained to the regulations coming from
brussels it means that there's probably
more stringent regulations being drafted
in brussels because the uk's pro-market
voice is not there to shape them there's
more space for french and german
preferences to prevail
yet the uk has chosen to be a rule taker
and not a rule maker because the uk will
continue to feel the effects of
regulation the eu continues to be the
most important market the export market
for the uk it's the number one
destination for most critical uk
industries whether we talk about
financial services whether we talk about
pharmaceuticals chemicals uh aerospace
uh and uh if you think about being a uh
uk car manufacturer do you want to
prepare your car so that you can sell
them in the uk or in the market that is
six size six times the size of your
domestic market
you do need the european market and the
question is do you really want to set up
a second production line to produce
different variants for your domestic
market
so it leaves me to conclude that when it
comes to brexit brexit doesn't really
undermine the brussels effect it's the
brussels effect that does undermine
brexit and ultimately the promise of
regulatory sovereignty
is much curtail because of the dynamics
underlying the brussels effect
so let me maybe end it there because i'm
eager to hear from the audience and
build on any questions that i i mention
or fail to mention and hear from you
next
[Music]
you
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