GEI Projects

10. SUBSIDIARITY IN THE GOVERNANCE OF GLOBAL MARKETS: EUROPEAN AND AMERICAN APPROACHES TO INTERNATIONAL RULES/REGIMES


Principal Researchers

Dr MICHAEL HODGES
Mr STEPHEN WOOLCOCK
CRUSA
London School of Economics and Political Science
Houghton Street
London WC2A 2AE

Contact

Mr Stephen Woolcock
CRUSA
London School of Economics
Houghton Street
London WC2A 2AE

Tel: 020 7955 7325/6798
Fax: 020 7955 6797
Email: woolcocs@lse.ac.uk

Duration

1 June 1994 – 30 June 1996

AIMS AND OBJECTIVES

In the European Union there is today much debate about ‘subsidiarity’ or what market regulation is best done at the European and what at national or sub-national levels. In North America the NAFTA raised similar questions about social and environmental policy in particular. The globalization of markets raises equally important questions about ‘subsidiarity’, at a global level. There are currently discussions, in various fora, about the need for the strengthening or establishment of multilateral regimes for investment, competition, social/employment protection and environmental protection. There is therefore an issue of ‘global subsidiarity’. In other words, in which cases is regulation at a multilateral/global level justified and in which cases should regional (ie European or North American) or national competencies remain?

This project has researched what forces and criteria shape the establishment of international rules/regimes regulating markets, contributed to the current debate on the establishment of regulatory regimes, by evaluating the criteria (efficiency, market access and legitimacy/accountability) that necessarily figure in any decision on the establishment of new or modified rules/regimes. It has also compared the European, North American (and East Asian) approaches to the establishment of international regulatory regimes; contributed to a better understanding of the interaction between approaches to regulation at different levels; and evaluated the effectiveness of the EU and North America (i.e. the USA) in coordinating policies towards different functions and levels of market regulation.

STUDY DESIGN

The research project is interdisciplinary and applied. The project started with a series of case studies in areas such as investment, social provision, taxation, environmental protection, competition/antitrust policy and technical norms. This has been followed by a comparison of European and North American approaches to the formation of international regulatory systems/regimes. The final, third phase has produced a synthesis of the case study and regional ‘cross-sections’ of rules/regime formation.

POLICY IMPLICATIONS

The new items on the multilateral trade agenda threaten to overburden the WTO at a time when it is still trying to digest and effectively implement the outcome of the Uruguay Round of trade negotiations. This project has sought to clarify why these ‘new issues’ have arrived on the multilateral agenda and what criteria or procedural rules should be followed for deciding which issues can and should be on the multilateral agenda and which might be dealt with at other levels. A conference on the theme of this project was held in May 1996, and a book is forthcoming. It is hoped that these will feed into the debate on the future work programme of the World Trade Organization in the run-up to the next Ministerial Meeting in April 1998.