The Future of Transatlantic Economic Relations: Continuity Amid Discord

The introduction to this edited conference volume probes beneath transatlantic political conflicts to assess the health of the transatlantic economic relationship and of the networks of regulatory cooperation established during the 1990s. It focuses our attention on the largely underappreciated economic side of the transatlantic relationship, and covers an array of sectors. The contributors include leading academics and policy makers from both sides of the Atlantic. We highlight three primary findings that emerge from the chapters. First, despite the concerns, transatlantic foreign policy rifts did not spill over into the economic realm or trigger economic backlash of any significance. Rather, the bulk of the evidence presented in this volume points to the continuity in the transatlantic economic relationship and the resilience of the transatlantic economic marketplace in a period of political turmoil. As Joseph Quinlan and Daniel Hamilton show in chapter 2, transatlantic trade and foreign direct investment have actually flourished in recent years, notwithstanding the bitter conflict over Iraq. As they conclude, "No other commercial artery in the world is as integrated and fused together by foreign investment, a fact lost on many pundits, parliamentarians and policy makers on both sides of the Atlantic." Similarly, Bruce Stokes (in chapter 3) maintains that trade relations during the first term of the Bush administration did not substantially differ from the Clinton years. Second, the chapters present dramatic differences in the degree of success (or failure) of transatlantic cooperation across regulatory areas. In some areas, such as competition policy, US and EU regulators continue to hold broadly similar mandates and regulatory philosophies (chapter 4). The record of transatlantic cooperation in this area continues to be largely complementary, based on the sharing of information and resources. Occasional disagreements, such as the Commission's rejection of the GE/Honeywell merger, may be spotlighted in the media, but they are atypical (chapter 5). In other areas, however, such as the regulation of genetically modified organisms (GMOs), US and EU regulators operate with starkly different regulatory philosophies and styles in a highly politicized policy environment (chapter 8). The volume's third finding is that changes in institutional and market power have shaped policy outcomes in distinct regulatory areas. Assessments of power have been relatively absent from previous studies of transatlantic economic relations. Previous studies have tended to emphasize the impact of economic globalization on the demand and supply of regulatory collaboration, and depicted the EU/US relationship as one of economic equals. Yet across the range of issues, the success of transatlantic cooperation, and the pattern of concessions by each side, has reflected varying power resources. These resources are not military ones, nor do they simply reflect market size, a traditional measure of economic clout. Although market size generally explains the growing role of the EU as a global actor in economic and regulatory fields, US and EU bargaining power also is affected by each side's institutional characteristics. In the case of financial services, for example, Posner maintains that it was not simply the size of the EU market, but also the establishment of the EU's regulatory competence and its extraterritorial reach which mattered. Institutional developments in the EU affected powerful US firms who, in turn, motivated the US Securities and Exchange Commission to work with EU authorities to accommodate and recognize EU standards in a number of areas.