Transnational market governance and regional policy externality: why recognize foreign standards?

Addressing non-discriminatory barriers to trade in the form of national standards and regulations has become central to global trade diplomacy.As a result, we increasingly observe a combined delegation of regulatory authority across borders and from the public to the private sectors through the norms of mutual recognition and standardization. This paper asks what the conditions are for such transnational market governance and seeks to explain variations in the specific applications of these principles across different levels of governance, European, transatlantic and international. First, we argue that European integration has resulted in regional policy externalities, whereby developments in the single market changed the operating environment for non-EU actors, creating a demand for negotiations both on their part and on the EU's part. Through such strategic spillover, the EU has benefited from a 'first mover advantage' by exporting core elements of its model. Second, we argue that regulatory compatibility between countries constitutes only part of the explanation for effective common governance. To account for modes of governance we also need to examine institutional conditions both internally and transnationally.