Transnational Regulatory Networks and Their Limits

Yale Journal of International Law, Vol. 34, No. 1

60 Pages Posted: 26 Jan 2009 Last revised: 23 Jun 2010

Pierre-Hugues Verdier

University of Virginia School of Law

Date Written: January 26, 2009

Abstract

In recent years, the rise of transnational regulatory networks (TRNs) has attracted the attention of international law scholars. Advocates of TRNs contend that, by cooperating directly with their counterparts abroad to address common regulatory issues, national regulators are creating a revolutionary system of effective global governance without centralized world government. This Article advocates for a more cautious approach to this phenomenon. Based on a theoretical analysis of TRNs, it argues that they may be successful in overcoming relatively simple problems of international regulatory coordination where state interests converge. However, TRNs are less likely to succeed when faced with more difficult regulatory issues where, for example, the choice of a specific policy has distributive implications or states have incentives to defect from common standards. In such cases, their effectiveness is undermined by the numerous domestic legal and political constraints faced by national regulators and by the institutional incapacity of TRNs to monitor or enforce the rules they adopt. To support this theory, this Article analyzes three TRNs - in international securities regulation, banking, and antitrust-widely seen as successful, and shows how the institutional weaknesses inherent in TRNs have limited their effectiveness. It concludes that ambitious claims regarding the transformative potential of TRNs are overly optimistic, and that future scholarship on TRNs should be more sensitive to the political aspects of international regulatory cooperation and the intrinsic limitations of informal governance structures.

Keywords: TRNs, transnational regulatory networks, transgovernmental regulatory networks, global governance, Basel Committee on Banking Supervision, IOSCO, International Competition Network

JEL Classification: F02, F53, F55, K33

Suggested Citation

Verdier, Pierre-Hugues, Transnational Regulatory Networks and Their Limits (January 26, 2009). Yale Journal of International Law, Vol. 34, No. 1. Available at SSRN: https://ssrn.com/abstract=1333201

Pierre-Hugues Verdier (Contact Author)

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

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