Lay summary

Over the past two decades the world economy has been dramatically reshaped by the rise of new economic powers and the proliferation of regional and bilateral agreements. The growing economic weight of Brazil, China and other emerging economies vis-à-vis the traditional trade hegemons, the EU and US, is well documented. The consequences of these market shifts for the regulation of the global economy, their implications for the EU’s and US’ influence on trade rules, and emerging powers’ evolving role in the structures of global economic governance are however less well understood. While scholars have started to study the role of new powers in multilateral institutions such as the WTO, one should keep in mind that today, relevant rule-making and policy-transfer occurs in various institutional venues, including bilateral and regional free-trade agreements as well as more informal frameworks such as transgovernmental dialogues and networks .

Therefore, this research project explores the following questions:

1. When and under what conditions does increasing market power translate into regulatory power, i.e. the power to shape the rules of the global economy?

2. How far does regulatory power vary across institutional venues and policy fields, and why?

3. Which role does market size play for regulatory power, and what is the importance of governance capacity and domestic interest groups?

We address these questions through a comparative research design juxtaposing two traditional regulatory hegemons, the European Union and the United States, with two emerging powers, Brazil and China in three topical fields of international trade policy: product standards, competition policy and intellectual property rights, focusing on key events over a period of 20 years (1991-2011, starting in the period preceding the conclusion of the WTO Uruguay Round and Brazil’s/China’s accession). In theoretical terms, we want to go beyond realist accounts that infer regulatory power from relative market size and look into the mechanisms that convey this economic leverage into political influence. In particular, we will investigate the importance of governance capacity (defined as capacity to set and uphold trade rules) and the role of domestic interest groups in generating demand for regulatory activism in different institutional venues.

Our methodology combines theoretically guided qualitative comparative analysis and process tracing. This approach combines in a first step the systematic identification of causal inferences in a medium number of cases (fuzzy-set QCA) with, in a second step, in-depth causal process-tracing in a small-N comparative research design. While the congruence analysis allows us to investigate the explanatory potential of three competing theoretical perspectives, the configurational logic takes into account that various interactions may exist between the different causal factors.

Our data base consists of pertinent regulatory initiatives in a defined set of institutional venues (based on coded policy documents/reports, minutes, and expert interviews) and economic and institutional indicators relating to market shares, governance capacity, and interest groups in the four ‘countries’. The project will involve field work in the EU, US, Brazil and China and is backed by a network of cooperation with research institutes and policy experts in these ‘countries’.