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

Addressing non-discriminatory barriers to trade in the form of national sta ndards and regulations has become central to global trade diplomacy. As a r esult, we increasingly observe a combined delegation of regulatory authorit y across borders and from the public to the private sectors through the nor ms of mutual recognition and standardization. This paper asks what the cond itions are for such transnational market governance and seeks to explain va riations 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 externaliti es, whereby developments in the single market changed the operating environ ment for non-EU actors, creating a demand for negotiations both on their pa rt and on the EU's part. Through such strategic spillover, the EU has benef ited from a 'first mover advantage' by exporting core elements of its model . Second, we argue that regulatory compatibility between countries constitu tes only part of the explanation for effective common governance. To accoun t for modes of governance we also need to examine institutional conditions both internally and transnationally.