From Rule-takers to Rule-makers: Emerging Powers in the Regulation of International Trade

When and how does increasing market power translate into regulatory power to shape the rules of international trade?

Project Summary

Over the past two decades, new economic powers have arisen within the world trading system. Brazil, China, India and Mexico are becoming influential players within an international regime whose core principles, rules and procedures have been shaped by others, notably the US and the European Union, prior to the formers’ ascent.

Whereas the shifts in economic power are by now well documented, we know relatively little about what large emerging economies seek from the global system and how they pursue their interests in particular in the global trade regime.

This project features a comparative research design examining the foreign economic policy behaviour of Brazil, China, India and Mexico in three contested fields of trade regulation: competition law, intellectual property rights and services-related labour mobility. These regulatory fields touch so-called “behind-the-border” issues and have far reaching implications for the role of the state in economic development.

Two of these fields flow directly from the regulatory agenda of the EU and the US – competition law and IPR – partly evoking vivid resistance and alternative approaches from countries such as Brazil and India in particular, whereas the promotion of labour mobility is a priority of the emerging countries meeting the resistance of Western powers.

In short, this project seeks to understand when and under which conditions emerging powers evolve from rule-takers to rule-makers in trade regulation, through which venues and with which implications for the substance and architecture of the international trade regime.

Academic Output

Working Paper

From rule-takers to rule-makers? Patterns of adaptation, contestation and initiative among emerging powers in the world trade regime

This paper looks comparatively at four emerging markets (Brazil, China, India and Mexico) and at their insertion (adaptation/contestation) within existing trade-rules in the framework of the Post- Washington consensus (PWC). A theoretical framework is proposed that links the analysis of international processes of rule diffusion with the domestic processes creating either demand for or contestation to these rules. This framework adopts a sectoral approach in order to highlight variation across different rules of the global economy in countries’ positioning in the global trade regime. Our preliminary findings suggest that overall, emerging economies insert quite smoothly into the liberal trade order that others designed. Although contrary developmentalist tendencies persist, “two-level games” often circumvent cleavages within ruling elites. In most cases, emerging countries have taken up existing rules, sometimes implementing them in creative ways, and have started promoting these rules themselves. In those cases, where we find attempts at the creation of alternative rules, mainly in the field of intellectual property rights and, to some extent, service-trade related labour mobility, the conjuncture international codification and pressure by influential domestic interest groups benefiting from alternative approaches seem to have triggered the transition towards international rule-making. For these efforts to be successful however, we find that the development of regulatory capacity is of crucial importance.

Executive Summary

This project set out to understand when and under which conditions emerging powers evolve from rule-takers to rule-makers in trade regulation. Our findings underline that the translation of growing market power into regulatory influence is a complex process that presupposes the domestic transition from interventionist to regulatory states alongside the insertion into the sites of global regulatory cooperation. Looking at four countries (China, Brazil, India, Mexico) and three policy areas (competition, intellectual property rights (IP), service-trade related labour mobility), we find a mismatch between the role the countries’ regulatory agencies strive to play at the international stage and their contested consolidation at home. While the domestic delegation of regulatory capacity to competent authorities seems particularly challenging, these authorities’ standing is innately nurtured through the transgovernmental ties with fellow regulators elsewhere. Transgovernmental technocratic networking sustains these countries’ insertion into and diffusion of established rules. In the few cases where emerging countries establish themselves as the promoters of new, alternative trade rules, it is the combination of organized domestic interests, strong domestic regulatory capacity and effective international networking that sustains the transition from rule-takers to rule-makers.

Research Team

Sandra Lavenex
Coordinator
University of Lucerne

Omar Serrano
Co-Coordinator
University of Lucerne

Mira Burri
Associated Member
University of Berne

Thomas Cottier
Associated Member
University of Berne

Manfred Elsig
Associated Member
University of Berne

Simon Evenett
Associated Member
University of St. Gall

Fausto Gurrea
Associated Member
Other

Yong Huang
Associated Member
Other

Scott Kennedy
Associated Member
Indiana University Bloomington

Richean Li
Associated Member
Other

Thiago Lima
Associated Member
Universidade Federal de Paraiba

Nuno Pires de Carvalho
Associated Member
World Intellectual Property Organisation

Status

completed

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Regions

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Coordinator

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