As the shape of regulation goes, the United States and the European Union aren’t all that different. Both are customs unions with a single trade policy, with unimpeded internal commerce hinging on a large degree of internal regulatory harmonization. The extent to which member states can autonomously enact regulations is limited in both unions: by the U.S. government’s constitutional power to regulate interstate commerce and by foundational treaties in the EU that codify the so-called “single market.”

From that similar foundation, however, the two unions have followed very different pathways over the past half century. In the United States, state-level regulation has grown increasingly disharmonious. Intervention-friendly states such as California are blazing regulatory trails in environmental, labor, and digital privacy regulation through what has come to be called the “California effect” (a term coined by University of California, Berkeley economist David Vogel in a 1999 paper), while other states have adopted a light regulatory touch in order to attract jobs and investment in a strategy often called (appropriately or not) the “Delaware effect.” Meanwhile, the EU has relentlessly pushed for increasingly harmonious regulation among its member countries.

Uniform standards are a precondition to any definition of a “single market” but the EU has gone beyond harmonization to stringency. At times, this has merely reflected a catch-up with individual member states whose tightening of regulations impeded trade flows—“upward harmonization” is the EU term of art—but more often stringent standards have been Brussel’s initiative.

The building of this “European regulatory state”—to borrow European University Institute political theorist Giandomenico Majone’s term—has been a political quest for higher standards in everything from food and product safety to digital privacy, aided by an opaque rulemaking process that fast-tracks them into law with nothing like the U.S. reliance on benefit–cost analysis and trust in the market’s potential to correct its own failures. In the EU, the precautionary principle reigns: the sole prospect of market failure is enough grounds for ambitious rules whose costs policymakers often care not to tally up in advance. (See “The Paralyzing Principle,” Winter 2002–2003.)

The EU’s regulatory zeal has been egged on by the awareness that its tightened, harmonized standards can be exported worldwide through market mechanisms as opposed to global campaigns or multilateral deals. The underlying drivers and far-reaching effect of this “unilateral regulatory power” are the theme of The Brussels Effect, which Columbia law professor Anu Bradford intends to be a counterpoint to what she deems the false narrative of European economic decline. In a number of ways, her book echoes Mark Leonard’s Why Europe Will Run the 21st Century, a 2005 broadside on the bloc’s potential to buck U.S. unilateralism and spread EU norms and values through persuasion. Bradford, however, does concede that the EU’s norm-setting power in the fields of democracy and human rights is not now growing but waning, but it does have growing regulatory might.

By its sheer market size and appetite to roll out stringent rules, the EU’s standards automatically make their way to other countries’ rulebooks, where multinationals find it difficult to either forgo the EU’s vast market of 500 million consumers or tailor varying products to different regulatory regimes. This is the genius behind the Brussels effect: it is unilateral but relies on market-driven mechanisms (Bradford calls this the “de facto Brussels effect”), sometimes buttressed by accompanying legislative emulation (de jure). American tech firms forced to globally comply with the EU’s General Data Protection Regulation (GDPR), for instance, went from fretting about its costs to lobbying Congress to use it as a template for U.S. privacy legislation, motivated by their desire to reduce their competitive disadvantage vis-à-vis domestic competitors that are not export-oriented.

Regulatory review / This “regulatory imperialism” comes with many drawbacks, not the least of which is its affront to democracy in the countries that undergo it. This does not trouble Bradford, who seems to think that exporting standards she deems morally superior is worth bypassing the democratic process and altering the political economy of sovereign nations. European regulations reflect a tradeoff between higher prices and supposed health, environmental, or privacy benefits, and they’re extended to consumers who’d otherwise make starkly different choices. In fact, it isn’t even clear that EU rules reflect the wishes of European consumers themselves, a problem that Bradford largely ignores.

When consumers report a high appetite for food safety, environmental, or privacy standards, their responses are taken by Bradford and EU regulators to justify virtually any regulatory action, regardless of its costs. Those costs, of course, do not only include money out of consumers’ pockets in the short term, but also a decrease in safer, cheaper, and better products down the line through innovation. In the EU these tradeoffs are rarely acknowledged in public discourse because of the minimal regulatory review done by Brussels. In contrast, in the United States—at both the federal and state levels—regulatory proposals usually face formal public comment and often include sophisticated benefit–cost analysis. The EU and its associated quangos are content with mere “impact assessments,” a watered-down, rushed form of analysis.

Lately, the EU’s regulatory ambitions have aimed for even grander projects, whose costs may be unquantifiable. Far from impressing restraint on regulators, this has only emboldened their zeal. It was only after the European Parliament and the Council of the EU—the bloc’s co-legislators—passed the GDPR that big tech companies and other large data processors began to tally up the expense that revamping their entire data collection practices would entail. They were hardly even consulted on the proposal, and besides, adding up the cost of ensuring that every piece of data is collected GDPR-compliantly couldn’t be measured in the short time it took for the EU to pass the law. This was reflected in a flurry of ex-post dour surveys by global consultancies, which, of course, was too late.

Protectionism? / A common qualm leveled against the Brussels effect is that it is protectionism in disguise. Bradford rejects this by pointing out that the EU has some of the world’s toughest competition rules, with a record of hefty fines on member states indulging in state aid to national champions. With the exception of pan-European giants—e.g., Airbus—this can put large industrial players at a disadvantage vis-à-vis U.S. and Chinese firms. The EU’s antitrust orthodoxy, however, is gradually giving way to increasing talk of a protective industrial policy.

Meanwhile, the EU’s iron-fisted enforcement of competition rules has mostly targeted U.S. firms, primarily in tech. Bradford acknowledges this but argues that hefty fines to Google and Amazon have mostly benefited smaller competitors not from Europe but the United States, which she believes demonstrates that the EU’s competition policy is the opposite of protectionism. Oftentimes there are simply no European champions to benefit from sanctions on U.S. tech giants, thanks to the Brussels effect itself. Consider that Google’s market share in the EU search engine market is its highest in the world, 20 points above that in its home American market (90% vs. 70%). Those decrying the EU’s impotence to compete with American technology should realize that excessive regulation bears a large chunk of the blame.

This is the stunning irony of the Brussels effect: Europe exports regulatory standards that primarily harm small EU innovators that can less afford to cope with red tape than U.S. firms, for whom complying with mandates or paying fines is a costly but survivable obstacle. So, ironically, European regulation can’t be decried for being protectionist, at least in these instances.

In other areas, however, the EU’s protectionist impulses are hard to ignore. Bradford’s narrow focus on regulatory policy blinds her readers to other market forces exporting EU policy, such as the multibillion-euro Common Agricultural Policy subsidies to European farmers, which oftentimes price developing country competitors out of their own markets, to cite one example. In other cases, what’s been advanced as health and safety reasons to shut out foreign competition has rested on shoddy science. Think of the EU’s bans on hormone-fed beef (1989) and chlorine-washed chicken (1997), both measures for which the scientific consensus did not indicate a danger to public health. (And, it should be noted, in both cases the World Trade Organization ruled against the EU.) EU bureaucrats have been happy to draw on shoddy science to enact protectionism in disguise.

Conclusion / Bradford’s appraisal of the Brussels effect’s future is clear-eyed. The entire EU edifice is now being challenged by sovereigntist pressures across the region, motivated less by a desire for lighter regulation than a complete rejection of “ever-closer union.”

But this is perhaps not the largest threat to Brussels. With Europe’s shrinking share of the world’s gross domestic product, America’s experience with growth-boosting deregulation, and China’s growing potential to export its state-capitalist model to far corners of the globe, it isn’t clear that future regulatory trends will emerge from the EU. More importantly, technological advances are allowing firms to segment their offerings to cater to different regulations. Geo-blocking can allow tech firms to shut only European customers out of content that the EU’s regulations on hate speech or privacy would prohibit. Terminator seeds can prevent genetically modified organisms (GMOs) from adventitiously spreading to farm crops destined for the GMO-intolerant EU. 3D printing allows producers to tailor goods to varying health and safety regulatory regimes.

These trends and innovations will gradually weaken the EU’s regulatory footprint worldwide. But until the bloc’s bureaucracy—for now autonomous and unaccountable—is reined in by common sense or a return to voluntary cooperation between sovereign nation-states, runaway regulation within the EU may go on unimpeded. For European innovators and many consumers, that’s a Brussels defect.