Of europe on the global marketplace. The most consequential shift of the last hundred years. There is some truth in that since world war ii the military influence of europe has certainly growth has been cod favorably with that of the United States or for example with china or india. And of course efforts to maintain an Economic Union have been more complicated greatly as we all know. But still, i think professor bradford sees things a little differently and in her book the brussels effect of the European Union rules the world w it is here. And also back there. Professor bradford argues that the eu remains critically important superpower. She makes the case very persuasively. It wields unilateral power. It is a phenomenon that has been there. Many examples and shapes policies his every day of the newspapers. What is remarkable is it exerts its influence without coercing anyone to do anything. Its just if you want to so in the European Union, you have to comply. So the book explores this complex topic and the research has received welldeserved and significant praise. Foreign affairs noted recently that the effect, and i quote, maybe the single most important book on the global influence to appear in a decade to read into the Financial Times called this book, quote, the definitive reference guide for those wishing to understand the effect. So, we have a treat ahead of us before we begin just a few words about the organizers of tonights event the interdisciplinary hub of Columbia Business School institute supports research on Global Business, provocative forums like this one instance a student from a host of Global Travel programs including study tours and classes during winter and spring break. Im proud to say next month the institute will send its 10,000 students overseas. That is quite an accomplishment. The other sponsor is the poor Richmond Center for business law and Public Policy at columbia university. Its a joint venture of the business and law schools. The Richmond Centers goal is to Foster Collaboration among the universities distinguished business in order to generate advanced research it has the potential to inform Public Policy as well as the searing practice of law. Again just like the brussels effect. Ke without further ado and to explain the effect in the many implications im pleased to welcome anu bradford with the international organization. Who is also a senior scholar at Columbia Business School. And to help lead the conversation we are very privileged to have the economics of it or we will then had 15 minutes at the end. Thank you all. [applause]. Thank you everybody for being here can i just get a sense of the room how many people are connected with the Business School . How may people are connected but the law school. How may people thought this was about brussels belgium. Enjoy. So great. This is a great book. Im actually not going to monopolize this conversation. On i know there are a lot of smart people who have comments and questions that i might not had thought of. I will probably open it up much sooner and come back in. Your neck and be completely surprised. Just from the introductions of a sentence that really grabs me. Examples of the regulatory influence abound and how hunting is produced in brazil but pesticides and Cocoa Farmers use that. When they start in dairy factories in china. But chemicals are incorporated in plastic toys in japan as well as how much privacy is afforded to Internet Users in latin america. You could have gone on and actually you do. The center chapters of the bookok are actually explaining the brussels effect in great detail. And then the book goes on chapters eight and nine its the kind that policy discussions tend to revolve around. And then what is can happen next. Ad eight is the good or bad chapter. I have a feeling a lot of the questions and remarks would be about those chapters but we agreed we want to spend some time talking about the essential core of the book where does it come from and why does it exist. You right on page 54 that the brussels effect is the same effect that causes host to serve fish at a dinner party. Please explain. If you are having a dinner party and your inviting eight guests and one of them doesnt eat meat and then another one likes meat but doesnt care for that. They had fish and vegetarian. Instead what you decide is that i will skip meet and serve the same food for everybody. We tend to gravitate towards the standards that has everybodys preferences. With catering to the individualized meats of every guest that is coming. And that is the concept of non visibility. Can you elaborate on what that means. Cael it explains why a company would have these things to extend the standard across the global operations. We all understand that if youre your Global Business that you want to trade into the European Markets. E but then you face the question whether you are actually followed the same rules across the other market or whether you want to separate production lines for those other markets. And often other markets lead you to conclude that i actually well prepare uniformity. And i sanders dies the one because that accommodates all the markets. And i can produce one product and Service Across all of the markets in which i operate. Legal is the spot form. I teach competition law and one of the things that we study is emerging. The other regulators around the world have a stakeke on whether they can proceed. If the u. S. Says nothings wrong with allowing n ge and honeywell to move and merge. That transaction is dead worldwide. It is the mos transform regulator. But not in another. That is an example of legal non divisibility. That explains why we have a lot of the Tech Companies follow a single privacy policy. Facebook, Google Microsoft they have a one global policy. Sometimes technically they defied that. They want to forgo the risk. Its technically too difficult. Another example very different one from the era of food safety. If you are a farmer now in brazil and you want to serve the European Market you need to make sure that you dont have gm owes. And then its a fear if even if you have a Market Opportunity in the u. S. Where you could use your gml. There is cross polymerization. The stories in the distribution without crosscontamination. Technically sometimes the products become non divisible. Then i talk about what is some of the biggest task. And that often is the manifest scale economy. It does it make sense if you go through the trouble and remove certain chemicals from your products in order to be safe for the European Market. He will then insert the chemical back into your market. An American Company has made all of its cosmetics consistent with european chemical regulations. It can be scale economies. Benefits related to having a goal global brand. He the Business Model of facebook they want to pride themselves with having one facebook and having a single global conversation. S if they follow different hate speech falls in america and in europe you would have a difficult conversation between an american and a european. Because some speech would not be difficult to some part of them participating in the conversation. Going back to the legal example. Some people would argue that the eu is going too far. These are two American Companies. Shouldnt they be allowed to merge. S would you say it is or is it . Is extraterritorial in defense. It affects the european consumers. If you think about what would be the alternative the companies could just list themselves in a place outside of europe and be allowed to escape the merger review. Its very difficult to think about an area like that where you could have a form of shopping. Where you can opt into some jurisdiction that does not care about the mergers. I think there is a valid criticism. I it doesnt ratchet this standards up. Whether we actually always have the optimal standard government if they get it wrong. G they get it wrong. One of the most fascinating aspects of the brussels of facts is that it represents a race to the top. They naturally gravitate towards a place where there is a least regulation. Is there a race to the bottom or is there a little bit of both in the world. There are a lot of colors associated with this idea that International Trade and economic globalization inevitably leads to the lowering of the standards. The idea that the countries want to gain comparative advantage and boost thehe ability to compete by lowering the environmental standard and very as others regulations. The scholarship does not actually show this one to be true. The companies are not located in trying to relocate the pollution haven or try to engage in practices that will be consistent with this hypothesis. It really lays outut a business rationale that leads the companies voluntarily to ratchet up the standards. What we dont even need to see is the race to the top in the sense that they will be emulating the u. S. Standards. The eu standards get replicated by the government. We see the race to the top but the core of the brussel fact. The American Companies start producing even in america even if they arent required to do so by u. S. Law. I have a lot more question as i said i do want to get the audience involved early on. If you have the deal with the mike. We will bring a mic to you. Does anybody have a question now. I see one right here. Please state your name. I appreciate you are sharing a lot with regards to how the law may affect the companys in america the developed world what does it mean for the entities or the economies in emerging markets such as africa and asia. And how are those shaping the race to the top. I think partially its a question of how they are having that descriptive matter. The Companies Operating in this market to the extent that they are export oriented they are adjusting their practices. Sometimes reluctantly. As the only way. The other question is whether its actually good or bad for the development of the country and there i talk a little bit about this in the book. I think you it can go both ways. They seek conceit to criticism relating to gml that what they are forcing the african farmers to do. Is not good for africa. And they would need the gm owes. But there is also Research Showing that it actually allows them to develop a product that allows them to talk type into the highest level. A lot of the things with example that you mentioned. Now they have a standard approval. In a greater demand in many other markets as will they have shown that the quality in many ways it can serve these companies and also serve some governments they do not have the capacity to stop mergers that may be harming their consumers. They dont have the capacity to enact the chemical regulations. So some of them quite cried happily to stop global cartels that would increase all consumers. I think theres no a single answer that would lead these governments always to embrace or criticize the brussels affect. Th but it the pens on the industry and the actor in question. Here is a question up here in the second row. A very happy colleague. Before you published the brussels affect. They published another book with a kind of a similar overtone are new global rulers. In which they focused on the hegemony of the International Standards organization and i wonder if its part of the brussels is fact that they had 27 votes in the International Standards organization there is some criticism. Of the strategic ability to leverage the 27 votes when it needs to get something done. Yes use it to regulate with a single voice. The standard setting i think hasnt international interaction. If you look at a lot of the their own regulations they cant be modeled after International Standards which then they take on to its regulations is advancing not only eu regulatory visiono but the international organization. T the same time given those 27 they were quite effective in influencing the standards that do emergeo from those organizations. What i come across in the research with the standard setting and allowing itself to be influence. By those standards. I will go to one question and then come to you next. There is an example overreaching. With the mission trading scheme. That was a very fascinating story. We all know that Climate Change is one of the priorities. We also know that the Multi Lateral corporations in tackling Climate Change has been limited. They had decided to try to move ahead on its own but this is where they are needing it to some extent. When the eu try to extend the admissions trading scheme and practice it would have meant if you are American Airlines you are flying from new york to london. You would need to basically buy it for the entire flight even if only a small part of it takes place in the european airspace. If your plane takes off this was extraterritorial in the sense that they caused a massive backlash but also Foreign Airlines who then used the collective power to go against it. So the eu would have lost massive sales. If you have collective response from the Business Community that pushes back. They say they are not Going Forward with this expression and also is more of a modern story. What they manage to do is manage to is manage to in the aviation industry. Because they have the Bargaining Power that they would be doing something unilaterally. I think it is an interesting effect of the limits of the brussels affect but also the contention that they can catalyze international corporations. Can you identify yourself. Can you talk a little bit about how you developed this strong power to be such a judgment maker and what percentage of buying power with food purchase what percentage with the eu be that people are so that we have to tailored to the eu. To say the u. S. Relationship. And then with the issue of the development of the production of the stock market. Can you tell how they affect those two areas. How did they develop the regulatory capacity. It doesnt mean that only eu could exercise such powers. What are the elements that are required. We could see the washington effect. But why dont we see those. One actually that we dont fully appreciate until 1990 it was the United States that set the global standard. They emanated from here. And the countries wereti emulating our standards. But the then they traded places and this is something the father of the california effect has explained affect has explained how u. S. Moves towards deregulation and left the stage for the European Union. They not only stepped in where the u. S. Was retreating it was also the moment when they were very deliberate at building the Single Market. They made it much easier to get all of these regulations through the political process. If you want to deliver you also remove the barriers. And we have more harmonized standards. You can get this environmental regulation and then you get the pro market parties. You get the left and the right. And were under regulations because the regulation was a tool for integration. They loved the Single Market and they left free trade acrossre the common market. In many ways it was easier to build coalition and consensus there were additional reasons that i discuss in the book some of these issues have not taken on as polarized. Bu we have the support for incense for the environmental regulation in the left and in the right the same with data protection. In scene with antitrust. The issues have not been similar to the issues that had faced the u. S. Legislators. And then you talk a little bit about what would it take to affect the food standard. The foundation is that you need to have large enough consumer market. If you are very proenvironment and you want to set the global standard you cannot do it because the company forgoes trade. There is no magic number that i can say that as long as you have this many consumers you will be able to set the standard. What the eu has going for it is that it is a large and generally wealthy consumer market. The gdp per capita in china is going to be for a long time behind. The buying power among the affluent consumers is still hard to follow. There are more people. In the eu. There is no magic number. If you think about in agriculture it was not a major marketin yet we have seen they reached the version possibly to steer them away from gmls. As long as you get along supply chain. You want to make sure everybody in the chain. As is comfortable with not trading in the eu. Im in a goin back here. Please identify yourself. I am cynthia roberts. I teach in the International Security program here at columbia. My question is a little bit out of left field but i could not resist coming. I cannot resist coming to a talk on the brussel effect. There are two other domains besides food that i want to raise for you to get your feedback. Both are areas where the u. S. Is dominant. I wonder if there is any cross domain affects that we could learn from your work on regulatory interest. One is closer than the other and that is the financial world where the u. S. Is by far the dominant player. We close euro