The New Economy: Transatlantic Policy Comparison Industry Self-Regulation in the E-conomy

The New Economy: Transatlantic Policy Comparison Industry Self-Regulation in the E-conomy David Bach1 Self-regulation has been a constant theme in U.S.-EU conversations about the regulation of the digital economy. But obviously, the meaning of “self-regulation” differs considerably in the two. To many Americans, self-regulation means that companies get to make decisions about the rules that regulate markets and that government stays out entirely. Europeans, in contrast, usually think of self-regulation as close cooperation between industry and government in the pursuit of a jointly defined policy goal. The difference between the two meanings is deeply rooted in alternative types of capitalism, and it is not going to go away. Understanding the sources and consequences of this difference is critical to reduce transatlantic tension, increase policy cooperation, and maximize the benefits from the E-conomy in Europe and the U.S. Propositions for Discussion Proposition 1. Self-regulation in the U.S. and Europe differs! The fundamental difference between U.S. and European conceptions of self-regulation concerns the role of government. In the U.S., self-regulation is historically equated with the liberal notion of “laissez-faire,” that is, the government is to take a back seat and let the private sector take the lead. Only if the private sector fails to deliver socially desirable goals, such as the protection of minors from harmful content for example, can government legitimately intervene in the market and lay down formal rules. The government’s only role in the self-regulatory process is to act as latent “rule-maker of last resort” and thus to provide a credible threat of intervention that stimulates private initiatives. Yet courts and the constant threat of costly civil litigation keep businesses on their toes. If America’s notion of self-regulation is rooted in liberal “laissez-faire,” Europe’s has grown out of the medieval guild system. Firms form associations (in which membership is often mandatory) and are assigned public tasks through government delegation. While the private sector still “takes the lead” and decides on market rules in this model, the government is a legitimate, often active, participant in the self-regulatory process. It helps form associations, sits down with firms to formulate policy goals, and can make the rules developed by the private sector enforceable in courts.
1 David Bach is a Ph.D. candidate in the Department of Political Science, and Research Associate at the Berkeley Roundtable on the International Economy (BRIE), at the University of California, Berkeley. He can be reached at bach@socrates.berkeley.edu.
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In short, while the private sector technically writes the rules that govern markets in both models, the role of the government sets the two apart. The U.S. government plays a passive role that centers on the threat of sanctions. American firms think of self-regulation consequently as regulation before the government has to get involved. In Europe, the government commonly participates in industry self-regulation, and firms perceive of it as a legitimate partner in the effort. Proposition 2. U.S. and European solutions clash in the E-conomy! The rise of the E-conomy has set these historically rooted models of self-regulation on a collision course. Every business with international operations knows that market rules and regulations abroad often differ from familiar ones at home. In the offline world, firms can carefully examine such differences before deciding to offer their products in a foreign country. Yet due to the Internet’s global reach, doing business online can expose firms instantly to a multitude of regulatory frameworks. The case of Nazi paraphernalia and French prosecution of Yahoo! vividly illustrates this problem. Policy-makers in Europe and the U.S. alike have promoted industry self-regulation of the Internet to cope with technological complexity and the rapid speed of change. The private sector is to provide what governments have commonly provided in the offline world (e.g., the protection of minors from harmful content, small claims dispute resolution, or technological standardization) and what consumers are increasingly demanding in the online world (e.g., the protection of privacy). What is being regulated is thus often not new; how and by whom, however, is where we see innovation. Given the cross-border character of many emerging e-commerce markets, many firms have a significant stake in evolving self-regulatory solutions on both sides of the Atlantic. Since U.S. and European models of self-regulation follow distinct logics, however, friction and conflict can result. U.S. firms find it difficult to understand that self-regulation in Europe commonly entails joining an industry association and working closely with governments. European firms, in turn, might not adequately appreciate how consumer-initiated civil suits are standard tools of market regulation in the American self-regulatory tradition. The incompatibility of many self-regulatory solutions imposes substantial costs on firms active in transatlantic digital markets. Moreover, it constitutes a source of uncertainty that deters businesses from more actively entering foreign markets, an opportunity cost paid by all of us. Proposition 3. Differences won’t go away, so crafting “interfaces” is key! Much of the enthusiasm for self-regulation stemmed from business leaders’ (and some policy-makers’) belief that it alone could deliver a single set of rules for global e-commerce. Governments, it was said, could never agree. The Global Business Dialog on e-commerce (GBDe) took it upon itself to make the E-conomy safe for self-regulation, globally. It turns out, however, that self-regulatory systems
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are so deeply rooted in historically grown policy-making styles that even the greatest possible private sector leadership will not yield a single regulatory framework for the E-conomy. The goal, therefore, must be to weave distinct self-regulatory solutions together. “Interfaces” must be built that make distinct solutions interoperable, minimize market friction, and thus maximize the benefits from transatlantic data trade. The “Safe Harbor” agreement in the case of data privacy is a promising example. It links two pillars of U.S. privacy protection – private certification systems such as TRUSTe and the threat of sanctions by the Federal Trade Commission (FTC) – to Europe’s network of public data protection commissioners. Background for Discussion When the Internet and electronic commerce thrust into the political spotlight in the mid-1990s, it was quickly evident that it challenged many existing rules and regulations. Two characteristics of the early Internet appeared to render many existing regulatory tools ineffective: first, the Internet separated ownership of the network from control over data flows and applications2; secondly, the Internet had little regard for national borders. The former meant that “regulating the pipes”, or the owners of the pipes, no longer guaranteed control over what was happening on the network. The latter meant that service and application providers were often beyond the jurisdictional reach of national rules and regulations, and at times, their physical notion was not known at all. In the 20th century, governments have become pretty good at regulating physical things within their borders. The Internet challenged both pillars of conventional government regulatory strategies. As business activities increasingly migrated to the online world, thereby seemingly undermining existing regulatory frameworks, governments scrambled to follow suit. In the area of content control, for example, the U.S. Congress passed the Communications Decency Act (CDA) in January 1996. In Europe, Bavarian police raided the offices of CompuServe, a leading Internet Service Provider (ISP), and charged its head with disseminating illegal pornography by permitting obscene postings on CompuServe-hosted newsgroups. These early responses appeared to do more harm than good, however, and the U.S. Supreme Court said as much when it struck down the CDA in 1997. In both Europe and the U.S., policy-makers subsequently began to warm considerably to the idea of widespread E-conomy self-regulation. For one, governments’ initial attempts to simply apply offline rules to the online world had been rather ineffective. At the same time, considerable business lobbying convinced policy-makers that premature, overly broad regulation would stifle innovation and distort
2 See François Bar and Michael Borrus, The Future of Networking (Berkeley Roundtable on the International Economy: 1994).
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competition. In light of the Internet’s perceived potential to reinvigorate economies, create jobs, and enhance international competitiveness, Washington and Brussels were quick to call for government restraint and maximum private sector leadership in developing rules for the E-conomy. Yet each had a distinct idea of what “government restraint” and “private sector leadership” meant, deeply rooted in their respective understanding of “industry self-regulation”. In July 1997, Bill Clinton and Al Gore presented their Framework for Global Electronic Commerce.3 In it they laid out the Administration’s principles for e-commerce regulation, stressing that the private sector should lead, governments should avoid undue restrictions, and provide minimalist rules only where their involvement is absolutely necessary. Consistent with a neo-liberal notion of laissez-faire, the American business community interpreted the announcement as a clear government pledge to stay out of e-commerce regulation, as long as the private sector could provide socially desired goods (such as the protection of minors, adequate personal data privacy, or central coordination of the Internet’s domain naming and addressing system). Some European observers, however, were convinced the U.S. had taken John Perry Barlow’s famous call for an Internet free from any outside intervention a bit too literal.4 Meanwhile in Brussels, responding to the Clinton/Gore paper, Europe’s then-Commissioner for Telecommunications Martin Bangemann suggested that business should take the lead in developing an internationally coordinated, legally non-binding “International Charter for Electronic Commerce” that would rely heavily on “market-led, industry-driven self-regulatory models.”5 To that effect, Bangemann invited representatives of major e-commerce stakeholders to a summit in Brussels, to discuss regulatory objectives and strategies to attain them.6 While close coordination with public authorities was nothing unusual for European Internet stakeholders, some U.S. firms cried foul as they feared Bangemann wanted to create an international organization to regulate the Internet. 3 See William J. Clinton and Albert Gore, A Framework For Global Electronic Commerce (Washington, DC: 1997). 4 See John Perry Barlow, A Declaration of the Independence of Cyberspace (Davos, Switzerland: 1996) 5 Bangemann first suggested the development of an “International Charter for Electronic Commerce” at a speech in Geneva in the fall of 1997. The idea was then developed further and published in February 1998. See Commission of the European Communities, Globalization and the Information Society: the Need for Strengthened International Co-ordination (Brussels: European Communities, 1998), Commission of the European Communities, Globalization and the Information Society: the Need for Strengthened International Co-ordination - Suggestions for the discussion by participants in the Round Table (Brussels: European Communities, 1998). The quotation is from the latter. See also David Molony, “Bangemann’s law: Why the Net needs a charter,” Communications Week International, 16 February 1998. 6 This process, which became known as the “Bangemann Challenge,” led directly to the establishment of the Global Business Dialog on electronic commerce (GBDe). See Maria Green Cowles, Who Writes the Rules of E-Commerce? A Case Study of the Global Business Dialogue on e-commerce (GBDe) (Washington, DC: American Institute of Contemporary German Studies, 2001).
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Proposition 1. Self-regulation in the U.S. and Europe differs! The contrast between the early Clinton/Gore and Bangemann proposals embodies the fundamental difference between U.S. and European conceptions of industry self-regulation. Self-regulation, particularly industry self-regulation of markets, rarely exists without government involvement. What role the government ought to play in the self-regulatory game, however, is what sets the American and European models apart. In the U.S., government’s principal role is to act as latent rule-maker of last resort. It thereby provides the business community with incentives to get the job done, and to get it done right. The government does not generally delegate regulatory authority formally to the private sector; in fact, the Constitution’s non-delegation clause makes such authority transfers virtually impossible.7 Instead, it simply refrains from formal regulation and signals its willingness to let the private sector demonstrate that government intervention is not necessary. Yet a lack of specific legislation does not necessarily imply a regulatory void. Common law provides entrepreneurial judges a considerable amount of leeway. Constant fear of costly litigation is therefore an additional mechanism that keeps self-regulating businesses in check. Similarly, lack of formal delegation does not mean that business-developed market rules do not have bite, that they do not obtain legal standing. Firms that violate self-stated business terms to the detriment of consumers, for example, can be held liable by the Federal Trade Commission (FTC) under broad statutes banning deceptive business practice. In Europe, self-regulation has grown out of the medieval guild system. In order to perform a certain craft, one had to be licensed by a guild. The guild effectively regulated the market and thus performed what are essentially public tasks. In many instances, these structures – the precursors of today’s industry associations – predated the rise of the modern, bureaucratized state in Europe. When the political demand for market regulation increased in response to the formation of the labor movement at the turn of the century and the economic malaise of the 1920s and 30s, states frequently delegated to these associations, further cementing their position. Industry self-regulation in Europe, consequently, has always been associated with close coordination between the private and public sector. Public regulatory tasks are formally delegated to private-sector associations, membership in those associations is frequently made mandatory to solve “free rider”-problems, and private sector rules often have legal standing. The government is thus intricately involved at every stage of the self-regulatory process and business accepts its role as a pro-active catalyst and facilitator of private sector governance. Rather than threatening sanctions should the private sector fail to deliver, as is government’s principal role in the U.S.,
7 For a provocative discussion of the non-delegation clause in the context of Internet domain name administration, see A. Michael Froomkin, "Wrong Turn in Cyberspace: Using ICANN to Route Around the APA and the Constitution," Duke Law Journal 50, 2000.
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government in Europe sits down with business leaders to discuss how to achieve public interest objectives. The rather sharp contrast between the American and European conception of self-regulation has played out in the actual implementation of the principles for e-commerce regulation spelled out by Clinton/Gore and Bangemann respectively. A few examples illustrate the contrast: United States European Union Privacy In the U.S., statutory protection of personal information occurs on a sectoral basis, and some industries are not covered by statute at all.8 For sectors without statutes, the U.S. relies on market pressures and private sector self-certification systems such as TRUSTe and the BBBonline. Should firms substantially deviate from self-stated privacy practices, however, they can be held liable under existing broad statutes against deceptive business practice. The EU, in contrast, has adopted comprehensive, cross-sectoral privacy protection that defines data subjects’ rights and data collectors’ responsibilities. Actual implementation, however, requires close coordination between the private sector and data privacy authorities. Industry associations have drafted sector-specific codes-of-conduct in consultation with public privacy watchdogs. They also provide the bulk of compliance monitoring. The public authorities generally only get involved in instances of grave abuse. United States European Union Harmful Content In the U.S., private sector efforts have been triggered by the threat of sweeping Internet content legislation. In addition to the CDA, Congress has passed the Child Online Protection Act (COPA) and the Children's Internet Protection Act (CIPA). So far, neither has fully survived judicial review by the courts. Various corporations, among them IBM, AOL, and Microsoft, have financially and otherwise supported the development of content rating and management mechanisms, such as the World Wide Web Consortium’s (W3C) Platform for Internet Content Control (PICS). No uniform content managementsystemexistshoweverandThe European Commission has responded to the legal limbo left by Germany’s prosecution of Compuserve with a two-pronged strategy that combines use of technological solutions and establishment of private sector hotline/watchdog organizations. It has financially supported the W3C’s efforts to develop PICS, as well as financed and catalyzed the creation of Internet Content Rating for Europe (INCORE) and Internet Hotline Providers in Europe (INHOPE), two EU-wide associations that coordinate industry self-regulation in this area.
8 See Abe Newman, The New Economy: Transatlantic Policy Comparison – Data Privacy (Berkeley Roundtable on the International Economy: 2001).
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protection from harmful content occurs largely on the level of individual Internet Service Providers (ISP). Even the mandatory inclusion of filtering technologies in public schools and libraries that receive federal funding remains contested. United States European Union Domain Name System Privatizing the Internet’s Domain Name System (DNS) and introducing competition in name registration was one of the Clinton administration’s first efforts to put its strong commitment to industry self-regulation into practice. Since 1998, the Internet Corporation for Assigned Names and Numbers (ICANN), a private non-profit in California, has performed technical coordination and associated policy functions with respect to the DNS under an agreement with the U.S. Department of Commerce (DoC). The administration insisted that no representatives of governments or international organization should hold an ICANN board seat. Instead, the board was to be composed of individuals representing the functional and geographic diversity of the Internet. While critics charge that ICANN has failed to deliver bottom-up, consensus-driven coordination, it remains the clearest manifestation of E-conomy self-regulation. While the European Commission has strongly supported industry self-regulation of the DNS, it has consistently advocated a formal, consultative role for governments. The Commission insisted on the creation of a Government Advisory Committee (GAC) within ICANN, for example, which the DoC reluctantly accepted. To maximize the influence of European private actors within ICANN, the Commission has held regular summits with European business representatives to define common policy goals, and has played an important role in the creation of EuroISPA, an association of European Internet Service Providers (ISP). On the domestic level, several EU member states participate actively in the management of their respective country-code suffixes, such it .de for Italy or .be for Belgium. In France, for example, the .fr-registry is run by a private sector organization, yet the French government has spelled out rules that govern the assignment of names. In the Netherlands, the government and industry are creating the legal basis for a formal government oversight role over private sector management of .nl. The three examples highlight two critical aspects of E-conomy self-regulation: first, governments play important roles in self-regulation by industry; and secondly, the role government plays differs considerably in Europe and the U.S. In the U.S., its principal role is to provide a latent threat of formal intervention to stimulate private sector initiatives. Furthermore, administrative agencies and courts
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provide checks on self-regulation as well as on overly broad legislative adventures. Otherwise, the executive branch in particular maintains an arms-length relationship to the private sector. In Europe, by contrast, public officials closely work with industry to develop and implement self-regulatory solutions. The European Commission in particular plays a critical role. Because of the diversity of firms involved in the Internet and e-commerce, no industry associations existed on the EU level to coordinate self-regulation. The Commission has consciously facilitated and financed the development of new associations so that the European system of self-regulation could work in the E-conomy. Proposition 2. U.S. and European solutions clash in the E-conomy! The Internet has not only set off a flurry of self-regulatory activities, it has also led to the clash of divergent American and European self-regulatory systems. In the early days of the Internet boom, some legal scholar declared cyberspace could never be subjected to national jurisdiction.9 Today, some argue “the Internet has borders.”10 The truth – as always – lies somewhere in the middle, and precisely herein lies the problem. If the Internet had indeed swept away all national rule-systems, a single set of global e-commerce rules (however established) could regulate activities in cyberspace. If, on the other hand, territorial boundaries were nicely reproduced in the online world, there would be no jurisdictional quarrels, as nations would craft individual rules and regulations for “their” piece of cyberspace. Yet the Internet has neither entirely done away with the notion of national economies, nor has it permitted a simple replication of offline boundaries. Instead, the Internet drives the “inter-penetration” of formerly distinct national markets. And as markets interpenetrate, distinct and divergent rule-systems become increasingly entangled. This entanglement of distinct national and regional rule-systems by virtue of market digitalization and migration into data networks implies that e-commerce firms are increasingly affected by regulatory developments abroad. The prosecution of Yahoo! for violation of French hate speech laws is a powerful illustration. Consistent with U.S. first amendment law, Yahoo! did not intervene when Nazi paraphernalia was offered through its auction site. It probably did not occur to anybody in Sunnyvale, California that such content could violate laws of countries whose citizens have just as easy access to the site as Yahoo’s American users. Whereas firms involved in conventional international trade and foreign investment can carefully consider where to export to or invest in, e-commerce firms may often offer
9 See, for example, David R. Johnson and David Post, "Law And Borders - The Rise of Law in Cyberspace," Stanford Law Review 48, 1996; and Stephen J. Kobrin, "You Can't Declare Cyberspace National Territory," in Tapscott, et al. eds., Blueprint to the Digital Economy (New York: McGraw-Hill, 1998). 10 See, for example, Bruce Kogut, "Introduction: The Internet Has Borders," in Kogut ed., The Global Internet Economy (Cambridge: The MIT Press, forthcoming 2003).
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products and services inadvertently in foreign markets, simply by having offered them on the web, or – as in the case of Yahoo! – by simply having provided the trading platform. The clash of divergent self-regulatory systems in Europe and the U.S. is probably nowhere as evident as in the area of privacy protection. Many Europeans simply assume that the lack of comprehensive statutory legislation in the U.S. implies that the American market for personal information resembles a lawless Wild West. Yet statutory protection in the U.S. for areas such as medical or financial records is as far-reaching as Europe’s. And although firm-specific privacy policies impose on consumers the burden of having to read through them, anything stated can in principle be enforced (though enforcement may be costly, a point discussed below). Seal programs such as TRUSTe have made it considerably easier for consumers to decide whether to entrust a firm with their personal information, and – by all accounts – TRUSTe’s privacy audits and the latent threat of FTC investigations provide a robust monitoring and enforcement system. But misunderstandings, misconceptions, and false allegations are just as common on the U.S. side. When business leaders and policy-makers in the U.S. first became aware of the EU Privacy Directive, there was a strong sense that Europe was trying to erect a trade barrier to keep American firms out of its lucrative markets for personal information-intensive services. To many, data privacy was the E-conomy equivalent of bananas and hormone-treaded beef in agriculture trade, and aircraft noise level restrictions in aviation services. Yet Europeans argued that the directive’s main purpose was to create a sound legal basis for meaningful industry self-regulation – “regulation to enable self-regulation,” as Commission officials have put it. And indeed, everyday implementation of the directive’s provisions is provided by the private sector. The overall benefits from transatlantic (e-)market integration are too vast to let different conceptions of industry self-regulation take too large a toll. The more business leaders and policy-makers on both sides of the Atlantic understand and appreciate the sources and implications of distinct self-regulatory traditions in Europe and the U.S., the more friction in transatlantic markets can be reduced. Proposition 3. Differences won’t go away, so crafting “interfaces” is key! The CEOs of some of the world’s biggest e-commerce stakeholders realized early on that insufficient cross-national coordination of self-regulatory initiatives could lead to considerable friction in international electronic markets. Led initially by Bertelsmann’s then-CEO Thomas Middelhof, these business leaders took Commissioner Bangemann’s summit invitation as an opportunity to launch what eventually became the Global Business Dialog on electronic commerce (GBDe).11 Modeled on the successful Transatlantic Business Dialog (TABD), the GBDe set up working groups to develop joint
11 See the GBDe’s website at www.gbde.org.
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proposals for e-commerce regulation in various policy areas. The overall goal was to develop internationally acceptable self-regulatory standards and to thereby convince governments around the world that the bulk of e-commerce regulation could be provided by the private sector. Where formal regulation appeared inevitable, the group lobbied for minimalist, internationally consistent rules. Thus far, the results have been mixed. GBDe participants have invested considerable effort in the development of self-regulatory standards and codes-of-conduct in areas such as consumer confidence (including privacy, alternative dispute-resolution, and trustmarks), cyber security, and digital rights management. And while these have certainly had effects on the development of self-regulatory codes on the national and regional levels, no single self-regulatory regime for global e-commerce has emerged. The distinctiveness of self-regulatory systems in Europe and the U.S. has had much to do with this.12 Even where firms develop very similar industry standards, the different character of self-regulation in Europe and in the U.S. will end up setting the two regimes apart. This does not mean that the GBDe has not been effective. It has given the push for maximum reliance on market-driven, self-regulatory mechanisms a global platform. The exchange of ideas among participants from various industries and geographic regions, and joint standard development have certainly added to the global cohesion among the world’s largest e-commerce stakeholders, thus minimizing market friction on the business side. But no matter how big the effort, the best global self-regulatory standards cannot sweep away distinct national and regional patterns of self-regulation that have grown over generations. Since the differences in self-regulation systems are thus not going to go away any time soon, policy-makers and business leaders alike should focus their energies on making distinct systems interoperable. “Interfaces” need to be constructed to reduce the costs of moving from one self-regulatory environment to the next. The GBDe’s standards are important on the rule content side in this respect, but similar efforts have to be focused on enforcement and adjudication. The recent EU-U.S. Safe Harbor agreement for personal data privacy protection is a promising example. Safe Harbor doesn’t substantially change the substantive content of privacy standards for U.S. firms. As said before, many firms already meet EU standards. What it does is to enable U.S. firms with adequate privacy standards to do business with European consumers, even though they are based in the U.S., a country that lacks the kind of comprehensive across-the-board privacy protection statute the EU directive requires. The Safe Harbor agreement has provided European consumers with a way of enforcing high privacy standards that U.S.-based firms voluntarily commit to. These firms can choose whether to be privacy-audited by representatives of the European Commission or by TRUSTe, the leading U.S. privacy seal program and a
12 Naturally, an argument about the local embeddedness of self-regulatory systems can be widened to include Japan, other parts of Asia, or South America. The general argument remains the same, though the specific differences among self-regulatory systems may vary from case to case.
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Safe Harbor partner. In either case, the FTC’s broad mandate to combat deceptive business practice serves as the enforcement tool. In short, the Safe Harbor agreement links two pillars of U.S. privacy protection – private certification systems such as TRUSTe and the threat of sanctions by the FTC – to Europe’s network of public data protection watchdogs. It thus makes the two systems interoperable. Safe Harbor is an interface. The demand for similar interfaces in other areas is high. Suing in U.S. courts is certainly a reliable enforcement tool available to many U.S. consumers, but it is generally prohibitively expensive to foreigners. Remedies could include increased reliance on alternative dispute resolution (ADR) mechanisms, or simplified access to the American judicial system for Europeans. Similarly, Europeans should work harder to give non-European e-commerce stakeholders access to the corporatist structures and associations that provide much of the infrastructure for self-regulation in the EU. In the area of taxation, a publicly sanctioned interface could “translate” between Europe’s system of value-added-taxation (VAT) and America’s sales tax for e-commerce transactions. On the content side, open standard technologies such as PICS appear to provide the most flexible, yet effective regulation of harmful or hateful content. The big political debate is about default settings, of course, and whether governments (or anybody else) should be allowed to make certain defaults unchangeable. In either case, a regime that provides for the mutual recognition of local PICS settings on the basis of common rating standards appears to be in everybody’s interest. Given its incredible potential, transatlantic electronic commerce has barely begun. Self-regulation has evolved into a reliable regulatory strategy for certain areas of the E-conomy. Yet self-regulation never occurs in a political vacuum – it is shaped by historical legacies, political capacities, and simple habit. Government always plays an important role in industry self-regulation, in Europe as well as in the U.S. What role it plays differs, however, and this largely accounts for the distinct conceptions of self-regulation on either side of the Atlantic. While such differences are inevitable, they need not cause as much friction as they have in the past. The more policy-makers and business leaders appreciate the sources and implications of variation in self-regulatory systems, the easier it will be to craft interfaces, policy tools designed to make U.S. and European solutions interoperable. As long as political and economic authority remains largely vested in states, global market governance will be a messy business. But appreciation for the roots of distinct regulatory styles will certainly make global governance easier.