Pre-emption is the only way….says the EU?

In an article entitled, “Brussels Rules OK,” in the September 20th issue of The Economist, readers were told that the European Union has become the global trendsetter in economic regulations regarding everything from trade practices to quality to ethics. The author goes on to suggest that the EU’s “precautionary principle” (which refers to the ways in which EU regulations preempt the behavior, production, and distribution of many global goods), has been more successful than its counterpart, the American style, cost-benefit analysis, (which relies more heavily on market forces and post-production lawsuits) at attracting a global audience for regulatory behavior.

Those supporting its merits value its ability to test potentially harmful products before they hit the marketplace. Supporters see it as the best way to ensure the safety of both the business community and consumers. They argue that by forcing the business community into compliance with harsher environmental and safety issues, the business community as a whole will gain a competitive edge (with the exception of Microsoft, recently ruled as an illegal monopoly in Europe) and consumers will have access to better products.

Those arguing against such “preemption” see things differently. Take for example an article appearing in Stratfor, entitled, “Precautionary Policy: Leaving the Precautionary Principle Behind.” Bart Mongoven argues that for all of its “apparent” benefits and common sense, the precautionary principle is not being employed as a policy prescription, but one that is shrouded in protectionism, stifles innovation, and wastes millions of dollars/euros.

“In early attempts to apply the principle to regulatory decision-making the tendency was to argue that an activity or product should not be allowed until it had been proven not to cause harm. The problem was that despite centuries of careful thought and study, proving a negative remains impossible, so applying this strict standard was never a credible approach. And parsing the issue—for instance, defining whether a practice or substance gave rise to “concerns”—proved too vague for the precautionary principle to withstand scrutiny from legislators and regulators” (Stratfor, May 25, 2006).

So why has the world embraced this European policy; a policy that seems to be utterly counterproductive? Well, it appears that these protectionist policies (let’s face it, that’s what the precautionary policy is) have given a great deal of authority back to the state; a power that many critics have claimed it had been losing for quite some time. Also, the EU has proven to be more powerful than the mighty Microsoft, the face of the American corporation; finding Gates and Co. guilty of illegally dominating European competition and stifling homegrown talent.

In short, many countries/regional organizations around the world (especially those in the throes of industrialization) applaud the measures created in Brussels because it keeps the money in state hands and allows home-grown businesses the opportunity to compete against more powerful multinational corporations. Is this the solution to woes of globalization? I am not too convinced that it is. What I am convinced of is that it will allow Europe to perform two necessary short term tasks: 1.) maintain its position as the standard bearer for global ethics and 2.) keep the United States and its business interests at arms length.