Integrating rule takers: Transnational integration regimes shaping institutional change in emerging market democracies

ABSTRACT

How does the transnationalization of markets shape institution building, particularly in those countries that have few options other than to incorporate the rules and norms promulgated by advanced industrialized countries? Building on recent advances in international and comparative political economy, we propose a framework for the comparative study of the ways in which transnational integration regimes (TIRs) shape the development of regulatory institutions in emerging market democracies. The ability of TIRs to alleviate the supply and demand problems of institutional change in these countries depends in large part on the ways in which TIRs translate their purpose and power into institutional goals, assistance and monitoring. Integration modes can be combined in different ways so as to empower or limit the participation of a variety of domestic public and private actors to pursue and contest alternative institutional experiments. We illustrate the use of our framework via a brief comparison of the impact of the European Union accession process on post-communist countries and the North American Free Trade Agreement (NAFTA) on Mexico, with special attention to the development of food safety regulatory institutions.

KEYWORDS:

• Transnational integration
• development
• institutions
• regulation
• East Europe
• Mexico
• food safety

ACKNOWLEDGEMENTS

We are grateful for the generous research support provided by the University of South Carolina CIBER and the Global Governance Program of the European University Institute as well as the insightful comments on earlier versions provided by Wade Jacoby, Jacint Jordana, Julia Langbein, David Levi-Faur, Mitchell Orenstein, Sven Steinmo, Jonathan Zeitlin and the Editors and Reviewers of this journal. All errors and omissions are our own.

Notes

1. We focus on the ‘West–East’ and ‘North–South’ cases of integrating emerging market economies with more advanced capitalist economies. Both are cases for ‘North-Western’ normalization. Our framework can be applied with modifications also to the ‘South–South’ integration regimes, which allow public and private actors greater room to shape initial transnational rules within the TIR.

2. Variations on the role of current and capital account liberalization can be found in Mansfield and Milner (1997) and Lederman et al. (2005). To the extent that policy anchoring, external conditionality and related penalties are defined with such precision as to make non-compliance nearly impossible, then hierarchical power appears to be the key solution for change (Schimmelfennig and Sedelmeier, 2005). Indeed, Caballero and Dornbusch (2002) proposed that the UN take over Argentina after its collapse in 2001and install a board of internationally known central bank governors to run economic policy. A more robust agenda can be found in Barnett (2004).

3. In addition to the secondary sources, this research is based on approximately 32 semi-structured interviews with relevant officials from the US, EU, Czech Republic, Romania and Mexico as well as analysis of official reports from relevant government agencies and business associations.

4. Indicators of market reforms put Mexico ahead of the CEEC in the early 1990s. Przeworski (1991) argued that local socio-political conditions made it likely that CEE would follow a path similar to Latin America. Discussions of the relative decline of Mexico and advances of the CEEC in institutional quality and productivity can be found in Bruszt and McDermott (2009) and Lederman et al. (2005).

5. Discussions on the regional nature of transnational linkages and norms can be found in Djelic and Sahlin-Andersson (2006), Jordana and Levi-Faur (2005), Kobrin (2002) and Levitsky and Way (2010: Ch. 2).

6. See also ‘Progress Reports and Enlargement Strategy Papers 1998–2003 of the European Commission’, http://ec.europa.eu/enlargement/press_corner/key-documents/index_archive_en.htm

7. According the EU Commission (2007), it spent about €28 billion on pre-accession assistance for ten new CEE member states from 1990 to 2004.

8. Duina (2006: 187, fn 2) estimates the NAFTA Secretariat budget to be about $US25 million. As part of the NAEEC, two NAFTA committees and the North American Development Bank (NADB) plan, evaluate and study environmental infrastructure projects. While some of the 36 projects to date have made significant advances for Mexico, the overall program is criticized for its lack of depth and funding. As of 2005, the NADB had about $US450 million in capital for making loans up to $US2 billion. The World Bank estimates a need for $US25 billion in annual infusions for ten years to modernize Mexico's infrastructure (Lederman et al., 2005; Studer and Wise, 2007: 61–62).

9. For thoughtful arguments about the combinatorial effect of incentives and learning communities on rule adoption and consolidation and the role of administrative reforms, see Dimitrova (2002), Epstein (2008), Schimmelfennig and Sedelmeier (2005: Ch. 11), and Sissenich (2007).

10. The data are normalized for population sizes. The differences in the growth rates for the absolute numbers are slightly less. The normalized growth rates for membership in Bulgaria and Romania for 1994–2004 were both around 90 per cent (Union of International Associations, Yearbook of International Organizations, various years).

11. For instance, the US accounts for about 85 per cent of Mexican agricultural exports (FAO, 2006).

12. All the countries of the EU and NAFTA are also signatories of the Sanitary and Phytosanitary Measures (SPS) agreement of the WTO, which aims to balance the promotion of scientific standards for food safety, the right of importing countries to have more stringent standards, and the avoidance of standards becoming used as trade barriers (Ansell and Vogel, 2006; Gatzweiler et al., 2002; National Research Council, 2000).

13. Similar to Mexico, the CEEC had to change their laws to international norms, and their firms had to comply with standards to enter more advanced markets. A key difference is that the CEEC governments had to comply with capacity benchmarks to administer, monitor and enforce EU food safety regulations and to ensure that firms were complying with certain preventive practices (Ansell and Vogel, 2006; Gatzweiler et al., 2002).

14. We draw here on several sources. The relevant EC Reports on these countries can be found at http://ec.europa.eu/agriculture/external/enlarge/publi/. See also Garcia-Martinez et al. (2006), Gatzweiler et al. (2002), Mishev and Valcheva (2005), World Bank (2005) and Yakova (2005/2006).

15. The data come from Dolezal and Janackova (2005) and ANSVSA Annual Report for 2005.

16. ANSVSA Annual Reports, 2005–2007.

17. There are 14 agricultural associations in the Czech Republic and 13 in Romania.

18. Major outbreaks and related import suspensions include strawberries, green onions, avocados, mangos and melons.

19. As of 2009, only 30 Mexican meat processors were certified to export to the US.

20. WTO data for SPS Capacity Building can be found at: http://tcbdb.wto.org/category_project.aspx?cat = 33113 (accessed 13 October 2011).

21. Certification data come from SENASICA, Subdirecion de Inocuidad Agricola, June 24, 2008. See also FAO (2006).

22. Extensive studies can be found at Avendano et al. (2006), SAGARPA 2005, FAO (2006) and Rivera et al. (2009). In their 2004–2005 survey of fresh vegetable producers in three of the most export-oriented states, Avendano et al. (2009) reveal that although over 80 per cent of respondents are aware of the new US standards, less than half complied with them and the vast majority were not aware of the Mexican government's food safety laws or its support programs.