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ABSTRACT
International soft law has become a hallmark of global economic governance: networks of official and private ‘governors’ create standards, best practices and norms. Research often frames these efforts as solutions to perceived problems arising from globalization. Yet the narrow focus on the rulemaking process – coordination, distributive implications and implementation – misses second-order political repercussions. Giving special attention to the interaction between international soft law and the political landscape of business advocacy, this article offers an alternative account of the relationship between transnational rules and powerful actors. We argue that transnational informal institutions are not only sites of cooperation that resolve the economic policy concerns of the day, but are also sources of policy feedback that can transform the political landscape. To illustrate the potential empirical traction of these arguments, we examine the critical case of the Basel Committee on Banking Supervision and the Institute of International Finance (IIF). The IIF went from being a struggling organization with no regulatory agenda or lobbying skills to the world's most influential financial industry advocate directly engaging transnational forums. We find that second-order effects of soft law were a primary cause of the IIF's transformation. Our study has major implications for research on global governance as we highlight the political ramifications and temporal effects of informal institutions for business representation.
ACKNOWLEDGEMENTS
We thank the anonymous reviewers and editors for invaluable comments. We also thank Tim Bartley, Stephen Chaudoin, Brooke Coe, Henry Farrell, Paula Ganga, Julia Gray, Jessica Green, Tana Johnson, Miles Kahler, Nikil Kalyanpur, Kathleen McNamara, Manuella Moschella, Dani Nedal, Stefano Pagliari, Felicity Vabulas, Gillian Weiss, Jonathan Zeitlin, and the Mortara Center for International Studies at Georgetown University.
DISCLOSURE STATEMENT
No potential conflict of interest was reported by the author.
Notes
1. We define soft law as a set of codified advisory principles that do not include mutually agreed obligations. (See also Shaffer and Pollack Citation2009).
2. McKeen-Edwards and Porter write, ‘Its sheer size and global representation make it the most important TFA (Transnational Financial Association) in the world today (2013: 38).
3. Brummer Citation2012; Davies and Green Citation2008; Porter Citation2005.
4. Pierson Citation1993; Pierson Citation2006; Hacker and Pierson Citation2010.
5. Pierson Citation1993: 628.
6. Vogel 1989: 14.
7. Interview, former IIF StaffA, Washington DC, 2016.
8. Quoted in Institute for International Finance (Citation2007: 139).
9. Huib Muller, Address to International Conference of Bank Supervisors (16 May 1988), quoted in Porter, States, Markets and Regimes in Global Finance at 66 (note 28).
10. Interview, former IIF StaffA, Washington DC, 2016.
11. Goodhart Citation2011: 417.
12. Reinicke Citation1995: 178.
13. Reinicke Citation1995: 178–179.
14. Interview, former IIF StaffB, Washington DC, 2016.
15. Interview, The US Department of the Treasury Official, 2008.
16. Interview, former IIF StaffB, Washington DC, 2016.
17. Institute of International Finance 2002, Annual Report.
18. Interview IIF StaffA, Washington DC, 2016.
19. As a former staff member(B) of the IIF explained to the author, ‘When you solve a problem like the Latin American Debt crisis, what do you need the IIF for?’, Interview, Washington DC, 2016.
20. Institute of International Finance Citation2007.
21. Interview, The US Department of the Treasury Official, 2008.
22. Interview, former IIF StaffA, Washington DC, 2016.
23. Institute of International Finance Citation2007: 144.
24. Institute of International Finance Citation2007: 55,56.
25. Institute of International Finance Citation2007: 55,56.
26. Institute of International Finance Citation2007: 60,61.
27. Institute of International Finance Citation2007: 69 ‘Given the significance of the proposals, the IIF developed a formal project structure for this work that paralleled that of the Basel Committee itself’. For more on institutional isomorphism, see DiMaggio and Powell (Citation1983).
28. Interview, former IIF StaffB, Washington DC, 2016.
29. Interview, former IIF StaffA, Washington DC, 2016.
30. Institute of International Finance Citation2007: 149.
31. Interview, former IIF StaffA, Washington DC, 2016.
32. Interview, former IIF StaffA, Washington DC, 2016.
33. Interview, former IIF StaffA, Washington DC, 2016.
34. Institute of International Finance Citation2007: 56.
35. The list includes America's Community Bankers, European Securitization Forum, Second Association of Regional Banks and the ISDA (Lall Citation2012; Young Citation2012).
36. Interview, former IIF StaffA, Washington DC, 2016.
37. Interview, former IIF StaffA, Washignton DC, 2016.
38. Kingsbury, Krisch and Stewart Citation2005; Zaring Citation2005.
39. Zaring Citation2005: 577.
40. The organization is comprised of three member associations – Securities Industry and Financial Markets Association, the Association for Financial Markets in Europe & Asia Securities Industry and Financial Markets.
41. Telephone Interview, GFMA official, 2016.
42. Institute of International Finance Citation2007.
Additional information
Notes on contributors
Abraham Newman
Abraham L. Newman is an associate professor at the BMW Center for German and European Studies in the Edmund A. Walsh School of Foreign Service and Government Department at Georgetown University. He is the director of the Mortara Center for International Studies and senior editor at International Studies Quarterly. His research focuses on the international politics of regulation and he is the author of Protectors of Privacy: Regulating Personal Data in the Global Economy (Cornell University Press 2008) and the co-editor of How Revolutionary was the Digital Revolution (Stanford University Press 2006). His work has appeared in a range of journals including Comparative Political Studies, International Organization, Science, and World Politics.
Elliot Posner
Elliot Posner is an associate professor of Political Science at Case Western Reserve University. His research on the politics of finance focuses on international cooperation, regulatory power and new market formation. He is the author of The Origins of Europe's New Stock Markets (Harvard University Press, 2009), and his articles have appeared in the European Journal of International Relations, Journal of European Public Policy, International Organization, the Review of International Political Economy and World Politics.