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The following contributions conclude this Review's debate on consumer protection under conditions of an increasingly integrated world economy. The essays published in the first round (SPSR 6(2), 2000: 79-99) focused on whether and why economic integration (often captured by the term globalization) affects the extent to which states are willing and able to protect consumers against environmental, health and safety risks. Both elements of the question -whether, and why -are contested.
Some observers claim that global market forces and the associated international institutions (e.g. the WTO and the EU) undermine existing consumer regulations and exert a "regulatory chill" effect on efforts to adjust or increase consumer protection. Others argue that economic integration may have differential effects on consumer regulation, depending on a variety of conditions: at times, they contend, the stringency of regulations may decline; in other cases, consumers may receive more protection.
The former claim has become conventional wisdom in large parts of the NGO community and the news media, as well as in some circles of academia. Bruce Silverglade, representative of an important U.S. consumer interest group, presented a rather moderate version of the pessimist claim: he highlighted the benefits of free trade, outlined some examples of downward pressure, and pointed to some deficiencies of the world trading system in this regard. Gunnar Trumbull (European University Institute, Italy) and Erika Meins (Center for International Studies, ETH Zurich), on the other hand, suggested that cases of declining stringency of consumer regulations resulting from market pressure are, in principle, possible but very rare in reality. Trumbull even claimed that more trade means safer products.
Consumer regulation issues have only recently become an important area of study in the social sciences. Most assessments to date on whether economic integration promotes or reduces consumer protection are based on a limited number of (mostly contemporary) cases. More empirical research will thus be needed before we have more robust answers to the "whether" question.
The causal arguments stated by proponents of one or the other view are particularly important when it comes to defining the empirical research agenda. The "why" question is no less contested than the question of "whether" and is most clearly de-DEBATE veloped in the contributions by Trumbull and Meins. Gunnar Trumbull challenges the pessimist claim by contradicting two of its key propositions: first, that sanctions initiated by countries with lower protection standards sometimes force countries with higher standards to lower the stringency of their regulations; second, that free trade contributes to interjurisdictional competition in laxity. Reflecting recent theorizing in political economy and comparative politics, Erika Meins seeks to provide a parsimonious explanation for when and why market forces have a depressing or an elevating effect on the stringency of consumer regulation. Her explanation focuses on the interaction of protectionist rent-seeking through regulation and public risk perceptions.
In this second and concluding round of the debate, we concentrate on how conflicting interests at the intersection of consumer protection and free markets are dealt with domestically and internationally. How societies cope with such conflicts, and with what degree of success (in terms to be defined), is of utmost importance both from a free trade and a consumer protection perspective. In the best case, such conflicts of interest are resolved to the extent that consumers and producers are able to fully enjoy the economic benefits of free markets while consumers believe that they are receiving "adequate" levels of protection -in democratic societies, free trade and investment are only sustainable if consumers subjectively experience "sufficient" protection and support free markets. In the worst case, rent-providing regulations, excessive liability claims, blockage of new beneficial technologies, and international trade conflicts will leave both consumers and producers worse off.
Conflicts of interest in this policy area often defy simple political economy distinctions of export-vs. import-competing producers, producers vs. consumers, or regulators vs. consumers or producers or both. Moreover, such conflicts of interest emerge domestically and internationally. Not surprisingly then, a large set of mechanisms to deal with such conflicts has developed in practice. In this debate, we focus on two particular mechanisms: international political and legal mechanisms, in particular formal dispute settlement procedures; and mechanisms that rely strongly on market instruments, particularly liability and insurance.
Research on consumer regulation shows that cross-national diversity of regulatory standards is strong. This diversity can cause tensions not only domestically, but also in global, regional and bilateral trading systems. While most analysts believe that the effects of regulatory diversity on investment flows are indirect and small, they argue that the effects on trade flows can be direct and substantial. Indeed, countries with less stringent standards have claimed that higher standards in other countries constitute illegal non-tariff barriers to trade. On the other hand, countries with higher standards have pressured countries with laxer standards to tighten their regulations because they regard these lower standards as an illegitimate competitive advantage. Both types of claims have sparked serious international trade conflicts. If unresolved, these trade conflicts threaten to undermine international free-trade systems on which consumer and producer benefits of free markets are predicated.
Andreas Ziegler from the Swiss State Secretariat for Economic Affairs reviews existing institutional frameworks for dealing with trade disputes over consumer regulations. He examines how international dispute settlement bodies, in particular
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