Examining the regulatory power of the European Union.
Having relied on special lightning ports for more than a decade, the latest generation of iPhones suddenly is equipped with a USB-C charger. Not because Apple executives were so eager for change. Nor because of the American Congress introducing new legislation for a company whose headquarters are based in the United States. In fact, it was bureaucrats and politicians from the European Union (EU) driving this transformation. A directive, adopted in November 2022, demands that mobile phones and small devices should work with one common charger, USB-C, to increase consumer convenience and decrease electronic waste, leaving the most valuable company in the world scrambling for a response. “We’ll have to comply, we have no choice”, lamented Apple executive Greg Joswiak.
How is it that the EU, often portrayed as having limited global power, can dictate such global standards, even beyond the continental borders and against such powerful actors? The answer lies in the so-called ‘Brussels effect’. This is a concept developed by Anu Bradford, an American law professor, in one of the most influential books on the EU over the last years, which is also titled ‘The Brussels Effect’ and came out in 2020. It helps to explain not only how phones are charged, but also how social media platforms are regulated and how the global market for genetically modified organisms (GMOs) functions, for example. In the coming years, it might be an important factor in the global battle to regulate artificial intelligence. High time to delve into the workings, controversies and future relevance of this Brussels effect.
The Brussels effect: what, why and how?
The EU, and specifically the European Commission, is renowned for its regulatory capacity, ranging from topics such as food standards to transportation to privacy and big tech. In the past, the Commission has been mocked and criticised for its regulations. The most prominent example remains the case about the shape of bananas that you have probably come across. Yet, although regulation may sometimes seem somewhat dull, it is one of the most important tools of power for the EU, allowing it to “rule the world”, in the words of Bradford.
In essence, the Brussels effect refers to a situation in which standards set for the EU become the norm in much of the rest of the world as well. For example, now that iPhones need to work with USB-C to be allowed entry into the European market, Americans buying the new phone are also confronted with this change. The importance and size of the European consumer market is what makes this situation possible. In case a country like Uruguay adopts such a regulation, Apple is unlikely to transform its entire production process for 3.5 million people. However, cutting off a wealthy market of 500 million Europeans is a very high price to pay for non-compliance.
Besides the size of the European market, there are also more cultural and organisational reasons for European regulatory dominance. On the one hand, the Commission is a widely experienced bureaucracy with a preference for stringent regulations. Often, European standards are the highest worldwide, which means that compliance here means compliance everywhere. This is a strong incentive for foreign companies and even governments to adopt this one rulebook that then works globally. At the same time, European citizens also accept, and often even demand, strict regulations. Compared to the United States, European citizens and policy-makers are more risk-averse, for example when it comes to the protection of their data. The American regulatory approach, which is strongly market-driven, can be summarised as ‘if it ain’t broken, don’t fix it’. Europeans, relying on the precautionary principle, would say ‘if it ain’t fixed, don’t use it’. Together, these factors make the EU such a powerful regulator.
The most obvious cases of the Brussels effect arise when foreign governments copy (parts of) European legislation. The effect can also be more ‘voluntary’, like in the case of Apple. Depending on the issue, European rules can be more or less difficult to circumvent, thus making the Brussels effect more or less likely to occur.
A global promotor of rights, or regulatory imperialism?
The Brussels effect is not without controversy and is perceived differently in other parts of the world. Imagine, for example, being the head of a powerful American firm seeking to merge with another firm for a bigger market share. After tough negotiations, the American government finally approved the deal, only to be turned down by an actor on the other side of the ocean. Because competition law has global effects, the EU can block two American firms from merging, potentially also in strategic domains. Or, the case of non-European food producers having to change their entire production process to react to new legislation adopted in the EU. Similarly, many Americans were not very happy to see the port of their iPhone change, as other devices were now harder to connect and voltage levels may be different. Thus, accusations about Europe abusing its position or imposing its standards on other parts of the world with very different priorities are not uncommon.
On the other hand, ‘Brussels’ has also developed a respectable reputation worldwide, with governments voluntarily copying legislation. The rights-based approach that is often taken does appeal to many governments around the world. And if not for that reason, sometimes it is also just easy or strategic to benefit from the work of EU civil servants. Moreover, companies themselves often want to be regulated and prefer clarity. Thus, whether the Brussels effect is ‘good’ or ‘bad’ depends very much on who you ask and what the case is about. It does seem that Brussels genuinely cares about the protection of European citizens, and is not concerned with strategic protectionism against other countries. Yet, it does raise the important question of how this tool of power, of which many European citizens are often not even aware, will be used in the future.
The global context
Zooming out a bit more, the world and Europe’s place in it is clearly changing. The rise of non-Western powers, the decline of multilateralism, and the increasing resurgence of ‘hard’ power do not work in favour of Europe’s position, all the more because Europe lacks the more traditional sources of power. On top of that, there is also the simple reality of demographics, which projects that the relative size of the EU market will shrink in the future.
To ensure staying relevant, there seems therefore to be a clear argument in favour of using the power tools Europe does have at its disposal. This may include a more strategic approach to regulation and market access. Surely, as you are probably thinking now, regulatory power alone will not rescue Europe from the vulnerable position it finds itself in. That is true. Yet, an ability to shape global conduct in the economic, technological, and environmental domains should not be underestimated. For example, the recently introduced Carbon Border Adjustment Mechanism, introducing a carbon tax for foreign exporters, explicitly aims for a Brussels effect by “encouraging” non-European countries to decarbonise. This mechanism, currently in the transitional phase, has widespread implications. Again, this move has also resulted in criticism outside of Europe, blaming the EU for protectionism and weakening the position of developing countries.
While the arguments in favour of a continued strong regulatory system and a more strategic approach are compelling, some of the same global forces also warrant caution. The relative shrinkage of the European market, the rise of emerging alternative markets, and a growing anti-Western sentiment mean that there are no guarantees for the future that the current level of leverage will remain. Although these risks are not to be expected in the short term, a point may be reached at which Europe starts to lose some of its clout. Ultimately, whether or not the Brussels effect occurs remains a choice by other actors, not a hard obligation.
Of course, the EU regulates first and foremost for European citizens, protecting their interests and increasing their well-being. They should, and will continue to do so rigorously. Over the years, the awareness about implications outside of Europe has grown. In turn, this may also make the Brussels effect an appealing strategic tool. Legitimacy, however, also remains an important pillar for being a regulator, especially when global sentiments are shifting. Moving forward, the EU should therefore attempt to include foreign actors more actively in the process, where possible. This does not have to mean compromising on European interests, but it can create a sense of ownership, understanding, and legitimacy. This way, the EU can continue to be a respected frontrunner in some of the big challenges of the future, in which the case of technology is especially of interest. Compared to these themes, the charger of an iPhone appears to be only a very minor issue.
Yannick has obtained a master’s degree from Centre International de Formation Européenne, and is currently pursuing a master in Crisis- and Security Management at Leiden University.