The limits of market power in shaping international regulatory cooperation: path dependence and loss avoidance in the Trans-Pacific Partnership negotiations

Abstract

What factors shape the ability of the United States to negotiate international regulatory cooperation? This paper discusses three theoretical approaches that help to explain the potential for regulatory change–market power, historical institutionalism, and loss avoidance–and applies them to the negotiation of regulatory issues in the Trans-Pacific Partnership (TPP). It seeks to understand why the regulatory disciplines in some TPP chapters were more rigorous than those in other chapters. Focusing on case-studies of the chapters on state-owned enterprises and regulatory coherence, the paper argues that the market power of the United States is more likely to secure stronger regulatory disciplines when there is: (1) a strong loss avoidance coalition in the USA pushing for change, and (2) a weakly institutionalized regulatory framework among parties in a given issue area that makes path dependence less important.