Global Value Chains and the Politics of EU Regulation in the Context of Preferential Trade Agreement (PTA) Negotiations

While the EU is traditionally considered an influential global regulator, recent analyses show that there is a great deal of variation in the extent to which the EU engages in regulatory export through Preferential Trade Agreements (PTAs), including PTAs with countries at similar (low) levels of development. This latter observation cast doubts on standard arguments conceiving of regulatory export strategies as a function of the preferences and patterns of political mobilization of domestic organized societal groups, both organizations representing business interests and Civil Society Organizations (CSOs). We propose a revision of this standard “regulatory politics” argument by developing a discussion of how the growing integration the EU economy with particular subsets of developing countries within GVCs affects the politics of regulatory export. European firms that operate within GVCs increasingly rely on imports of finished products or intermediate inputs produced in low-cost countries. These European firms, i.e. import-dependent firms, can be expected to oppose the export of those regulatory burdens that are more likely to translate into an increase of their imports’ variable costs. By weakening Baptists-Bootlegger coalitions supporting PTA-led regulatory export, this dynamic explains why the EU adopts a more lenient regulatory approach in PTA negotiations with particular sets of developing countries. Empirically, we illustrate the plausibility of this argument by comparing the politics of EU regulatory export in the context of PTA negotiations with different sets of developing countries: Vietnam, Cariforum, and Central America and the Andean Community.