Overview

While large, multinational corporations have supported the removal of tariffs, behind the scenes these firms have fought for protection in the form of product regulations, including testing, labeling, and registration requirements. Unlike tariffs, these regulations can raise fixed costs, excluding smaller firms from the market and shifting profits toward global giants. Narrowing the Channel demonstrates that globalization and globalized firms can paradoxically hinder rather than foster economic cooperation as larger firms seek to protect their markets through often unnecessarily strict product regulations. To illustrate the problem of regulatory protectionism, Robert Gulotty offers an in-depth analysis of contemporary rulemaking in the United States and the European Union in the areas of health, safety, and environmental standards. He shows how large firms seek regulatory schemes that disproportionately disadvantage small firms. When multinationals are embedded in the local economy, governments too have an incentive to use these regulations to shift profits back home. Today, the key challenge to governing global trade is not how much trade occurs but who is allowed to participate, and this book shows that new rules will be needed to allow governments to widen the benefits of global commerce and avoid further inequality and market concentration.  

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9780226669366

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Reviews

Gulotty adeptly combines a theory of regulatory protection with empirical evidence from various industries to make his case, and he concludes with implications for the future of the global trading regime. -- Choice Gulotty argues that globalization and globalized firms can paradoxically hinder rather than foster economic cooperation, as larger firms seek to protect their markets through strict product regulations. He illustrates the problem through an analysis of contemporary rulemaking in the United States and the European Union in the areas of health, safety, and environmental standards. -- Law and Social Inquiry Gulotty's study of the politics of regulatory protection is well-suited for a world where differences in productivity are captured in firm-level outcomes. -- World Trade Review

Author Information

Robert Gulotty is assistant professor of political science at the University of Chicago.

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