Resisting Europe’s Regulatory Imperialism

All nations want globally competitive economies. That is why most try to structure their regulatory systems in ways that protect key societal interests, such as privacy, public health, and the environment, but don’t burden their companies with too much red tape.

As Rob Atkinson writes in Latin Trade, Europe is an exception to this rule. That is partly because powerful civil society groups exert disproportionate influence on policymakers. But more generally, it is because, in an economic era defined by technological innovation, Europeans embrace the “precautionary principle”—the idea that if an innovation may cause harm, then those proposing responsible for it should bear the burden of proving it will not. The resulting regulatory system makes European industry markedly less globally competitive.

Europe would be better off if its policymakers challenged civil society and embraced the “innovation principle”—the idea that because new technologies usually benefit society and pose modest risks, government should pave the way for innovation while ensuring baseline protections are in place, where necessary, to limit harms. But Europe has instead tried to get other nations, including in Latin America, to adopt its regulatory regime in order to reduce its own competitive disadvantage.