Harmonizing internationally to harmonize internally: accounting for a global exit from the EU’s decision trap

Abstract:

The joint decision trap concept traditionally explains progress in EU policy-making through dynamics located within the EU's multi-level governance. Yet, with the expansion of global regulatory co-ordination, the EU governance system increasingly interacts with policy-making in international regimes, which influences the internal dynamics of the EU's decision-making.

This article seeks to refine the joint decision trap model by introducing global exit mechanisms and illustrating their empirical relevance for the case of accounting standards. The global exit builds on leveraging the outside benefits of global policy, the legitimacy of global standards, and new opportunities for locking in policy preferences through global commitments.

Specifically, the accounting case demonstrates the Commission's strategy of ‘harmonizing globally to harmonize internally’ that produced an agreement after decades of stalemate. Moreover, it demonstrates how the global exit enables the Commission to protect internal harmonization despite the growing criticism and calls for the repatriation of regulatory sovereignty.