Liberal Unified Europe, Illiberal Fragmented US? How Europe's Single Market Has Surpassed America's

Today the “TTIP” negotiations seem close to failure, largely due to European opposition to threats of unacceptable liberalization or “Americanization.” This is ironic, since in many large areas that TTIP is attempting to address—public procurement, services—EU rules are actually more unified and liberal than those that exist in the US “single market.” In public procurement (ten to fifteen percent of economic activity), the EU has strong rules against national discrimination. In the US, the so-called “market participant exemption” from federal regulatory authority allows US states to favor local providers as much as they like—and the number of state laws explicitly favoring local providers has grown in recent decades. Similar patterns characterize the enormous realm of services (seventy to eighty per cent of these economies). Both polities have many different regulatory regimes in this vast area, but the default principle in the EU is free movement and automatic recognition of qualifications from other member states. The default principle in the US is that state-based qualifications are invalid in other states—like lawyers admitted only to one state’s bar—and this fragmentation is mitigated only erratically by voluntary standards regimes and bilateral state-to-state agreements. This paper highlights that these little-recognized ways in which the EU has adopted more centralized and liberalized market rules than the US pose challenges to practically all the major theoretical work on market-building in either the US or the European contexts. We argue that a combination of institutional and constructivist arguments can help explain these surprising patterns in single-market construction.