Author: Harvard International Law Journal

[Erin F. Delaney, a Research Fellow at Columbia Law School (she holds a Ph.D. from Cambridge University and a J.D. from the NYU School of Law), & Samuel Issacharoff, the Reiss Professor of Constitutional Law at New York University School of Law, respond to David Schleicher, What If Europe Held an Election and No One Cared?]


Multilevel democracy is difficult. Voters have limited time and even less information. Political parties provide the indispensable integrative mechanism for the polity and bring order to the chaotic political marketplace. But parties form around core political concerns, and national parties translate poorly across different levels of government. In this article, David Schleicher turns to the European Union and perceptively analyzes the failure to generate meaningful Europe-wide political parties and campaigns as symptomatic of many forms of multilevel democracy, and thus perhaps less distinctly European. He takes the analytic framework he honed with regard to the absence of robust partisan competition at the local level and directs it now to political institutions that pale beside vigorous national-level politics – specifically, the European Parliament, an institution which inspires mostly apathy and neglect in European voters. The result is a proposal to jigger the institutional prerequisites for EP representation in order to incentivize cross-European political organization and politics. What emerges is creative and provocative.

[David Schleicher, an Associate Professor of Law at George Mason University School of Law, describes his recently published article What If Europe Held an Election and No One Cared?] So, to start, I would like to thank my editors at the Harvard International Law Journal and the good people here at Opinio Juris for providing this forum. And I would particularly like to thank Erin Delaney and Samuel Issacharoff for writing a response to my paper. I’m looking forward to hearing your responses as well. My paper, What If Europe Held an Election and No One Cared?, examines the difficulties the European Union (EU) has had in introducing direct democratic representation into its law-making process. In so doing, it provides an explanation for why multi-level political systems frequently feature a common type of democratic failure. Elections at non-national levels of government (ranging from the pan-European elections I discuss in the paper to state and city legislative elections in the U.S.) regularly fail to provide much in the way of democratic accountability because voters treat them as a referendum on national political figures while paying little attention to the effect they will have on local, or supra-national, public policy. In the paper, I argue this is a result of "mismatch," or an election law system that causes (or doesn't discourage) a lack of fit between the governmental level at which political party systems are organized and where elections are held. Looking at the EU provides a window into this endemic problem for multi-level democracies. So, some background:

[Pierre-Hugues Verdier, author of Mutual Recognition in International Finance, responds to the comments by Stavros Gadinis and Eric Pan] I would first like to thank Professors Pan and Gadinis for their generous and insightful comments on my article.  While it is impossible to offer a full response in this forum, I would like to offer some thoughts on three salient points. First, as Professor Pan correctly points out, financial cooperation arrangements that share important features of mutual recognition have existed for decades.  However, I believe the arrangements described in the article constitute a significant development relative to those prior approaches.  Take, for instance, the CFTC's acceptance of foreign trading screens and PCAOB's reliance on foreign auditors. 

[Eric Pan, an Associate Professor of Law and Director, The Samuel and Ronnie Heyman Center on Corporate Governance, responds to Pierre-Hugues Verdier, Mutual Recognition in International Finance] Pierre-Hugues Verdier has written an extremely important paper about one of the key regulatory strategies in international finance.  As Prof. Verdier has noted, many jurisdictions have applied mutual recognition arrangements to provide cross-border access to financial services providers, issuers and investors, and he skillfully analyzes the challenges facing mutual recognition arrangements.  In order to provoke a further discussion about the importance of mutual recognition in international financial regulation, I wish to draw out some of the points made by Prof. Verdier and express additional thoughts regarding how mutual recognition arrangements have been used in the past, the implications for future mutual recognition arrangements and the main challenges facing mutual recognition arrangements.

[Stavros Gadinis, an Assistant Professor of Law at U.C. Berkeley School of Law, responds to Pierre-Hugues Verdier, Mutual Recognition in International Finance] Pierre Verdier's piece, "Mutual Recognition in International Finance," centers on a fundamental question in this area of the law: how can regulators from one state admit inside their borders institutions and products shaped under another state's regime, without imposing additional requirements to admission? Lifting regulatory barriers is the primary step towards a truly global financial market, because it removes high transaction costs that constrain capital flows. However, opening the regulatory gateways to foreigners is a matter of heated debate, which typically evokes rational objections as well as deep-rooted fears: do these foreign institutions and products provide to investors similar safeguards to those honed after decades of domestic regulation? Will the sudden influx of - perhaps more cost-effective - foreign providers put the domestic industry in a competitive disadvantage? Could the admission of foreigners ultimately undermine the importance of domestic regulators by providing an official back-door channel into a closely guarded domestic market?

[Pierre-Hugues Verdier, an Associate Professor of Law at the University of Virginia School of Law, describes his recently published article Mutual Recognition in International Finance] In the absence of an international organization devoted to financial regulation, the rapid globalization of finance since the 1970s has taken place against a legal background shaped primarily by national regulators.  As the multiplication of large, transnational financial institutions and cross-border transactions increased the need for international policy coordination, regulators responded by setting up transgovernmental regulatory networks (TRNs) and adopting soft law instruments.  In an article published in 2009, I argued that TRNs suffered from significant limitations stemming from domestic legal and political constraints, their inability to overcome distributive obstacles to harmonization, and their lack of monitoring and enforcement capabilities.  In the aftermath of the financial crisis, many commentators agree that existing coordination mechanisms did not live up to expectations in pivotal areas such as bank capital standards.  Thus, while TRNs are likely to remain an important component of financial governance, we need a more complete understanding of the various means through which states can cooperate to ensure effective cross-border financial regulation and market access.