Brussels effect

The Brussels effect is the process of European Union (EU) regulations spreading well beyond the EU's borders. Through the Brussels effect, regulated entities, especially corporations, end up complying with EU laws even outside the EU for a variety of reasons. The effect is named after the city of Brussels, the de facto capital of the European Union, used as a metonym for the European Union.

The combination of market size, market importance,^[1] relatively stringent standards and regulatory capacity^[2] of the European Union can have the effect that firms trading internationally find that it is not economically, legally or technically practical to maintain lower standards in non-EU markets. Non-EU companies exporting globally can find that it is beneficial to adopt standards set in Brussels uniformly throughout their business.^[3][4]

The California effect and the Brussels effect are a form of "race to the top" where the most stringent standard has an appeal to companies operating across multiple regulatory environments as it makes global production and exports easier.^[5][6][7] The effects are the opposite of the Delaware effect, a race to the bottom where jurisdictions can purposefully choose to lower their regulatory requirements in an attempt to attract businesses looking for the least stringent standard.^[8]

Scholars could so far not empirically verify the limits of the Brussels effect in international law, especially World Trade Organization (WTO) law.^[9] Furthermore, for the Brussels effect to occur, it was shown that not all prerequisites identified by Bradford have to occur cumulatively.^[9] Research has indicated that the EU's regulatory power varies substantially depending on the context of the regulation involved.^[10][11]