The Intersection of Private Regulation and State Sovereignty in International Bu...

The Politics of Private Regulation and State Sovereignty

• Firms are interested in private regulation for reputation-building and risk management, rather than for coordination and market expansion.
• Firms face demands from activists, which can be accommodated through rules for operations or supply chains, rather than true standards creating uniformity.
• Convergence on a single set of standards in an industry is unlikely due to fundamentally different goals of firms and challengers.
• Analysis of the politics of credibility involves tracing the revision of rules and oversight over time, support for industry-driven and NGO-endorsed initiatives, and development of new approaches and technologies.
• Large companies have a privileged position in power struggles over private regulation.
• Transnational private regulation clashes with pre-existing cultures of production, national strategies for economic growth, and domestic law when put into practice.
• The clashes generate a power struggle known as the "politics of grounding."
• The central players in the politics of grounding are transnational private regulatory initiatives and domestic government agencies at the point of implementation.
• Governments at the point of implementation have sought to "repurpose or replace" transnational private regulatory initiatives.
• A notable example is the resistance from the Bangladeshi government to the Accord on fire and Building Safety, leading to a transfer of operations to the state.
• In China, the State Forestry Administration and Chinese Academy of Forestry formed a competing initiative, the China Forest Certification Council, and tightened rules for foreign certifiers, impacting the Forest Stewardship Council's operations in the country.
• The amount of FSC-certified land in China fell significantly, while certification under the Chinese standard grew rapidly after affiliating with a global competitor, the Programme on the Endorsement of Forest Certification.