Administration has, in many of its most important subject areas, become internationalized. This transformation has removed the regulation of goods and services from domestic rulemaking and transformed it into a matter for supranational agreement. It has taken review away from the courts and made administration an exercise in bureaucratic collaboration.
And it has occurred quietly-not through laws passed by legislatures, treaties agreed to by executives, or mandates lain down by international organizations such as the United Nations. Instead, the internationalization of regulation has happened informally, and the primary impetus for its development has been domestic bureaucracies themselves.1
Even though areas of rulemaking that affect millions of people have changed, the phenomenon, as a form of procedure, remains largely unexamined.2 It is not a part of administrative law syllabi, nor is it taught in many international law courses. Scholars have examined particular areas of harmonization with an eye to their substance while neglecting their process, and efforts to look at global administrative practice as a coherent body of lawmaking are still nascent.3
As for international lawyers, they now recognize that this bureaucratic collaboration exists and have sensed its potential. But they have not drawn any confident conclusions about how the organizations might evolve.
In this article, I seek not just to site regulatory cooperation in the framework of international rulemaking, but also to identify the direction in which this cooperation might be going. I go into detail about the types of rules generated by the phenomenon, and I analyze some of its successes. I also identify the real problems with the phenomenon. The problems do not lie, as many observers have argued, with a democratic deficit and a bias in favor of the United States-at least not as those problems are usually defined. Rights of participation in informal international rulemaking are afforded rather broadly across the First World. However, developing countries enjoyed much more limited access, and it is in the developed/developing divide that informal regulatory cooperation is at its perhaps most problematic.
These problems, as well as successes, arise from the way that regulatory cooperative organizations make rules. The entities, although they began as informal regimes, have developed into recognizable forms of international administration over the last decade.
Call it hard and soft international administrative procedure. I interpret the phrase broadly to cover the three principal achievements of international regulatory cooperation-at least in my case study. These achievements range from hard procedural law to soft harmonization-through-example. They include: 1) hard international rules that constrain financial institutions in developed countries; 2) softer principles of supervision that bureaucrats in developing countries may emulate; and 3) models for regulators in adjacent issue areas.
Nowhere is internationalization of administration more clear than in the area of financial regulation. Agencies like the securities and Exchange Commission ("sec") and the Federal Reserve Board now play roles as international lawmakers, and, in turn, are increasingly constrained by international agreement. Some observers think the informal agreements that these agencies have made over the past two decades limited the spread and impact of the international financial crises of the past ten years.4 Others believe that those agreements contributed to the worldwide recession of the early 1990s.5
I study two of these international financial regulatory organizations (I call them, perhaps inelegantly, "IFROs") as my principal examples because of the length of their pedigrees and the high level of their accomplishments.6 The Basle Committee on Banking Supervision ("Basle Committee") and the International Organization of securities Commissions ("IOSCO"), both began in the 1970s, are important players in both international and American financial regulation, and now participate in a number of second-generation IFROs that have been formed in their image. …