The conditions and potentials of federalizing trade policy: Comparing Canada and the United States

Whereas some federations reacted to the expanding international trade agenda by 'federalizing' trade policy-making and allowing sub-federal governments a substantial involvement, others did not. Comparing Canada and the United States, this paper investigates the conditions and potentials of federalization on the case of public procurement liberalization. The first section argues that the institutionalization of intergovernmental relations depends on the incontestability of sub-federal claims to authority and the absence of cheaper alternatives. In the US, the availability of federal pre-emption and the possibility to exclude sub-federal competencies from international agreements acted as a brake on state involvement. In Canada, 'watertight' provincial competencies and a non-representative second chamber enabled a gradual federalization. The second section argues that federalization holds the potential to increase constituent units' openness to procurement liberalization. While their deficient involvement has constrained US states' openness, federalization was instrumental in Canadian provinces' recently growing openness for international suppliers.