Conclusion

The concluding chapter of Trade Policy in Multilevel Government not only elaborates on the theoretical model’s explanatory power and its limits in the light of the three analysed polities, but also turns to raising questions as to the democratic legitimacy of the multilevel pattern of trade policy described in the book. Questions of democratic legitimacy in multilevel systems are complicated by the fact that a popular and a territorial logic of representation coexist and, at times, compete. Both citizens and constituent units are entitled to input into the system. The ensuing tension between popular and territorial logics of representation also permeates multilevel trade governance. In the EU and the Canadian cases, territorial legitimacy clearly takes precedence over popular representation. Seen from this perspective, the US case appears in a somewhat different light. In the face of adaptational pressures arising from economic and political globalization, popular representation could also be regarded as an additional layer of autonomy in self-rule systems of multilevel government.

United States

The first of the three case studies looks at the United States. It finds that while the states’ opportunities for individual exit have remained unconstrained in the non-coercive field of procurement in which federal pre-emption is not an option, no serious attempts have been made to systematically increase their voice. This is due, firstly, to the mechanics of the US senate-type system of multilevel representation and, secondly, to the lack of an institutionalized procedure of vertical collaboration in a policy environment characterized by ‘coercive federalism’. Persisting barriers in the internal market and a widespread politicization of international procurement liberalization as a threat to state sovereignty have further contributed to constituent units’ high propensity to seek exit from international constraints. Ultimately, the US case highlights the limits of self-rule systems in organizing trade openness across multiple levels of government. Endowing the states with little voice in polity-wide policy-making, the US model shows a marked tendency to breed resistance to internationally driven adaptational pressures among constituent units. As self-rule systems are built on a delineation of central and subcentral spheres of competence, they generally tend to lack the institutional means and ideational underpinnings to effectively organize collaborative power-sharing by establishing patterns of shared rule.

Resisting Openness

The third chapter of Trade Policy in Multilevel Government introduces the field of procurement as a hard case of trade liberalization. Contracting in line with the principle of ‘best value for money’ curtails public actors’ ability to rely on procurement as a directed means of redistribution. Nevertheless, this principle has served as the rallying cry of an international regime of procurement liberalization that has gradually evolved since the 1970s and whose historical development is described here. In a second step, the chapter elaborates on the patterns of openness and resistance to procurement liberalization among the three multilevel polities chosen for analysis. Over the entire period of observation, the US states’ openness has been comparatively low. Intermittently, their resistance had decreased in the run-up to the 1994 GPA. In recent years, however, the number of states willing to be bound by international procurement disciplines plummeted to virtually zero. As for the Canadian provinces and territories, the picture shifted in recent years. Especially in the negotiations on CETA, they permitted the EU wholesale access to their procurement markets. Within a short period, the Canadian provinces’ position on international procurement liberalization thus witnessed a veritable sea change. Finally, in the EU case, openness on part of member state governments has consistently proved highest among the three cases. Already within the scope of the 1979 GATT Code, all EC members’ central procurement was covered, albeit modestly. In the 1994 GPA and its 2012 revision, the EU covered its procurement on the national, regional, and municipal level.

More Voice, Less Exit

The second chapter constructs a theoretical framework to account for the introduced research puzzle. Building on a central line of work on ‘federal dynamics’, it argues that the institutions and procedures of intergovernmental relations bear a decisive impact on a multilevel system’s ability to organize openness to international trade. While self-rule systems build on power-hoarding and the delineation of spheres of competence, shared rule systems rely on collaborative power-sharing between central and subcentral executives. In reference to Hirschman’s seminal concepts of exit and voice, the chapter then posits that any multilevel polity endows subcentral executives with a specific amount of voice in the making of trade and procurement policy. This voice it expects to be inversely related to exit: the more voice subcentral executives are equipped with, the less they dispose of an incentive to exit from a system-wide policy or international commitment. As shared-rule systems endow constituent units with more voice in polity-wide trade policy-making, they should organize openness more effectively than self-rule systems. At the same time, the inverse relationship between voice and exit does not unfold in an experimental vacuum. Depending on the specific policy sector, intervening factors can come to affect constituent units’ propensity to seek exit without affecting the amount of their voice. In the specific field of trade and procurement policy, the book expects two such policy-specific factors potentially to affect constituent units’ degree of exit. These are the amount of domestic procurement market integration and the politicization of international procurement liberalization.

European Union

The third case study investigates the case of the European Union. It finds that the EU’s constituent units enjoy an unusually influential role in its council model of subcentral representation. Member states shape EU trade policy at both stages of formal decision-making. In-between these formal veto points, collaborative relations between supranational and national executives are supported by a dense and formalized network of committees as well as a clear-cut division of procedural authorities. Turning to the two theorized intervening factors, the chapter finds that the nexus between European integration and international liberalization has been particularly close in procurement, reinforcing member states’ openness. Politicization of procurement liberalization, in turn, has remained low despite recent years’ contestation against CETA and TTIP. Ultimately, the EU case corroborates the initial expectation that shared rule systems are institutionally and procedurally well-equipped to adapt flexibly to the demands of multilevel trade governance and organize openness more effectively than self-rule models. EU member states have developed strategies to avoid the joint-decision trap’s propensity to decision-making blockades and lowest common denominator outcomes. Among these means rank a clear-cut division of procedural competences with the Commission, a densely institutionalized system of IGR largely secluded from domestic public and party political pressures, and the adoption of legislative proposals by qualified majority. This general institutional and procedural set-up has allowed the Union to act as a ‘market-making polity’ both internally, forging an integrated procurement market, as well as externally, pursuing an offensive agenda in the WTO and in preferential trade agreements.

Canada

The second case study zooms in on the case of the Canadian system of multilevel government. In contrast to the US case, Canada has demonstrated remarkable adaptability in its patterns of vertical power-sharing. The chapter finds that despite the provinces’ initial lack of voice in its self-rule setting, the Canadian federation has been able effectively to construct a regime of ongoing, constructive, and trusting vertical dialogue in the field of international trade policy. Against the backdrop of increasing domestic market integration and a generally low degree of politicization, their increased voice has eventually incited subcentral executives to forego their sovereign right to exit. Ultimately, the Canadian case demonstrates that, under certain conditions, self-rule systems can adapt to their increasing embeddedness in multilevel trade governance. Despite being built on a delineation of central and subcentral spheres of competence in ‘watertight compartments’, the Canadian system integrated means of shared rule to deal with pressures from the international realm while preserving a substantive measure of subcentral autonomy. The concomitant increase in subcentral voice leads to two observations of immediate relevance to the theorizing of multilevel trade governance. First, despite the systematic inclusion of subcentral executives in trade policy-making, the destructive side-effects of the joint-decision trap can be avoided. Second, multilevel systems are dialectically capable of integrating certain fields while decentralizing authority.

Introduction

The introductory chapter to Trade Policy in Multilevel Government commences by elaborating the empirical puzzle of subcentral executives’ varying openness to trade liberalization. In multilevel government, it is unusual for lower-level executives to sit at international negotiating tables. At the same time, the latter increasingly hold competences of relevance to contemporary trade policy. The ‘deep trade’ agenda of recent decades has progressively subjected subcentral governments’ prerogatives to international rule-setting, thereby constraining their policy space. Interestingly, subcentral governments in different multilevel polities have reacted with widely varying degrees of openness to this development. How can this variance in subcentral openness be explained? The remainder of the introductory chapter sketches out the book’s theoretical and methodological approach. After elaborating on its contribution to existing scholarship on trade policy and the dynamics of multilevel government, and emphasizing the empirical significance of public procurement liberalization for the political economies of multilevel polities, the chapter presents a brief summary of the book’s empirical findings. It concludes with an overview of the book’s general structure.