More voice, less exit. Sub-federal Resistance to International Procurement Liberalisation in the European Union, the United States and Canada

Via an agenda of “deep trade”, global trade governance has increasingly intruded into domestic regulatory space. This is all the more relevant in federally-organised polities in which competencies now subjected to international rule-setting are constituent units’ prerogatives. In many federations, the field of public procurement is a case in point. At the same time, sub-federal executives’ resistance to international procurement liberalisation has varied vastly across federations. While EU member states’ resistance has remained low, US states’ resistance has persisted and increased in recent years. The Canadian provinces, in turn, have only recently begun to open their procurement markets to foreign suppliers. In an attempt to explain this puzzling variance in sub-federal resistance, this Dissertation argues that federations’ domestic institutional and procedural foundations bear an influence on policy outcomes in trade liberalisation. Relying on the concepts of “exit” and “voice” (Hirschman 1970), it posits that sub-federal executives’ voice is inversely related to their reliance on exit. The more voice sub-federal executives are equipped with, the less they dispose of an incentive to exit from a system-wide policy or international commitment. Voice hinges, firstly, on a federation’s institutional configuration. Council federalism, providing constituent units with a direct representation in federation-wide policy-making, endows sub-federal executives with more voice than senate federalism which relies on indirect forms of territorial representation. It depends, secondly, on the nature of vertical relations between both orders of government. Constituent units enjoy more voice when their relations with the federal level are collaborative, marked by formalised patterns of joint policy-making, rather than competitive, pursuing a delineation of federal and subfederal spheres of competence. In case studies of the United States, Canada and the European Union, the Dissertation finds that the posited inverse relationship between sub-federal voice and exit holds and that resistance among sub-federal executives has indeed evolved systematically. In the US senate federation, effective means of joint policy-making have not evolved in the noncoercive field of procurement. In the Canadian case, increasing vertical collaboration has compensated provinces for senate federalism’s low voice. In comparison, the EU case proves peculiar for constituent units’ decisive role in its second chamber federalism and the dense regime of trusting vertical collaboration it accommodates. Member states’ low resistance is a manifestation of the EU trade regime’s comparatively effective workings. Eventually, the dissertation’s findings hint at an appropriate institutional and procedural design for international rule-setting in multi-level settings. If federal executives seek to subject sub-federal prerogatives to international constraints, they should allow for constituent units’ continuous, systematic and collaborative inclusion.

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