Services Liberalization by Federations and Federal-Type Structures: What Approach to Sub-Central Measures?

Abstract

The paper addresses an issue that has so far been left to little attention in literature dealing with international trade in services. It asks how services liberalization is conducted by countries that have a federal structure and where services are not regulated only on the level of the central government but also by various sub-national entities. Some of the most powerful nations, such as the United States and Canada, have divided competencies over services regulation. So does the European Union which due to its common trade policy can in its external trade relations be contrasted with federal states. The paper analyzes the different ways in which federations and other federal-type structures engage in international services liberalization by using the EU, US and Canada as examples. In order to shed more light on their treaty practice and to see to what extent sub-central levels of government appear in their services schedules, the paper reviews the GATS commitments as well as the services commitments that the EU, US and Canada have made in some of their recent PTAs. The paper shows that there are crucial differences in the way that these federal entities engage in international services liberalization. The paper also draws more far-reaching conclusions on the approach to take towards liberalization commitments by sub-central levels of government and assesses the effect that they have, or rather the effect that the lack of such commitments has, on the liberalization levels reached in modern trade agreements.