Forum of FederationsForum of FederationsC. D. Howe InstituteC. D. Howe Institute

Addressing Internal Market Addressing Internal Market Barriers and Integration: Barriers and Integration:

The United States of The United States of AmericaAmerica

ByBy

Conrad J.Conrad J. Weiler, Jr. Weiler, Jr.Associate ProfessorAssociate Professor

Department of Political ScienceDepartment of Political ScienceTemple UniversityTemple University

Philadelphia, PA 19122, USAPhiladelphia, PA 19122, USAweilerc@temple.edu

February 1, 2010, TorontoFebruary 1, 2010, Toronto

1. Importance of Foreign Trade to 1. Importance of Foreign Trade to USUS

The US Constitution was adopted in significant part to deal with The US Constitution was adopted in significant part to deal with foreign trade issues. foreign trade issues.

In 1787, foreign trade was about 20% of the US economy, and was In 1787, foreign trade was about 20% of the US economy, and was crucial to internal growth and a rising standard of living.crucial to internal growth and a rising standard of living.

In the 19In the 19thth and early 20 and early 20thth centuries the growing internal market centuries the growing internal market predominated and foreign trade declined to a low of about 6% of predominated and foreign trade declined to a low of about 6% of GDP in 1944. GDP in 1944.

Foreign trade began rising again and by 2007 it was about 15% of Foreign trade began rising again and by 2007 it was about 15% of GDP, but still small relative to domestic activity.GDP, but still small relative to domestic activity.

Thus, while economic globalization is increasingly important, Thus, while economic globalization is increasingly important, foreign trade-based pressures to remove market barriers are still foreign trade-based pressures to remove market barriers are still relatively less important than internal pressures. relatively less important than internal pressures.

2. US Constitution2. US Constitution

Strong national executive, legislative and judicial branches were Strong national executive, legislative and judicial branches were created. Congress has broad power to regulate foreign and created. Congress has broad power to regulate foreign and domestic commerce, and other related commercial and monetary domestic commerce, and other related commercial and monetary powers.powers.

Treaties and international trade agreements are made exclusively Treaties and international trade agreements are made exclusively by Congress.by Congress.

Congress has power over import duties and a tax power, which Congress has power over import duties and a tax power, which since 1916 also includes an income tax.since 1916 also includes an income tax.

Congress has broad spending power.Congress has broad spending power. The Necessary and Proper Clause supplements and extends all The Necessary and Proper Clause supplements and extends all

national powers.national powers. The National Supremacy Clause overrides states in areas of The National Supremacy Clause overrides states in areas of

national authority, though the extent of these powers is subject to national authority, though the extent of these powers is subject to interpretation.interpretation.

3. US Constitution3. US ConstitutionRole ofRole of StatesStates

States were banned from import, export, tonnage and inspection States were banned from import, export, tonnage and inspection duties except with permission of Congress (rarely given).duties except with permission of Congress (rarely given).

States may not make treaties or issue money.States may not make treaties or issue money. States must grant the privileges and immunities of each state to States must grant the privileges and immunities of each state to

citizens of other states, and give full faith and credit to the public citizens of other states, and give full faith and credit to the public records and acts of each state. These provisions help provide a records and acts of each state. These provisions help provide a largely free and open market.largely free and open market.

States may form compacts with each other, with permission of States may form compacts with each other, with permission of Congress.Congress.

States have all powers not given to the national government.States have all powers not given to the national government. States must observe due process and equal protection of the laws, States must observe due process and equal protection of the laws,

especially since the 1950’s to end race and gender discrimination.especially since the 1950’s to end race and gender discrimination. States, however, may and do have an active and growing States, however, may and do have an active and growing

international outreach to promote own economies and investment.international outreach to promote own economies and investment.

4. Recent US Economic Policy4. Recent US Economic Policy

After the Supreme Court allowed broad exercise of the Commerce After the Supreme Court allowed broad exercise of the Commerce power in 1937, Congress, with strong Presidential leadership, power in 1937, Congress, with strong Presidential leadership, legislated broadly over many areas of the economy, with mostly legislated broadly over many areas of the economy, with mostly “economic” regulation from the 1930’s on, and more “social” “economic” regulation from the 1930’s on, and more “social” regulation from the 1960’s on. Congress created many new regulation from the 1960’s on. Congress created many new regulatory agencies which preempt most state regulation:regulatory agencies which preempt most state regulation:• Securities and Exchange Commission (1934)Securities and Exchange Commission (1934)• Federal Communications Commission (1934)Federal Communications Commission (1934)• Civil Aviation Administration (1938; merged into Federal Civil Aviation Administration (1938; merged into Federal

Aviation Administration in 1958)Aviation Administration in 1958)• Consumer Product Safety Commission (1972)Consumer Product Safety Commission (1972)• Environmental Protection Agency (1970)Environmental Protection Agency (1970)• Federal Energy Regulatory Commission (1977)Federal Energy Regulatory Commission (1977)

Congress has also used its spending power to create over 400 Congress has also used its spending power to create over 400 grant programs to state and local governments, sometimes grant programs to state and local governments, sometimes attaching conditions that might reduce barriers.attaching conditions that might reduce barriers.

5. US Economic Policy, cont’d.5. US Economic Policy, cont’d.

Congress banned discrimination regarding race, gender, age and Congress banned discrimination regarding race, gender, age and disabilities in the private sector under the commerce power since disabilities in the private sector under the commerce power since the 1960’s.the 1960’s.

Congressional preemption of state laws and unfunded mandates Congressional preemption of state laws and unfunded mandates on states increased after 1970’s, with over 300 instances since on states increased after 1970’s, with over 300 instances since then, partly a response to tighter budgets-regulating states by fiat then, partly a response to tighter budgets-regulating states by fiat instead of offering money.instead of offering money.

In 1995 (In 1995 (LopezLopez) the Court began narrowing Congress’s power ) the Court began narrowing Congress’s power somewhat, especially over social regulation.somewhat, especially over social regulation.

But the Court still allowed broad federal preemption of states and But the Court still allowed broad federal preemption of states and also continued the exercise of its own Dormant Commerce power also continued the exercise of its own Dormant Commerce power over states.over states.

Globalization helped make big business push for more Globalization helped make big business push for more deregulation as well as preemption since 1970’s.deregulation as well as preemption since 1970’s.

Presidents took the lead toward more free trade agreements from Presidents took the lead toward more free trade agreements from the late 1980’s on.the late 1980’s on.

6. Importance of US Market 6. Importance of US Market BarriersBarriers

Direct state regulation covers about 20% of the economy.Direct state regulation covers about 20% of the economy. In the US, the term “market barrier” tends to be applied to In the US, the term “market barrier” tends to be applied to

obstacles posed by foreign countries to US exports, not to obstacles posed by foreign countries to US exports, not to domestic problems. Internal barriers are considered as discrete domestic problems. Internal barriers are considered as discrete sectoral or industry issues to be dealt with pragmatically.sectoral or industry issues to be dealt with pragmatically.

A 2009 WEF survey found the US to rank 44A 2009 WEF survey found the US to rank 44thth (tied with Canada) (tied with Canada) among 135 nations in terms of prevalence of import barriers. among 135 nations in terms of prevalence of import barriers. (Germany, Britain, France, Spain, Benelux and Australia had lower (Germany, Britain, France, Spain, Benelux and Australia had lower barriers.)barriers.)

There are very few estimates of the actual costs of internal market There are very few estimates of the actual costs of internal market barriers, but one study says the benefit of unilateral barrier barriers, but one study says the benefit of unilateral barrier removal would be only 0.4% of GDP because of the relative removal would be only 0.4% of GDP because of the relative openness of the US and low ratio of foreign trade to GDP. openness of the US and low ratio of foreign trade to GDP. (Bradford and Lawrence, 2004)(Bradford and Lawrence, 2004)

There are no regular intergovernmental agencies or mechanisms There are no regular intergovernmental agencies or mechanisms dealing with market barriers generally.dealing with market barriers generally.

7. State Market Barriers Today7. State Market Barriers Today States exclusively or nearly control States exclusively or nearly control

• Insurance ( about 2.1% of GDP)Insurance ( about 2.1% of GDP)• Occupational licensing (covering about 18% of workers)Occupational licensing (covering about 18% of workers)• Corporate charteringCorporate chartering• Unemployment insuranceUnemployment insurance

States share regulation with federal government inStates share regulation with federal government in• TelecommunicationsTelecommunications• ElectricityElectricity• Some areas of transportationSome areas of transportation• Occupational safety Occupational safety • Environmental regulationEnvironmental regulation• Consumer protectionConsumer protection• Banking and InvestmentsBanking and Investments• Securities Securities

States retain broad authority over many other areas: taxes, subsidies, States retain broad authority over many other areas: taxes, subsidies, land use and related regulation, tort, property and contract law, public land use and related regulation, tort, property and contract law, public health, education, state and local government employment and health, education, state and local government employment and procurement, police, economic development, and others.procurement, police, economic development, and others.

8. Dealing With Market Barriers:8. Dealing With Market Barriers:US CongressUS Congress

National businesses tend to want less regulation, but if Congress National businesses tend to want less regulation, but if Congress simply abolishes a federal law, the States might reregulate that simply abolishes a federal law, the States might reregulate that function. function.

So some businesses also think Congress needs to do more So some businesses also think Congress needs to do more preemption of the states, while supporters of federalism may think preemption of the states, while supporters of federalism may think Congress does too much. Congress does too much.

Since the 1970’s, while deregulating, Congress has become more Since the 1970’s, while deregulating, Congress has become more sensitive to a more active national business community and less sensitive to a more active national business community and less concerned with state and local officials, and has preempted concerned with state and local officials, and has preempted hundreds of state laws.hundreds of state laws.

Congress has many ways of overriding state law, sometimes fully, Congress has many ways of overriding state law, sometimes fully, sometimes partially, sometimes as a condition of grant money, sometimes partially, sometimes as a condition of grant money, sometimes as a direct mandate.sometimes as a direct mandate.

It is unclear how much preemption has been done specifically to It is unclear how much preemption has been done specifically to clear state market barriers or what the exact benefits have been, clear state market barriers or what the exact benefits have been, but certainly most preemption overrides diverse state standards, but certainly most preemption overrides diverse state standards, and there have been major areas of clearly economic preemption.and there have been major areas of clearly economic preemption.

9. Dealing With Market Barriers:9. Dealing With Market Barriers:The Supreme CourtThe Supreme Court

From 1937 to 1995 the Court allowed virtually any federal From 1937 to 1995 the Court allowed virtually any federal exercise of commerce power, including preemption of state laws.exercise of commerce power, including preemption of state laws.

Since the 1995 Since the 1995 LopezLopez decision, federal commerce regulation decision, federal commerce regulation generally and some state powers have also been narrowed, such generally and some state powers have also been narrowed, such as state punitive damage awards in the 2003 Campbell case. as state punitive damage awards in the 2003 Campbell case.

The Greatest Court weapon against states is the “Dormant The Greatest Court weapon against states is the “Dormant Commerce Clause,” whereby the Court enforces an open national Commerce Clause,” whereby the Court enforces an open national market against state protectionism based on its interpretation of market against state protectionism based on its interpretation of powers implied from the Constitution without need for powers implied from the Constitution without need for Congressional action.Congressional action.

Example: in 2005 the Court used this doctrine to override the 21Example: in 2005 the Court used this doctrine to override the 21stst Amendment, which seems to allow states to regulate liquor Amendment, which seems to allow states to regulate liquor imports. Several states had banned direct purchase from out-of-imports. Several states had banned direct purchase from out-of-state wineries, but permitted for in-state wineries.state wineries, but permitted for in-state wineries.

10. Dealing With Market Barriers:10. Dealing With Market Barriers:The Executive BranchThe Executive Branch

Since the 1970’s and especially since Pres. Reagan, there has Since the 1970’s and especially since Pres. Reagan, there has been less federal money for states.been less federal money for states.

There has been a general decline since 1970’s in Federal attention There has been a general decline since 1970’s in Federal attention to intergovernmental relations and federalism.to intergovernmental relations and federalism.

Under Pres Bush, especially, there were some business-backed Under Pres Bush, especially, there were some business-backed attempts to override states.attempts to override states.

Since 1980’s the President has generally led efforts to make Since 1980’s the President has generally led efforts to make foreign trade agreements, which may override state laws, but has foreign trade agreements, which may override state laws, but has made some concessions to states. (There is a formal consultation made some concessions to states. (There is a formal consultation mechanism, the Intergovernmental Policy Advisory Committee, , mechanism, the Intergovernmental Policy Advisory Committee, , and information and consultation was promised to the states in and information and consultation was promised to the states in negotiation or litigating trade agreements.)negotiation or litigating trade agreements.)

Pres. Bush and Reagan also relaxed enforcement of some laws, Pres. Bush and Reagan also relaxed enforcement of some laws, such as environmental and consumer protection, in some cases such as environmental and consumer protection, in some cases triggering state reregulation.triggering state reregulation.

11. Dealing With Market Barriers11. Dealing With Market BarriersStatesStates

States may adopt uniform laws, e.g., the massive Uniform States may adopt uniform laws, e.g., the massive Uniform Commercial Code, adopted in all 50 states: it governs commercial Commercial Code, adopted in all 50 states: it governs commercial contracts and related instruments. 25 other laws were adopted by contracts and related instruments. 25 other laws were adopted by 45 or more states.45 or more states.

States may form Interstate compacts: (sometimes also with Feds States may form Interstate compacts: (sometimes also with Feds or Canada) such as the Interstate Driver License Compact, the or Canada) such as the Interstate Driver License Compact, the Multistate Tax Commission, and many others.Multistate Tax Commission, and many others.

States may extend reciprocity: often in occupational licensing, States may extend reciprocity: often in occupational licensing, taxes, child support, education, gun registration, and other areas.taxes, child support, education, gun registration, and other areas.

States may litigate: in recent years State Attorney Generals States may litigate: in recent years State Attorney Generals (usually elected) have pursued litigation that sometimes helps (usually elected) have pursued litigation that sometimes helps create national standards, (or create new barriers): Microsoft, New create national standards, (or create new barriers): Microsoft, New York consumer protection suits against banks.York consumer protection suits against banks.

States may informally cooperate with each other and the Federal States may informally cooperate with each other and the Federal government, directly or through the “Intergovernmental Lobby” of government, directly or through the “Intergovernmental Lobby” of the National Governors Association, National Conference of State the National Governors Association, National Conference of State Legislatures, and others.Legislatures, and others.

States may regulate above or in place of federal standards States may regulate above or in place of federal standards creating a new standard, e.g. California auto emissions.creating a new standard, e.g. California auto emissions.

12. Dealing With Market Barriers12. Dealing With Market BarriersBusiness and The EUBusiness and The EU

Business and other organizationsBusiness and other organizations• US Chamber of Commerce has major lobbying and litigation US Chamber of Commerce has major lobbying and litigation

efforts, many other business groups also are active, but little efforts, many other business groups also are active, but little general criticism of state barriers.general criticism of state barriers.

• Think tanks and political groups promote or oppose trade; Think tanks and political groups promote or oppose trade; Public Citizen is very critical of WTO and NAFTA and effects on Public Citizen is very critical of WTO and NAFTA and effects on states; CATO Institute and Institute for International Economics states; CATO Institute and Institute for International Economics are very supportive of free trade. are very supportive of free trade.

The most comprehensive critic of US state barriers has been the The most comprehensive critic of US state barriers has been the EU. Chief concerns: EU. Chief concerns: • Over 10,000 standards and technical specifications, and the Over 10,000 standards and technical specifications, and the

decentralized US process of determining them;decentralized US process of determining them;• Procurement, electrical and electronic products;Procurement, electrical and electronic products;• Liquor laws;Liquor laws;• Subsidies (c.f. 2004 Boeing complaint to WTO)Subsidies (c.f. 2004 Boeing complaint to WTO)• Services, especially insuranceServices, especially insurance

13. Specific Market Barriers:13. Specific Market Barriers:

State and Local State and Local TaxesTaxes• Internet Sales Taxes: With Internet Sales Taxes: With

potentially over 6000 potentially over 6000 taxing entities, in taxing entities, in Quill Quill (1992), the Supreme Court (1992), the Supreme Court suspended them as too suspended them as too burdensome on business. burdensome on business. States are now working to States are now working to make such taxes more make such taxes more uniform, asking Congress uniform, asking Congress to allow them.to allow them.

• State Corporate Income State Corporate Income Taxes: Declining revenues, Taxes: Declining revenues, costly compliance; states costly compliance; states and the Multistate Tax and the Multistate Tax Commission are working to Commission are working to harmonize rules. No action harmonize rules. No action yet by Congress.yet by Congress.

TransportationTransportation• States were preempted States were preempted

from all airline, and most from all airline, and most trucking, bus and rail trucking, bus and rail regulation from the 1970’s regulation from the 1970’s on.on.

• NAFTA requirement to let NAFTA requirement to let Mexican trucks fully into Mexican trucks fully into US are so far being US are so far being blocked by Congress blocked by Congress (partly because of state (partly because of state and trucker opposition.)and trucker opposition.)

14. Specific Market Barriers14. Specific Market Barriers

EnvironmentEnvironment• Several major federal acts Several major federal acts

since 1960’s preempted since 1960’s preempted state rules in water, air, state rules in water, air, toxic waste.toxic waste.

• 10 Northeastern states 10 Northeastern states form Regional Greenhouse form Regional Greenhouse Gas Initiative in 2007.Gas Initiative in 2007.

• States may impose higher States may impose higher standards, e.g. California standards, e.g. California in vehicle emission in vehicle emission standards, toxic standards, toxic substances, effectively substances, effectively resetting national resetting national standard. standard.

BankingBanking• States removed from States removed from

supervision of savings and supervision of savings and loans in1989.loans in1989.

• Interstate Banking and Interstate Banking and Branching Efficiency Act of Branching Efficiency Act of 1994 removed most 1994 removed most restraints on interstate restraints on interstate banking.banking.

• States still retain some States still retain some bank regulation-2009 bank regulation-2009 Supreme Court ruling in Supreme Court ruling in Cuomo v. ClearinghouseCuomo v. Clearinghouse allows state consumer allows state consumer protection suits against protection suits against banks.banks.

15. Specific Market Barriers15. Specific Market Barriers

ElectricityElectricity• Feds begin imposing Feds begin imposing

deregulation in 1970’s, deregulation in 1970’s, also allow states to also allow states to deregulate.deregulate.

• FERC controls interstate FERC controls interstate sales of wholesale sales of wholesale electricity and electricity and transmission.transmission.

• States still control in-state States still control in-state retail markets and retail markets and generator siting, posing generator siting, posing problems for an efficient problems for an efficient national grid.national grid.

TelecommunicatiTelecommunicationsons• Feds impose deregulation Feds impose deregulation

in 1980’s.in 1980’s.• 1996 Telecommunications 1996 Telecommunications

Act allows federal Act allows federal preemption of state bans preemption of state bans on cable and phone on cable and phone companies entering each companies entering each other’s markets.other’s markets.

• Local zoning rules against Local zoning rules against cell towers restricted.cell towers restricted.

• States may still play a role States may still play a role in setting rates and in setting rates and granting franchises.granting franchises.

16. Specific Market Barriers16. Specific Market Barriers

InsuranceInsurance• Insurance represented about 2.1% of US GDP in 2006, and was the Insurance represented about 2.1% of US GDP in 2006, and was the

largest industry left mostly to the states.largest industry left mostly to the states.• The 1999 Gramm-Leach-Bliley Financial Services Reorganization The 1999 Gramm-Leach-Bliley Financial Services Reorganization

Act set minimum standards, and allowed banks into the industry.Act set minimum standards, and allowed banks into the industry.• States were given until 2003 to better coordinate insurance agent States were given until 2003 to better coordinate insurance agent

licensing.licensing.• Globalization and domestic pressures led business to pressure Globalization and domestic pressures led business to pressure

Congress to preempt state rules (though some local businesses Congress to preempt state rules (though some local businesses favor state regulation.)favor state regulation.)

• States are working with the National Association of Insurance States are working with the National Association of Insurance Commissioners (state officials), the National Governors Commissioners (state officials), the National Governors Association, the National Conference of State Legislators and Association, the National Conference of State Legislators and others to prevent a federal charter and licensing of agents.others to prevent a federal charter and licensing of agents.

• 36 States have formed the Interstate Insurance Product Regulation 36 States have formed the Interstate Insurance Product Regulation Commission to promote standardization and resist federal Commission to promote standardization and resist federal preemption.preemption.

17. Specific Market Barriers, cont’d.17. Specific Market Barriers, cont’d.

Standards Standards • State and local governments State and local governments

in the US enforce thousands in the US enforce thousands of product, service and other of product, service and other standards. Many accepted standards. Many accepted standards are privately standards are privately developed, and international developed, and international norms are not always norms are not always complied with as required by complied with as required by NAFTA and the WTO NAFTA and the WTO Agreement on Technical Agreement on Technical Barriers to Trade.Barriers to Trade.

• There are constant pressures There are constant pressures and movements to create and movements to create uniformity from business and uniformity from business and from the American National from the American National Standards Institute, and Standards Institute, and others: progress is voluntary.others: progress is voluntary.

Torts, Class ActionsTorts, Class Actions• State tort, malpractice and State tort, malpractice and

damages laws vary and damages laws vary and some states are easier some states are easier locations for filing and locations for filing and collecting large damages collecting large damages in class action suits.in class action suits.

• Business generally, Business generally, doctors and others and doctors and others and conservatives have long conservatives have long been trying to narrow and been trying to narrow and harmonize state rules.harmonize state rules.

• In 2003, the Supreme In 2003, the Supreme Court set limits on state Court set limits on state punitive damage awards.punitive damage awards.

• 2005 Class Action Fairness 2005 Class Action Fairness Act reduced state Act reduced state autonomy, especially in autonomy, especially in larger class actions.larger class actions.

18. Role of International 18. Role of International AgreementsAgreements

The NAFTA and WTO Agreements generally increased awareness The NAFTA and WTO Agreements generally increased awareness that international rules might conflict with state and local laws. that international rules might conflict with state and local laws. Most state governors supported these agreements. Most state governors supported these agreements.

Some minor changes were made to give states more notice of Some minor changes were made to give states more notice of changes and actions that might affect them.changes and actions that might affect them.

These agreements also required state and local governments to These agreements also required state and local governments to declare which procurement programs would be covered or declare which procurement programs would be covered or reserved.reserved.

Few suits against states: one WTO suit, Beer I and II, dealt with Few suits against states: one WTO suit, Beer I and II, dealt with state and local laws. A challenge to the Massachusetts Anti-state and local laws. A challenge to the Massachusetts Anti-Burma purchasing law was upheld in 2000 under domestic foreign Burma purchasing law was upheld in 2000 under domestic foreign affairs preemption principles.affairs preemption principles.

NAFTA raised the issue of Mexican trucks in US, also allowed NAFTA raised the issue of Mexican trucks in US, also allowed Investor suits, such as the unsuccessful 2005 Methanex suit.Investor suits, such as the unsuccessful 2005 Methanex suit.

On the whole, the direct impact of international trade agreements On the whole, the direct impact of international trade agreements has been small on internal state barriers, but indirectly there is has been small on internal state barriers, but indirectly there is pressure from globalization.pressure from globalization.

19. Successes and Failures19. Successes and Failures

The greatest effort in the US to remove internal market barriers The greatest effort in the US to remove internal market barriers was the establishment of the Constitution in 1787 and 1788.was the establishment of the Constitution in 1787 and 1788.

On the whole the US has long been an increasingly successful On the whole the US has long been an increasingly successful open market, though numerous barriers remain.open market, though numerous barriers remain.

In recent decades, partly due to globalization, national and In recent decades, partly due to globalization, national and international businesses have increased their demand for national international businesses have increased their demand for national regulation over 50 state regulators.regulation over 50 state regulators.

In recent decades the rate of Congressional preemption of state In recent decades the rate of Congressional preemption of state laws has increased, but state regulation has also increased. laws has increased, but state regulation has also increased.

It is difficult to calculate the costs of remaining barriers, and It is difficult to calculate the costs of remaining barriers, and doubtless new ones will arise as new products become available in doubtless new ones will arise as new products become available in wider markets. wider markets.

Given the lack of any specific mechanism to generally address Given the lack of any specific mechanism to generally address barriers, and barring major trade disputes, for the immediate barriers, and barring major trade disputes, for the immediate future internal market barriers will be dealt with on an individual, future internal market barriers will be dealt with on an individual, not comprehensive, basis as they become an issue, usually from not comprehensive, basis as they become an issue, usually from internal business pressures, but indirectly from globalization internal business pressures, but indirectly from globalization pressures also. pressures also.

20. Lessons for Canada20. Lessons for Canada

The elephant in the room for the US in 1787 was Britain, leading The elephant in the room for the US in 1787 was Britain, leading to the Constitution, but no elephant since. The American elephant to the Constitution, but no elephant since. The American elephant seems not to be having quite the same effect on Canada now.seems not to be having quite the same effect on Canada now.

If the Canadian courts narrowly interpret the commerce power, If the Canadian courts narrowly interpret the commerce power, and the federal government is not willing to push its powers, the and the federal government is not willing to push its powers, the US may not really be a good model for Canada. In the US the US may not really be a good model for Canada. In the US the Supreme Court is fairly vigorous against barriers, and Congress Supreme Court is fairly vigorous against barriers, and Congress and the President are also relatively more forceful.and the President are also relatively more forceful.

The AIT seems the best approach, though perhaps it can use some The AIT seems the best approach, though perhaps it can use some changes based on the Australian model. Perhaps adding fiscal changes based on the Australian model. Perhaps adding fiscal incentives for provincial progress, and taking the process out of incentives for provincial progress, and taking the process out of politics if possible might give it greater strength.politics if possible might give it greater strength.

Perhaps an appeal, as in Australia, to increase prosperity and Perhaps an appeal, as in Australia, to increase prosperity and employment during this recession, as opposed to a focus on employment during this recession, as opposed to a focus on barriers directly, could also help generate momentum. (I would barriers directly, could also help generate momentum. (I would suggest the same for the US at this time.)suggest the same for the US at this time.)