ABSTRACT
This chapter reviews the historical development toward decentralization and the separation of powers. It explains how and where the Canada-United States Free Trade Agreement (CUSFTA) infringed on provincial powers and how the subnational governments reacted, as well as which role they played in the implementation procedure. The chapter explores the implications for both the study's null hypothesis and the fiscal federalist hypotheses. It presents the North American Free Trade Agreement (NAFTA) between the United States, Canada and Mexico, which came into force in January 1994. In some respects it went beyond the CUSFTA, particularly with its side agreements on labor and the environment that had significant implications within Canada for intergovernmental relations and the domestic implementation of the side-deals. The primary Canadian objective in negotiating the CUSFTA was to secure access to the US market through a binding dispute settlement process.
