Skip to comments.The Future of North America: Beyond Free Trade
Posted on 04/07/2005 8:37:54 PM PDT by hedgetrimmer
When it came into force on January 1, 1994, the North American Free Trade Agreement (NAFTA) joined the economic futures of Canada, Mexico, and the United States. Clearly both Canada and Mexicoreflecting the forces of geography and marketshad been integrating with the US well before NAFTA took effect. Indeed, the US and Canada had signed a bilateral free trade accord some six years earlier. But, with NAFTA in place, the pace of integration accelerated, and systematic rules governing trade and investment along with dispute resolution mechanisms were established, and the governments assumed an active role in guiding, promoting, and managing economic relations among the three countries. Moreover, the three countries are increasingly viewed as a single economic entity, one with a GDP of some $10 trillion or 15 percent larger than the 15-country European Union.
What then lies ahead for North America? As it stands, the NAFTA agreement takes a very narrow view of integration, focusing almost exclusively on trade and investment matters, steering clear of any new institutional, social, or development arrangements. NAFTA barely addresses such vital issues as immigration policy and labor markets, the energy sector, environmental protection, and law enforcement. Moreover, despite this trilateral relationship, the three governments of North America largely conduct business within the framework of two bilateral relationships.
The governments of Canada, Mexico, and the United States now must confront the question of whether NAFTA is enough. Do they want to keep their trilateral relationship largely focused on economic matters or are they interested in integrating more deeply, in more fully joining their societiesperhaps initiating a process to build a North American Community, if not precisely along the lines of the European Union, then something similar but less ambitious? Whatever the three countries decide their ultimate objective to be, what additional steps, if any, should they take in the interim to affect the pace and structure of their integration?
This document is designed to begin a process to help answer these questions. It is based on the deliberations of conference held in December 2001 at the Brookings Institution, as part of a project on the future of North American Integration organized with the support of seven organizations from the three North American countries.2 The consortium has been formed to explore the issues and choices that lie aheadincluding the costs, benefits, and constraints associated with various optionsas the three nations consider the kind of future relationship they wish to develop. The aim of the project is to assist decision-makers, opinion leaders, and ordinary citizens understand the promise and challenges associated with the integration of Canada, Mexico, and the United Statesand encourage them to think more systematically about how they wish to proceed and where they want to end up.
In the balance of this report, we summarize and expand upon the discussion at the December conference, which brought together academic experts, policy officials, and business leaders from all three countries. Leadoff presentations were made by three distinguished experts from the three countries: Robert Pastor of Emory University; Ambassador Andres Rozental from Mexico, who is President of Consejo Mexicano de Asuntos Internationacionales; and Former Foreign Minister of Canada Perrin Beatty, President and CEO of the Canadian Manufacturers and Exporters.3 The report contains a variety of policy suggestions offered by these and other experts at the conference but, unless otherwise indicated, expresses no consensus behind any particular ideas. The report will be revised to take account of the results of additional meetings planned for Mexico City and Ottawa, and subsequently will be distributed widely in the three nations.
Economic Integration is a Fact of Life for US, Canada and Mexico
Today, the US is overwhelmingly the largest trading partner of both Canada and Mexico and the biggest foreign investor in both countries.
Total trade between the US and Canada now amounts to about $450 billion per year, nearly two-and-one-half times what it was ten years ago. Canada buys some 70 percent of its imports from US suppliers and sends more than 80 percent of its exports to the US market. Nearly two-thirds of all foreign investment comes from the US.
Trade between the US and Mexico exceeds $250 billion per year, more than four times that of a decade ago. Mexico ships almost 90 percent of it exports to the US, and obtains some 70 percent of its imports from the US. Mexico has become the second largest trading partner of the United States, and if the growth of its bilateral commerce continues at its current rate, Mexico could soon be challenging Canada's number one ranking. Mexican exports to the US, once largely made up of petroleum and agricultural products, are now more than 85 percent manufactured goods.
Although it does not come anywhere close to the amount of either country's bilateral commerce with the US, trade between Canada and Mexico increased nearly five-fold in the past 10 years. The two countries are now each others' 3rd largest trading partnertrailing only the US and EU. The amount they sell to and buy from each other amounts to some $9 billion, nearly as much as the trade between Brazil and Argentina.
Economic integration among the three countries already goes considerably beyond trade and investment. Mexicans continue to migrate in large numbers to the US, principally in search of jobs and higher wages. Upwards of 21 million persons of Mexican origin now reside in the US. Some 9 million of these were born in Mexico, and 4 million are in the US illegally. They contribute in countless ways to the US economy and society.
Mexicans and Mexican-Americans now send some $8 billion annually back to their communities. Although the numbers are still modest, a growing number of Mexicans are also finding their way to Canada. And tourism is expanding in all three countries or, at least, it was before September 11th. Mexico is the main destination of American tourists, while the US and Canada are prime destinations of the other North American nations.
The three countries are tied together in many non-economic ways as well. Mexicans are changing language patterns, social norms, and culture throughout the US. As Mexican migrants become residents and citizens, they are increasingly influencing local and national politics and culture. Indeed, the voting strength and preferences of Mexican-Americans are shaping US policy toward Mexico. At the same time, US cultural phenomena are increasingly pervasive in both Mexico and Canadathrough films, TV, music, tourists, and student and professional exchanges. Civil society organizations of many types function easily across the borders of all three countries.
The Future of Integration
Unless the three governments decide to halt further integration, recent trends strongly suggest that the societies and economies of the US, Canada, and Mexico are likely to draw closer and closer together. In particular, cross-border trade, investment, and migration should all continue to increase.
Stronger cooperation is clearly the aim of the three governments. That was made plain in the joint statement of Presidents Bush and Fox and Prime Minister Chretien, issued in April 2001 during the Quebec City Summit of the Americas. The three leaders recognized that "patterns of cooperationby governments, business, and other members of civil societyare building a new sense of community among us." And they pledged to "work to deepen a sense of community, promote our mutual economic interest, and ensure that NAFTA's benefits extend to all regions and social sectors." To achieve this objective, the three leaders called for "coordinating efforts in support of efficient North American energy markets and strengthening trilateral cooperation to address the legitimate needs of migrants," while pledging to "examine options to further strengthen our North American partnership . . . and advance the trilateral relationship."
President Fox of Mexico, since his election in July 2000, has most energetically pursued the goal of North American integration. Even before taking office in December, he traveled to Ottawa and Washington with several groundbreaking proposals for strengthening ties among the three countries. He called on his US and Canadian counterparts to consider transforming NAFTA from a free trade area into a common marketand to consider working toward the longer term goal of "open borders," for people as well as goods, among the three countries. Although largely rebuffed on these ambitious goals, Fox has continued to press for deeper integration among all three countries particularly focused, unsurprisingly, on Mexico's bilateral relationship with the United States.
President Bush and many members of the US Congresseven those with a history of antagonism toward Mexicohave endorsed the idea of reshaping US policy toward Mexico in such sensitive areas as immigration and drugs, and in pursuing closer economic ties. Bush went so far as to call the US relationship with Mexico its most important in the world.
The events of September 11 radically transformed the foreign policy agenda of the USand shifted priorities in US relations with Mexico and Canada. Border security commanded most of the immediate attention of policymakers in the United States, while the issues of greatest concern to Mexico and Canadaresolving outstanding trade disputes and reshaping immigration policies, the core issues of any integration effortappeared to lose their urgency. Instead, security matters became a central focus for collaboration among the three governments. Canada and Mexico recognized the importance of security concerns on their own merits, but were also intensely aware that, in light of changed US priorities, security cooperation was essential to sustain normal cross border commerce, capital flows, and the movement of people. The agendas of the three countries may be less congruent now than they were before Sept. 11, but the three countries each now have different, and possibly stronger, reasons for integration.
Different Paths Toward Integration
Although many political leaders in the US, Canada, and Mexico agree that greater economic and political coordination among the three countries would be desirable, no preferred formula or path for achieving that coordination has yet emerged. Indeed, there are wide differences on how to proceed, depending on a range of factors, including specific interests at stake, ideological preferences, and pragmatic judgments of what is possible.
These differences were apparent at our December conference. What follows below are some of the broad visions for future integration and associated policies for carrying them out that were advanced during the meeting.
First Things First: Fully Implement NAFTA
For those supportive of further integration, it is crucial that, at a minimum, NAFTA be fully implemented. So far, the provisions of the NAFTA accord have been largely fulfilled on schedule, but a great deal still needs to be done to meet its requirements in both letter and spirit.
In particular, many in Mexico have expressed concern about US compliance with NAFTA on issues as varied as sugar and trucking. For its part, Canadians are concerned about the ongoing unfair trade investigations by the US government of its lumber exports to the United States, as well as possible new barriers raised against the import of Canadian wheat and steel. While these matters may not be specifically covered by NAFTA, many in Canada feel that the US is not showing good faith by restricting free trade in these commodities and products. As for the United States, many policy makers and citizens remain concerned about Mexico's adherence to the accord's rules of origin provisions and its labor and environmental side agreements.
Some advocates of closer North American links argue that, for the next several years, the three governments ought to focus only on resolving these various disputes and work to ensure the full implementation of NAFTA. Several arguments are cited to support this view.
For one thing, NAFTA provides the core legal and institutional framework for integration. If it cannot be made to work, then how can the governments think of further initiatives to deepen integration? Indeed, pursuing other integration strategies could end up weakening the commitment to NAFTA and defer its completion.
Moreover, there may be some dark clouds on the horizon that could make NAFTA even more difficult to implement in the years ahead as the scheduled tariff reductions under the agreement become more binding, especially in Mexico. Facing greater competition from the North, domestic constituencies within Mexico may resist full implementation of the NAFTA. These pressures are likely to grow if the United States is not seen as adhering to its part of the agreement. A similar backlash could arise in Canada if the current disputes over the export of Canadian lumber, steel and wheat to the United States are not somehow brought to an amicable conclusion.
One suggestion for minimizing future conflict over NAFTA-related issues might be to establish a permanent North American Court on Trade and Investment, which would replace the current ad hoc tribunals provided for under the Agreement. The rulings of this Court would be binding as is the case for the ad hoc tribunals. In addition, a permanent Court would avoid the conflicts of interest that are becoming prevalent because of the difficulty of finding judges on a temporary basis, while it would permit the accumulation of precedent and thus the development of a more stable framework for trade and investment. The Court's proceedings should be transparent: its hearings should be open to the public and opportunities should exist for interested parties from all countries to present briefs on disputes that come before the tribunal.
Moving Beyond NAFTA: The Options
It will be difficult, if not impossible, to design and implement additional integration measures beyond NAFTA until there is broad agreement among policy makers and citizens on medium and longer run objective. The effort will be complicated by the political fragmentation inherent in the political systems of governmentembodied in separation of powers in different branches of government at the national level and federalism between national and provincial/state governmentsin all three countries. Nonetheless, it is useful to examine three possible broad paths toward greater integration as a way of focusing attention on the long-run choices with respect to integration that each nation confronts:
A "NAFTA-plus" arrangement, which would be limited to additional trade and investment measures that might lead to a full-fledged customs union with a common external tariff.
"Deeper integration" would seek accords on other subjects where there are cross-border impacts, including migration, energy and water management, transportation and infrastructure, security arrangements, and foreign policy consultations; and
A "supra-national institutions" option, which could involve modest arrangements to deal with specific issues or sectors, or be as ambitious as entailing EU-style inter-governmental executive and legislative functions. These are not mutually exclusive paths. It is possible that leaders and citizens of the three countries could agree on an eclectic policy framework that contains elements of each of these broad models.
A NAFTA-plus arrangement would build on NAFTA, but keep the focus of any new integration effort on trade and investment. This approach, for example, might turn NAFTA from a free trade agreement into a full-fledged customs union, with a common external tariff. Over the longer run, it could also contemplate the strengthening and deepening of economic coordination generallyfor instance, through increased harmonization of regulations and macro-economic policy. Policy harmonization might eventually aim toward a common currency (although there was consensus at the December meeting that talk of a common currency is today premature and that the flexible exchange rate system so far has worked relatively well to smooth out each country's adjustments to macroeconomic shocks).
Other non-trade measures could also facilitate trade. One example would be an integrated continental plan for improving transportation between the three countries by, among other things, establishing common vehicle safety standards and eliminating restrictions against domestic carriage by foreign providers (airlines in particular). If appropriate security measures can be agreed upon, a North American "open skies" arrangement could be contemplated. The many different sub-national and national transportation regulatory standards make harmonization an extremely ambitious goal, however. It may be more feasible to seek the adoption of minimal standards coupled with mutual recognition of standards across countries (an approach to standards adopted by the EU).
Consideration could also be given to wideningrather than deepeningNAFTA to incorporate other neighboring countries like those of Central America and the Caribbean. In fact, President Bush has recently endorsed such this option by announcing his intention to begin negotiations toward a free trade arrangement with the Central American and Caribbean region. In addition, Canada and Mexico already have bilateral agreements with many of the countries in the two regions. Some argue, however, that widening NAFTA to include these additional countries may weaken the original agreement and detract from the potentially larger benefits of achieving deeper integration just among three NAFTA partners.
Another direction for integration, not inconsistent with the previous ones, would be to develop more formal cooperative arrangements in other critical areas outside trade and investment. The most important of these would be security, migration and labor movement. Others might include energy and water management, infrastructure development, and even foreign policy consultations.
The events following September 11 already have pushed the United States to cooperate more closely with both Canada and Mexico in border management. Canada, in particular, has agreed to expand its efforts to check trucks and other vehicles destined for the United States. Various participants at the December Brookings conference suggested the countries take even more ambitious steps, ranging from further improvements in coordination of customs and immigration procedures of the three countries, to a merger of these functions into a single North American Immigration and Customs Service.
September 11 has had the opposite effect, at least so far, on migration issues. Just prior to that event, it looked as if the United States was open to considering a major "guest worker" program for Mexican citizens who work part-time in the United States. The momentum behind that idea has since cooled, but the problems posed by illegal immigration from Mexico to the United States will not go away. The participants at the December conference did not explicitly discuss how to move forward from here. The authors of this report will seek input on this issue at the next two meetings in Mexico and Canada.
While there already is a vigorous energy trade among the three countries, various impediments stand in the way of any expansion. The Mexican government, for example, imposes high taxes on Pemex, its state-owned oil company, to help fund social programs. This discourages investment in it's the country's oil sector. There is still very limited debate over the idea that Pemex be privatized, which remains a politically charged issue in Mexico. Canadian governments, federal and provincial, maintain some controls over the export of electricity and water. Meanwhile, from the Canadian and Mexican perspective, the US lacks a well-defined national energy policy. Given these constraints, the short run prospects of removing impediments to energy and resource trade between the countries are slimeven as a tripartite Working Group has been meeting to discuss national and sub-national policies on energy.
EU-Style Supra-National Institutions
The most ambitious approach would be for NAFTA to adopt something approaching the EU model. To be sure, the notion of an EU-style arrangement for North Americain which some governmental functions are devolved to a regional authorityseems politically unrealistic at the present time when even NAFTA remains controversial. Moreover, there are many differences between the EU and North America. The major members in the EU are more equal in size whereas NAFTA is defined by its asymmetry. The members of the EU were driven to form a regional framework in large part as a way to secure peace after successive wars on the continent. While the U.S. fought Canada and Mexico in successive wars in the early part of the 19th century, the borders have been peaceful for more than 100 years, and the incentives for integration have been primarily economic.
Nonetheless, the EU's 50 years of experience integrating 15 diverse countries may provide some lessons and ideas that could be relevant to a different North American model. The EU experience might well serve as a useful framework for political leaders and citizens in all three countries as they consider the depth and nature of further integration efforts. In some senses, the North American region is already more integrated than the EU. Despite the freedom of movement across European borders contemplated by the so-called Schengen agreement, cross-border movementespecially out-migration from the poorer countries (Greece, Spain, and Portugal) to the richer countries in the Unionso far has been surprisingly small. This is one of the consequences of a very successful "cohesion" policy by the EU that has narrowed the disparities between rich and poor countries. If migration between Mexico and the United States is to be reduced, similar policies may be needed.
Building North American Institutions
No strong consensus emerged in our December meeting for any one of these broad visions or approaches. We did agree, however, that the interest of citizens of all three countries would be served by launching more systematic processes aimed at developing some measure of consensus around a longer-term vision of a North American project. This is especially important since, notwithstanding NAFTA, the primary focus of each country has been on its bilateral relationships with the other two countries. Trilateral institutions are weak, and are largely limited to NAFTA commissions and dispute resolution panels. Several ideas for strengthening trilateral institutions were discussed at the December conference, but it was recognized that the role and characteristics of any new institutions will depend on how much the countries want to accelerate integration efforts and their common vision of how those efforts should proceed.
At the official level, one suggestion is for the governments to establish a new North American Commission that, on an ongoing basis, would seek input from citizens, experts and opinion leaders in the three countries and provide advice to the three national governments, and possibly certain state and provincial governments, about the preparation and implementation of a "North American agenda".4 Such an agenda could include some or all of the policy subjects just mentioned, including but not limited to: trade and investment, infrastructure development, security and immigration cooperation, further integration of resource trade among the countries. The Commission could provide its advice either informally or at semi-annual or annual summits of leaders of the three countries.
A related proposal would be to transform the two existing legislative consultative groups, US-Mexican and US-Canadian, into a North American Parliamentary Group. This Group would provide a significant forum for legislators from the three countries to exchange views regularly on issues of common interest. There may be benefits as well to providing a more formal structure to the ongoing meetings of Governors and Premiers from the border states.
Whether or not these inter-governmental consultative mechanisms are established, we strongly agree that more exchanges of experts and citizens should occur between the three countries. These efforts can generate ideas that ultimately affect public attitudes and government policies in the three countries. More such efforts should be encouraged, perhaps aimed at fleshing out integration proposals for specific sectors or policy initiatives.
Why Pursue Integration at All? Whose Interests Get Served?
The experience of NAFTA suggests that all three countries have gained economically from the expansion in trade and investment, and that further integration will contribute to rising incomes and productivity in the three nations. At the same time, further integrationespecially the kinds that would entail some degree of shared governancechallenge traditional notions of sovereignty, as well as what it means to be citizen of one country or possibly of a larger North American community. In addition, to the degree that further integration entails additional competitive challenges to certain industries or groups in the three countrieslow-skilled American workers, for exampleit is likely to arouse political opposition even in the best of circumstances.
For all these reasons, the benefits and costs of further integration need should be weighed against each other, and their impacts on different groups within each of the societies assessed carefully. Additional steps toward integration beyond the closer ties that are likely to deepen naturally, while they may be mutually beneficial, must be managed and explained to the peoples of the countries so that they are supported by their citizens.
Mexico has the greatest stake in building closer and denser economic ties because, in per capita terms, its economy lags so substantially behind those of Canada and the US. The huge size of the US and Canadian economies, more than twenty times that of the Mexican economy, provide a continually expanding demand for Mexican products and a ready source of investment capital for the countryall of which should accelerate Mexico's growth prospects and help it converge toward Canadian and US income levels. In turn, an economically thriving Mexico serves important US and Canadian interests. A richer Mexico will contribute to stability and democracy within the country, making it more attractive for foreign direct investment and exports from both Northern neighbors.
The US, Mexico, and Canada also should all gain from an integration strategy that leads to the more effective management of migration issues, which may be the source of greatest tension between Mexico and its two northern neighbors. Ironically, it was past US-Mexican migration that created the cultural and social roots for greater integration between the two countries. That migration has also increased the political motivation in the United States for integration with Mexico in particular, as the number of Mexican-American voters steadfastly expands and gain expanding political influence.
All three countries also are in a position to gain from more systematic collaboration in dealing with a range of other problems including criminal drug trafficking; environmental protection, energy and water management, and transportation, communications and other infrastructure development.
Hard Decisions and Hard Work Ahead
There is no easy path to greater integration for the three nations of North America. In each country, there are sizable groups, perhaps even majorities, who remain unhappy about NAFTA and its results, and there is substantial political resistance to further integration from those who are convinced they will lose more of value than they gain. They include workers who are afraid of losing their jobs, firms fearing competition or worried about having to sell out to foreign owners, politicians and citizens who are concerned about diminished sovereign authority, and publics who worry about changes in social policies and institutions and the dilution of national cultures.
The main roadblock to integration, however, is the still huge disparity in income and wealth between Mexico and its two NAFTA partners. Mexico's per capita income is roughly one sixth of that of the US and a quarter of Canada's. Living standardsmeasured by wages, education levels, housing quality, health statistics, mortality rates, and public services of all kindreflect these enormous differences, which are far greater than ever existed between any two members of the EU. Meanwhile, the difference in per capita income between the US and Canada has widened considerably in the past decade, as the US per capita GDP grew by more than 50 percent, while Canada's growth was less than ten percent. The US-Canadian income gap is large by European standards, but it does not appear to be a major impediment to enhanced integration, in part because Canada continues to perform better on a number of key quality of life indicators. A growing productivity differential between the two nations may be more of an obstacle.
In addition, the sharp income and wealth differences between Mexico and its northern neighbors cannot be ignored, because they interfere directly with the solution of so many shared problems. The most important of these are migration and labor flows, which are largely driven by wage differentials and cannot be controlled without sharply diminishing the gap. As long as the wage difference is so massive, it will be difficult ever to shake American and Canadian workers of their belief that industries and jobs will consistently move toward Mexico in search of cheap laborthe core of their opposition to NAFTA and its expansion. Moreover, along with other poor countries, Mexico confronts serious problems of corruption, which make cooperation in anti-drug campaigns and other law enforcement efforts difficult. Even without corruption, Mexico would lack the resources to be a good partner in combating terrorism, drugs, or environmental deterioration, among other common threats.
There is no simple or rapid way to reduce the income gap. Mexico simply has to expand its economy at a significantly faster rate than either the US or Canada. Even if the Mexican economy were to grow 3 percent a year faster than either of its NAFTA partners, it would still take Mexico more than 20 years to reach one half of Canada's GDP per capita, and more than 30 years to attain one half of that of the United States.
But the long term nature of the project should not be an excuse for pessimism. Just one generation ago, the nations of Southeast Asia were among the poorest in the world. Today, residents of many of the economies in the region enjoy living standards that will soon approach those of developed economies.
The pace at which the income gap between Mexico and its Northern neighbors will narrow is mainly up to the policymakers and citizens of Mexico, who will have to sustain appropriate fiscally-disciplined, growth-oriented policies; maintain the confidence of external investors; complete their economic reform agenda; and invest substantial domestic resources in infrastructure and human capital.
The US and Canada, however, will also have to decide how much, if anything, they are prepared to do to help bridge the income gap between themselves and Mexico. The World Bank, for example, estimates that Mexico will need in the coming decade some $20 billion more financing for infrastructure development than it is likely to secure from currently available sources, public or private.5
Where could such additional monies come from? Several sources were discussed at the December Brookings conference, although no consensus backed any particular one of them. For example, a new fund managed by the World Bank and/or Inter-American Development Bank was discussed, along with an enlargement of the North American Development Bank, which could raise funds on the capital markets based on pledges from the US and Canada. The Andean Development Corporation (CAF) has shown the productive contribution a regional development bank can make. Although all five of its core member countries are poorer than Mexico (let alone the US or Canada), the CAF has been consistently able to secure private capital at "investment grade" interest rates. A North American bank should be able to do as well.
There is a considerable difference of opinion, however, about the potential efficacy and political feasibility of having the two richer partners transfer substantial resources, even indirectly through intermediaries, to Mexico in the mold of the "social cohesion" funds of the EU. There is no doubt that the gap between the richer and poorer countries in the EU has been significantly reduced in the last decades and that the cohesion funds have played an important role, although there are differences of view as to the degree that the funds were responsible, as opposed to private investment and freer trade.
In addition to the economic gap, Mexico's institutional problems make its integration with the US and Canada more difficult. For ordinary US and Canadian citizens and their representatives in Washington and Ottawa, Mexico is a less desirable partner because of corruption, as well as the shortcomings of its justice and law enforcement systems. The election of Vicente Fox in July 2000, the first opposition candidate to take power peacefully in Mexico's history, demonstrated Mexico's important progress toward democracy in recent yearsand was widely welcomed in the US and Canada. As part of the effort to promote North American integration, Mexico, however, needs still to meet the continuing challenge of strengthening its democratic institutions and become a more open and just society.
All three countries also will have to confront issues of sovereignty and basic nationalism in deciding how much further integration to pursue. Virtually by definition, multilateral cooperation leads to the loss of sovereign decision-making power. In exchange for expected benefits, NAFTA has required the US, Mexico, and Canada all to substitute mutually-agreed upon rules and joint dispute resolution procedures for what had previously been national decisions. Deeper North American integration will introduce more common rules and regulations, more joint decision-making, and perhaps even new trilateral institutions. These changes will provoke opposition among groups in all three countries who will use traditional conceptions of "sovereignty" as their defense.
At first blush, it would seem that Canada and Mexicobecause they are smaller and less powerfulwould gain most from the development of joint procedures, rules and institutions, which could restrain the more powerful US, and make it harder for the US to get its own way. However, the two smaller nations are concerned on at least two counts: first, that the US, because of its size and power, may dominate any trilateral arrangements that are established; and, second, that even if such arrangements do help restrain the US, further integration itself will lead to US dominance. Canadians in particular also are worried about the dilution of their culture and the potential that their country's safety nets and other social policies will inevitably be watered down. Mexicans, for their part, worry about increasing US control of their industries, displacing important elements of their culture, and American owners taking command of the nation's natural resources.
Another key challenge that all three countries must confront as they consider any further steps toward integration is how to do so without detracting from current efforts to reach new agreements under the auspices of the WTO and the potential Free Trade Agreement of the Americas (FTAA). On the surface, the political energy devoted to cementing a North American arrangement may divert attention from these broader initiatives. Delaying the FTAA, however, could be in Mexico's interest because it would give time for Mexico to continue to benefit from preferential access to the US market. At the same, it is also possible that by pursuing a deeper North American agenda, all three countries might be able to develop a common front in such negotiations, enhancing the bargaining leverage of any one of them.
Finally, whatever efforts are made to join their economies together, all three countries will become even more vulnerable to the economic decisions and performances of their partners. A booming economy in one nation will enhance economic prospects in the othersbut, similarly, the consequences of an economic recession or crisis will be transmitted across an integrated North America. Mexico and Canada are far more vulnerable to US economic vicissitudes than the US is vulnerable to either of them. After all, the economy of Mexico is one-twentieth the size of the U.S. and Canada's, one-tenth the size, and both are heavily reliant on trade with and investment from the US. But they will also benefit a good deal more from a prospering US than the US will gain from a prospering Canada or Mexico.
Even if the three governments take no further steps, the economies, societies, cultures and institutions of three countries should continue to integrate on their own accord. The three countries now face a decision of whether and how they should seek to accelerate, smooth, and institutionalize this integration process. This will not be a simple challenge. Much more dialogue between the three governments and their citizens will be required to reach consensus on the broad goals and specific policies that any such further integration may entail. The major objective of this project is to begin this dialogue and the search for ways to develop "win-win-win" strategies for all three countries and their citizens.
1. The paper was mainly drafted by Peter Hakim and Robert Litan with contributions from Margaret Hill, Robert Pastor, and Andres Rozental. [return]
2. The organizations include The Brookings Institution, Inter-American Dialogue, Mexican Council on Foreign Relations (CMRI), National Policy Association, Policy Research Initiative of the Canadian Government, The Conference Board of Canada, Public Policy Forum of Canada and Technological Institute of Mexico (ITAM). [return]
3. Presentations on various specific topics addressed in this report also were made by other experts from the three countries. [return]
4. For a fuller development of this option, see Robert Pastor, Toward A North American Community: Lessons from the Old World for the New (Washington, D.C. Institute for International Economics, 2001). [return]
5. In addition, it may be possible to realize some efficiencies from the existing infrastructure system through such market-like devices as congestion pricing. [return]
Once we're done importing third world status, what's beyond that??
Paul Martin--We're talking about big progress.
President Bush--We started to advance this idea in Quebec City, as a matter of fact, in 2000 with the Free Trade Agreement of the Americas. To me that's the most practical extension of the recognition of the realities that we're all going to be facing as the 21st century evolves.
So the division you asked about in your question as to what kind of union might there be, I see one based upon free trade that would then entail commitment to markets and democracy, transparency, rule of law.
To this extent, we have entered into an agreement with the Central American nations called CAFTA.
(Keeping in mind in front of us the European Union, how much is this partnership a first step toward continental integration? )
Barf alert needed here.
Not freedom, not liberty, that much is certain.
This is a scary situation. One of the theories (because the Bush admin. does not feel it has to explain itself to its citizens) is the concept of continental integration is a big part of the reason Bush will not do anything about the illegal immigration issue. If it is, we are in a world of hurt -- and we have little to say about it at the moment....right or wrong???
Is Washington "secretly" forcing something upon the American people they, in majority, most likely do not want???
It has to be global government. Hemispheric integration is but a step along the way.
Come get a load of this twaddle. The masks are coming off, and the "future" is plain to see ...
"Bienvenidos a Aztlan. Oprima el numero dos para Ingles."
The link in post #14 shows how hard the federal government is lobbying to get the CAFTA passed. They have asked immigrants to represent their home countries to the Congress to get them to vote Yes on CAFTA.
They are not asking native born citizens to contact Congress and express their opinions about the trade agreement.
CAFTA furthers the hemispheric integration and paves the way for the FTAA, which will seal our fate.
They want open borders much more than they fear terrorism.
You know that feeling you get when you are so pissed off that you can feel the muscles twitching in your face above your lip (happens to me on the right side)?
That's what I feel when I read about this crap.
Who in the hell are these son of a bitches to be casually discussing relieving me of my freedoms, my Constitution, and my Nation? I owe ZERO allegiance to "North America". My family has not fought and died for this country for 250 years just to have some smug globalist assholes plotting the demise of this nation's sovereignty like they are planning a bake sale.
We are becoming integrated with Mexic0 and Central America via illegal immigration. All their children born here are legal and will be a big pressure group in a few decades. This isn't the America I grew up in, it isn't even the America of 20 years ago
Its a long article but it shows the planning process that is going on behind the trade agreements.
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