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Whither North America?
Robert A. Pastor
Photo: Department of Foreign Affairs and International Trade Canada
The rise of China in the 21st century has coincided with the decline of North America. While China’s commercial success is one reason for the decline of our continent, the far more important cause is the absence of leadership by the latest prime ministers of Canada and by the presidents of the United States and Mexico.
Since the signing of the free trade agreement between Canada and the United States in 1988 and that of the North American Free Trade Agreement (NAFTA) in 1992, the three parties experienced an acceleration of economic integration that comes close to the European Union’s. By 2001, intra-regional trade rose to 46 per cent of the three countries’ international trade —up from 36 per cent in 1988. But by then the North American experiment was exhausted, and since 2001, regional integration declined to 40 per cent.
The reduction of trade and investment barriers originally fueled the rise of a North American market; the fall was more complicated. First, China applied its energy to outcompete the world in trade. Second, 9-11 unhinged the United States, resulting in heightened border restrictions so severe that trading among neighbours became more costly than trading with China. Third, the three countries decided to pursue the easier path of widening free trade with other countries instead of the difficult but more productive strategy of deepening North American economic integration. Fourth, although intra-regional trade had tripled, of which 80 per cent transited overland, the three countries did not invest in continental roads or infrastructure or even plan for it.
The fifth reason for the decline of the trilateral project was the most consequential: with the exception of former Mexican president Vicente Fox, North American leaders have thought small in the past decade. When former U.S. president George W. Bush proposed the Security and Prosperity Partnership at Waco, Texas in 2005, he instructed his Cabinet to think incrementally, exclude Congress, and not ask for money. More recently, President Barack Obama and his advisors have been preoccupied with so many crises that they have missed the continental picture and reverted to the old “dual-bilateral” approach of dealing with one crisis —now drugs— and one country at a time. Canada’s latest prime ministers —Liberal and Conservative— excluded Mexico from their definition of North America, believing that association with Mexican drug violence would undermine its “special relationship” with the United States. The fact that this bilateral relationship has yielded little more than nice rhetoric has not led Canada to question its assumption or policy.
So when the three current leaders met in Guadalajara in August 2009, they had very little to say to each other except to promise another summit in Canada in 2010. Canadian Prime Minister Stephen Harper apparently forgot to issue a formal invitation but, at least, the three foreign ministers met in Ottawa last December. They talked about Central America, Haiti, and natural disasters, but they too forgot to set a date for a summit perhaps because they forgot to talk about North America. In brief, the three governments have reminded us why North America is declining: they lack imagination and leadership.
What should they do? Incrementalism has failed repeatedly. The three governments cannot even agree on a single standard for truck safety. The U.S. and Canada cannot agree on pre-clearance facilities in the Niagara area. The U.S. cannot even implement NAFTA’s provision to open the border to Mexican trucks that are certified as safer than American trucks.
We need to start over with a big North American idea, one based on the simple premise that all three countries benefit when one succeeds, and we are all hurt when one fails. Hence we should turn to the paramount challenge for North America: how to construct a Community that will narrow the development gap between Mexico and its northern neighbours, that will re-discover the region’s competitive advantage, and that will fill the institutional vacuum by lean and effective trilateral advisory groups.
Trade is not enough to achieve these goals. The three leaders need to make substantial commitments. They could set up a 10-year, $20 billion per year investment fund to connect by roads and infrastructure the poor southern part of Mexico to its northern neighbours. They could commission a 10-year North American plan for transportation and infrastructure, which can provide the foundation for a great leap in commerce that would be facilitated by a common external tariff. They could assemble and train border and customs officials to manage the borders like partners not adversaries. They could replace the dozen identity cards currently needed to transit the borders with a single agreed-upon North American pass.
Existing institutions on trade, environment and labour would also need strengthening. A new North American regulatory commission to harmonize —when desirable— national regulatory policies could be set up and eventually lift environmental, labour and safety standards. A North American Parliamentary Group could be created to provide a forum for legislators from all three countries, and an Advisory Council to propose continental initiatives and build a North American consciousness could be established.
Public opinion surveys demonstrate that the peoples of North America would like their leaders to be bolder in integrating North America, but the leaders have been intimidated by an intense minority who fear any co-operation with our neighbours. It is time for our leaders to lead and design a North America that will lift the continent and its people to new heights. Let us start with a new bold North American idea: not a bureaucratic one, but one that stirs blood.
Robert A. Pastor is Professor and Director of the Center for North American Studies at American University in Washington, D.C. Dr. Pastor is the author of the forthcoming book, The North American Idea: A Vision of a Continental Future.