NAFTA – a proposal for renewal

April 28, 2008
Thanks to Ron Robertson for forwarding this thoughtful piece that addresses the problems of NAFTA and offers intelligent solutions. We hope that it will ‘stir the pot’ and elicit further comments. We have only one question: is it realistic to think that the respective bodies would pass the necessary legislation? We fear that the demonstrated voter hostility to NAFTA would overcome any common-sense public policy. But perhaps this could become an Age of Miracles.
Getting a grip on NAFTA
Christopher Jones*, Special to the Sun
The U.S. presidential primaries have provoked debate there and in Canada about reopening the North American Free Trade Agreement.
As this political fracas subsides, perhaps calmer heads can prevail to address the more obvious shortcomings in the current approach to Canada-U.S. border and trade relations.
The lack of leadership on NAFTA has created a vacuum that threatens the largest bilateral trading relationship in the world. The arrival of a new administration in Washington could help correct the original failure to develop the supranational institution required to regulate the flow of people and goods between NAFTA member states; to detect, anticipate and respond to emerging commercial, infrastructural, environmental and security challenges, and to resolve disputes in a final and binding
manner.
I propose the creation of a North American Border and Environmental Agency (NABEA).
NAFTA came into force in 1994, creating a free-trade area, providing “national treatment” to each others’ investors, guaranteeing energy access and providing dispute resolution panels with debatable results.
However, in areas relevant to tourism, forestry, agricultural exports and safety, and transportation, the agreement continues to give preference to national policy and domestic bureaucracies.
The result? A prolonged and damaging dispute over softwood lumber; the lengthy exclusion of Canadian cattle from U.S. markets; the imposition of documentation and travel requirements under the Western Hemisphere Travel Initiative (WHTI) to the detriment of the Canadian tourism sector; the creation of the U.S. Secure Flight Program, which will require Canadian air carriers to submit passenger manifests to the U.S. 72 hours before departure of flights that may not even land in the U.S. (in contradiction of the 1944 Chicago Convention on Civil Aviation and Canadian privacy laws.)
Many of these policies required costly litigation, endless lobby campaigns in Washington, and immense expenditures of Canadian political capital, time and effort over the past 15 years, often to little or no avail.
By contrast, the Treaty of Rome, which created the European Economic Community in 1957, mandated a supranational commission made up of member-state appointees whose primary loyalty is to the EEC (now the European Union) and its founding objectives: Harmonious economic development activities; continuous and balanced expansion; increasing stability; rising standard of living, and closer relations between member states. The European Commission plans, integrates and coordinates member-government policies in trade, transport, environment and other fields to the EU’s collective benefit.
To its credit, the EU has also developed and enshrined the Schengen Accords, which permit passport-free travel throughout the EU. Unfortunately, the WHTI, which may well provoke a cumulative loss of $3.2 billion to the Canadian tourism and travel industry between 2005 and 2010, is taking North America in the opposite direction.
Canada and the U.S. already have a few supranational entities, including the International Joint Commission on Boundary Waters, the Commission for Environmental Cooperation of North America, three NAFTA secretariat offices limited to adjudicating trade disputes in a “fair, timely and impartial manner” and a North American Leaders Summit, from which emerged the Security and Prosperity Partnership — a vague, ill-defined process whose status looks uncertain.
While this kind of piecemeal, ad hoc cooperation, and increasingly frequent litigation, may once have been an acceptable means of regulating the relations between Canada, the U.S., and Mexico, it clearly no longer is.
There is a compelling case for creating a NABEA. Senior officials would be high-level political appointees of the three member states with prescribed terms of office. The agency would be empowered to make binding decisions in limited areas that would supercede the national laws and regulations of the NAFTA governments.
I propose that it initially be tasked with implementing uniform policies, standards and shared intelligence in relation to: Security, terrorist risks and countermeasures; air and water quality; agricultural standards and safety; consumer product safety; container screening; commercial freight export rules; truck weights and dimensions, and documentation, visa and customs requirements for visitors from both within the NAFTA region and overseas.
Agency staff would be diplomats drawn from foreign affairs, trade, transport and other departments of the three national governments. While even this limited basket of pooled sovereignty will provoke the ire of ardent nationalists, the point is that the dysfunctional reality of business-as-usual, reactive Canadian policy-making and Washington-based advocacy makes this step necessary.
We need visionaries to forge a supranational North American decision-making entity whose mandate is to promote collaboration and the collective economic well-being of the NAFTA states.
Unilateralism is a non-starter in the 21st century. Facilitating the legitimate movement of travellers and dealing with multi-jurisdictional environmental problems requires a coordinated approach by North American governments. Regional interests or insular bureaucracies inhibit solutions consistent with an interdependent world.
If Europeans can arrive at this sort of concerted action despite centuries of conflict, residual enmity, multiple languages and disparities in population size and economic clout, surely it is within our collective ability to do so on this continent.
*Christopher Jones is vice-president of public affairs at the Tourism Industry Association of Canada.
January 6, 2004

The celebrations of Nafta’s 10th anniversary are far more muted than those involved in its creation might have hoped. In the United States, the North American Free Trade Agreement has failed to fulfill the most dire warnings of its opponents and the most fervent expectations of its supporters. In Mexico, however, the treaty remains controversial and even harmful — as do America’s efforts to liberalize trade throughout the hemisphere.

Background
Has Neo-Liberalism Failed Mexico
J. Bradford DeLong
(Project Syndicate) Six years ago, I was ready to conclude that the North American Free Trade Agreement (NAFTA) was a major success. The key argument in favor of NAFTA had been that it was the most promising road the United States could take to raise the chances for Mexico to become democratic and prosperous, and that the US had both a strong selfish interest and a strong neighborly duty to try to help Mexico develop.
…But the 3.6% rate of growth of GDP, coupled with a 2.5% per year rate of population and increase, means that Mexicans’ mean income is barely 15% above that of the pre-NAFTA days, and that the gap between their mean income and that of the US has widened. Because of rising inequality, the overwhelming majority of Mexicans live no better off than they did 15 years ago. (Indeed, the only part of Mexican development that has been a great success has been the rise in incomes and living standards that comes from increased migration to the US, and increased remittances sent back to Mexico.)
Intellectually, this is a great puzzle: we believe in market forces, and in the benefits of trade, specialization, and the international division of labor. We see the enormous increase in Mexican exports to the US over the past decade. We see great strengths in the Mexican economy – a stable macroeconomic environment, fiscal prudence, low inflation, little country risk, a flexible labor force, a strengthened and solvent banking system, successfully reformed poverty-reduction programs, high earnings from oil, and so on.
Yet successful neo-liberal policies have not delivered the rapid increases in productivity and working-class wages that neo-liberals like me would have confidently predicted had we been told back in 1995 that Mexican exports would multiply five-fold in the next twelve years.