Four hundred million people live in Canada, Mexico and the United
States, but few, if any, think of themselves as residents of North
The three governments have devoted so much effort to defining their
differences that the people have not seen what they have in common,
or that they share a continent, values and an agreement. The North
American Free Trade Agreement (NAFTA) began officially on Jan. 1,
1994, and it is a foundation on which we should build a North American
Despite its critics, NAFTA succeeded in what it was designed to
do. Today, the United States exports nearly four times more to our
two neighbors than to Japan and China and 40 percent more than to
the 15-nation European Union. In the 1990s, Mexico had the highest
rate of export growth in the world, and Canadian investment in the
United States grew twice as fast as U.S. investment in Canada.
Two decades ago, less than one-third of the three countries
international trade was with each other; today, its more than
half. Our firms have become continental and more competitive, and
North America has a combined gross product of $10 trillion, making
it the largest free trade area in the world, 15 percent higher than
the European Union.
NAFTAs failure has come from what it omitted. The income gap
between Mexico and its northern neighbors has not narrowed. Illegal
migration has increased. If Europe built too many institutions,
NAFTA made the opposite mistake. It lacks institutions to anticipate
or respond to crises or take advantage of opportunities. It also
lacks leaders who could define an inclusive identity that would
inspire citizens of all three countries to think of themselves also
as North Americans.
Alone, Mexican President Vicente Fox Quesada has offered a vision
of a wider community and an eventual common market. President George
W. Bush clearly wants good relations with Mexico, but despite many
meetings with Bush and his administration, the American president
has failed to offer a response to Foxs proposal. Prime Minister
Jean Chretien of Canada also wants to work closely with President
Bush, but he cant see Mexico over the colossus next door.
And so, absent leadership by Bush, NAFTA is likely to remain two
bilateral relationships rather than a single, continental relationship.
What should the presidents of the United States and Mexico and
the prime minister of Canada do? The three met in Québec
in April 2001 for a photo opportunity at the Third Summit of the
Americas, but they didnt have much of an exchange. The three
governments officials have a trained incapacity,
in Nobel Prize-winning economist Robert Mertons phrase, to
visualize the two bilateral relationships as actually two sides
of the same problem. They treat each border problem as distinct
without realizing that a trilateral approach is more likely to yield
durable rules instead of a lopsided collision between a big and
The only way to define a North American agenda is to establish
a North American commission to prepare the leaders for summit meetings.
Unlike the sprawling, regulatory European Commission, the North
American one should be lean and advisoryjust 15 distinguished
individuals, five from each of the countries. Their task would be
to help the leaders think continentally. To deal with immigration
and customs at the border, they could propose North American
passports for frequent travelers, or that North American
customs and immigration officers patrol the perimeter, and
subsequently reduce documentation by half. Instead of grading each
others behavior against drug traffickers, as Washington currently
does, we could work more effectively as partners.
Illegal immigration will not be reduced until the income gap between
Mexico and its northern neighbors is reduced. The European Union
lifted its poorest countriesSpain, Portugal, Ireland and Greeceand
we could learn from their experience. From 198699, per capita
GDP of those countries rose from 65 percent to 78 percent of the
EU average, and emigration slowed markedly. The astonishing progress
was due in part to free trade and foreign investment, but mostly
to the transfer of aid that amounted to 24 percent of the
recipients GDP. The most effective resulting projects were
in infrastructure and education.
NAFTA is deliberately laissez faire, but the result is that most
foreign investment has concentrated in the congested, polluted border
area between the United States and Mexico, where it has served as
a magnet attracting workers from the heart of Mexico. From there,
many immigrate illegally to the United States. In other words, the
absence of a strategy has meant that NAFTA has been encouraging
illegal migration, not reducing it.
Foreign companies would prefer to invest in the interior (where
the workforce would be more stable), but the roads and infrastructure
are inadequate. The World Bank estimates Mexico needs $20 billion
a year for 10 years just for infrastructure.
The three leaders should establish a North American Development
Fund, whose priority would be to connect the border to central and
southern Mexico. If roads were built, investors would come, immigration
would decline and income disparities would narrow. If Mexicos
growth rate leapt to twice that of its neighbors, the psychology
of the people and their relationships would be transformed.
There is much more that a North American Commission could proposea
continental plan for infrastructure and transportation, a plan for
harmonizing regulatory policies, a customs union, a common currency.
But the boldest accomplishment would be a Development Fund. The
three leaders should not create a new bureaucracy; the World Bank
and the Inter-American Development Bank could administer it. But
it will need an injection of funding comparable to the Alliance
The three North American governments could contribute in proportion
to their wealth, but the United States needs to lead. Fox has focused
on migration because he knows that Mexicans want respect from United
States, but the only solution to our relationship is narrowing the
income disparities between our two countries. That should be the
building block of a new community. Then, we all would begin to think
of ourselves proudly as North Americans.