Four hundred million people live in Canada, Mexico and the United States, but few, if any, think of themselves as residents of North America.

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 Community.

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, it’s 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.
NAFTA’s 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 Fox’s proposal. Prime Minister Jean Chretien of Canada also wants to work closely with President Bush, but he can’t 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 didn’t have much of an exchange. The three governments’ officials have a “trained incapacity,” in Nobel Prize-winning economist Robert Merton’s 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 smaller country.

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 advisory—just 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 other’s 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 countries—Spain, Portugal, Ireland and Greece—and we could learn from their experience. From 1986–99, 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 2–4 percent of the recipient’s 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 Mexico’s 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 propose—a 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 for Progress.

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.”