Economist: Three countries or one continent?

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SHAFAQNA (International Shia News Association) NEVER have Latin American leaders talked so much about regional integration as in the past decade. They have cooked up an alphabet soup of organisations, whose chefs hold non-stop summits even as trade among them grows only slowly. But three countries in the Americas have practised integration while eschewing much of the fanfare.

Under the North American Free-Trade Agreement (NAFTA), which came into effect in January 1994, the economies of Mexico and Canada have become ever more closely entwined with that of the United States. Trade between the three has more than tripled, to $1.1 trillion in 2013, and cross-border investment has risen fourfold. Many companies now operate on a North American basis.

Yet this economic entanglement has no match in politics and policy. The Security and Prosperity Partnership of North America, set up by George W. Bush in 2005 to deepen NAFTA, was quietly downgraded four years later to a regular meeting of the three countries’ leaders. An accompanying private-sector “competitiveness council” was disbanded.

Because NAFTA is falsely blamed in the United States for a net loss of manufacturing jobs, it is a subject that Barack Obama prefers not to mention. Stephen Harper, Canada’s Conservative prime minister, hews to his country’s close bilateral relationship with the United States. Mexico’s problems with organised crime, its reputation as a source of migrants (though few now cross the border) and the fear that it might provide an access route for terrorists (though it hasn’t) make closer trilateral ties politically toxic in the other two countries.

This neglect is a missed opportunity, according to a new report* by the Council on Foreign Relations, a New York think-tank. Drawn up by a group led by Robert Zoellick, a Republican former cabinet member, and General David Petraeus, a former commander of American forces in Iraq and Afghanistan, the report makes a passionate case for North America to switch from “an afterthought” to “a central priority for US policy”.

It identifies several opportunities to seize. Shale gas and oil in the United States, the Canadian tar sands and Mexico’s historic opening up of its oil, gas and electricity industries to private investment hold out the prospect of North American energy self-sufficiency. That means interconnecting grids and pipelines—as well as shared environmental standards.

Second, border infrastructure has not kept pace with closer economic ties. Lorries routinely wait for hours to cross at the busiest points on the Mexican border. Migrant-phobia has seen Congress fund a doubling of the number of Border Patrol agents on the Mexican border since 2000 (to 18,611), but there is a national shortfall of 3,800 customs officers. Upgrading border infrastructure would cost only $6 billion.

The report also calls for a “North American community”. That would involve immigration reform, steps to ease cross-border employment, and a security strategy that puts less stress on fortifying the border and more on intelligence collaboration and on a joint effort to tackle organised crime in Central America.

With the United States in an increasingly nativist mood and distracted by events elsewhere, these sensible ideas seem Utopian. Neither Mr Obama nor John Kerry, his secretary of state, have shown much interest in Mexico. In private, Mexican officials complain about this; they respond by stressing their growing ties with South America and Asia.

Yet perhaps the dynamics are about to change. Rafael Fernández de Castro, a Mexican academic, says that the economic reforms of President Enrique Peña Nieto have awakened the interest of business leaders in the United States. And that could eventually filter through to the politicians. In his trips to the United States Mr Peña talks about the economy and business, rather than drugs or migrants.

For most of the 20th century, Mexico’s leaders were in thrall to nationalism and defined themselves by their political opposition to their northern neighbour. When Carlos Salinas, Mexico’s then president, proposed NAFTA, he felt compelled to exempt the state’s monopoly of energy from its scope; the United States excluded the movement of labour. Mexico’s invitation to the likes of Exxon and Chevron to invest in its oil and gas is another milestone on a journey of convergence across the Rio Grande. North Americans will eventually have to recognise that Mexico’s rising economic importance to the United States has political implications.

 

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