Building a North American Community
Report of an Independent Task Force
Sponsored by the Council on Foreign Relations
with the
Canadian Council of Chief Executives and the
Consejo Mexicano de Asuntos Internacionales
<snip>
At their meeting in Waco, Texas, at the end of March 2005,
U.S. President George W. Bush, Mexican President Vicente Fox, and
Canadian Prime Minister Paul Martin committed their governments
to a path of cooperation and joint action.We welcome this important
development and offer this report to add urgency and specific recommendations
to strengthen their efforts.
The three countries of North America are each other’s largest
trading partners. More than 80 percent of Canadian and Mexican trade
is with its North American Free Trade Agreement (NAFTA) partners.
Almost one-third of U.S. trade is with Canada and Mexico. Trade
among these three countries has tripled in value over the past decade.
In addition, cross-border direct investment has increased sharply, contributing
to the integration of the three economies.
North America is also energy interdependent, though not energy
independent. In 2004, Canada and Mexico were the two largest exporters
of oil to the United States. Canada supplies the United States
with roughly 90 percent of its imported natural gas and all of its
imported electricity.
In addition, all three countries face common security dangers, from
terrorismto drugtrafficking to international organizedcrime.Addressing
these dangers is a major challenge in this dynamic region: the borders
between Canada, the United States, and Mexico will be crossed over
400 million times in 2005.
As liberal democracies, the governments also share common principles:
protecting individual rights,upholding the rule of law, and ensuring
equality of opportunity for their citizens. North America, in short, is
more than an expression of geography. It is a partnership of sovereign
states with overlapping economic and security interests, where major
developments in one country can and do have a powerful impact on
the other two.
More than a decade ago NAFTA took effect, liberalizing trade
and investment, providing crucial protection for intellectual property,
creating pioneering dispute-resolution mechanisms, and establishing the
first regional devices to safeguard labor and environmental standards.
NAFTA helped unlock the region’s economic potential and demonstrated
that nations at different levels of development can prosper from
the opportunities created by reciprocal free trade arrangements.
Since then, however, global commercial competition has grown
more intense and international terrorism has emerged as a serious
regional and global danger. Deepening ties among the three countries
of North America promise continued benefits for Canada, Mexico,
and theUnited States. That said, the trajectory toward a more integrated
and prosperous North America is neither inevitable nor irreversible.
In March 2005, the leaders of Canada, Mexico, and the United
States adopted a Security and Prosperity Partnership of North America
(SPP), establishingministerial-levelworking groups to address key security
and economic issues facing North America and setting a short
deadline for reporting progress back to their governments. President
Bush described the significance of the SPP as putting forward acommon
commitment ‘‘to markets and democracy, freedom and trade, and
mutual prosperity and security.’’ The policy framework articulated by
the three leaders is a significant commitment that will benefit from
broad discussion and advice. The Task Force is pleased to provide
specific advice on how the partnership can be pursued and realized.
To that end, the Task Force proposes the creation by 2010 of
a North American community to enhance security, prosperity, and
opportunity. We propose a community based on the principle affirmed
in the March 2005 Joint Statement of the three leaders that ‘‘our
security and prosperity are mutually dependent and complementary.’’
Its boundaries will be defined by a common external tariff and an outer
security perimeter within which the movement of people, products,
and capital will be legal, orderly, and safe. Its goal will be to guarantee
a free, secure, just, and prosperous North America.
<snip>
NAFTA has dramatically enhanced our ability to make better use of the
abundant resources of our three countries and thus made an important
contribution to economic growth within North America. Over the
last decade, however, our economies have faced growing challenges
in increasingly competitive and globalized world markets. We need to
domore to ensure that our policies provide our firms and workers with
a fair and unfettered basis to meet the challenges of global competition.
Unwieldy North American rules of origin, increasing congestion at
our ports of entry, and regulatory differences among our three countries
raise costs instead of reducing them. Trade in certain sectors—such as
natural resources, agriculture, and energy—remains far from free, and
disputes in these areas have been a source of disagreement among our
countries. Furthermore, the NAFTA partners have been unable to
resolve a number of important trade and investment disputes, which
has created continuing tension in our commercial relationships.
Leaders in our three countries have acknowledged these challenges
and discussed a wide range of responses during the 2005 Texas summit.
Those involving changes in formal trade agreements will of necessity
take time to negotiate and ratify. However, in other areas, notably
regulatory cooperation and the expansion of transborder activities in
critical sectors such as transportation and financial services, there is a
shared recognition that the three countries can and should act quickly
inways thatwould make a real difference in improving the competitiveness
of firms and individuals in North America.
Shared challenge of uneven economic development. A fast lane
to development is crucial for Mexico to contribute to the security of
the entire region. Mexico’s development has failed to prevent deep
disparities between different regions of the country, and particularly
between remote regions and those better connected to international
markets. Northern states have grown ten times faster than those in
the center and south of the country. Lack of economic opportunity
encourages unauthorizedmigration and has been found to be associated
with corruption, drug trafficking, violence, and human suffering.
Improvements in human capital and physical infrastructure in Mexico,
particularly in the center and south of the country, would knit these
regions more firmly into the North American economy and are in the
economic and security interest of all three countries.
Leaders in our three countries have acknowledged these problems
and indicated their support for a number of promising measures, including
immigration reform, but there remains considerable scope formore
individual, bilateral, and joint efforts to address development needs.
What We Can Do
In making its recommendations, the Task Force is guided by the
following principles:
• The three governments should approach continental issues together
with a trinational perspective rather than the traditional ‘‘dual-bilateral’’
approach that has long characterized their relationships. Progress
may proceed at two speeds in some spheres of policy. Canada and
the United States, for example, already share a long history of military
cooperation and binational defense institutions, and they should
continue to deepen their bilateral alliance while opening the door
tomore extensive cooperation with Mexico. Yet many issues would
be better addressed trinationally. Shared concerns range fromregional
economic growth to law enforcement, from energy security to
regulatory policy, from dispute resolution to continental defense.
• North America is different from other regions of the world and
must find itsowncooperative route forward.AnewNorthAmerican
community should rely more on the market and less on bureaucracy,
more on pragmatic solutions to shared problems than on grand
schemes of confederation or union, such as those in Europe. We
must maintain respect for each other’s national sovereignty.
<yeah, right, you can't have "national sovereignty" AND still follow
the next bullet point where "people flow freely":>
• Our economic focus should be on the creation of a common economic
space that expands economic opportunities for all people in
the region, a space in which trade, capital, and people flow freely.
• The strategy needs to be integrated in its approach, recognizing the
extent to which progress on each individual component enhances
achievement of the others. Progress on security, for example, will
allow a more open border for the movement of goods and people;
progress on regulatory matterswill reduce the need for active customs
administration and release resources to boost security. North American
solutions could ultimately serve as the basis for initiatives involving
other like-minded countries, either in our hemisphere or more
broadly.
• Finally, a North American strategy must provide real gains for all
partners and must not be approached as a zero-sumexercise. Poverty
and deprivation are breeding grounds for political instability and
undermine both national and regional security. The progress of the
poorest among us will be one measure of success.
<snip>
WHAT WE SHOULD DO NOW
• Establish a common security perimeter by 2010. The governments
of Canada, Mexico, and the United States should articulate
as their long-term goal a common security perimeter for North
America. In particular, the three governments should strive toward
a situation in which a terrorist trying to penetrate our borders will
have an equally hard time doing so, no matter which country he
elects toenter first.Webelieve that thesemeasures should beextended
to include a commitment to common approaches toward international
negotiations on the global movement of people, cargo, and
vessels. Like free trade a decade ago, a common security perimeter
forNorthAmerica is anambitious but achievablegoal that will require
specific policy, statutory, and procedural changes in all three nations.
• Develop a North American Border Pass. The three countries
should develop a secure North American Border Passwith biometric
identifiers. This document would allow its bearers expedited passage
through customs, immigration, and airport security throughout the
region. The program would be modeled on the U.S.-Canadian
‘‘NEXUS’’ and the U.S.-Mexican ‘‘SENTRI’’ programs, which
provide ‘‘smart cards’’ to allow swifter passage to those who pose
no risk. Only those who voluntarily seek, receive, and pay the costs
for a security clearance would obtain a Border Pass. The pass would
be accepted at all border points within North America as a complement
to, but not a replacement for, national identity documents
or passports.
<snip>
WHAT WE SHOULD DO BY 2010
• Lay the groundwork for the freer flow of people within North
America. The three governments should commit themselves to
the long-term goal of dramatically diminishing the need for the
current intensity of the governments’ physical control of cross-border
traffic, travel, and trade within North America. A long-term goal
for a North American border action plan should be joint screening
of travelers from third countries at their first point of entry into North
America and the elimination of most controls over the temporary
movement of these travelers within North America.
<big snip of "open borders for people, goods, and educational cooperation">
The global challenges faced by North America cannot be met solely
through unilateral or bilateral efforts or existing patterns of cooperation.
They require deepened cooperation based on the principle, affirmed
in the March 2005 joint statement by Canada, Mexico, and the United
States, that ‘‘our security and prosperity are mutually dependent and
complementary.’’
Establishment by 2010 of a security and economic community for
North America is an ambitious but achievable goal that is consistent
with this principle and, more important, buttresses the goals and values
of the citizens of North America, who share a desire for safe and secure
societies, economic opportunity and prosperity, and strong democratic
institutions.
<snip>
This report articulates a vision and offers specific ideas for deepening
North American integration. I endorse it with enthusiasm, but would
add two ideas to galvanize the effort and secure its implementation: a
customs union and *****U.S. government reorganization.*****
The report recommends that the three governments negotiate a
common external tariff on a sector-by-sector basis, but some sectors
will prevent closure, leaving untouched the cumbersome rules of origin.
Paradoxically, but as occurred with NAFTA, a bolder goal is more
likely to succeed than a timid one. We should negotiate a customs
union within five years. That alone will eliminate rules of origin. This
will not be easy, but it will not be harder than NAFTA, and mobilizing
support for a customs union will invigorate the entire North American
project.
*****North American integration has subtly created a domestic agenda
that is continental in scope. The U.S. government is not organized to
address this agenda imaginatively. Facing difficult trade-offs between
private and North American interests, we tend to choose the private,
parochial option. This explains the frustration of Canada and Mexico.
To remedy this chronic problem, President Bush should appoint a
special assistant on North American Affairs to chair a Cabinet committee
to recommend ways to breathe life into a North American community.
A presidential directive should support this by instructing the Cabinet
to give preference to North America.*****
Robert A. Pastor
