Thursday, 24 February 2011

Economist: To each his own (problems with NAFTA)

The Economist has today published a useful run-down on the current state of play vis à vis NAFTA—the North American Free Trade Agreement.... or, North America's (potential) answer to the EU.

Despite optimistic beginnings in 1994, when NAFTA was founded, more recent concerns have served to take the fullest implementation of NAFTA off the agendas of both the USA and Canada—unfortunately for Mexico, they appear to be the weak link in the political / economic chain...
When Canada, Mexico and the United States implemented the North American Free-Trade Agreement (NAFTA) in 1994, it was hailed as a promising first step towards the deeper integration of the continent. Six years later Vicente Fox, then Mexico’s president, called for a customs union, a common external tariff and free labour flows. And in 2005 the leaders of the three countries began a series of annual summits to push an ambitious “security and prosperity” agenda.

Since then the drive for integration has ground to a halt. The “three amigos”, as their leaders were once dubbed, could not find time to meet last year, and the session scheduled for February 26th has been cancelled. When Barack Obama and Stephen Harper, Canada’s prime minister, announced on February 4th that they were exploring ways to harmonise regulations and co-ordinate security—plans that had previously been discussed trilaterally—they did not mention Mexico.

A North American version of the European Union was always a long shot. Having one giant dealing with two relative dwarves is unlikely to produce a deal acceptable to all parties. Moreover, North America lacked the historical impetus of the second world war, which gave European integration a sense of purpose. ...
The article goes on to provide a pleasing level of detail on the reasons for NAFTA's current drift—important as an update to content that might be provided by any textbook. A quick summary would outline the following:
  • US (and some) Canadian concerns regarding border enforcement
  • the ongoing Mexican Drug War
  • the lengthy economic recession that has worked against further trade liberalisation
  • a shift in Canadian focus on emerging markets from Mexico to Asia
  • ongoing difficulties with economic reforms in Mexico
Only a short article - but well worth the read!

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