Highlights of Faculty Seminar IV
April 16, 2003

Subject: Alternative Futures: Imagining a Different North America?

The co-chairs were Vice President of International Affairs, Dr. Robert A. Pastor, and Professor Phillip Brenner, Chair, Inter-Disciplinary Council on the Americas (SIS). The two presentations were by Dr. Gary Hufbauer, Reginald Jones Senior Fellow, Institute for International Economics, and Dr. M. Delal Baer, Senior Advisor, Americas Program, Center for Strategic and International Studies.

Pastor summed up the seminars. The first sought to define North America as being more than just three countries - an area increasingly integrated socially and economically, though not politically or policy-wise. The second addressed the nature of the linkages that connect as well as the profound divergence in development between Mexico and its northern neighbors. The third focused on the most acute dilemma -how to continue to integrate the region in the wake of heightened concerns about terror and communicable diseases. The issue for the final seminar is: where do we go from here with "North America"? How can we rethink our relationships?

According to Hufbauer, the opposition of Canada and Mexico to the Iraq war made short-term integration difficult in the economic and security areas. No bold initiatives about integration will come from Canada and the US before 2004, due partly to elections. Chances for integration will depend in part on the evolution of perceptions of security in Canada and Mexico and whether "smart border" arrangements can permit better risk-management. Opportunities for integration also exist in energy, perhaps for a plan dealing with an Artic oil/gas pipeline and alternatives such as hydrogen, fusion, solar and nuclear. Some disputes may also be resolved on trucking, wheat, and lumber. Some institutional integration may be possible, and he offered several ideas: (1) a trilateral trade dispute commission to harmonize rules for antidumping and countervailing duties; (2) Canada as nonvoting observer in US ITC and vice-versa; and (3) cooperative supervision of banks and financial markets.

Baer was also pessimistic in the short-term about trilateralism. She thought that "North America" will only become a field of study many years from now. The fall-out of differences on Iraq make "trilateralism" an unlikely path, and some senior U.S. policymakers associate the term 'North America' with transfer payments and U.S. "giveaways." Mexican hostility towards NAFTA has increased, and is most evident in the move to try to renegotiate agricultural provisions. Foreign Minister Jorge Castañeda's resignation slowed down integration. The issue of security offered the best way to gain support for greater economic integration. Although Mexicans may be against a "NORAD" model of security cooperation, security integration along the borders was moving forward due to expanded US investment and the presence of Mexican troops. For Baer, change has to be incremental, policymakers flowing with the "current," widening free trade agreements to the hemisphere before deepening NAFTA.

Brenner characterized the seminars as having highlighted tensions between various analytical models for understanding integration. The seminars caused those skeptical of their utility to change somewhat and think about "big" ideas and the "bigger" picture. For him, the 50th anniversary of Puerto Rico's commonwealth "status"suggests an analogy: does integration offer Mexico a future like Puerto Rico's? Integration proponents need to deal with several issues: NORAD and security, immigration, energy dispute resolution, U.S. "hegemony," and U.S. domestic politics not being ready for more integration. Brenner's second point referred to Adam Smith's Wealth of Nations, which created a new paradigm that broke down cartels and permitted greater efficiency. Similarly, North America could chart a new path for regional integration.

Group discussion dealt with governance, stakeholders, watersheds (Colorado, Río Bravo, Usumacinta) as a new model to think about a continent, Canadian bulk water sales (NAFTA rules and the economics of water pricing), and the International Joint Commission (its transboundary successes and failures, e.g., biodiversity).

Clarkson questioned the seminar's assumptions - that integration was "good" and the actions of the three nation states acting individually were "bad." For him, Pastor's notion of "integration" was "one size fits all," overlooking Canadians' worry about issues of social justice and the environment. Pastor responded that the three countries of North America have the opportunity to forge a unique experiment between a developing and two industrialized countries: that that aimed to narrow the development gap while fostering regional, sectoral policies for shared problems and opportunities.

For Hufbauer, NAFTA's labor and environmental chapters were feeble. Mexico's delinquency problems, high interest rates, difficulties with home mortgages create monetary instability that are challenges to be addressed by an integration based on possible dollarization (de facto, de jure, or the AMERO). A Mexican political scientist from CIDE said that NAFTA was pushed by Mexican elites, not by others, and current attitudes makes energy reforms difficult.

Final discussions focused on the pace of integration and implementation of a compelling vision of "North America" (e.g., "visionary pragmatists" building North America, one-sector-at-a-time, in electronics and autos, eliminating rules of origin), and Mexico's many FTAs with small countries complicating an eventual customs union with Canada and the U.S. Also mentioned were future AU courses about North American water, politics, governance and institutions, business, law, social movements, trade and the environment, and economics.