Requiem or Revival?: The Promise of North American Integration

Chapter 3. Obstacles to Integration: NAFTA's Institutional Weakness

When he took office in 2000 President Vicente Fox promoted the idea of a deeper integration of North America, one that would include the free transit of not only goods, services, and capital, but also labor. He also proposed establishing a U.S.$20 billion development fund equivalent to Europe’s cohesion funds to invest in, among other things, infrastructure corridors to better connect the North American region. More generally, Fox proposed the European Union process of integration as a model for North America. This approach, also known as NAFTA-plus, was seen by many as the most effective way to mitigate the huge asymmetries between Mexico and its two northern neighbors—a gap that has lingered tenaciously since the 1994 implementation of the North American Free Trade Agreement (NAFTA) among Canada, Mexico, and the United States. Fox’s proposal met with little success in Canada and the United States, leaving the much less ambitious programs that had been established since 1994 to cope with the asymmetries. Among these programs are the agreement to broaden the mandate of the North American Development Bank (NADBank); the Alliance for Prosperity Program, meant to channel private investment into marginalized areas of Mexico that export migrant labor; and the trinational Security and Prosperity Partnership of North America (SPP), 53 Obstacles to Integration NAFTA’s Institutional Weakness isabel studer 3 03-8201-8 ch3.qxd 7/13/07 4:30 PM Page 53 launched in 2005 with the aim of providing a comprehensive framework for enhancing both the competitiveness and the security of the region. The commonly held view that the events of September 11, 2001, reduced the political possibilities for advancing Fox’s proposed North American agenda is an accurate but partial explanation for where things now stand. In the absence of such tragic events, perhaps, the United States would not have turned its attention toward matters of global security and Canada would not have focused mainly on its bilateral relationship with the United States. But even then, other structural, economic, geopolitical, and especially sociocultural factors would still stand in the way of deepening North American integration . This is the basic argument of my chapter. The analysis is divided into four parts. The first section differentiates NAFTA from the world’s other large integration scheme, the European Union (EU), and in doing so sets a baseline for my argument. The second and third sections of the chapter focus on how domestic political dynamics in the United States are determining factors for the anti-institutional bias and organizational deficits that underpin NAFTA. The fourth section deals with the resistance to formal integration with the United States on the part of Canada and Mexico and suggests that the shadow of the past also accounts for NAFTA’s weaknesses. Two Models of Integration The aim of this analysis is not to fully compare the two forms of integration in North America and Europe but rather to note some basic differences between the two. While NAFTA seeks trade and investment liberalization and adopts a minimalist institutional framework, the European process has more ambitious social and political objectives and supranational institutions that support these objectives. The European institutional framework (including the European Parliament, the European Court of Justice, the European Council, and the European Commission) is a multilevel system in which decisionmaking competence in several key policy areas resides in Brussels, not in the national capitals, and aims at solving common transnational problems and advancing the integration process. This framework also addresses inequalities inside the countries and among states at the regional level. In North America the predominant stance is that the market will deepen the process of economic integration and will thus rectify long-standing inequalities in the long run. The only two standing North American institutions , the North American Commission for Environmental Cooperation and 54 Isabel Studer 03-8201-8 ch3.qxd 7/13/07 4:30 PM Page 54 the North American Commission for Labor Cooperation, were created with the implicit objective of monitoring Mexico’s enforcement of environmental and labor law (mainly through citizens’ complaints), rather than the more proactive goal of solving common transnational problems from a position of institutional strength. At best, these institutional mandates regarding trilateral cooperation are diffuse. In the absence of clear political objectives to address the challenges of deeper integration, these institutional settings reflect an overly cautious state-centric approach, in which most relevant decisions are left...