The North American Free Trade Agreement and North America
Case Synopsis
This module offers an analysis of the North American Free Trade Agreement as a trade accord, and then more broadly explores the idea of North America beyond trade as a regional system.
In the case study, Stephen Blank notes that the North American Free Trade Agreement (NAFTA) is widely used to describe a broad array of developments that have heightened North American integration. But, as it underlines, it is important to realize that the trade agreement, while a central element in what might be called a "North American system" is still only one part of a larger system.
In the first part, Blank provides a basic understanding of the North American Free Trade Agreement, including the historical context in which it was formulated and its content. In the second, it looks more widely at the "North American reality".
The case study reviews the most important provisions of the agreement and describes what it does not include and the controversies it engendered at the time the agreement was being drafted and since it came into force. The first section of the case concludes with an overview of how most economists assess NAFTA.
The second section suggests that one can think of this North American reality in two dimensions: first, how we visualize North America; and, second, the issues which Canadians, Americans and Mexicans must confront in North American terms in the next 5-10 years.
Blank notes that we can visualize North America as three sovereign, autonomous nations which have signed a free trade agreement. We can also visualize North America as a continent of historical regions, some of which cross national borders, as a system of supply chains that cross borders, or as network of trade corridors. Each of these "visions" of North America deepen our understanding of the nature of the continent and also help us to comprehend some of the tensions that exist today - for example, between claims of national sovereignty and security and economic integration or regional identity.
The case study puts forward that, over the coming years, we will increasingly perceive certain "realities" in North American terms - for example, environmental sustainability, energy, competitiveness, security and demographic change. Mexico provides, in the view of the case, a particularly vital issue for North America.
Educational Objectives
The module can be used for several purposes. It provides a basic background for a professor who wishes to use North American content in a course. It can also be used similarly to provide background for students who are working on a more narrowly focused North American assignment or project.
The aim is to provide a basic understanding of the North American Free Trade Agreement and to understand how the agreement is part of a wider North American "reality".
The module will help extend discussions of North America beyond trade into discussions on environmental issues, production systems and supply chains, energy, security, the geography of trade corridors, demographics and economic development.
The module should also provide the opportunity for a vigorous discussion of criticisms of NAFTA and concerns about "NAU" (North American Union). It sets the stage for the confrontation of views on national sovereignty and cross-border collaboration in such vital concerns as energy security.
Teaching Plan
This piece is an ideal starting point for an introductory class on North American issues and offers the opportunity for a structured debate on how we visualize North America. The challenge inherent in presenting NAFTA is to go beyond the text of the trade agreement to the broader and more fundamental principles raised. Is North America simply NAFTA, a trade agreement between three sovereign nations, or should we move beyond trade and explore the historical and cultural regions that cross borders, while moving towards a broader North American reality? The discussion questions put forward some ideas and themes for doing this.
Students could be split in two groups, pro and con, and analyze the arguments and counterarguments made by the author at the end of the piece regarding the idea of an integrated North America, analyzing the various interests -corporate, civil, national, state and local, etc.-at play. They could then be charged to research the issue, and conduct an in-class debate with a written brief submitted as well.
Questions for Discussion
Part 1: NAFTA
What have been the impacts of NAFTA?
1. On wage distribution: did it hurt low-wage workers in the US? Did it help Mexican as much as people thought it would when NAFTA was first negotiated? Has productivity converged among the three countries, as some speculated should have happened after NAFTA?
2. On the idea of a common currency;
3. On perimeter security arrangements - also taking into account the more recent Security and Prosperity Partnership (SPP) Agreement;
4. On rules-of-origin;
5. On environmental cooperation.
Part 2: The North American Reality
1. Are there limits to the bottom-up growth of North American integration?
-Further integration blocked in some key areas;
-Inefficiencies created by patterns of interest group and government policies; -Parameters of decision-making: highly complex federal systems;
-The invisible hand of markets? Or the visible hand of regulations?
2. Is there interest in "North America" as a concept?
-At the highest levels, despite annual North American Leaders Summit, leaders know little about developments in North America;
-Is there a "North American" vision? Narrowly focused sectoral interests vs. broadly defined national interests
3. How can a "North American" vision be developed?
-To create a vision of North America, how can discussions among NAFTA nations, economic interests and civil groups be cultivated?
-What interests do we currently share that could be expanded upon in the current political and economic environment (ie. with a focus on cost efficiency and effective infrastructure)?
4. In this light, how can the benefits of economic integration in North America be maintained?
-What kind of arrangements would support sustained collaboration to deal with the issues noted above? Should the path of Europe be followed toward a political union? It is easy to say no to a North American Union, particularly since no one is advocating that anyway. It is more difficult to say how to advance and sustain the benefits of cooperation among the three nations of North America.
Relevant Courses
This module could be used in a wide range of courses in political science and comparative politics as an introduction to issues of regional integration. It would be useful similarly in many economics courses that deal with trade and integration.
The module would work in courses on US, Canadian and North American history.
Useful Links from PNA
- A Space for Cities in Trade Agreements
- A Vote for Change and U.S. Strategy for North American Integration
- Beyond NAFTA: The Emergence And Future of North American
- Enhancing Competitiveness in Canada, Mexico and the United States
- Great Expectations: Mexico's Short-lived Convergence under NAFTA
- Hudson Report: Trade Policies (Video)
- Lessons of NAFTA for U.S. Relations with Mexico
- North American Economic Relations: The Challenges for the Next U.S. Administration
- North American Trade Corridors: An Initial Exploration
- Political Culture and Petroleum Policy: Comparing Canada and Mexico under NAFTA
- Regionalization and Environmental Governance in North America: Policy Challenges for the New Administration(s)
- The Effects of 9/11 on Canadian-U.S. Trade: An Update through 2008
- The Idea of North America (Video)
- The State of North American Integration
Suggested Bibliography
Audley, John J., Demetrios G. Papademetriou, Sandra Polaski and Scott Vaughan (2003) NAFTA's Promise and Reality: Lessons from Mexico for the Hemisphere. Washington: Carnegie Endowment for International Peace.
Cameron, Maxwell A. and Brian W. Tomlin (2000). The Making of NAFTA: How the Deal Was Done. Ithaca: Cornell.
Clarkson, Stephen (2008). Does North America Exist? Governing the Continent After NAFTA and 9/11. Toronto: University of Toronto Press.
Courchene, Thomas J. and Colin R. Telmer (1998). From Heartland to North American Region State; The Social, Fiscal and Federal Evolution of Ontario. Toronto: Faculty of Management, University of Toronto.
Doern, Gary B. and Brian W. Tomlin (1991). Faith and Fear: The Free Trade Story. Toronto: Stoddart.
Golob, Stephanie (2003). "Beyond the Policy Frontier: Canada, Mexico, and the Ideological Origins of NAFTA." World Politics 55 (3) April: 361-398.
Graubart, Jonathan (2008). Legalizing Transnational Activism: The Struggle to Gain Social Change From NAFTA's Citizen Petitions. University Park, PA: Penn State University Press.
Hufbauer, Clyde and Jeffrey J. Schott (2005). NAFTA Revisited: Achievements and Challenges. Washington: Institute for International Economics.
Hufbauer, Gary Clyde and Jeffrey J. Schott (2007). "NAFTA Revisited." Policy Options October: 83-88.
Jackson, Robert J., Gregory S. Mahler, Holly Teeters-Reynolds and Carl C. Hodge (2004). North American Politics; Canada, USA, and Mexico in a Comparative Perspective. Toronto: Pearson Prentice Hall.
Lipset, Seymour Martin (1990). Continental Divide: The Values and Institutions of the United States and Canada. New York: Routledge.
McBride, Stephen (2006). "Reconfiguring Sovereignty: NAFTA Dispute Settlement Procedures and the Issue of Public-Private Authority." Canadian Journal of Political Science 39(4): 755-775.
Pastor, Robert (2001). Toward a North American Community: Lessons From The Old World For The New. Washington: Institute for International Economics.
Policy Research Institute (2008). The Emergence of Cross-Border Regions Between Canada and the United States, Final Report. Montreal, November.
Preston, Julia and Samuel Dillon (2004). Opening Mexico; The Making of a Democracy. New York: Farrar, Straus and Giroux.
Scott, Robert (2003). "The High price of ‘Free' Trade: NAFTA's failure has cost the United States jobs across the nation." Washington: Economic Policy Institute, Briefing Paper, November.
Smith, Murray G. and Frank Stone, eds., Assessing the Canada-U.S. Free Trade Agreement. Montreal: The Institute for Research on Public Policy.
Van Pelt, Michael (2003). "Moving Trade: An Introduction to Trade Corridors." Hamilton: Work Research Foundation, May.
Winham, Gilbert R. and Elizabeth DeBoer-Ashworth (2000). "Asymmetry in Negotiating the Canada-US Free Trade Agreement, 1985-1987," in I. William Zartmann and Barry Z. Rubin, eds., Power and Negotiation. Michigan: University of Michigan.
Woodside, Kenneth (1989). "The Canada-United States Free Trade Agreement." Canadian Journal of Political Science 22:1 (March): 155-170.
Yasmeen, Abu-Laban, Radha Jhappan and Francois Rocker, eds, (2008). Politics in North America; Redefining Continental Relations. Peterborough, ON: Broadview Press.
Suggested Web Resources
- Border Environment Cooperation Commission: http://www.cocef.org/.
- Canada: NAFTA Chapter 11: http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/nafta-alena/texte/chap11.aspx?lang=en.
- CBC Archives (2009). "Canada-U.S. Free Trade Agreement," available from http://archives.cbc.ca/IDD-1-73-536/politics_economy/free_trade/.
- Commission for Environmental Cooperation: http://www.cec.org/.
- International Centre for Settlement of Investment Disputes (ICSID): http://www.worldbank.org/icsid/index.html/.
- Mexico: NAFTA Chapter 11: http://www.economia.gob.mx//
- NAFTA Secretariat: http://www.nafta-sec-alena.org/DefaultSite/index.html.
- North American Agreement on Labour Cooperation: http://www.naalc.org/.
- North American Free Trade Agreement: http://www.nafta-sec-alena.org/DefaultSite/index_e.aspx?DetailID=78.
- Public Citizen, Global Trade Watch website, "NAFTA Chapter 11: Corporate Case", available from http://www.citizen.org/trade/nafta/CH__11/.
- Tri-national Working Group of Government Experts on Workplace Safety and Health: http://www.naalcosh.org/english/index.shtml.
- UNICITRAL Rules: http://www.uncitral.org/.
- United States: NAFTA Chapter 11: http://www.state.gov/s/l/c3439.htm
- U.S. International Trade Administration "NAFTA Homepage", available from http://www.export.gov/FTA/nafta/index.asp.
Note: PNA is committed to encouraging intelligent discourse among our members. Comments are moderated by PNA, in accordance with the PNA Comment Policy. PNA does not necessarily endorse any of the views posted below.
1 Comment
Each Teaching Note is geared towards a variety of disciplines and can benefit from feedback by instructors.
Please help enhance this Teaching Note - to share with the community how you've used this resource and what teaching methods were most effective, we invite you to become a member of Portal for North America.
