IN 1994, NAFTA was as much integration as
the needs and politics of its three member countries could afford them. Twenty
years later current politics are less amenable than they were to deeper
integration, and needs are fewer. Treaties are tougher to undo than to do, and
NAFTA won't disappear. But a sequel --better, bigger, deeper--will just not
happen. We are back to bilateral agendas, and we should focus on them.
North-American integration had two pillars:
the auto industry, with truly North-American production chains, and the energy
dependence of the United States on its two neighbours. Only the first was
really a trilateral agenda and as the industry is now reconsolidating along a
US-Mexico axis, with Canada an increasingly marginal partner, a core rationale
for regional integration is withering. Energy proved crucial to the Canada-US
deal, but was left out of NAFTA because of nationalist qualms in Mexico. Still,
the US's unquenchable thirst for energy, and the reserves and investment needs
of its neighbours created a sense of regional interdependence. This second
pillar is now crumbling as shale oil and gas transform the US into a
self-sufficient energy behemoth.
Twenty years go, moreover, there was no
China factor. Yes "Asia-Pacific" was seen as the world's forthcoming
engine of growth, but nobody could sensibly bet the house on Asian markets or
see them credibly as an alternative to America's. How things have changed.
China's share of Canada's trade is increasing as fast as the US' share is
declining. The simple fact that Obama could dither for so long on Keystone
shows how weak Canada's hand has become on what used to be the central
strategic vulnerability of its neighbour. Obviously, killing Keystone will
precipitate Canada's turn to Asia, but approving it would not alter the
fundamentals: the two countries' economies are drifting apart and soon, the old
joke about Canada getting the flu each time the US coughs will need to be
"chinezed."
Mexico has been moving in the same
direction, as China has become the country's second largest trade partner. The
movement, however, is much slower and likely to be much less radical than for
Canada. The degree of economic, social and cultural integration of the border
area, now reinforced by the redeployment of the auto-industry, has created a
level of interdependence that has probably never existed between Canada and the
US.
With trilateral stakes so low, there is no
logical reason for current administrations to spend scarce political capital on
deeper integration and, surprise, surprise, they don't. Meanwhile, however,
bilateral agendas pile up: infrastructure, security, environment, water,
migration, visas, standards, and so on. The best way to address those
challenges is to frame them from the outset as bilateral issues.
In that new landscape, the US remains
Canada's most important partner, especially, if anything, as its increasingly
resource-dependent economy is now hooked--both literally and figuratively--on
China. Mexico, moreover, matters for Canada and it is just ridiculous that some
progress on travel restrictions
had to wait for a trilateral meeting to take place. As a
significant trade partner, an important link in the value chains of major
Canadian companies, and a society with which increasingly close links have been
built over the years, it merits more attention from "the Centre" than
it has received. That attention should be freed from the NAFTA shackles in
which it is still stuck in much public discussion and policy development.
Continentalism and North-American
integration made lots of sense a generation ago and clever political leaders
seized the day. The very same ideas have now become blinders. We should drop
them.
[This post was first published on Open Canada.]
