Breaking Out of the Box

Five years ago, U.S. President George W. Bush visited Mexican President Vicente Fox at his home in Guanajuato. The two pledged to consult their Canadian counterpart and together build "a North American economic community whose benefits reach the lesser-developed areas of the region and extend to the most vulnerable social groups in our countries." They have, in fact, made no progress toward those goals. Since then, the war in Iraq, friction over illegal immigration, violence along the U.S.-Mexico border and a lack of compliance on trade agreements have resulted in a marked deterioration in U.S. relations with its neighbors. In 2000, two thirds of Mexicans viewed the United States favorably. According to polls, that number has now declined to 36 percent (graphic).

When Bush and Fox sit down with new Canadian Prime Minister Stephen Harper in Cancún on March 30, all three leaders will pretend that relations are better than they are. They will note "progress" toward the goals of the Security and Prosperity Partnership, signed last year in Texas, even though it is a timid, paper-shuffling exercise that measures success by the number of bureaucratic meetings.

What they should do is think far more boldly. The only way to solve the most pressing problems in the region--including immigration, security, and declining competitiveness--is to create a true North American Community. No two nations are more important to the United States than Canada and Mexico, and no investment will bolster security and yield greater economic benefits for America than one that narrows the income gap between Mexico and its North American partners.

Bridging that gap was supposed to be one of the many benefits that the North American Free Trade Agreement (NAFTA) would deliver. And indeed, since NAFTA took effect in 1994, trade and investment among the United States, Mexico and Canada have nearly tripled, making North America the world's largest free-trade area in terms of territory and gross domestic product (GDP). Yet the income gap has widened: the annual per capita GDP of the United States ($43,883) today is more than six times that of Mexico ($6,937).

NAFTA has been inadequate in other ways as well. The agreement made no provisions for cushioning economic downturns like the Mexican peso crisis of 1994-95. It created no credible institutions that operate on a truly regional basis. Thus, after terrorists struck New York and Washington on September 11, 2001, the Bush administration unilaterally tightened security on its international borders while Ottawa and Mexico City reverted to their traditional ambivalence toward Washington.

Illegal immigration has increased and if anything, NAFTA has inadvertently fueled immigration by encouraging foreign investment near the U.S.-Mexican border, which in turn serves as a magnet for workers in central and southern Mexico. As a result, the number of undocumented Mexican workers who live in the United States has skyrocketed in the NAFTA era, from an estimated 1 million in the mid-1990s to about 6 million today. One of every six undocumented immigrants is under 18 years old, and since the mid-1990s the fastest growth of the population has occurred in states like Arizona and North Carolina that had relatively small numbers of foreign-born residents in the past.