Wednesday Night #1329 – Professor Stephen Blank on the North American Reality

The North American Reality
Stephen Blank
August 9, 2007

In the heat of the summer, we have been washed over by a wave of blogs warning about plans afoot to create a North American Union or to build new gigantic new NAFTA superhighways across the US.

Alien invaders — a “Bushite” coup, announces one blog – will swarm across the border and Chinese goods will pour in from Mexico – all of this plotted out to undermine US sovereignty and the American way of life. Another blog quotes an Arizona State Senator: “The signs already are there, from an ‘inland port’ in Kansas City and construction of a superhighway corridor through Texas to the lack of any real action in building a wall between the U.S. and Mexico…It’s all going to be a ‘North American community,’ just like the European Union …complete with the creation of a single currency just like the Euro… We will have no sovereignty, we will have no Constitution left.”

Flash: The tragic collapse of the I-35 bridge in Minnesota is tied to NAFTA Superhighway traffic: it is the result of a “Premeditated Merger”.

And behind these secret plans? A secret cabal, of course. The North American Forum – a North American Trilateral Commission or Bilderberg. The Forum is carefully following the course laid out by the left-leaning Council on Foreign Relations led by – who else? – David Rockefeller the éminence grise behind everything global.

It is an exciting tale and, while we have heard it before, it still makes for amusing summer evening reading. But none of it is true. Neither a North American Union nor a monster 12-lane superhighway running from Canada to Mexico is on the table or in the cards. And instead of a finely tuned plan for submerging national sovereignties, little more exists than bits and pieces of ideas for modest collaboration on regulatory harmonization. There is nowhere a master plan for North America.

But there is a North American reality, and it is time we took it seriously. Many of the most important issues that Americans, Canadians and Mexicans will confront in the next decade must be viewed in a North American context. And if we do not examine them as North American issues, it is likely that we will fail to solve many of the most serious problems our nations will face in coming decades.

For example?

For example, environmental issues – invasive species, endangered species and habitats, airshed pollution, water. One cannot speak of these as US, Canadian or Mexican issues – and certainly there are no “national” answers to them. Environmental issues that will loom large in our near-term future do not stop at the Rio Grande or at the 49th parallel. This is no surprise. Canadian, US, and Mexican environment groups and government agencies have been working together for years on many bilateral and regional projects. (The International Joint Commission is the oldest continuing US-Canada body – dealing with the Great Lakes since 1909.) Given its very modest budget and little public attention, the Commission for Environmental Cooperation, created by NAFTA, has been a remarkably successful North American institution. There is no doubt that to deal with mounting environmental risks, we need to cooperate closely with our North American neighbors and to explore new means to jointly address them.

Or energy security. Our largest source of energy is Canada – oil, gas and electricity. Mexico is our second largest source of oil after Canada. The North American system of gas pipelines and electric transmission is basically seamless. US energy security is best seen in a continental framework. Both Canada and Mexico have huge energy reserves, from Tar Sands in Canada (which make Canada second in proven oil reserves after Saudi Arabia), to virtually unlimited hydro resources in Quebec and Labrador, to Mexico’s untouched deep water oil resources in the Gulf of Mexico. Enormous investments are required to bring these energy sources online. It is not just finding these resources, however. We need to ensure that pipelines, wires and ports are maintained and that there is clear responsibility for doing this; we need to ensure that energy resources are used in efficient and environmentally secure ways. We need to think about a wide array of options for the future, about new forms of private-public partnerships and perhaps whether we need some sort of continent-wide energy strategy that meets the different political systems and sensitivities in North America.

Population movements. Most population experts agree that there is no “local” remedy for illegal immigration from Mexico. Most feel we need to think in terms of broader agreements on the movement of people and on the development strategies to create new jobs. It is greatly in the interest of Canadians, Mexicans and Americans that regions of poverty in North America be eliminated and that the North American economy be efficient, secure and inclusive. To accomplish this goal will require the combined efforts of the three NAFTA nations.

Security. Few doubt that the three NAFTA partners must work together to ensure the highest levels of security for our people and communities. We need to deepen cooperation at our borders and we need to explore vigorous ways to ensure that threats are met before they reach our nations. To close or to militarize the US-Canada and US-Mexico borders must be viewed as a last desperate step, and considered in the light of the competitive costs it implies, not the only policy option to maintain US security.

Competitiveness and Transportation Infrastructure. Unlike Europe where “national champions” still prevail in many industries, many leading US, Canadian and Mexican firms have created cross border supply chains as a key element of their competitive advantage. Our transportation infrastructure – which enabled firms to develop these complex systems in the 1980s and ‘90s – has now reached capacity. Even before 9-11, the physical infrastructure at critical Canadian and Mexican border crossings was already nearly overwhelmed. No agency is charged with the responsibility for monitoring use, for identifying infrastructure problems or for developing scenarios for usage requirements even in the near future. Surely, we must work together to develop ideas for transportation infrastructure that will support North American competitiveness in the 21st century.

All of this leads to the critical question of how we should deal with these issues. The governance issue is this: How do three sovereign but increasingly economically and culturally interdependent North American nations respond to these great issues that confront us all? The NAFTA agreement is one element of what has become a complex, multi-dimensioned North American system. How do we move ahead to solve the problems that will be so vital in the next decades? Are we talking about some sort of NAFTA II? Or would it be better to focus on one issue at a time? Must we build new institutions to deal with these issues? How do we do this in ways that inform our populations and build a creative and widespread dialogue and avoid what Europeans now call a “democratic deficit”?

The experience of the Security and Prosperity Partnership (the SPP) is important. Reports from SPP Working Groups set up after the Bush-Fox-Martin meeting in Waco, Texas in 2005 illustrated a wide array of activities taking place under the political-journalistic radar. These included, for example, a new framework agreement to encourage trans-border online business, the implementation of modifications of rules of origin covering many products, a memorandum of understanding on information exchange and cooperation on public health and safety protection of consumer products and even a harmonized approach to BSE. There were even vague agreements to develop a trilateral Regulatory Cooperation Framework by 2007, to pursue a North American Steel Strategy, to create a trilateral Automotive Partnership Council of North America and to undertake an accelerated program to promote mutual recognition of results from testing laboratories.

At the same, we have seen a myriad of business and community driven initiatives underway to expand and improve cross border links. Specialist groups such as the Can-Am Border Trade Alliance and the BTA provide a critical voice insisting that security and efficiency are not incompatible. From the Detroit River International Crossing Project to the improved Lacolle-Champlain Border Crossing and the East-West Maine Highway Study – to name a very few – business and local groups are pressing for new transportation and border infrastructure. The same goes for developments along trade corridors – such as deepening entrepreneurial ties among Winnipeg, Kansas City, Guadalajara, Monterrey and Mexico’s deep-water Pacific ports. (This is the now blog-notorious NASCO.) Mexico plans to open its first foreign-based customs clearing facility in Kansas City, 1000 miles from the border.

What has happened with all of this? So far, everything remains fragmented. There are some clear successes: In PNWER (the Pacific Northwest Economic Region) and along the Mid-Continent Corridor we see different types of emerging economic regions. But enormous highway spending in the 1990s failed to create a system of North-South corridors. Instead, overwhelmed by earmarks, our transportation system suffers from a veritable spaghetti bowl of “high priority” corridors and a continued failure of maintenance. Nowhere is there a vision of an efficient and secure North American transportation system for the 21st century. And the SPP? There has been little coherent follow-up and the entire SPP process remains opaque. Indeed, the SPP has been widely viewed as a dangerous threat to US sovereignty.

Two conclusions are evident.

One is that this movement is driven by deepening interdependence. The political economy of North America is no longer composed of three autonomous national economies. Instead we should think in terms of linkages among production clusters and distribution hubs across the continent – links resting on new cross-border alignments among businesses, communities and local and state-provincial governments. At the same time, we have to think of social groups – whether environmentalists, religious groups or ethnic communities – that cross borders. This is the North American reality.

The second is that the current two-tier process in which national leaders play mum about North American developments while businesses and bureaucrats in federal, state and municipal governments and community groups squirrel away to repair problems in the North American system is unacceptable.

Unacceptable because, despite these efforts to overcome the “tyranny of small differences,” the step-by-step approach lacks the coherence needed now. Since the 1980s, economic integration in North America has been driven largely by corporate strategies and structures. Now, limits to this bottom up process have been reached and clear decisions are required on key issues of security, borders, transportation, energy and immigration. At this point, the incremental approach is simply not enough.

Integration-by-stealth is also unacceptable. NAFTA quickly became the lightning rod for every fear about globalization; the SPP has become the new face of evil. If we hope to get beyond this demonization, concerns must be confronted. The fact is, if we act like conspirators, we cannot be surprised if people think there is a conspiracy.

There has been much discussion about what we can learn from the European experience. Europe’s achievements – and failures as well – in institution building provide us with a wide array of lessons and ideas. But there is a deeper lesson. Before we can talk about institution building, we should listen to Jean Monnet. Monnet, the “father of the European Community”, felt that people could only unite behind a vision they shared.

We need to talk about what is happening in North America, to explore what our interests are in this emerging continental system, and to open a dialogue about different, indeed competing, visions of North America. The dialogue should involve perspectives from different regions, different economic and social sectors and those who oppose as well as support economic integration. The process must get outside of the beltways – it must give voice to community and economic leaders who are most deeply involved in this new system. Only in this way can we create the second key element of Monnet’s approach – building constituencies that would press governments to realize their shared vision.

There is a North American reality – a complex North American system, many sectors of which are characterized by deep structural integration – that is deeply misunderstood. Canadians, Mexicans and Americans all depend profoundly on this system. After a decade of rapid growth, however, and in the wake of the events of 9/11, we see evidence that integration has slowed and that the North American economic system is becoming more fragile. To reinvigorate the process of integration requires now energy to create a vision for the 21st century and the mobilization of informed and active constituencies that will press for new steps forward by the three NAFTA governments.