The main promise of the trilateral agreement was to dismantle interstate barriers, and on that it delivered. Trade among the United States, Canada and Mexico more than doubled from $291 billion in 1993 to $678 billion in 2002, while foreign direct investment by the three countries in one another increased during the same period from $120 billion to $310 billion. Mexico and Canada are aware of the overwhelming importance of the United States to their economies, but few people here realize that our first and second largest trading partners are on either side of our borders. We export nearly four times more to them than to China and Japan, and 75 percent more than to the 15-nation European Union. Moreover, Canada and Mexico are the sources of 36 percent of all our energy imports.

But the rest of the Americas hesitate in expanding the agreement because of all that it did not do. NAFTA has failed to address the development gap between Mexico and its northern neighbors, and that gap has widened. During the 1990s, the ratio of U.S. income per capita to that of Mexico went from 6.0 to 6.6, even higher than it had been 40 years before. Nor did the agreement address illegal migration; those numbers have tripled in the last decade. Yet the most significant sign of failure came in the response to 9/11. Lacking any credible institutions to address common interests, the United States acted unilaterally to block its borders, while Canada and Mexico demonstrated ambivalence about siding with the angry superpower next door. 

For the next decade, North America’s agenda should be partnership and integration. While the European model is very different from ours, we would be foolish not to learn from its 50 years of experience with integration. North America should not duplicate Europe’s supra-national bureaucracies, but it does need some institutions to cope with an increasingly integrated, but unregulated, market. The three governments should establish a North American Commission to forge a common policy on a plethora of issues, including transportation and infrastructure, border security, energy, labor, the environment and labeling standards. They should replace ad hoc dispute settlement mechanisms with a permanent Court on Trade and Investment.

The European Union was very successful in reducing the income gap between its richest and poorest countries in a relatively short time. It did so through freer trade and investment, but mainly through a program of nearly $500 billion in aid, contingent on better macroeconomic policies. A considerable amount of the money was wasted, but much was also put to effective use. We will not achieve a genuine partnership in North America or reduce illegal migration unless we narrow the development gap here. Mexico needs to grow at twice the rate of the United States on a sustainable basis. North America should establish an investment fund to help build roads, infrastructure and education in Mexico. We need to provide substantial aid—but much less than we are grant-ing to Iraq.

The United States has been distressingly cavalier in its attitude toward a country that has the ability to destabilize our national security and economy without even meaning to do us harm. Instability in Mexico would bring a flood of refugees to the Southwest, and the United States could not contain the consequences. Conversely, if Mexico's economy prospers, no other country would benefit more than the United States, because we provide 90 percent of all of that country’s imports.

But there is another important reason that Mexico’s success matters: If it were to attain first-world economy status, this would provide a model and an incentive for the rest of Latin America to join the Free Trade Area of the Americas.

The second decade of NAFTA requires new attitudes and bolder steps than the first. Instead of acting unilaterally and alternating between ignoring and patronizing our neighbors, the United States needs a decade-long vision of the continent along with strong leaders to articulate the concept of a new North America. If we did this, fears of free trade would dissipate and the outlines of a united hemisphere would become visible. 

Robert A. Pastor is professor and director of the Center for North American Studies at American University. He is the author of 15 books, including Toward a North American Community: Lessons from the Old World for the New.