At the Special Summit of the Americas in Monterrey, Mexico, in January, the
34 heads of state remained divided on whether to try to complete the Free Trade
Area of the Americas by the 2005 deadline established during earlier summits.
The debate harkened back to the one on whether to move ahead  with the North
American Free Trade Agreement (NAFTA) more than a decade ago. A review of
NAFTA’s consequences might shed some light on the present controversy.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.
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