NAFTA and the New North American Summitry

In late March, the leaders of Canada, Mexico and the United States met in what appeared to be the second of a series of annual summits. Indeed, the meeting that occurred in Cancùn one year after a first trilateral gathering in Waco, Texas, ended with the announcement of a third sequel next year, this time in Canada. If that's the case, the Security and Prosperity Partnership (SPP) launched by President George W. Bush, Mexican President Vicente Fox and former Canadian Prime Minister Paul Martin, (replaced this year by the newly elected Stephen Harper) will have generated an unexpected process of North American summitry. This would provide a much-needed forum to address, at the highest level, the future of North American Free Trade Agreement (NAFTA).

Although it delivered much of its promised benefits, the 12-year-old NAFTA desperately needs a good upgrading. "NAFTA 1.0" was designed before the creation of the World Trade Organization (WTO), before 9/11, even before Google. Since its entry into force, NAFTA partners innovated and have advanced and expanded their respective trade agendas through more than 15 separate trade agreements signed with third countries. They also had ample time to experience the internal limitations and inefficiencies of the original agreement, for example in the "rules of origin system" or in the operation of the dispute settlement mechanisms (see cover story). But, paralyzed by the rigidity of NAFTA institutions as well as by domestic protectionist sensibilities, the three governments only have been able to improve the agreement marginally; they have slowly evolved toward "NAFTA 1.01" when an expanded "NAFTA 2.0" would have been required.

A more firmly established North American summit process could, and should, rescue NAFTA from this slow evolution toward decrepitude. Up to now, this is a task the leaders cautiously have put aside, focusing instead on security issues and avoiding even the mention of NAFTA in their declarations.

There are undeniable signs, however, that this attitude is changing. A week before the Cancùn summit, the three countries' trade ministers began a thorough review of NAFTA operations and discussions on possible trilateral cooperation in trade negotiations with third countries. Furthermore, at the summit itself, the leaders announced the creation of the North American Competitiveness Council, a private sector body that will almost certainly advocate enhancing NAFTA to compete better with the new Asian trade powers. These initiatives should pave the way for a third North American summit where the perspectives on the future of NAFTA will, at last, frankly be assessed.