North American Free Trade

A new continentalism took hold on February 5, 1991, when the leaders of Canada, Mexico and the United States announced they would negotiate a North American Free Trade Agreement. NAFTA, if and when completed, will reshape corporate strategies, redraw the mental map of citizens in each country and gradually create a North American economic identity based on global competition.

NAFTA is the product of longstanding trends in both Mexico and Canada toward sharing production with U.S. companies and conducting more than 70 percent of their trade with the United States. The decision to deepen and formalize these economic ties, however, is a qualitative change that may prove politically challenging as well as economically rewarding. Advocates of open economic borders will have to compete with insular nationalists, ideas for innovative trinational cooperation with restrictive notions of sovereignty, liberalization with protectionism, and market philosophies with residual populism.

Mexican President Carlos Salinas de Gortari set this process in motion in June 1990 when he requested a free-trade agreement with the United States. He thus reversed decades of inward-looking policies and, in effect, toppled a wall of mistrust in U.S.-Mexican relations. The Bush administration quickly recognized that the moment was ripe for a historic political reconciliation. This reconciliation has rippled throughout Latin America, replacing fears of U.S. hegemony with a pragmatic interest in hemispheric free trade.

A year after Salinas' initial request, negotiators held their first substantive meeting in Toronto, on June 12, 1991, forming working groups on market access, trade rules, services, investment, intellectual property and dispute settlement. A final treaty could be presented as early as the beginning of 1992, well before U.S. presidential elections, or in early 1993, well before Canadian elections. The timing of the talks is thus designed to avoid politicization, which would complicate the task of making difficult concessions and achieving truly comprehensive economic liberalization.

But what forces have brought the United States, Mexico and Canada to this point? What difficulties does NAFTA present for all three nations, and what are its multilateral implications? In short what does the future hold for this new continental configuration?

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