How a Great Power Falls Apart
Decline Is Invisible From the Inside
This week, U.S. President Barack Obama will travel to Mexico, where he will meet with his North American counterparts, Canadian Prime Minister Stephen Harper and Mexican President Enrique Peña-Nieto. The summit points to a great strategic opportunity: 20 years after the North American Free Trade Agreement entered into force, all three countries have the chance to forge a new forward-looking agenda for North American competitiveness and integration and thereby increase the economic growth and global influence of each.
As crises in the Middle East and rising tensions in Asia have consumed U.S. policymakers’ attention over the past decade, Washington has devoted comparatively little thought to North America. Yet it is precisely the broader global challenges of the 21st century that make an ambitious strategy to strengthen North America so important. By adopting policies that foster a more competitive and integrated region, the three nations can lay the foundation for greater prosperity at home while bolstering their power and positions worldwide.
Such a strategy can draw strength from several tailwinds that are already blowing in North America’s favor. With three democracies, almost 500 million people, and economies totaling $19 trillion, North America possesses the economic and demographic heft to put China and a rising East Asia in perspective.
The Canadian, Mexican, and U.S. economies are also highly integrated, with over $1 trillion in annual commerce. The countries are each other’s largest trading partners. And due to the development of regional supply chains, spurred by NAFTA, they are increasingly making things together, not simply selling things to each other.
Then there is the energy revolution, the epicenter of which is located in North America. Oil and gas production in Canada and the United States is soaring. The United States is now the world’s largest natural gas producer and, by 2016, could be its largest crude oil producer. Meanwhile, Mexico is poised for its own breakout thanks to the historic energy reform engineered by Peña Nieto last year.
Finally, relations among the three nations benefit from their shared values as open, pluralistic, and multi-party democracies. Despite memories of past conflict, North America today is remarkably free of destabilizing rivalries or territorial disputes.
The question now is whether Canada, Mexico, and the United States can develop a common vision to build on these strengths and help the region meet its full potential.
In contrast to the NAFTA of two decades ago, there is no single policy initiative on which North American integration and competitiveness will rise or fall. Rather, success requires a comprehensive and interlocking program of policies and projects that draws together not only the three countries’ national governments, but also their state and provincial authorities, private sectors, and civil societies.
There is clear demand, for example, for significant public and private investment in the region’s aging border infrastructure, which is currently a bottleneck that threatens to constrain growing trade flows and undercut the natural advantage of geographic proximity.
North America’s borders should be an asset, not a chokepoint, for advancing continental cooperation in security, commerce, and protection of the environment.
North America also needs a unified energy strategy. The oil and gas boom could give the continent a significant edge by increasing its energy security, encouraging manufacturing and energy-intensive industries to move there (especially as wages rise in East Asia), and creating millions of new jobs. But the strength of these trends will turn, in part, on whether the three countries build the pipelines and electrical grids that can enhance their competitiveness.
Another advantage for the continent is its demographics, which stand in contrast to the aging, shrinking workforces of many other nations. Making the most of this source of strength, however, will depend on developing North American human capital through education and training, facilitating the matching of workers with jobs across all three countries, and putting in place immigration reform.
North America should also seek to develop, wherever possible, a common approach in the broader international arena. For instance, whereas Canada, Mexico, and the United States are participating in talks for the Trans-Pacific Partnership, Washington is pursuing a free trade agreement with the European Union on its own. It would be preferable to bring Ottawa and Mexico City into this negotiation.
It also makes sense to explore how to align Canada and the United States with the Pacific Alliance -- a coalition that unites Chile, Colombia, Mexico, and Peru in support of free trade and open economies -- and pursue deeper cooperation between North and South America in addressing security, development, and governance challenges in Central America and the Caribbean.
Enhancing North American coordination in the fight against transnational criminal networks and drug traffickers should be another priority. Canada and the United States have a clear interest in supporting Mexico’s efforts to strengthen its rule of law institutions.
More immediately, perhaps the most powerful action the Obama administration could take to promote a continental agenda is organizational. Although the idea of a North American strategy has won influential advocates in Washington -- including Vice President Joe Biden and Commerce Secretary Penny Pritzker -- it would be helpful to designate a single, senior point-person at the White House to ensure that North America receives continuous, not episodic, attention. The point person could also help make sure that the numerous departments and agencies across the U.S. government are working together and in cooperation with local authorities and non-government stakeholders to deliver on North America’s promise.
The best news for North America is that, regardless of what its governments do, market forces will continue to drive the development of an integrated, competitive regional economic power. Nonetheless, public policy choices will play a critical role in either accelerating or undermining that progress. This week’s summit gives the leaders of the United States, Canada, and Mexico an opportunity to advance the shared future North America needs.