Congressional passage of NAFTA next week may speed the economic integration of North America, but the defeat of NAFTA won't stop it. Like it or not, this process is already well under way and cannot be reversed. The next stop, if NAFTA passes, is likely to be something much more powerful -- a North American common market that eventually will bind the continent together as one economic unit, from the Yukon to the Yucatan.
Americans don't warm to the notion of a common market. To conservatives, it conjures up images of aloof Eurocrats imposing new rules and taxes on over-regulated entrepreneurs. Liberals are more fearful still, envisioning supranational rule by trade potentates deaf to environmental and labor concerns.
Canadians and Mexicans are even warier. A continental common market can sound unnervingly like a United States of North America, with Washington its unchallenged capital.
Yet a North American common market is both inevitable and desirable. Economic integration cannot and will not stop with the adoption of a freer trade and investment regime. A common market structure is needed -- and in fact is already being developed -- to resolve the inevitable conflicts of economic integration and to capitalize fully on its inherent advantages.
When NAFTA was first proposed, critics in all three countries claimed that its hidden agenda was the development of a European-style common market. Didn't Europe also start out with a limited free trade area? And, given the Brussels precedent, wouldn't this mean ceding some measure of sovereignty to unelected bureaucrats? Even worse, wouldn't this lead to liberalization and collaborative policy making in many other sensitive areas, from monetary policy and immigration to labor and environmental law?
NAFTA's defenders said no. They argued that the agreement is designed to dismantle tariff barriers, not build a new regulatory bureaucracy. NAFTA, declared one congressional backer, "is a trade agreement, not an act of economic union."
Yet the critics were essentially right. NAFTA lays the foundation for a continental common market, as many of its architects privately acknowledge. Part of this foundation, inevitably, is bureaucratic: The agreement creates a variety of continental institutions -- ranging from trade dispute panels to labor and environmental commissions -- that are, in aggregate, an embryonic NAFTA government.
Border environmental and public works problems are being addressed by new regulatory bodies, and new financial mechanisms are being developed within the NAFTA framework. These institutions won't be just concepts, or committees, but large buildings with permanent staff. The environmental commission is to be housed in Canada, the labor commission in the United States, and the coordinating NAFTA Secretariat in Mexico. With their trinational personnel and a mandate to work collectively and independently, these agencies should develop a distinctive NAFTA corporate culture.
North America's political and demographic structure encourages a decentralized integration. Each NAFTA partner is a continent-wide assemblage of industrially and culturally distinct population centers and geographical districts. Unlike any other international trade grouping, the member governments are all organized federally: NAFTA would be a consortium of 92 states and provinces, plus scattered federal districts, territories and dependencies.
The Canadian provinces and U.S. and Mexican states cover the same range of size and population and are reasonably analogous juridically. The provinces have far more autonomy than U.S. states, while the Mexican states, by dint of tradition (though not by law), have far less. Still, the Mexican states are getting greater independence in environmental affairs, investment promotion and educational management. Opposition governments in several states -- a Mexican first -- are accelerating this trend. So are tax provisions and pollution codes discouraging additional industry in Mexico City. Economic deregulation and belated electoral reforms are gradually loosening the capital's choke hold on the body politic.
Mexico isn't alone in its rediscovery of federalism. In Canada, whatever the outcome of the next round of constitutional reform, Ottawa will devolve still more power to the provinces. Indeed, one reason that Quebec is the province most favorably disposed toward NAFTA is that Quebecers see it as a way to consolidate local autonomy within the quasi-federal context of an integrated North America.
Redrawing the Map In the 19th century, Mexico was in the West. Now it is in the South. NAFTA would reinvigorate traditional north-south trade corridors from Canada to central Mexico. And these, in turn, would further stimulate economic integration within the many natural regions of North America that spill across national boundaries. Washington Post reporter Joel Garreau anticipated this trend in his 1982 book "The Nine Nations of North America."
More important than formal trade reforms will be the informal progress toward market unification, with revamped transportation networks, new trade corridors and population centers, and new industrial specializations. Electric power grids would be interconnected; so would broadcasting and telecommunications networks. "National" parks would cross national borders. Fiber-optic information highways would connect telecommuters in all three countries.
Bullet trains would link Dallas to Monterrey and New York to Montreal. New airports and seaports would be built along borders to draw customers from both countries. All this would naturally encourage new subregional economic relationships across national lines. And this, in turn, would transform a regional free trade zone into something denser, more integrated and more stimulating.
The U.S.-Canadian free trade agreement has already deepened this subregional consciousness in the northern United States. In the Pacific Northwest, the growing trade with British Columbia has made "Cascadia" a standard marketing and industrial planning concept. More important than the exchange of goods is the perception -- in Victoria, Spokane and Eugene -- of common regional interests: in the timber and fishing industries; in high-tech education; in environmental practices; in expanding trade with Asia. On issues ranging from GATT to wildlife preservation, Vancouver and Seattle have more in common with each other than they do with Montreal and Cleveland.
At the border's midpoint, entrepreneurs and local governments are promoting a "Red River" district uniting Minnesota and the Dakotas with Manitoba and Western Ontario. Many of the same commodities are produced on both sides of the border (iron and wheat, machine tools and auto parts) with surprisingly little direct overlap.
NAFTA would impose new subdivisions on the continent, with northern Mexico and its contiguous neighbors coalescing into four distinct subregions -- a more diverse and differentiated area than Garreau's "Mexamerica" monolith, which embraced everything from Texas to California, with most of Mexico thrown in.
These emerging NAFTA border regions correspond naturally to North America's time zones. (Mexico, Baja excepted, keeps all its clocks on central standard time, but that will change.) Moving from west to east, they are:
LAS CALIFORNIAS: The two Californias, upper and lower, are linked by culture, history and immigration. Los Angeles is the second-largest "Mexican" city in North America. The central Californian valleys that form the country's highest-yielding agricultural district have depended for generations on Mexican labor. The second-biggest city on the North American Pacific Coast, Tijuana -- edging past San Francisco and San Diego -- is the definitive border metropolis, a sprawling gateway where an Americanized Mexico intermingles with a Mexicanized America. The rest of Baja California is a winter playground for American Californians. Wealthy Mexicans, meanwhile, favor vacation stays in La Jolla, and UCLA undergraduate educations for their bilingual children.
NAFTA would bind the Californias even closer together. Long Beach is already Mexico's biggest Pacific port; a proposed Tijuana desalination plant could become San Diego's biggest new source of electricity and fresh water. The privatization of Mexican farmlands and NAFTA's foreign investment reforms would lure California agribusiness to Baja's fertile northern valleys. The expanding Tijuana airport, hard by the border, would be Southern California's big air freight hub.
THE ROCKY MADRES: The trade corridor where NAFTA would have its biggest impact is east of the California, along the continent's mountainous spine: the great ranching and mining badlands from Alberta to the Bajio that are North America's real West. Despite their obvious similarity, the Mexican and American sides on this region have never had much to do with one another. There are few good road and rail crossings and -- on both sides -- sparse industrial development and little agricultural exchange. NAFTA would change that.
With NAFTA facilitating financing and promoting demand, and removing obstacles to cross-border trucking and tourist buses, Guaymas would become a port and resort, first for Tucson and Phoenix, and eventually for the entire Southwest. Three hours farther south, the deep-water harbor at Topolobampo would be developed into an efficient alternative rail port with direct overland service to west Texas and Denver. The region's emerging industrial center is Hermosillo; its anchor, the $2 billion Ford Tracer plant.
As this central swath of North America becomes more urbanized and industrialized, manufacturing trade would bind the region together just as cattle and immigrations did in the past. The pivotal cities are Juarez and Denver.
MONTERREY METROPLEX: The crux of the new NAFTA trading relationship is the connection between greater Monterrey, the capital city of private Mexican industry, and the Eastern Texas triangle bounded by Houston, San Antonio and the Dallas-Fort Worth metroplex.
Cross-border traffic naturally funnels through this corridor -- it's already the conduit for a third of all U.S.-Mexican trade. High-speed rail service and borderless information services would revolutionize this route before the NAFTA transition period was over. Monterrey is the headquarters for Mexico's cement, glass, brewing, petrochemicals, plastics and steel industries, three of its top five banks, and two of its top five retailers, and for franchise chains of everything from Blockbuster videos to Domino's pizza.
Texas, meanwhile, sits directly athwart Mexico's principal population centers. Eastern Texas is the center for U.S.-Mexican marketing, shipping and export-import financing. It's also Mexico's main supplier of goods, ranging from helicopters and customized computer software to refined gasoline, cotton clothing and advanced machine tools.
THE GULF COAST: The final border region is essentially maritime, sweeping from Tampico to Tabasco and around to Tampa and Galveston. The big industries on all sides are oil, shrimp and shipping. Fertilizer and petrochemical plants are an integral part of the gulf economy. The coasts are fringed by the same lowland subtropical agriculture: cotton, citrus, sugar, Brahma beef, winter vegetables.
This is the most predictably protectionist of the NAFTA regions. It is also the most polarized environmentally. The fishing industry, a leading employer in all gulf coastal states, is everywhere at odds with oil drillers and shippers. But there is a growing sense of common interest in the protection of the gulf's fragile ecology, both offshore and along what remains of the original mangrove coastlines.
Resettling the Continent It was exactly a century ago that Frederick Jackson Turner warned that the West was won -- that is, the territories seized from Mexico were being tilled and populated -- and the great pioneering era of American history was coming to a possibly traumatic close.
Turner was a bit premature. But the 1990 census confirmed that the westward expansion finally is over. The national center of demographic gravity is no longer marching toward the Rockies. California's population is still rising, but that is the result of immigration (Mexico being the principal culprit), not citizens relocating west.
The fastest-growing state in the 1980s was Florida, the first time in generations that distinction had been held by an eastern state. Californians are looking back East for work, cheaper housing and the greener spaces they bypassed on the way out. Southern California is as crowded and costly as the northeastern corridor; its air is warmer but also dirtier. The West, accustomed since birth to constant growth, is becoming just another region, with the same cycles of growth and decay that the rest of the country has long endured.
Its westward expansion finally complete, the United States is again trying to push south into Mesoamerica. The difference this time is that, by mutual assent, Mexico is wedding itself to the United States -- and laying subtle claims to the lands that Santa Ana lost.
NAFTA would restructure the continent, with lines of people and goods running north-to-south as well as east-to-west, and once-fixed borders blurring in overlapping spheres of economic influence and political power. Economically, Mexico ultimately would be nearly the size of Canada, and a bigger and better trading partner than Japan. Mexican immigration would diminish over time as Mexican prosperity rises, while the immigration that remains could be regulated and legalized within a common market system of preferences. The North American Free Trade Agreement is the framework for a relationship that would restructure much more than mere trade.