Integration and relocation

The process of economic integration takes time. Businesses in one country have to learn how to outsource to another.

A manufacturer of refrigerators cannot simply shut down a plant in Iowa one week — and open up in Mexico the next. Except for the very largest, most businesses cannot make such shifts by themselves.

So an industry of lawyers and plant locators and accountants and fixers has to develop.

It also takes time for the experience of the first pioneers to feed back to the second wave of industrial firms wanting to relocate.

Where companies own the factory and land, they cannot easily pull up stakes. Typically, the company lets the old facility wear out, laying off small numbers of workers slowly while it prepares to relocate.

Often, the decision is made at the moment of expansion, or the shift to a new product line. It is nevertheless relentless.

Heavy air traffic

To accommodate trade, transportation links are bending north-south. The Canadian federal government’s 200-year transportation policy of linking Canada east-west, and later north to the undeveloped north, is now shifting to widen the routes to the U.S. market.

It is not the federal government in Ottawa that is driving this change. The provinces are shifting their road plans in response to the increasing demands from exporters and importers.

Mexican, Canadian and U.S. transportation companies have made plans for a seamless rail system through the continent. Kansas City Southern and its Mexican subsidiary call their service “NAFTA Rail.”

By 1997, Canada and the United States had the most air connections of any two nations in the world. More than 15 million passengers flew between the United States and Mexico in 2003 — an almost 40% increase since 1994.

As the economic relationships proliferate, cross-border political connections have grown among the states and provinces, outside the formal foreign policy apparatus of the three governments.

Close-knit cooperation

Some 18 U.S. states now maintain offices in Mexico. Another 12 have offices in Canada. The large Canadian provinces have permanent commercial representation in the United States and Mexico.

Ontario and Quebec are associate members of U.S. Council of State Governments. The governments of the New England states and eastern Canadian provinces have a formal association — as do British Columbia, Alberta, the Yukon, Washington, Oregon, Idaho, Montana and Alaska.

The governors of the Great Lakes states and the premiers of their provincial counterparts meet regularly on regional problems.

On the southern border, the Border Governors Conference holds annual meetings between the heads of California, Arizona, New Mexico, Texas, Baja California, Chihuahua, Coahuila, Nuevo Leon, Sonora and Tamaulipas.

Formal commissions exist between Sonora and Arizona, Chihuahua and New Mexico, and Baja California and California.

The ordinary “we”

The problem, of course, is that market integration lacks a social contract, which the history of each of the three nations tells us is necessary to make a wider economy work for everyone.

As Jorge Castañeda, who later became Mexico’s foreign secretary, observed, NAFTA was “an agreement for the rich and powerful in the United States, Mexico and Canada, an agreement effectively excluding ordinary people in all three societies.”

Not surprisingly, NAFTA has contributed to the upward redistribution of income, wealth and power in each nation. Now the great challenge is to create a much broader sense of community — a continental “we” — upon which to base a cross-border politics that can effectively promote the interests of ordinary people in this new North American economy.