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U.S. Consul General on NAFTA, American-Canadian business relations and a North American political union

The North American Free Trade Agreement (NAFTA) is now in its second decade of existence. The agreement has established a rapprochement between Canada, the United States and Mexico, and U.S. Consul General Philip T. Chicola, on a recent whistle-stop tour to UFV’s Abbotsford campus, believes that NAFTA will one day be subsumed into a more inclusive agreement that may include greater economic and political unity between the three countries, similar to the European Union.

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by Paul Brammer (News & Opinion Editor)

The North American Free Trade Agreement (NAFTA) is now in its second decade of existence. The agreement has established a rapprochement between Canada, the United States and Mexico, and U.S. Consul General Philip T. Chicola, on a recent whistle-stop tour to UFV’s Abbotsford campus, believes that NAFTA will one day be subsumed into a more inclusive agreement that may include greater economic and political unity between the three countries, similar to the European Union.

Chicola commented on the possibilities and complications that NAFTA faces in the proposed trajectory of its evolution. “I think eventually NAFTA will be superseded by a more comprehensive agreement. [One] of the hardest parts is continuing to get adjusted to the changes that those agreements bring about.

“That takes time to process and digest, and the whole world trade picture is morphing and changing all the time. How quickly those changes will happen is anyone’s guess. But they will happen, that is one thing in the schedule I think.”

One common complaint made of NAFTA is that it has been responsible for the siphoning of jobs away from one of the NAFTA countries to one of the others. While Chicola admitted that NAFTA is responsible for the relocating of jobs to and from cities and areas, the Consul General pointed to the emergence of countries such as India and China as competitors and leaders in the world manufacturing stakes. “[NAFTA has] been very successful in increasing trade between the countries and integrating their economies. It has been a failure explaining to people what it does and doesn’t do…There is this vision in the U.S., for example, that NAFTA siphoned all these jobs out of the U.S.; it siphoned some [but] most of the jobs were not siphoned…The bulk of the jobs migrated elsewhere in the world for totally different reasons, nothing to do with NAFTA.”

Recent statistics have intimated that American and Canadian businesses are fostering closer links as a result of the trade integration expounded by the tenets of NAFTA. Last month’s HSBC Trade Confidence Index found that Canadian companies believed the U.S. to be one of their top three trading partners, while a growing number of businesses in the U.S. identify Canada as their top trading country.

A number of reasons for this trade relationship were touched on by Chicola – unifying them all was the familiarity that Canadians have for American customs, businesses and business practices, and vice versa. “[They are a] very easy place to do business – the rules are very similar; in most cases identical. They speak the same language [so] they don’t have to go running around, trying to find intermediates. It is not subject to the kind of legal impediments that you would find in countries with different legal traditions. You don’t have to deal with questions of corruption; you don’t have a lot of the impediments you have elsewhere. This opens up the trade between the two countries, and the amount of trade we do with one another will continue to increase.”

The implementation of the trade agreement has led commentators to wonder where NAFTA will lead; the possibility of some kind of political union, not unlike the European Union, is a possibility that may be explored in the future. Chicola commented on the viability and possibility of such a union, using Europe as an example. “I think [political integration] is much harder – I think it is much harder for several practical reasons: I don’t think the U.S. is prepared to give up sovereignty and, clearly, to start a system like that you have to make some serious decisions about giving up sovereignty. I don’t think Canada or Mexico are prepared to do that either.

“I think political integration may happen but it will be far away…Economic integration, dealing with trade barriers, [and] reducing those trade barriers is going to happen long before it happens.”

The European Union began life as a trading body much like NAFTA. Chicola commented on the characteristics of the E.U., and how that model can be useful in mapping out the future of relations between the U.S., Canada and Mexico. “For the first 20, 25 years of the incipient E.U. evolving into what it is, it was basically a trade organization in a much more benign environment. It started out as a way to integrate Germany into the European economy and only in the 70s and 80s did it begin to evolve into a political union.

“I think in North America it would be much, much slower. At some point those political structures will change, but that point may be 50, 60, a hundred years in the future…Certainly, people in all three countries would have to change their views about nationality and what it means to be a sovereign power. They [would] have to stop thinking of themselves as Americans or Canadians or Mexicans…In Europe they still think of themselves as Spanish or French or English, they don’t think of themselves as Europeans.”

One accusation levelled at NAFTA is that it attempts to force artificial or unnatural changes on the member countries, at the cost of alienating their respective populations and ways of living. Chicola explained that NAFTA is an agent of social evolution. “The question is – would the person working the small plot in South Central Mexico, growing corn for himself and his family…would that allow him and his family to have a better future? The answer is probably not. They probably are living today pretty much the same way they lived in the nineteenth century, so unless you bring in a law change…their lives won’t get better. So it’s a terrible choice, it’s a very difficult thing to explain, but it’s inevitable in some fashion or other.”

Next Friday: Part two of the Consul General interview

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