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[Note: A transcript of this meeting is unavailable. The discussion is summarized below.]

October 17, 2001

Not for Attribution

Atlanta, GA

The Atlanta Roundtable held its second session on October 17, 2001 to discuss the future of North American integration in the wake of the terrorist attacks. Gordon D. Giffin, Vice Chairman of Long, Aldridge & Norman and former U.S. Ambassador to Canada, and Robert A. Pastor, Professor of Political Science at Emory University, led the discussion.

The Atlanta Roundtable addressed the following questions:

1. What were the prospects of North American integration prior to September 11? What are they now?

2. What has been U.S. policy toward Canada and Mexico vis á vis trade? How has it changed since September 11? How should it change?

3. How will security concerns on the Canadian and Mexican borders affect trade policy going forward?

4. How has the United States’ response to the terrorist attacks (i.e. enforcing a security perimeter with Canada) affected our broader relations?

5. What are the costs and trade-offs of future U.S. actions to deal with the terrorist threat on our borders?

6. What can or should Canada and Mexico be doing to support the “war” on terrorism?

Findings and Key Points

Mexico prior to September 11

• A transformation occurred in Mexico with the election of Vicente Fox. He met with President Bush on September 4 and proposed a very broad agenda: legalizing anywhere from three to seven million illegal immigrants, expanding temporary migration from Mexico, increasing cooperation in law enforcement, especially against drug trafficking, and organizing a binational committee to promote development in the poorer regions in Mexico.

Mexico after September 11

• A week prior to September 11, the discussion focused on ways to facilitate integration and the movement of people and of goods. On September 11, the borders were virtually shut down.

• In the immediate term, September 11 has had a profound effect on both Mexico and Canada. Both countries had come to rely on freer trade with the United States, with U.S. exports and imports approximately 85% of their total trade, and thus any impediments introduced at the borders had a very deleterious effect on the two countries’ economies.

Canada prior to September 11

• Canada is the country with which the United States has the largest commercial relationship. It has collaborated on military matters, and its economy and transportation is very tightly integrated with the United States.

• Canada is the largest energy supplier (natural gas, electricity, and petroleum) of the United States and has 25% of fresh water resources of the world.

• Canada is the member of every global multilateral club that the United States belongs to: NATO, APEC, OAS, G-7. Their history of engagement with Mexico is much more limited.

• The challenge before September 11 was to take what has been a remarkably successful trade agreement and construct a model for North America that permits the three countries to be more integrated and yet retain their sovereignty. The longer-term challenge is how to take the North American experience and expand it to the hemisphere.

Canada after September 11

• Many of the issues with respect to North America’s integration are magnified in the wake of September 11. Serious people have thought through these issues, not to address terrorism per se, but to advance our continent both in terms of border management, security, and immigration. The issue now is priorities and the political will to address them.

• September 11 has caused the United States to examine the threats presented by the attacks and subsequent events. The risk is that long-term costs will result as the administration tries to deal with the challenges of terrorism and as Congress introduces legislation that tightens up the borders.

• The perception of an “immigration sieve” in Canada has and is provoking positive progress: Canada has already introduced major new immigration legislation—making domestic legal changes and appointing John Manley to be Tom Ridge’s Canadian counterpart.

• The U.S. foreign policy establishment is enormously well schooled in dealing with over-the-horizon challenges of Asia, the Middle East, and Europe, but are not good about doing foreign policy in our part of the world. There is no structure in the State Department to address the growing importance of North America. From World War II until 1998, Canada was in the European bureau. It now is in the Western Hemisphere bureau, which is administered by Latin American experts.

The successes and failures of NAFTA

• The successes: NAFTA came into force in January 1994, six years after the U.S.-Canadian free trade agreement. It has dramatically reduced trade and investment barriers, and trade and investment have almost tripled among the three countries. U.S. exports to Mexico and Canada are four times its exports to China and Japan, and 40% above its exports to the European Union. The rate of Canadian investment in the United States has exceeded the rate of U.S. investment in Canada.

• Only about 116,000 jobs that were lost since NAFTA have been attributed to trade with our partners. At the same time, the United States created 22 million jobs. NAFTA has brought the expansion of trade, the expansion of jobs, and the increasing competitiveness and continentalization of companies in North America.

• All three countries have become integrated economically, as well as socially due to a greater degree of immigration. In the 1990s, the population of the United States grew 13.2%, with 60% growth of Mexican immigrants.

• The failures: NAFTA didn’t create any real institutions to help the countries think in a tri-national way or as a North American entity. It made the opposite mistake of the European Union, which had over-institutionalized. As a result, it was incapable of anticipating or responding quickly to the peso crisis of 1994 to 1995, which disillusioned so many in Mexico and in the United States.

• NAFTA hasn’t aimed to reduce the development gap between Mexico and its neighbors. As a result, the income per capita gap between the United States and its two neighbors has widened, not narrowed. And until the development gap is reduced, the level of illegal migration from Mexico will not decline.

Areas of disagreement

The prospects for North American integration

• Public opinion polls in the three countries have shown:
  1. We like each other;

  2. Our values are converging toward a North American model, not an American one; and

  3. We are prepared to join a North American entity provided that it wouldn’t threaten the culture of each country and that the standard of living would increase.

• Despite what the polls say, several argued that Canadians do not want to be more integrated with the United States or be part of a North American union because they are concerned that the union would be dominated by the United States. Canada has spent its entire existence defining itself as what it’s not. Canadians fear that greater integration will homogenize or suppress their culture.

Deepening or widening of NAFTA

• The deepening of NAFTA means greater coordination or harmonization of policies. Thinking continentally for transportation and infrastructure would facilitate economic competition and integration. NAFTA’s limits have been reached and what is needed now is an institution that thinks about these problems in a continental way.

• Some in the United States are allergic to establishing institutions that might resist its preferences. We shouldn’t insist that “our way” is the only path, that we’ll just abrogate and walk away from international agreements.

Areas of agreement

Canada

• What’s happening vis á vis Canada post-September 11 is the misconception that Canada is a security threat to the United States because it is an immigration sieve on the northern border. Canada understands and recognizes that this rhetoric is going on and the dynamics of its relationship with the United States—economic and otherwise—could be negatively impacted by this paranoia.

• Canadians began the dialogue with the United States on a perimeter policy, and it will have more vitality because of September 11, only because there will be a fear that the United States will come up with something more narrow and dysfunctional.

Mexico

• Mexicans had moved in this direction pre-September 11 as part of the comprehensive approach to migration. They have really enforced their perimeter policing and have deported in the last year 152,000 people (from 49 countries), who had tried to transit Mexico to the United States. They have for the first time had a border police arrest these foreigners. They cannot arrest Mexicans because it’s against their constitution, but they discourage them by educating them.

• Development should be the first issue on the North American agenda, not immigration. Migration has differential effects on different countries. It benefits economically the receiving country, although the distributive effect is a serious problem. It largely benefits the middle class and the affluent of the United States and hurts the poor and the sending country most of all.

• The major motivation for migration from Mexico to the United States is not jobs, but a differential in income, which ranges from 8 to 30 times. Until that differential is significantly narrowed, there will be a very heavy stream of migration, which will only increase when there are economic problems in Mexico.

Bob Pastor’s Recommendations

• A lean advisory North American Commission whose purpose is to set the agenda for Summit meetings by the three leaders. The Commission would prepare proposals to help the leaders think about issues from a continental standpoint. Instead of two parliamentary groups—the U.S.-Mexican and U.S. -Canadian—he proposed a single North American parliamentary group to help all sides.

• A new model within the U.S. government to manage North American affairs is essential. He proposed a White House based model whereby the Coordinator for North American affairs would chair an Inter-Agency Group on North America and report through the National Security Adviser and the Domestic Policy Adviser to the President. An alternative model is a State Department structure, at the Undersecretary level. (He has developed both proposals in his new book, Toward a North American Community: Lessons from the Old World for the New, Institute for International Economics, August 2001).

• A permanent court on trade and investment to replace the ad hoc mechanisms that have had problems of conflict of interest.

• A customs union that establishes a common external tariff and removes customs requirement between the countries, moving us a step closer to a common market.

• A perimeter formula that would put together a North American core of immigration and customs law enforcement officers. The officers would be trained by all three countries in a single unit and would be responsible for enforcing the perimeter of immigration. This model would reduce by half the customs and immigration documentation to cross the border.

• A North American Development Fund so that all three countries contribute a proportion of their wealth to help with education and building infrastructure in Mexico.

Gordon Giffin’s Recommendations

• Allocate more resources to the U.S.-Canadian 5,500 mile border to make it more efficient. We had 9,000 officers of immigration, customs, and border control assigned to Mexico and only 900 assigned to Canada. September 11 has given the political will to address an issue that should have been addressed long ago, and Congress has now appropriated money for 1,000 people on the Canadian border.

• Enhance the movement of a legitimate person so that more time can be spent on the illegitimate person. We need to document people and goods so that they move more quickly, i.e. a North American pass that requires a cursory background check done.

• Clear commercial trucks remotely so that they don’t clog the border.

• Reorganize all of our border functions into one department, one agency, so there is more efficient operations. The INS is in the Justice Department, the Customs is in the Treasury, and the Coast Guard is in Transportation. As a result, they have different bosses, different policies, and different levels of accountability.

• Balance our need for security and our need for the continent to be integrated. We cannot impose unilateral solutions from Washington. We need to have a dialogue and to collaborate with both Canada and Mexico.