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Ten Years Later: What We Have Learned About Advancing North America's Competitiveness

Article by Daniel W. Fisk March 26, 2015 //   6 minute read

This week marked the tenth anniversary of the most serious effort beyond the North American Free Trade Agreement (NAFTA) to advance economic integration among Canada, Mexico and the United States.

Known as the Security and Prosperity Partnership (SPP), the effort was launched in Waco, Texas, on March 23, 2005 by then-President George W. Bush, Canadian Prime Minister Paul Martin and Mexican President Vicente Fox. The SPP sought to pursue “new avenues of cooperation that will make our open societies safer and more secure, our businesses more competitive, and our economies more resilient.”

The SPP was an attempt to streamline bureaucratic structures so North America’s economic potential could be unleashed beyond the success with NAFTA. Policymakers had struggled to find a way to do that since the creation of NAFTA, and the SPP became the mechanism.

So, a decade after the launch of the Security and Prosperity Partnership, what have we learned? The key is presidential leadership and these four lessons stand out:

Stop treating North America as an afterthought

A group convened recently by the Council on Foreign Relations concluded that the North America agenda has been “downgraded” since 2009 by all three countries. The group further concluded that the North American agenda is an “afterthought” for U.S. policymakers.

Their structural recommendation:  designate a senior U.S. official -- either the Vice President, the Secretary of State, the Secretary of the Treasury, or the National Security Advisor – as a “champion.” They also proposed creating more bureaucracy. The group called for new “North America” offices within the National Security Council (NSC) and State Department, respectively.

While well-intentioned, this misinterprets recent history. It also misinterprets the underlying reality of what impedes economic integration.

Use existing structures smartly

Creating more foreign policy bureaucracy by dividing responsibilities into a “North American” bureau and a rest-of-Latin America bureau will not advance the agenda better than the current structure.

The existing NSC process is malleable enough to coordinate greater North American cooperation.  This was evidenced by both the SPP and the Merida Initiative with Mexico, which enhanced cooperation in addressing the threat of organized criminal elements.

Both initiatives were overseen and coordinated by the NSC structure without creating more bureaucracy. The National Security Advisor, along with the NSC staff, was clearly empowered by the President to coordinate policy development and implementation.

In turn, the NSC played the role of breaking deadlocks, with authority to escalate decisions to cabinet and presidential levels as the situation required.

Look to the Merida experience

North American economic integration is not significantly advanced because the three foreign ministries are able to better communicate. If the Merida Initiative had simply been left to the U.S. State Department, it would have been a months-long “talking” exercise.

Instead, with clear presidential leadership and active NSC oversight, the details of the Merida framework were agreed upon within 90 days of its intellectual authorship by Presidents George W. Bush and Felipe Calderon.  Credit goes to many in the U.S. and Mexican bureaucracies for determining those details and, in the U.S. case, for presenting them to Congress.

Require regulatory transparency and cooperation

Merida also benefited from the fact that it did not intrude into the regulatory structure of the two nations.  The regulatory structure in the areas of food and consumer safety, environmental protection, and labor (including immigration) are the critical impediment to a greater integration of the three North American economies.

These regulatory entities do not report to the foreign policy bureaucracy.  Their respective mandates and authorities are contained in statutes, notably the Administrative Procedures Act.  For the United States, this act impedes the ability of economic sectors and regulators to share experiences and accept comparable standards. 

The inability to determine appropriate shared standards among the three North American countries impacted the objectives of the SPP and will continue to impede a more integrated and prosperous North America.

The lack of regulatory alignment among the three countries due to duplicative reviews have cost American consumers billions of dollars.Prices for products either produced in or containing parts from Canada or Mexico cost an estimated 10 percent more than they would with a better regulatory structure. That kind of structure would recognize and accept equally demanding standards of food and consumer product safety and environmental and labor protections.

Leadership from the President

Along with Merida, the approval of NAFTA and launch of the SPP, demonstrate that progress can be made on the North America agenda with leadership from the President.  That leadership cannot be delegated.

To be clear, the President is not an “action” or “desk officer.” However, the bureaucracy responds to the President, not the Vice President or the Secretaries of State or Treasury, or the National Security Advisor.

The President’s involvement most often forces the closure of bureaucratic disagreements. Leadership, whether to move the bureaucracy or highlight the need for regulatory reform through legislative procedures, has to come from the President.  It does not result from more bureaucracy.

That may be the main lesson from the SPP.

Daniel Fisk is a fellow in the Economic Growth initiative at the George W. Bush Institute.