De-Institutionalizing North America:1
NAFTA’s Committees and Working Groups2
Stephen Clarkson, Sarah Davidson Ladly, and Carlton Thorne
Third EnviReform Conference, November 8, 2002
The EnviReform project has tackled various aspects of citizen mobilization in North America
around issues of concern to civil society organizations (CSOs) such as environmental
sustainability and labour standards in the context of the North American Free Trade Agreement.
Originality for NAFTA was claimed as being the first trade and investment agreement not only to
1
Author’s Notes: We would like to thank the Department of Political Science and Dean Carl
Amrheim of the Faculty of Arts and Science at the University of Toronto for their generous
financial support in providing the research travel grant that allowed us to conduct our
research in Washington, D.C.
We would also like to thank the Woodrow Wilson
International Center for Scholars for their hospitality during the week of April 6-12th. Thank
you to all of the professionals who agreed to be interviewed —(David Decarme of the
Department of Transportation, Professor Charles Doran of Johns Hopkins University, Jeffrey
Dutton of the Office of NAFTA and Inter-American Affairs and the United States
Department of Commerce, Carl Hartill of the Canadian Embassy, Carlos Rico of the Mexican
Embassy, Kent Shigetomi of the Office of the United States Trade Representative, and
Sidney Weintraub of the Centre for Strategic and International Studies). To all of the
Canadian civil servants at the Department of Foreign Affairs and International Trade who
took the time to complete our exploratory questionnaire, thank you. Thanks to Ricardo Del
Castillo and Claude Carrière of DFAIT for their administrative support.
2
Our investigation of the NAFTA Committees and Working Groups was first conducted through
reading secondary sources related to NAFTA and continental governance, as there was no
secondary literature that addressed the significance of the NAFTA Committees and Working
Groups themselves. In regard to primary source materials, we read all of the published
reports listed on government websites such as the Canadian Department of Foreign Affairs
and International Trade and the United States Trade Representative. In January-March, 2002,
we sent out several questionnaires pertaining to the tasks and responsibilities undertaken by
the Canadian representatives of the NAFTA Committees and Working Groups. This material
was primarily used in an exploratory sense to help frame our subsequent interviews. In April
2002, we interviewed several prominent academics in Washington D.C. and American
government officials that had either worked on the NAFTA Committees and Working Groups
or had extensive experience with NAFTA issues.
1
endorse environmental sustainability but to create an institution – the Commission for
Environmental Co-operation (CEC) – that would increase the weight of environmental
considerations in trade policy matters within the continent. A similar claim was made for the
North American Agreement on Labour Co-operation (NAALC). Considerable research efforts
have been devoted –- including in EnviReform’s conferences in 2000 and 2001 – to the CEC and
the NAALC’s effectiveness as vehicles for citizen participation in the governance of North
America. On the whole, the scholarly consensus is that the labour side agreement has not
increased the muscle of organized labour vis-à-vis the market forces unleashed by NAFTA.
Assessments of the CEC have been more nuanced. Almost entirely ignored in discussions of the
citizen side of North American governance has been the committee structure set up by NAFTA.
to complete the agreement’s unfinished business or to pursue its agenda. Observers inspired by
the European Union’s heavily institutionalized model tended to assume that the committees and
working groups established by NAFTA would evolve, whether as more substantial structures for
continental governance or as access points allowing CSOs to participate in the process of North
America’s development.
On January 1, 1994, the United States, Canada, and Mexico signed NAFTA and so created
what was touted as the world’s largest free trade area. NAFTA was a comprehensive agreement
that provided for the elimination of tariffs and reduction of non-tariff barriers and further
established disciplines for governments in the areas of investment, services, competition policy
and the temporary entry of business persons.3 NAFTA was proclaimed to be an “economic
constitution”
4
for North America as it effectively created a supranational framework for all
continental economic activity. It embodied a vision of continentalism insofar as the agreement
was to exert significant control over the level and manner of economic integration between its
member states and in this regard set the parameters for what would constitute legitimate policy in
North America. A continentalist agenda was further signaled by both a formal and informal shift
from the dual-bilateralism of the past to an envisioned trilateralism of the future. This emerging
trilateralism was a product of the more general desire to both foster and formalize the ‘North
American’ relationship.
NAFTA goes further than any previous free trade agreement in that its reach extends
“beyond the border.” In addition to tariff elimination, the agreement contains provisions on
potential non-tariff barriers such as standards and includes new ‘deep integration’ issues such as
3
NAFTA Overview, Department of Foreign Affairs and International Trade, 2001.
http://www.dfait-maeci.gc.ca/nafta-alena/over-e.asp
4
Stephen Clarkson, “Apples and Oranges” Prospects for the Comparative Analysis of the
EU and NAFTA as Continental Systems, (Italy: European University Institute, 2000), 51.
2
investment and intellectual property. As a result, the agreement exerts extensive control over
member states’ domestic policy and regulatory schemes. The far-reaching scope of the agreement
led the signatory governments to anticipate challenges stemming from the corollary need for high
levels of integration in many areas. While there was marked resistance on the part of all three
states for corresponding political institutionalization, given the challenges presented by the scope
of the agreement, some institutionalization was unavoidable. The resulting compromise was a
meager and highly decentralized institutional structure designed to deal with a range of sector and
policy-specific subjects, which were likely to arise from the complexity of this increased
integration, and further to foster the co-operation necessary for implementation and
administration.5 The permanent institutions created to oversee NAFTA’s functioning consist of
the Free Trade Commission (ministerial level meetings), the NAFTA Secretariat (three national
sections) and approximately 30 committees and working groups.
The committees and working groups (CWGs), which make up the underbelly of NAFTA’s
institutional structure, are concerned with a wide range of issues and were generally mandated to
facilitate trade and investment. These institutions were intended to monitor and promote the
successful administration of the North American Free Trade Agreement by establishing that a
committee or working group oversee the implementation of a specific chapter of the agreement.
The CWGs were, in essence, organized trilateral forums where civil servants from the three
countries could exchange relevant information, resolve minor disputes, and discuss future
liberalization. The structure and composition of the committees and working groups were
intended to favour objective analysis and resolution of conflicts. The intent was to create
institutions which were somewhat ‘de-politicized’ insofar as they would encourage the formation
of epistemic communities of technical and sectoral experts who might be more inclined to favour
long-term benefits over politically dangerous short-term costs.6 The CWGs fulfilled these criteria
as they were seen to be conducive to the formation of small networks of working relationships
and the consolidation of bodies of experts.7 They were mostly mandated within the text of the
agreement to meet on average from one to four times yearly, or as issues arose, and to produce
reports for the Free Trade Commission according to particular schedules established within the
agreement.
5
Joseph McKinney, “NAFTA-Related Institutions in the Context of Theory” in Created From
NAFTA: The Structure, Function, and Significance of The Treaty’s Related Institutions,
(Armonk, New York: M.E. Sharpe Inc., 2000), 14.
6
McKinney, 22.
7
McKinney, 17.
3
The structure and mandates of these groups was significant insofar as they were trilaterally
staffed institutions composed of government, and occasionally private sector, experts with
mandates to evaluate and even help direct public policy within the member states. Despite the
historical ‘hub and spokes’ configuration of Canada-U.S.-Mexico relations (Canada-U.S. and
U.S.-Mexico) the NAFTA committees and working groups, in the spirit of a new continentalism,
were created with a view to trilateralize relations, both acknowledging this new dynamic and
hoping to foster its long-term developments.
We will argue that in the eight years since the signing of the agreement, the committees and
working groups have, on the most part, been under-utilized. As relatively insignificant continental
institutions, they have little potential to serve as entry points into North American governance for
civil society. This, weakness is largely due to the considerable incongruity between the working
group’s trilateral and professional nature and the bilateral and political realities which continue to
characterize the relations between Canada, the U.S. and Mexico. This is because so-called
continental issues are generally bilateral issues, either U.S.-Canada or U.S.-Mexico, and as such,
are of little interest to the uninvolved party. Further, these relations have not yet reached a stage
where discussions and disputes may be channeled towards de-politicized institutions built on a
groundwork of formal legal equality. The bilateral realities of the North American relationship
render the formal trilateral structure of the working groups an unnecessary and largely inefficient
mechanism through which to resolve disputes and discuss emerging issues. Moreover, the
political realities of North American relations are less than amenable to groups of
professional/neutral experts empowered to act as arbiters of trade and commercial disputes. It
appears that the formula embodied in the committees and working groups is only workable for
low-level, low-interest disputes, as more politically sensitive controversies require a political
arena with less strict objectivity, more flexibility and more room for compromise. Such bilateral
and political realities constitute a serious impediment to the formation of active and effective
continental institutions.
The following analysis will consist of three sections. The first includes a brief summation of
the history of economic and political relations between Canada, the United States and Mexico.
This is followed by a discussion of the theory behind, and the ideals embodied within the
committees and working groups, specifically in regard to fostering trilateral co-operation and
towards encouraging the professional resolution of technical and commercial disputes. The
second section presents and analyses our research on the past and current status, activities and
dynamics of the NAFTA Committees and Working Groups. We will examine, in detail, two cases
(energy and trucking) that appropriately illustrate the general trends affecting the CWGs. This
will be followed, in the third section, by a discussion of the factors contributing to the significant
disjuncture between the ideals out of which the committees and working groups were borne and
4
the continuing bilateralism of the North American relationship and the continuing existence of
political sensitivities and constraints which necessitate political negotiation and compromise.
Section One : Ideals of Trilateralism and Professionalization
Historical Context of Political and Economic Continental Relations:
NAFTA has been described as an “after-the-fact acknowledgement”8 of the realities of the intense
economic integration occurring between the United States, Canada and Mexico. However, while
NAFTA is a trilateral agreement, historically the pattern of North American integration is best
described in terms of a ‘hub and spokes’ dynamic; a term which broadly designates a series of
bilateral relationships which exist between the core power (the U.S.) and its two neighbours
(Mexico and Canada).9 This concept most accurately describes the pre-NAFTA relations between
the three countries when a combination of market forces, state policies and demographic and
cultural patterns fostered and maintained two bilateral relationships rather than generate an
integrated or trilateral continentalism.10
While both Canada and Mexico have at different times tried various third-way policies and
nationalization programs in the hopes of lessening their economic dependence on the United
States,11 both countries’ economies have become increasingly dependent on the U.S., which for
the last century has been the largest trading partner of both Canada and Mexico as well as each
country’s largest foreign investor.12 In 1984, ten years before NAFTA, 77.2% of Canadian
foreign direct investment inflows came from the U.S. as did 63% of Mexican inflows.13
8
Mexican Embassy Official. Interview by authors. Washington, D.C. 10 April, 2002.
9
Eden, Lorraine and Maureen Appel Molot, “The View from the Spokes: Canada and Mexico
Face the United States.” In North America Without Borders? Integrating Canada, the United
States, and Mexico, edited by Stephen J. Randall with Herman Konrad and Sheldon
Silverman, (Calgary, Alberta: University of Calgary Press, 1992), 67.
10
11
Ibid, 71.
Brunelle, Dorval and Christian Deblock, “Economic Blocs and the Challenge of the North
American Free Trade Agreement.” In North America Without Borders?
Integrating Canada, the United States, and Mexico, edited by Stephen J. Randall
with Herman Konrad and Sheldon Silverman, (Calgary, Alberta: University of Calgary Press,
1992), 126.
12
Clarkson, “Apples and Oranges”, 13.
13
Smith, Murray G, “Consolidating and Deepening Economic Relations in North America.” In
North America Without Borders? Integrating Canada, the United States, and Mexico, edited
5
In contrast, Canadian-Mexican interaction has been relatively insignificant.14 In 1990
Canada was Mexico’s sixth largest trading partner while Mexico ranked only 17th on Canada’s
list.15 Canada and Mexico have further lacked the significant historical and political ties found
between both Canada and the U.S. and the U.S. and Mexico, chiefly because of their geographic
separation and significant income disparity.16
The continental relationship is made even more complex by the United States’ hegemonic
status and the ensuing asymmetries in power between the three states. The U.S. is the continent’s
economic engine as it is the source of by far the largest share of all economic activity. In 1987,
the U.S. was responsible for 85% of the region’s exports and 91% of its imports.17 Moreover, at
the time of NAFTA’s signing the U.S. economy was twenty times larger than that of Mexico’s
and twelve times the size of Canada’s.18
Despite these realities, the committees and working groups established to oversee and
implement NAFTA were a step in the direction of a new continental identity founded on ideals
such as legal equality, trilateralism and the anticipated benefits of an increased
professionalization of trading and commercial relationships. The working groups were generally
mandated to act as trilateral forums where the three signatory parties could foster trilateral
cooperation and communication, encourage the professional resolution of disputes and generally
promote the adherence of all parties to the text of the agreement. There was to be approximately
equal representation of the three countries within the membership of each group and all groups
were to be co-chaired by an official from each member state. Meetings of the groups were to take
place, in turn, in Canada, the U.S., and Mexico.19 The officials sitting on these groups were to be
drawn from various agencies and ministries and selected for their detailed knowledge of the issue
at hand – be it pesticides, trucking standards or customs issues.20 Thus, the trilateral and semi-
by Stephen J. Randall with Herman Konrad and Sheldon Silverman, (Calgary, Alberta:
University of Calgary Press, 1992), 71.
14
Eden and Appel Molot, 68.
15
Smith, 69.
16
Eden and Appel Molot, 78.
17
Brunelle and Deblock, 125.
18
Salvatore, Dominick, “NAFTA and the EC: Similarities and Differences.” In The North
American Free Trade Agreement, edited by Khosrow Fatemi and Dominick
Salvatore, (Great Britain: The Alden Press, 1994), 23.
19
Claude Carrière – Director General, Trade Policy Bureau
20
Ibid.
6
professional nature of the NAFTA institutions marked a significant departure from the past nature
of North American relations.
While it appears that some of the groups were created in order to give the appearance of
action on issues the parties were unable to resolve during the negotiations,21 the majority of
groups were genuinely intended to be functional and effective forums for discussion and the
oversight of the administration of the agreement. The working groups’ trilateral and professional
natures were seen as being key contributing factors to their anticipated level of effectiveness.
Trilateralism:
The trilateral nature of the NAFTA committees and working groups was grounded in a desire to
create forums where all three parties could voice and transmit their interests in a relatively depoliticized arena. Trilateral forums appeared to be not only appropriate and efficient, but also
more likely to defuse bilateral conflicts and provide a means to depart from the traditional
bilateralism of North American trade negotiations. The formation of trilaterally staffed working
groups was significant insofar as it created institutions where foreign actors, with specialized
knowledge, were explicitly encouraged to lend their voice to discussions on domestic policy. In
this respect the groups could be described as emerging structures of continental governance.
By fostering trilateral co-operation, the signatory parties hoped to mitigate each party’s
ability to unilaterally interpret and administer NAFTA. The groups were to be a mechanism
whereby member-states could be held accountable at a relatively low level, allowing the other
parties a chance to intervene before policies were entrenched and beyond contestation. The
existence of such trilateral institutions also lent itself to offsetting somewhat the immense
asymmetries in power that exist between Canada, the U.S. and Mexico. The groups could, in
theory, decrease this asymmetry simply by ensuring that the two less powerful states – Mexico
and Canada – were never left to negotiate one-on-one with the U.S. Additionally, participation in
these groups would allow Canada and Mexico influence over some aspects of U.S. regulatory
policy and generally ensure that all three states were given “voice opportunities” with which to
make their views known and to possibly give them effect.
22
If the committees and working
groups were to be actively establishing norms, regulations or policy, then by affording Canada
and Mexico the opportunity to participate equally in the deliberative process the groups could, in
21
Doran, Charles. Andrew W. Mellon Professor of International Relations, director of Centre for
Canadian Studies and director of international relations at the Nitze School of Advanced
International Studies, Johns Hopkins University. Interview by authors. Washington, D.C.
11 April, 2002.
22
McKinney, 14.
7
theory, increase the likelihood that the implementation of the agreement would not be distorted
by U.S. hegemony.
Professionalization:
To achieve an effective and objective interpretation and implementation of the agreement, the
CWGs were created with an eye towards increased professionalization and de-politicization of the
relations between the three countries, as pertaining to their trade/commercial relationships.
Although, membership of these groups was drawn almost entirely from the civil services of the
respective states and “political direction for the NAFTA work program [was to be] provided by
Ministers through the Free Trade Commission”23, the groups were nevertheless intended to be
relatively insulated from direct political pressures in their day-to-day activities.
The establishment of NAFTA CWGs can be seen in the context of a shift towards the depoliticization of some forms of public authority insofar as they ensure that decision-making is
diffused along a highly decentralized institutional structure and is vested in the hands of
professional policy-makers. It appears that the signatory countries sought to create this web of
relatively autonomous and insular bodies with highly specialized mandates in the hope of
increasing the likelihood of a fair and consistent implementation of the Agreement. The decision
to structure these institutions as fragmented groups staffed by civil servants with technical
expertise came out of a belief that the interpretation and implementation of NAFTA was more
likely to operate in a rules-based fashion if at least partly removed from the sphere of domestic
politics.
24
The parties sought to create effective trilateral institutions which would be likely to
treat issues objectively and favour long-term benefits over politically dangerous short-term costs,
25
engender trust and decrease deception between member states, create favourable conditions for
the generation of objective solutions to policy conflicts, 26 and generally increase the chances that
member countries would live up to their commitments and act according to the principles of the
agreement. The committees and working groups were thus appropriate as they were seen to be
conducive to the formation of small networks of working relationships and the consolidation of
bodies of experts.27 Furthermore, all of these outcomes associated with trilateral institutions and
the general de-politicization of the implementation process would be likely to benefit Canada and
23
Carrière.
24
McKinney, 22.
25
McKinney, 22.
26
McKinney, 19.
27
McKinney, 17.
8
Mexico as the outcomes associated with a rules-based systems tend to benefit the less powerful
peripheral states.
The creation of the NAFTA CWGs was a testament to the desire of the three governments
to work towards de-politicizing commercial disputes out of an acknowledgement that, to a large
extent, these issues were not national issues arising between states, but rather issues arising
between national and increasingly multinational firms.28 When viewed in this light, it is in the
interests of a national government to distance itself from these disputes both because these firms
represent narrow commercial, rather than national, interests and because these issues have a
tendency to act as constant irritants in inter-state relations.29
The creation of groups intended to serve as “an apolitical arena for the discussion of issues
and, through early dialogue on contentious points, the possible avoidance of disputes.”30 spoke to
this gradual shift towards an increasing consensus on the part of governments that disputes and
discussions surrounding largely commercial transactions and relationships ought to be dealt with
by professionals acting in forums that were relatively free of political power-dynamics. It was
through the creation of such environments that these issues could be resolved on the merits of the
arguments and claims being judged upon stable legal and economic criteria.31 Under this new
direction, efficiency and merit were to prevail over politics. 32
While no one expected high-level issues to be easily passed over to institutions such as the
committees and working groups, there was a general consensus that over time, as issues were
resolved effectively, these types of processes would gain more legitimacy which would in turn
lead to more important issues being directed towards these forums. 33
Section Two: The Status of the NAFTA Working Groups
Composition:
The NAFTA Committees and Working Groups are staffed by civil servant representatives drawn
from each of the three NAFTA countries. These officials come from a range of departments and
agencies. One civil servant is designated as the national lead or contact of each committee or
working group. Typically a member state will have between two to ten members representing
28
Doran
29
Doran
30
Carrière.
31
Doran
32
Doran
33
Doran
9
their interests on any committee or working group. While there is approximate equity in
representation, the United States does tend to have the largest contingent of civil servants
working on any specific committee or working group. Where there is a discrepancy, Canada’s
and Mexico’s lesser resources usually explain the imbalance. In regard to frequency of rotation of
membership within the committees and working groups, the highest turnover rate tends to be
found among the Canadians. This is because the majority of Canada’s representatives are foreign
service officials who are by nature subject to periodic rotation.34
In many cases, one civil servant will be responsible for the activities of more than one
committee or working group. The time required to service each NAFTA committee and working
group varies, but generally, the portfolio takes up a very small portion of a civil servant’s time.35
One NAFTA working group official noted that he spends only about 3% of his time working on
his particular working group portfolio. By contrast, the majority of his time is spent working on
the FTAA.36 Naturally, in the event that a trilateral meeting of the working group is about to take
place, the representatives will likely devote more time than normal to their working group-related
assignments.37
Relations within the CWGs tend to be informal and bilateral. Much work is done over the
phone or via e-mail rather than by convening an official meeting of the group. Furthermore, civil
servants who staff the committees do not appear to think of themselves as members of a cohesive
and stable group. The national members of the various working groups are likely to deal with
their international counterparts on a frequent and informal basis for a variety of non-NAFTA
issues, and as such, the communication style does not change when the issue falls under the ambit
of a NAFTA committee or working group. 38
In all three countries, there appears to be an overlap between membership on the NAFTA
committees and working groups and involvement in the negotiations surrounding the Free Trade
Area of the Americas. This overlap suggests a high level of involvement by a small number of
officials who represent their department’s interests in all trade-related spheres. The CWGs may
also have as members “volunteers from the private sector who offer particular expertise on an
34
Shigetomi, Kent. Director for Mexico and NAFTA Affairs—Office of the United States Trade
Representative. Interviews by authors. Washington, D.C. 10 April, 2002.
35
Dutton, Jeffrey. Office of NAFTA and Inter-American Affairs, United States Department of
Commerce. Interview by authors. 12 April 2002.
36
Ibid
37
Dutton.
38
Dutton
10
issue and represent a variety of non-governmental interests”
39
as well as representatives from
non-governmental standards organizations, scientists and other technical experts. 40
The national sections of each NAFTA committee or working group are ultimately
accountable to their national government’s trade-coordinating agency or department (DFAIT,
U.S.T.R., Secretaria de la Economia) but decisions made by the groups must also be cleared by
the various departments and agencies represented within the group. While the CWGs are
mandated to produce regular reports for review by the Free Trade Commission, this is not, by any
means, the primary way in which they are held accountable.41
Activities and Processes
A Committee or working group was established for virtually every chapter detailed in NAFTA.
Just as the mandates of the CWGs vary, so to do the actual processes and functions of the
individual groups, which fall into the general categories of: Implementing or overseeing the
implementation of the NAFTA; Acting as forums for the exchange of information between the
three member countries; Acting as forums for the resolution of minor conflicts; Harmonizing
regulations; and Acting as forums for the relay of information and ideas between the member
governments and any interested non-governmental organizations. Notwithstanding the above, the
majority of groups investigated are engaged in a combination of these activities.
1) Implementing or overseeing the implementation of the agreement:
The majority of groups investigated are involved to some extent in the oversight of NAFTA’s
implementation insofar as they are mandated to deal with any issues that arise during that process
and to address ambiguities in the text as they appear. The group most directly involved in the
implementation of NAFTA is the Committee on Trade in Goods. This working group has been
quite successful. It has now completed all four rounds of its tariff acceleration mandate. As a
result, the group no longer meets regularly. 42
39
NAFTA
Organizations, United States Trade Representative Website,
2001.
http://www.ustr.gov/regions/whemisphere/organizations.shtml
40
NAFTA - Trade Compliance Centre, Market Access and Compliance – U.S. Department of
Commerce, 2001. http://www.mac.doc.gov/tcc/e-guides/eg_naf09.html
41
Dutton
42
Shigetomi.
11
2) Exchange of information:
An activity common to all groups is acting as a forum for the exchange of data between member
countries. This information-sharing takes on many forms, including: tracking each country’s
administration or implementation of the agreement, formulating understandings around different
sectors, laying the necessary groundwork for further generation of ideas regarding deeper
integration and, more generally, understanding the needs and concerns of each country. This
exchange of information ideally results in the generation of trilateral statements or reports.
Collectively, information sharing has become the primary function of the working groups. 43
3) Resolution of Conflicts:
Another widespread function of the CWGs is to resolve low-intensity disputes. This is intended to
limit the number and the nature of the conflicts that must be dealt with by the Free Trade
Commission, or by NAFTA dispute panels. The CWGs were intended to act as a first line of
defense insofar as they seek to resolve conflicts quickly and quietly before they burgeon into
larger problems. The groups investigated have worked on, or resolved low-level disputes
concerning, for example, the appropriate classification of goods44 (Customs Subgroup), increased
Mexican duties on the importation of frozen Canadian geese and U.S. ducks (Trade in Goods)
and the application of a merchandise-processing fee by the U.S. on importations of some
Canadian textile products45 (Trade in Goods).
4) Harmonization of Regulations:
Some of the groups investigated have explicit mandates to harmonize, or to generate new,
regulations that directly affect how the Agreement is implemented and administered. The most
notable example of this is the Working Group on Rules of Origin. This group was established to
“develop common regulations to govern the detailed interpretation, application and
administration of the Rules of Origin”
46
which are essential to the accumulation of economic
benefits insofar as they protect against direct and indirect trade deflection. This working group is
presently one of the most active. It recently reconfigured and realigned seven NAFTA rules of
43 43
44
SICE – NAFTA Reports, http://www.sice.oas.org/trade/nafta/reports/goods_e.asp
NAFTA Reports – Committee on Rules of Origin, SICE, 2001.
http://www.sice.oas.org/trade/nafta/reports/origi_e.asp
45
SICE – NAFTA Reports, http://www.sice.oas.org/trade/nafta/reports/goods_e.asp
46
Government of Canada, NAFTA: What’s It All About?, 39.
12
origin, bringing them into conformity with changes in the Worldwide Harmonized System
announced by the WTO in January, 2001.47
5) Forums for the Relay of Information Between the Governments and Interested Parties:
A final function of the committees and working groups is the facilitation of the exchange of
information and ideas between those responsible for the implementation of the NAFTA (member
governments) and any interested non-governmental parties (private sector interests). Certain
CWGs appear to engage in a fairly large amount of private sector consultation. One of the key
responsibilities of members of the Telecommunications Standards Sub-Committee (TSSC) is the
coordination of efforts and the exchange of information with the Consultative Committee for
Telecommunications (CCT), a body that represents the telecommunications industry. The recent
reconfiguration of the TSSC’s membership clearly illustrates how closely government officials
and non-governmental actors can work together within the working group structure. The TSSC’s
membership consists of two to three government officials from each of the NAFTA nations, but
for the last three years, the chair and the vice-chairs of the CCT have additionally been invited to
all of the committee’s meetings. The goal behind such actions is to enhance the degree of
feedback coming directly from the industrial sectors of the three countries.
While the degree of private sector consultation in the TSSC is particularly “extensive,”48 the
degree of private sector participation and consultation varies from group to group.
49
The
relatively high frequency and level of interaction between the CWGs and the private sector is,
however, not surprising given the time-honoured approach of extensive private sector
participation in regard to foreign economic policy decisions established by the U.S. As confirmed
by one working group official, the level of consultation is “nothing beyond the usual day-to-day
interaction” for a department such as the U.S. Department of Commerce.50
Current Levels of Activity
At present, approximately 60% of the CWGs are inactive. Several factors have contributed to this
inactivity, the most obvious of which being a working group, such as the Committee on Trade in
Goods, essentially fulfilling its mandate. This group recently completed its final round of tariff
47
Shigetomi.
48
Response from a civil servant questionnaire, Land Transportation SubCommittee.
49
Dutton
50
Dutton
13
acceleration ahead of schedule, and thus, no longer has a clear agenda to complete.
51
The
Committee on Trade in Goods stands out as the only example of a group that appears to have
completed, to the acceptance of all three parties, the mission set out for it by NAFTA which
specified the items requiring tariff removal.
A more common cause of inactivity is a lack of political motivation and direction regarding
the future of a particular working group. The Advisory Committee on Private Commercial
Disputes Regarding Agricultural Goods, the Government Procurement and Committee on Small
Business, and the Working Group on Trade and Competition Policy fit into this category. In these
cases, the groups are inactive largely because the three nations are unsure about what benefits
future work by these groups will garner. Owing to the often disparate agendas and concerns
amongst the three nations, finding trilateral agreement on the direction the group ought to pursue
has been a major sticking point. Concerning the Working Group of Trade and Competition
Policy, the Director for Mexico and NAFTA affairs within the United States Trade
Representative notes, “The U.S. feels it has completed its work [but] we have some
disagreements with Canada, I believe, on what the future work in competition would be.”52
Furthermore many issues within their mandate are too politically sensitive to be dealt with
in the working group forum. Owing to their highly politicized nature, certain issues are unsuitable
for a group of professional experts to resolve. They instead require bilateral negotiations. In
regard to the Chapter 19 Working Group on Trade Remedies, Kent Shigetomi (U.S.T.R.)
confirms this understanding; “Again, a lot of the time it’s because some of these things are so
polarized and bilateral that they move out of this working group thing, to just bilateral
negotiations.” 53
There is another category of inactive working groups. These are groups such as the
Committee on Trade in Worn Clothing and the Working Group on Emergency Action, which, in
fact, have never met. These groups were born out of the inability of the negotiating parties to
reach consensus on certain controversial issues during the NAFTA negotiations. Rather than
delay the signing of the Agreement, many unresolved and contentious issues were assigned to the
working groups as a way to “soften the failure of a lack of resolution.” 54 In these cases it seems
that such working groups were simply a “graceful way of pretending there would be more
discussion.”
51
Shigetomi.
52
Ibid.
53
Shigetomi.
54
Ibid.
55
Doran.
55
The reality of the situation has, however, posed considerable difficulties for these
14
working groups as issues considered contentious prior to 1994 are not, at present, any easier to
navigate.
Among the groups that are still active, several factors are also at play. One factor
contributing to high levels of activity among some groups is that certain working groups have
been revitalized as a result of increased political will and energy in related areas of government
policy. An example of this is the Customs Subgroup which, since September 11th, has been
largely concerned with issues of border security. This group, particularly in the six months
following September 11th, has been reasonably active.
56
The Working Group on Rules of Origin
appears to have been reinvigorated by post September 11th events.
57
A key catalyst propelling
this new activity has been the negotiation and implementation of smart border initiatives between
the United States and Canada and Mexico. It does need to be noted, however, that while the
activities of the smart border initiatives have contributed to increased activity in the associated
NAFTA working groups, this is only because the determinations of the political negotiations
between the three states have trickled down to the Customs Subgroup as a last effect. The
Customs Subgroup was not utilized in the development of the aforementioned initiatives. This
illustrates again that important political issues are not handled within the working group context.
58
Thus, the increased activity levels found within this category of working groups must not be
deemed an institutional triumph of NAFTA. Rather, extraneous political motivations can recharge
working group mandates.
A final set of factors contributing to higher levels of working group activity involve the
extent to which the particular working group reflects the continued bilateralism of North
American relations. An example of this is the Working Group on Agricultural Grading and
Marketing standards. This productive group was not initially created as a trilateral working group,
rather it consisted of “two bilateral committees provided for in the NAFTA, with a mandate to
review and resolve issues regarding the operation of grade and quality standards.”59 Only recently
has this group begun to discuss issues in a trilateral fashion.60 Upon examination of the NAFTA
Operational Review,
61
it seems that some of the more active trilateral committees are those that
deal specifically with a certain issues on a bilateral basis. Examples of such groups include the
56
Shigetomi.
57
Ibid.
58
Dutton.
59
NAFTA Operational Review, http://www.dfait-maeci.gc.ca/nafta-alena/revchart-e.asp
60
NAFTA Committee On Agricultural Trade Report to the Commission, http://dfaitmaeci.gc.ca/nafta-alena/report4-e.asp
61
NAFTA Operational Review, http://www.dfait-maeci.gc.ca/nafta-alena/revchart-e.asp
15
Committee on Standards Related Measures, the Temporary Entry Working Group, the Committee
on Sanitary and Phytosanitary Measures, as well as the technical working groups recently set up
in this area (Pesticides, Animal Health, etc.). That these groups maintain fruitful information
exchange and meet more regularly than some of their more exclusively trilateral counterparts is
consistent with our conviction that the bilateral realities of the North American relationship are
more efficiently handled on a bilateral basis.
The Mexico-U.S. Trucking Dispute
In the North American Free Trade Agreement, the U.S. agreed to end its restrictions against
Mexican trucking companies travelling through the United States. The restrictions were
maintained, however, throughout the Clinton administration, in large part because of strong
domestic political pressure stemming from special interest groups benefiting from the status quo.
American trucking unions opposed the abolition of the restrictions, arguing that Mexican trucks
would not sufficiently adhere to American safety standards. Financial considerations were more
probably the real issue, however, as the cross-border-trucking industry carried $250 billion in
Mexican-United States trade at the time. Such financial considerations catalyzed the U.S.
insurance companies as well. If American truckers were to be transporting fewer goods, its
market share and profits would decrease. It also feared that Mexican truckers would not be able to
handle the financial payouts that might be required for accident claims, which was argued, would
rise dramatically because of the increase in use of Mexican trucks.62
Until the early 1980s, the United States gave equal treatment to U.S., Canadian, and
Mexican trucks seeking permission to operate in America. Indeed, in 1980, the Motor Carrier Act
virtually removed all regulatory barriers to entry. Canada, in turn, reciprocated allowing access to
American truckers travelling through Canada. However, Mexico did not afford American truckers
the same privilege. In retaliation, 1982 marked the end of equal treatment for Mexican applicants
by the United States. While the 1982 Bus Regulatory Reform Act also imposed a two-year
moratorium against Canadian truckers, a presidential MOU quickly lifted the restriction against
Canada. This was in response to Canada’s guarantee that U.S. carriers would continue to have
unhindered access within the Canadian market. It is interesting to note that the same presidential
memorandum explicitly cited that U.S. truckers had continued to be denied access to the Mexican
market. This state of affairs persisted until 1995, as the presidential moratorium against Mexico
62
Condon, Bradly, and Sinha, T. (2001). An Analysis of an Alliance: NAFTA Trucking and the
U.S. Insurance Industry. The Estey Centre Journal of International Law and Trade Policy.
Vol. 2 (2), 235-236, 240.
16
was extended every two years. While the moratorium did provide exemptions to certain
categories of Mexican trucking companies and businesses, most prospective applicants were
restricted by the moratorium. 63
In 1994, with the signing of the NAFTA, it appeared that a compromise had been struck
between the three nations over the issue of cross border trucking. The Canadian and Mexican
Ministers of Transportation signed three MOUs permitting Canadian and Mexican truckers equal
access within both countries. For the United States, a MOU between the three countries allowed
American truckers to carry cargo from Canada to within 20 kilometres inside of Mexico.
However, Mexico and the United States did not grant full access to the other country’s truck
drivers. 64
In 1995, the Mexican government requested that a NAFTA dispute resolution panel rule
upon whether the U.S. was in violation of the trade agreement. (Under NAFTA, the U.S. had
agreed to phase out the moratorium. The intent was to progressively allow Mexican trucks to
obtain operating authority. This process was to have begun on December 16th, 1995 and to have
been completed by January 1, 2000.65) In February 2001, the panel ruled that “it was against the
North American Free Trade Agreement to put a moratorium on free movement of trucks between
the United States and Mexico.”
66
This decision required the Department of Transportation to
begin considering all Mexican applications on their merit, as opposed to the broad-blanketed
refusal of all Mexican companies. The decision was in keeping with NAFTA articles 1202 and
1203, regarding national treatment and Most-Favoured-Nation treatment, respectively.
67
In
regard to the outcome, Condon and Sinha (2001) comment that,
“In the trucking case, the United States placed a reservation in an annex to permit the
moratorium on Mexican trucks to continue, but also included dates when specific aspects of the
moratorium would be phased out. Once the reservation expired…the moratorium did not pass
muster. Had it been consistent with the NAFTA rules, no reservation would have been required in
the first place. Thus, by using the reservation, the United States virtually admitted a violation of
the rules” (Ibid, p. 239).
63
Ibid, 236-237.
64
Ibid, 237.
65
Ibid, 238.
66
Ibid, 236.
67
Ibid, 238.
17
The Working Groups and the Mexican-U.S. Trucking Dispute
The Land Transportation Sub-Committee was established under Chapter Nine of the NAFTA
to address developments of more compatible standards related to truck, bus, and rail
operations and the transport of hazardous materials among the United States, Mexico and
Canada. The NAFTA agreement provided for the LTSS to implement a work program in
accordance with the timetable established in Annex 913.5 a-1. (Emphasis Added). 68
Within this general mandate, the Land Transportation Subcommittee significantly
established a Cross-border Operations and Facilitation {TCG #1} Consultative Working Group to
deal with the Mexican-U.S. border issue. Since its inception, however, the group’s most
significant activity has been to arrange “for a meeting of the trilateral ad hoc government-industry
insurance group formed by TCG #1 two years ago”
69
Thus, the Land Transportation
Subcommittee has primarily functioned to exchange information and study national regulatory
systems. This is despite the fact that Annex 913.5.a-1 explicitly states that,
The Subcommittee shall implement the following work program for making compatible the
Parties’ relevant standards-related measures. No later than three years after the date of entry
into force of the Agreement, for standards-related measures respecting vehicles, including
measures relating to weights and dimensions, tires, brakes, parts and accessories,
securement of cargo, maintenance and repair, inspections, and emissions and environmental
pollution levels. 70
These issues fuelled many of the safety concerns expressed by the United States. The task of
harmonizing weight standards for bus and truck operations fell within the mandate of the Land
Transportation Subcommittee, as it was an issue that was meant to be resolved in a trilateral,
professional fashion by a group of experts. The group, however, was unable to touch upon this
challenging issue in any real way because of its politically-charged nature. As a result, it
floundered within this institutional framework. The bilateral nature of the dispute, a primarily
United States-Mexico issue, is one reason why it did not function well in the trilateral framework.
Canada remained involved in this issue only to the extent that it desired to be kept informed of
68
Meeting of the NAFTA Land Transportation Standards Subcommittee Baltimore, October 2528, 1999 http://www.dfait-maeci.gc.ca/nafta-alena/report13-e.asp
69
Ibid.
70
North American Free Trade Agreement, Ch. 9. Annex 913.5.a-1, 2 (a) iii.
18
developments, and that it wanted to see the dispute resolved. Despite being formally a NAFTA
issue, it remained primarily a bilateral dispute.71
The most important barrier to the working group’s success, however, was the highly
politicized nature of the dispute. Eventually, the increasing importance of Mexico in U.S.
presidential and congressional politics, necessitated a politically negotiated solution. As the issue
was, in truth, about the U.S. government’s refusal to act in the face of powerful domestic interests
opposed to granting national treatment to Mexican trucks, a solution was required which would
allow Mexican trucks into the U.S. while also taking into account the domestic political realities
which had, up until that point, prevented the U.S. administration’s compliance with NAFTA. This
issue was resolved, and could only be resolved, by high-level negotiations between Presidents
Bush and Fox.72
The Land Transportation Subcommittee has since become reinvigorated as a result of the
Bush Administration’s decision to honour the panel’s decision. Prior to this decision, it was noted
that,
the motivation, if you will, for that committee to really do a lot of work has kind of
stagnated…the problem with gaining some momentum for that group’s work has been,
basically, in a practical sense, tied to an ability to foresee that we’re actually going to
implement these provisions of the agreement, because no one, up until about two months
ago, had a real clear vision that we were actually going to do that. 73
In regard to the actual procedures surrounding the implementation of the dispute panel’s
ruling, the U.S. Congress set out specific guidelines that the Department of Transportation had to
comply with in order to implement those provisions. The DOT hopes to be able, by the end of
June 2002, to be issuing new grants of operating authority to Mexican carriers. The onus lies
entirely on the Americans to satisfy the NAFTA’s provisions. 74 The Working Groups had little to
do with the resolution of the dispute. The United States’ shift in policy was primarily a result of a
change in the administration and other political considerations.
71
Decarme, David.
Chief – Surface, Maritime and Facilitation Division, United States
Department of Transportation. Interview by author. Washington, D.C. 11 April 2002.
72
Dutton.
73
Decarme.
74
Ibid.
19
The North American Energy Working Group
With the specific details surrounding the North American energy relationship not fully hammered
out in NAFTA, efforts continue towards building a deeper continental understanding regarding
energy. In the 2000 presidential campaign, the Bush team began talking about building a more
comprehensive and compatible North American energy framework. The idea of setting up a
working group to look at North American energy issues first appeared around February 2001 as a
result of the Bush Administration’s desire to factor in a more international element in its overall
policy on energy. On April 22nd, 2001, in Quebec City the creation of a North American Energy
Working Group was announced. 75
NAEWG was set up by the Energy Ministers of the three countries to help
foster communication and co-operation among the governments and energy sectors of the
three countries on energy-related matters of common interest, and to enhance North
American energy trade and interconnections consistent with the goal of sustainable
development, for the benefit of all. 76
In terms of activity level, The NAEWG has been very active and has further been very
successful in accomplishing meaningful tasks at an early stage. While there is no set number of
meetings the group has met frequently.
77
As with NAFTA CWGs, decisions within the NAEWG
are made informally and on a consensus basis. Most of the Canadian members come from the
Ministry of Natural Resources, although a few work for the Department of Foreign Affairs and
International Trade and some also serve on the National Energy Board.78
The NAEWG performs a wide range of functions, one of which, as noted by Carl Hartill,
concerns information exchange and the harmonization of statistical methods between the three
countries.
One good example is that the United States Energy Information Administration does not
count Canada’s Oil Sands as a reserve…They have definitional difficulties in terms of
whether that’s a conventional reserve. A conventional reserve in Saudi Arabia means you
stick your finger in the ground and the oil comes up. A conventional reserve in Canada, with
advances in technology, the way they extract the oil out of the oil sands and so on means at
75
Hartill, Carl. Economic and Trade Policy – Canadian Embassy. Interview by authors.
Washington, D.C. 12 April 2002.
76
North America – The Energy Picture, http://www.nrcan-rncan.gc.ca/es/energypicture/index.html
77
Ibid.
78
Hartill (equivalent data for the U.S. and Mexico not given).
20
this point that those reserves are economically and technologically recoverable…When the
American focus is out on Saudi Arabia, and Venezuela, or Iraq in terms of energy supply
and so on, and we’re next door with reliable energy supply, abundant energy supply, market
access guarantees both for Canada and the United States, we need to make that point…We
have a great difficulty trying to get on the U.S. energy radar screen. 79
The NAEWG, therefore, in cases such as the one above, does serve an important function
and can be an effective tool towards promoting significant bilateral goals (i.e. Canada is using it
as an additional forum whereby it can advance its definitional concerns surrounding the United
States’ classification of oil sands). It is interesting to note that while NAEWG is officially a
trilateral forum, it, too, appears to reflect the bilateral realities of the North American energy
relationship.
In early 2001, U.S. President Bush, Canadian Prime Minister Chrétien, and Mexican
President Fox recognized that, as neighbors, their energy issues merited regional attention
and agreed there would be great benefit to all three nations from enhanced cooperation in
this area. 80
The question is: why was the North American Energy Working Group not set up under the
aegis of NAFTA? NAFTA has an energy chapter (Chapter 6) and the North American Energy
Working Group is exploring issues around continental energy supply and the harmonization of
the energy infrastructure and practices, among other things. The North American Energy
Working Group’s mandate is in the same spirit as the mandates of the NAFTA working groups,
and it is, like the NAFTA committees and working groups, a trilateral forum.
The non-NAFTA treatment of energy suggests that energy is a very important and a very
controversial issue for the three governments. Although there exists a NAFTA energy chapter, it
is clear that it was not meant to facilitate the same degree of open and secure access as many of
the other chapters of the Agreement.
One reason why Chapter 6 is not particularly demanding is because energy is not just a trade
issue. It is a multi-dimensional issue for all three countries, for which social and environmental
factors play a great part.81 This is especially the case with Mexico and it is for this reason that the
Energy Chapter in NAFTA consists largely of Mexican reservations concerning market access.
79
Ibid.
80
North America – The Energy Picture, http://www.nrcan-rncan.gc.ca/es/energypicture/index.html
81
Hartill.
21
NAFTA’s Chapter 6 shows that not all three countries shared the same degree of enthusiasm for
opening up this area of the economy.
What the Mexican reservations hint at in the actual text of the agreement is tangibly
revealed in the day-to-day understandings among government officials. While energy is an active
issue, it is not handled under the ambit of NAFTA to any extent. As a Canadian official remarks,
“Yes, we have a NAFTA energy chapter, yes it provides for national treatment, and so on
and so forth, but look through the system, look through the market, and you will find that, you
know, five or six years on, not everyone has sort of taken this jargon into their daily workings, the
way they carry out business. I was actually in a meeting [recently]82 where I heard a FERC
specialist [federal energy regulatory commission] say, because we were taking about NAFTA and
national treatment, ‘What is all this NAFTA talk?’ …this is not like shoes, this is not like autos,
this is not like even wheat, or other sectors that are covered by the trade agreement where people
operate on the same basis, trade with the same play-rules that we’ve put through the system for
the last fifty-five years…” 83
The North American energy relationship remains a highly political issue, with billions of
dollars at stake. The fact that the NAEWG was created outside of NAFTA supports our
contention that issues of political significance, with considerable money and powerful interests do
not get channeled through NAFTA institutions. To work within NAFTA on energy would
constrain the governments’ policy options. Trilateral discussions on energy are more suited to
forums where there is still room for political compromise and negotiation, rather than forums in
which the parties are subjected to a legalistic interpretation of each countries’ commitments made
in an international agreement. It appears to be the case that energy continues to be an issue that,
because of the political realities faced by each nation, cannot be assigned to relatively depoliticized institutional mechanisms.
Section Three: The Disjuncture between Theory and Reality
The Continuing Bilateralism of North American Relationships:
Despite some of the claims suggesting the creation of an economic North American community
similar to the European Union, the trilateral nature of NAFTA was the ancillary effect of a
convergence of differing interests and motivations among Canada, the U.S. and Mexico. Each
state entered into the negotiations with specific bilateral goals and with little regard for the party
outside the scope of these direct interests.
82
Date unspecified.
83
Ibid.
22
Given the primary objectives of the three countries in signing NAFTA, it is not surprising
that integration has, to a large extent, continued to evolve bilaterally, between the U.S. and
Canada and the U.S. and Mexico.
84
While it is indisputable that significant changes have
occurred within the North American relationship as a result of NAFTA, both subtly, insofar as
there is increased trilateral communication and consciousness, and formally, insofar as there have
been dramatic tariff reductions and moves towards the harmonization of policy and standards, it
nevertheless remains true that the ‘North American’ dynamic is two separate bilateral
relationships.
85
This is the case both economically, as is clear upon comparison of levels of
integration and interaction between the three relationships, and also socially and politically
inasmuch as the relationship between Mexico and Canada has remained marginal. Further, in
both the U.S. and Canada, there is considerably more public support for bilateral North American
free-trade than there is for continental or trilateral free trade involving all three countries. 86
U.S.-Canada
In the eight years since the signing of NAFTA, the Canada-U.S. economic relationship has
become extremely integrated, to such an extent that for many businesses the border is little more
than a line on a map. The Canadian economy is extremely dependent on the U.S. market, so
Ottawa devotes considerable energy to ensuring the stability of that relationship. Close to twothirds of Canada’s industrial output is exported to the United States, up from one-fifth in 1989
when Canada and the U.S. signed their first free-trade agreement. 87 Furthermore, it is generally
acknowledged that the significance of Canada’s economic ties with the U.S. now exceed the
84
The New Dynamics of North America: US – Mexico Relations and the Border Economy.
Report from the U.S. – Mexico Public Policy Forum Executive Study Tour, May 10 – 17,
2002. South United States and Northern Mexico, Public Policy Forum
http://www.ppforum.com/english/publications/presentations/StudyTourReportFINAL.pdf
85
Weintraub, Sidney. Director, Americas Program – Center for Strategic and International
Studies. Interview by authors. Washington, D.C. 11 April 2002.
86
EKOS/PPF Symposium – Rethinking North American Integration. The Sheraton Center
Toronto Hotel, 123 Queen Street W., Toronto ON . June 18 2002.
http://www.ppforum.com/english/publications/rethinkingprtl.pdf
87
Fagan, Drew. “Nationalism, bilateralism. Both make sense for Canada” In the Globe and
Mail.
17 June 2002. B9.
23
country’s degree of political influence in Washington.88 The level of vulnerability generated by
this disparity leads to an increasingly singular focus, on the part of Canada, on accessing and
securing access to the immensely lucrative market to the south. As noted by an official from
DFAIT, this “is a very, very key point…Our relationship under the NAFTA with the United
States is very much a bilaterally focussed relationship.” 89
U.S.-Mexico
Since the signing of NAFTA, U.S.-Mexico trade has skyrocketed, as has more generally the two
countries’ level of economic integration. Mexican exports to the U.S. have increased from
roughly 50 billion (U.S.) in 1994 to just over 100 billion (U.S.) in 2001.90 Mexico’s many
economic initiatives along the U.S.-Mexico border, including employment programs for migrant
workers and its border industry program, have driven the country’s growth rates over the past
eight years. Mexico’s Maquiladora program (low-value added manufacturing sites primarily
along the U.S.-Mexico border) now accounts for 8% of Mexico’s total employment and 52% of
its exports.91 All of these are in essence, U.S.-Mexico initiatives. Their considerable significance
to the Mexican economy makes the U.S.-Mexico relationship of central importance to the
Mexican government. Mexico City further aims to play the role of strategic ally to the U.S. in its
relations with Central and South America and has quite successfully used its gains from NAFTA
to increase its political weight both in terms of foreign economic policy and with regard to
increasing its leverage on the U.S. domestic agenda.
The U.S.-Mexico relationship is becoming more and more significant not only to Mexico
but also to the United States. Although domestic opposition to free-trade with Mexico remains,
Mexico has become increasingly significant to the current administration because of increased
levels of trade as well as a variety of domestic concerns. First and foremost of these are the issues
around U.S.-Mexican migration and the growing size and political weight of the MexicanAmerican community within the U.S, which as of 2001 accounted for more than 10% of the U.S.
population. 92
88
Ibid.
89
Hartill.
90
U.S.-Mexico Chamber of Commerce, http://www.usmcoc.org/eco2.html
91
The New Dynamics of North America, 18.
92
Weintraub
24
Canada-Mexico:
Although trade and investment levels between Canada and Mexico have increased considerably
in the post-NAFTA years, at best, this can be described as a shift from a relationship which was
virtually non-existent to one which is still quite modest. Canada’s level of direct investment in
Mexico has increased to approximately 4% of Mexico’s total FDI inflows, compared to the U.S.’s
share of 60%.93 Canada-Mexico trade exceeded $C18 billion in 2001, up from roughly $C6
billion at the time of NAFTA’s signing.94 Again, however this is dramatically less than the
approximately 230 billion in trade between the U.S. and Mexico. In sum, although there have
been significant increases in the level and range of interaction between Canada and Mexico, to a
large extent both countries are still obsessed with their respective relationships with the U.S.
Canada and Mexico also compete for U.S. market share. Although, in truth, they directly compete
in very few sectors, as Mexico seeks to re-orient itself as a more high-skilled economy, the extent
of their competition may increase.95 Beyond the shipment of mainly primary goods to Mexico,
Canada has not really capitalized on its access to the Mexican market and continues to have a
relatively low profile in the border region.96
Beyond economic integration, Canada and Mexico have also largely failed to capitalize on
the possibilities for strategic alliances in their dealings with the U.S. One significant exception to
this trend was Canada and Mexico’s joint efforts to prevent the implementation of Section 110 in
the 1996 Illegal Immigration Reform and Immigrant Responsibility Act. If implemented, Section
110 would have required “relevant U.S. agencies to put in place, by June 2000, a system to
register all entrants into the United States and… to keep a record of all people exiting the
country.”
97
This was, of course, intended to increase border security but it would have had the
corollary effect of virtually paralyzing movement, and thus trade, along the two borders. In
reaction to this proposal, Canada and Mexico formed a ‘U.S. Business Alliance’ aimed at
encouraging domestic opposition to the proposition. This alliance proved to be quite effective and
as of 2002, the provision has yet to be implemented.98 This example of co-operation is the
exception rather than the rule. 99
93
The New Dynamics of North America, 30.
94
Canada-Mexico Trade and Investment Relations,
http://www.dfait-maeci.gc.ca/mexico/mexicotraderelations-e.asp
95
The New Dynamics of North America, 32.
96
Ibid.
97
Ibid, 23.
98
The New Dynamics of North America, 23.
99
Ibid, 35.
25
This failure to harness opportunities for strategic linkages, and more generally to create a
more trilateral dynamic in North America, appears to be at least partly the result of Canada’s
hesitancy towards working with, or even being associated with, Mexico in its dealings with the
United States. This is partially the result of Mexico having a more controversial relationship with
the U.S. and ongoing tensions in areas around narcotics, migration and treatment of illegal
immigrants. It has been noted that to some extent in the U.S., while Mexico is a foreign country,
Canada is more just “the part up there” and in that respect increased trade and integration with
Canada is far less contentious among the U.S. population.100 For reasons such as these, Canada is
reluctant to work with Mexico as it prefers to avoid getting involved in controversies with which
it has no significant interest, and is quite insistent on trying to maintain its ‘special’ relationship
with the U.S.
Effect on the Working Groups:
As discussed in Section Two, the NAFTA CWGs have been under utilized and generally have not
presented themselves as effective continental mechanisms for dealing with issues that arise
between the U.S., Canada and Mexico under the ambit of NAFTA. This phenomenon appears to
be, at least partly, related to problems which have arisen from the incongruity between the
working groups’ trilateral nature and the continuation of a strong dual-bilateralism in North
America. The disjuncture between the theory behind the working groups and the reality of North
American relations has manifested itself within the committees and working groups in two
general ways. It has resulted in the institutions being circumvented and under-utilized. This has,
in turn, reduced the activity level of the majority of the groups; and it has limited the scope of the
committees and working groups agendas’.
As noted, amongst all three states there appears to be a marked lack of interest in utilizing
NAFTA’s institutional channels to resolve conflicts around implementation, day-to-day issues,
and even as forums for discussion and information exchange. This stems primarily from the fact
that although these groups deal with ostensibly trilateral concerns, in fact, the majority of issues
which arise are of a distinctly bilateral nature and, as such, are more appropriately dealt with in a
forum involving two rather than three parties. In some respects, this simply involves questions of
efficiency as it is, in the words of a member from the Committee on Trade in Goods, “logistically
easier to just pick up the phone” and deal with the relevant party as opposed to coordinating and
organizing a meeting of the NAFTA working group.101
100
Weintraub.
101
Dutton
26
Furthermore, when the topic of discussion is of a bilateral nature, it tends to end up being
handled through traditional bilateral channels. In practice this means that, as a result of the long
history of bilateral relations, especially between the U.S. and Canada, these relations tend to be
less formal and handled more as part of a day-to-day interaction. Consequently, as a result of
most issues involving either the U.S. and Canada exclusively, or the U.S. and Mexico
exclusively, much of the communication around NAFTA issues is handled informally and via
older established relationships – in essence, the way things were carried out pre-NAFTA. This
continued bilateralism lends itself more to the informal and pragmatic bottom-up approach that
defines much of Canada-U.S. interaction and which is becoming the norm between the U.S. and
Mexico.
This clear preference for dealing with these issues on a one-to-one basis102 is not simply the
result of a general aversion to institutions. As one American committee member stated,
“multilateral institutions are better - you just have to get the institutions right.”103 Clearly the
trilateral NAFTA committees and working groups are not sufficiently reflective of the North
American reality.
It becomes even more apparent that the groups’ trilateral structure acts as an impediment to
their use. A wide range of bilateral institutions and consultative mechanisms already exist, both
between the U.S. and Canada and the U.S. and Mexico, which are extremely active and are, in
fact, in many cases dealing with issues that also fall within the ambit of the NAFTA committees
and working groups.104 These bilateral mechanisms exist in a variety of sectors, from energy to
agriculture to customs, and are, according to U.S. officials, far more active than the NAFTA
groups. When questioned on the reasons why changes in Port Restrictions made in the early
1990s were not dealt with by a NAFTA working group, an official from the Office of NAFTA
and Inter-American Affairs stated simply, “these things just get worked out bilaterally.”105
In addition to creating incentives for the avoidance and circumvention of the committees
and working groups, the incongruity between the groups’ trilateral nature and the continuing
bilateral reality of North American relations has further limited the purposes for which the groups
may be used. Some bilateral issues simply cannot be handled effectively in a trilateral forum and
as a result, the member governments do not consider the NAFTA committees and working groups
as viable on these issues. Recent examples of this are the two separate bilateral border agreements
that were negotiated between the U.S. and Canada and the U.S. and Mexico this past year in the
102
Ibid.
103
Ibid.
104
Dutton
105
Dutton.
27
wake of September 11th. Although there is a Customs Subgroup set up under the NAFTA, which
has been fairly active and of which all three countries are members, this group was not chosen to
develop further plans for co-operation and security along the two borders. The NAFTA group
was not chosen to tackle these issues as the dramatically different issues surrounding the U.S.Mexico border and the U.S.-Canada border rendered a trilateral group an inefficient and
inappropriate mechanism.
Another example of the NAFTA working groups’ agendas being limited by the lack of a
true ‘continentalism’ is the three governments’ failure to use these groups as a forum for the
development of a common North American position to present at the negotiations for the FreeTrade Area of the Americas in Panama. As one U.S. working group member noted, it is
“unfortunate” that the working groups have not been used to coordinate positions similar to the
strategic blocks maintained by Mercusor and the Andean community.106
The Continuing Need for Political Negotiation and Compromise:
In addition to the problems generated by the continuing bilateralism of North American relations,
the NAFTA committees and working groups have further been hindered by the political realities
which continue to characterize the relations between Canada, the U.S. and Mexico. The nature,
and much of the content of these relations, are not yet at a stage where discussions and disputes
may be successfully navigated within de-politicized institutions which are built on a groundwork
of formal legal equality. Many issues that fall within the ambit of NAFTA are difficult for the
national governments to navigate as they are politically sensitive or involve a severe asymmetry
in power between the member states.
Domestic Sensitivities and Constraints:
Within North America, politically sensitive disputes, which one can loosely define as those
involving either large amounts of money or jobs, many jurisdictions, or questions which touch
upon national sovereignty, are in many cases very difficult to handle formally. The most political
issues, which arise under NAFTA, are rarely, if ever, dealt with within the more
professional/technical CWGs. Rather, they are generally diverted to forums that are considerably
more political and provide more room for compromise and negotiation. Although beneficial for
many other reasons, institutions which are too professional and/or legalistic are incapable of
dealing with diplomatic sensitivities and are further unable to provide the space needed to
106
Ibid.
28
accommodate, where necessary, the political realities faced by the non-compliant state.107 This
was highlighted in our examination of the NAFTA Trucking dispute, where a resolution was only
able to be reached when a compromise was struck which, while it did not force strict compliance
with the agreement, was mutually satisfying to both parties. This speaks to the fact that when
implementation issues are politically sensitive and face well-mobilized and powerful domestic
interests, these cases must be handled in a forum which has the flexibility to take such
considerations into account. 108
As often said, ‘all politics are local’ - and frequently, despite what a country may have
committed to within the text of an international agreement, it is unable, or unwilling, to carry out
these commitments in the face of domestic pressure. 109 All three of the NAFTA signatory states
are, at times, subject to such constraints for a variety of reasons.
The U.S. is especially vulnerable in this respect because of its government’s division
between the executive and legislative branches and the strong power held within the hands of
individual senators and congressman for whom constituency interests are paramount. However,
as noted, it is not just an American aversion to formal institutions, both Canada and Mexico are
also subject to pressures which produce a similar result.
While it may be true that to some extent Canada and Mexico would be better served under
hard and fast trilateral and professional institutions insofar as their rules-based nature would
lessen the impact of power disparities, all nations face these sorts of political constraints. At
different times and for different reasons, it is also in the interests of Canada and Mexico to
maintain a less formal system that possesses escape routes for sensitive political issues. This
became clear when Canada faced challenges to its laws protecting its cultural industries and
likewise when Mexico is challenged over its reservations on trade in energy.110
In sum, it appears that issues of political significance, which involve considerable amounts
of money and powerful interests do not get channeled through NAFTA institutions because of the
three countries’ aversion to passing sensitive issues over to technical, professional bodies.
Because of the constraints these governments face domestically they are more amenable to
forums where there is still room for political compromise and negotiation rather than simply a
legalistic interpretation of each countries’ commitments made in an international agreement. This
acts as an impediment to the constructive use of the NAFTA CWGs.
107
Weintraub
108
Dutton
109
Dutton.
110
Weintraub
29
Asymmetries in Economic and Political Power
The challenges presented in channeling controversial issues through de-politicized institutions are
made more serious by the gross imbalances in economic and political power within North
America. The incongruity between the vast differences in power between Canada, Mexico and
the U.S. and the formal equality possessed by each state within the NAFTA institutions becomes
an issue because, in the words of one commentator, “the institutional structure of NAFTA is not
terribly deep or complex.” As such the NAFTA institutions are by no means able to assert their
will in the face of contestation. 111 This relatively weak institutional structure was no doubt
intentional as all three countries were reluctant to cede sovereignty to continental institutions
when negotiating the agreement.
While the reduction of political asymmetry is of course the goal of rules-based institutions,
this formal equality becomes more and more untenable in the face of larger and larger disparities
in power. An extreme example of this phenomenon,112 the North American relationship is
particularly ill-suited to institutional mechanisms, as their inflexibility creates a strong reluctance,
on the part of the U.S., to deal with issues at that level.113 While groups within both Mexico and
Canada fear the usurpation of their national sovereignty by the U.S., in many respects the loss of
sovereignty is in fact more of an issue for larger powers – it is harder to get big powers to yield
sovereignty because there is less incentive for them to do so.114 Consequently, although a central
tenet of NAFTA, these power dynamics make it more difficult for Canada and Mexico to
“demand and obtain [from the U.S.] equality in decision-making.” 115
Although there is a general consensus on the part of Canadian and Mexican officials that
NAFTA has been an equalizing agent,116 it is also understood that the formal legal equality
granted under the agreement will never do away with the gross imbalance in economic and
political power between the three states. This formal equality created incentives for Canada and
Mexico as the agreement could only make an already asymmetrical relationship more
manageable. For example, upon signing NAFTA Mexico was, in theory, immediately given 33%
of the influence, although it represented 3% of the NAFTA market.
117
However, rules-based
institutions only benefit the peripheral players if the core power agrees to abide by and subject
111
North American Integration, Ekos
112
Ibid.
113
Dutton
114
Doran
115
Ibid.
116
Carlos Rico, Mexican Embassy. Interview by Authors. Washington, D.C. 10 April 2002.
117
Ibid.
30
itself to the decisions of those institutions. The chances of this diminish the wider the disparity
between the formal equality granted under the law and the actual political and economic
inequality. In essence, therefore, this disparity in power and economic size seriously limits the
possibilities for political integration in the form of continental institutions in North America.118
Effect on the Working Groups:
Despite the apparent consensus on the part of the NAFTA governments that disputes and
discussions surrounding largely commercial transactions and relationships ought to be dealt with
by professionals acting in forums which were relatively free of political power-dynamics, the
political realities of North American relations have proven to be an obstacle to these ideals. The
direct result of the disjuncture between the professional and technical nature of the groups and the
politicized reality of North American relations is that politically charged issues are not able to be
dealt within the NAFTA committees and working groups. This results in either the circumvention
of such a group, as we saw earlier in the energy case study, or in the groups becoming deadlocked
and eventually inactive, and as such, the issue then having to be resolved in other, more political,
forums. Three examples of the later outcome are the Chapter 19 Working Group on Trade
Remedies, the Government Procurement and Small Business Committee and the Working Group
on Services and Investment.
The Chapter 19 Working Group on Trade Remedies was established in 1993 and was
mandated “to seek solutions that reduce the possibility of disputes concerning the issues of
subsidies, dumping, and the operation of trade remedy laws regarding such practices.”
119
The
exceptionally controversial nature of these issues ensured that the group would be unable to even
approach these sensitive topics. Not surprisingly, an official at U.S.TR described the situation
with the working group as “Inactive…. It’s dumping. Again, a lot of the times it’s because some
of these things are so polarized and bilateral that they move out of this working group thing, to
just bilateral negotiations.”
120
Similarly the Committee on Government Procurement and Small
Business, which was established “to resolve issues related to government procurement, to provide
a forum for future negotiations, and to facilitate technical co-operation between the Parties,”
121
….” has been unable to proceed with its work since 1999, although it has a mandate for future
negotiation from the Free Trade Commission. This has apparently, been caused by the inability of
118
Weintraub
119
SICE – NAFTA Reports, http://www.sice.oas.org/trade/nafta/reports/remed_e.asp
120
Shigetomi
121
1994-1996 Report On the NAFTA Government Procurement Working Group, http://dfaitmaeci.gc.ca/nafta-alena/report6-e.asp
31
the group to “reach trilateral agreement on how to proceed” given the controversial nature of
regulations surrounding government procurement for the three parties. 122
Another example is the Working Group on Services and Investment, which has in its
mandate the notoriously controversial Chapter 11. NAFTA’s Chapter 11 creates the means
whereby a foreign corporation may take legal action against a member state in the event that this
state expropriates their assets. While these types of clauses on investments are not unusual in
trade agreements, NAFTA’s chapter 11 has been widely criticized as a usurpation of national
sovereignty by multinational firms. The Working Group on Services and Investment was
established to “monitor implementation of Chapter 11 and 12; develop procedures for
consultation and notification on relevant matters; and focus initially on actions required by the
Parties to implement commitments in Chapters 11, 12, and their Annexes.”
123
However, the
working group has been inactive since 1999 and the politically charged discussions relating to
investment under Chapter 11 have instead been assigned to special groups set up outside of the
working group system.124 As noted by an official from U.S.T.R. when questioned on the reasons
for the original working group’s inactivity, “…a lot of the talk about investment has focused
specifically on NAFTA Chapter 11 and that has taken place in special negotiating groups on
Chapter 11 that only meets to discuss Chapter 11.”125
As is demonstrated by the examples above, the structures created under NAFTA,
particularly the committees and working groups, have not been capable of dealing with
controversial or politically sensitive issues. This has resulted in a situation where, while the
CWGs are able to deal with relatively low-level, low-interest disputes and discussions, more
politically sensitive controversies must be dealt with in a more political arena with less strict
objectivity, more flexibility and generally more room for compromise. In this respect, the
disjuncture between the political realities of North American relations and the professional and
technical nature of the committees and working groups acts as an effective obstacle to their use.
Conclusion
While it is true that the North American relationship is still young, it nevertheless appears to be
charting its own unique course towards a high level of economic integration. It remains to be seen
whether political integration will follow this increasing economic integration. The experience of
122
123
Shigetomi
NAFTA Operational Review, http://www.dfait-maeci.gc.ca/nafta-alena/revchart-e.asp
124
Shigetomi
125
Shigetomi
32
the NAFTA committees and working groups demonstrates the presence of significant obstacles
hindering the establishment of valuable continental institutions. As one committee member noted,
“the biggest lesson to be learned from NAFTA… is that there must be clear instructions in the
agreement that would provide for a strong institutional structure.”
126
Without strong institutions
with clear mandates, the natural dynamic of North American relations will hinder the use and
potential of such groups. The considerable incongruity between the working groups’ trilateral and
professional nature and the bilateral and political realities that continue to characterize the North
American relationship continues to both limit their use and effectiveness.
One can argue that effective continental institutions cannot be created if a continental
community does not yet exist. But if adequate political structures do not exist, those civil society
organizations whose mandate touches on North-America-wide issues will continue to be deprived
of legitimate channels through which to gain access to the policy- and decision-making that is
moulding the continent in forums inaccessible to the public. There is, in sum, good reason for the
scholarly silence surrounding NAFTA’s committees and working groups: they have acted to deinstitutionalize North American governance and so maintain its resistance to democratic practice.
Comments, corrections and any suggestions for further research would be gratefully
received: [email protected] [email protected] [email protected]
126
Dutton
33