The North American Free Trade Agreement’s negotiations were distinguished by each partner’s extreme reluctance to institutionalize its continental relationship. Understandably, the global superpower had little interest in tying its hands with provisions that might concede some decision-making parity to its two smaller neighbours. For Canada’s part, even when it negotiated the Canada-United States Free Trade Agreement in 1988, its main – if contradictory – aim was to avoid organizational entanglements while nevertheless constraining the US government’s unilateral acts of trade protectionism. More surprisingly, President Salinas de Gortari accepted CUFTA’s weak-institution model as the organizational premise for his trade negotiations. Having had to...

Since it had been negotiated within the context of increasingly politicized commercial conflicts between the United States and its two neighbours, the North American Free Trade Agreement was intended to provide mechanisms through which the parties could resolve their recurrent disputes. Because of the differing problems each faced, the three signatories had different objectives for the various dispute-resolution procedures to which they finally agreed. Canada’s prime negotiating objective was to shelter itself from harassment by the torturous procedures of Congress-mandated trade protectionism, which often used anti-dumping and countervailing duties aggressively to block imports from Canada. Mexico sought to position itself...

Just because the transborder ‘governance from above’ created by NAFTA turned out to be toothless – with the important exception of Chapter 11 endowing transnational corporations with a hard-law capacity to discipline governments in the three countries – it does not follow that NAFTA failed to generate any ‘governance from below.’ Indeed, its two landmark side agreements, which created formal trinational commissions in response to pressure from the labour and environmental movements, appeared to give the lie to those critics who alleged that neoconservative globalism was liberating transnational corporations from constraints on their ability to exploit workers and despoil the environment. After...

As we could have assumed, a putatively pro-labour institution established by three neoconservative governments bent on liberating North American business from regulatory constraints was designed to fail. Sceptics about a parallel, environment-friendly institution had less obvious grounds for a priori despair. Whereas the corporate community and its political associates had little reason to care about the condition of the working class, they could not ignore the environment with equal impunity. Plunging wages and weakened labour rights may be positive for the bottom line, but environmental degradation can be bad for business. To the extent that green is good for the...

The previous four chapters evaluated NAFTA institutions’ capacity to provide governance in the various domains to which they were assigned. This chapter takes a different tack. It addresses the question of boundary waters to see how this aspect of North American transborder management had long preceded – but was subsequently affected by – trade and investment liberalization.

In North America’s two sets of borderlands, shared water has become the lifeblood not just for the human existence of over a hundred million residents in the three countries but for the economic activity in which these people engage. The waters in the two binational...

To introduce the subject of transborder governance, whose workings in a variety of economic sectors I explore in Parts Two and Three, this chapter addresses the general issue of how business-government interactions occur at the level of national economic policy making. A case in point is the negotiation of the Canada-US Free Trade Agreement and the North American Free Trade Agreement – the framework that re-constitutionalized the three countries’ economic interrelationships.

The analysis highlights how transborder governance was both a consequence of earlier and a cause of further North American integration. Indeed, the contemporary dynamics of transborder governance in North America...

North America has only 7 per cent of the world’s population but accounts for nearly one-third of global energy production and consumes over four times more energy per capita than the global average.¹ With energy providing the lifeblood of its three economies, there can hardly be a sector more central to North America’s ‘existence’ yet more complex in its transborder governance challenges.

The importance of energy to each of the three countries is manifested in strikingly different ways. Having been a measure of Mexico’s exploitation by British and American capital in the early twentieth century, oil became a potent symbol...

Ever since coal made possible the first industrial revolution, most forms of energy have been transportable across national boundaries, making them early candidates for transborder governance. In contrast, farming had been historically a local activity, regulated autarchically within each national jurisdiction. Agricultural sectors became internationally significant only when farmers produced more than could be consumed domestically and when their produce could be transported over long distances – two conditions that first applied to grains, which extended Canada’s staple-export integration in Great Britain’s imperial economy. With the development of refrigeration and air transport, global markets developed for even the most perishable foodstuffs....

As one of the most regionally integrated industries in North America, steel should be an excellent example of transborder governance. In the fallout from NAFTA and in the face of an increasingly globalized steel market, the United States, Canada, and Mexico did indeed band together continentally to an unusual degree. Since 2001, the North American steel sector has appeared to be functioning as a regional bloc in such international forums as the WTO and the OECD, where it proposed combined and cohesive international-trade strategies. In 2003 the North American Steel Trade Committee (NASTC) was created to institutionalize the already strong...

When NAFTA entered into force in 1994, a pair of industries expected to be shielded from global competition by a carapace of new regional rules: the auto sector was one, textiles and apparel the other. As it turned out, the combination of the three countries’ textiles and apparel industries’ under a single protection system unleashed dramatic changes in the relations between governments, private manufacturers, and labour unions across the continent. This chapter investigates the nature of these interactions and analyses the extent to which they make North America exist. It argues that the textiles and apparel sectors on the continent...

As the chief source of financing for business (apart from bank loans, venture capital, and private sources), stock markets are crucial to a capitalist economy’s functioning. Because the capital markets in Canada and Mexico have long been closely connected to those of the United States, this review of transborder governance in North America starts by examining how private markets and public regulators have interacted both within and between the continent’s national boundaries.

When a business raises capital for its operations, it sells shares of its ownership known as stocks, or equity. A company may also offer bonds, which obligate it...

Anyone would be forgiven for having expected banking to rank with energy, agriculture, and the capital markets as a sector in which transborder governance and a pre-eminently North American character prevails. After all, proximity is a major facilitator of business, and banks could have been assumed to be driven by the continent’s transnationalization. But banking in North America is not what it seems for two main reasons. Structurally, ownership patterns did not become integrated across the two US borders after the inauguration of free trade. And institutionally, NAFTA created neither norms nor mechanisms that could establish a transborder continental governance...

The banking sector showed that the European banks played a larger role in Canada and Mexico than US banks, but it also demonstrated that, apart from NAFTA’s financial-services dispute-settlement rules that would turn out to be of little moment, transborder governance in this sector was global, not North American.

Despite North America’s lack of governance structures, significant policy harmonization between the three countries has occurred informally in related policy areas, but not necessarily because they are members of the same continent. The three governments’ common posture on genetically modified (GM) food labelling is an excellent example of this informal process,...

The global economic governance promoted by the General Agreement on Tariffs and Trade was all about reducing the commercial barriers erected by states at their territorial borders. GATT focused on reducing the tariffs and quantitative restrictions that raised the prices or limited the volumes of goods that exporting countries tried to sell in other markets. While some of the thousands of rules contained in the World Trade Organization’s agreements still deal with border barriers affecting the trade of physical goods, this landmark agreement represented a revolution in global economic governance because it also included rules directing national governments to alter...

So far, this text has offered four answers to our question about North America’s existence. In institutional terms, North America was anti-climactic – given all the attention paid to the negotiation and signing of NAFTA – when we saw how little it created. Approached in terms of specific economic sectors for which geographical propinquity matters, here North American governance turned out to be more than meets the eye. As for those economic sectors more connected to global than continental governance regimes, there are two categories. Some sectors are in a state of transition, moving from significant continental governance to more globalized systems....

The US government’s immediate circling-the-wagons response to the terrorist attacks of September 11, 2001 produced enormous blockages at the two American borders’ crossing points. Trucks lined up for many kilometres. Commuters could not get to work. Automobile assembly plants designed for just-in-time production closed down, costing them daily hundreds of millions of dollars.¹ The borderless world of the 1990s had suddenly been overcome by an instinctually territorial and autarchic response as Washington looked global terrorism in the face.

The central challenge of the new security environment was an intensified version of the ancient border-management dilemma – how to facilitate the flows...

For most countries, border security and military defence merge seamlessly one into the other. But for Canada and Mexico, living as they do on the glacis of the world’s most powerful military machine, the issues remained largely distinct until global terrorism conflated the two.

As recently as the 1990s, when the world’s trouble spots were far from the Western Hemisphere, students of North America would have had little reason to analyse the continent’s transborder military relations. But President George W. Bush’s declaration of a War on Terror, his administration’s publication of a new security doctrine, the government’s commitment to national...

A remarkable feature of the old North America was Canada’s manifest disinclination – in terms of both economic self-interest and intellectual curiosity – to connect with Mexico. The opposite was equally true: even though Mexico’s exports to Canada were considerable, its political and cultural connections were minimal. This chapter first reports how Canada and Mexico gradually developed a bilateral relationship of their own once NAFTA linked them within a formal economic arrangement, helping to stimulate increased commercial interrelations. It was not a matter of love at first sight when senior trade officials came to know each other during the NAFTA negotiations. On...

The immediate institutional lesson taught by Washington’s unilateral border blockade on September 11, 2001 was confirmation that NAFTA had not provided Canada or Mexico with new capacity to affect issues of overriding North American importance. NAFTA’s Free Trade Commission did not meet to review the US government’s actions. No Chapter 20 dispute panel was convened to determine whether the United States had appropriately applied the national-security rationale for violating its NAFTA obligations not to constrict trade flows. No North American summit was called to address the United States’ unnegotiated shift to a new policy paradigm in which, as immortalized by...