'Three Amigos' agree on 'trusted traveler' program
- Obama met with Mexican President Enrique Pe%F1a Nieto and Canadian Prime Minister Stephen Harper
- Leaders agree on trusted traveler program to ease border crossing
- An effort to deepen exchanges under NAFTA
TOLUCA, Mexico — North American leaders agreed Wednesday on creating a continent-wide "trusted traveler" program, allowing vetted individuals to cross borders quickly.
The program is part of an attempt at deepening commercial and cultural exchanges 20 years after the North American Free Trade Agreement was signed.
Economic analysts say the agreement unleashed previously unimaginable flows of goods among the three countries opened the Mexican economy, but that it needs to updated and better work out issues such as border delays and facilitating the movement of people and products
President Obama, meeting in this Mexican industrial city with President Enrique Peña Nieto of Mexico and Prime Minister Stephen Harper of Canada, signaled his willingness to promote trade and push ahead with more ambitious agreements – which include the proposed Trans-Pacific Partnership (TTP) – in spite of opposition from some in his own party.
"Canada and Mexico are our biggest trade partners and that creates millions of jobs," the president said at a joint news conference.
"We'll get this passed if it's a good agreement," he said of the TPP.
Obama spent less than nine hours in Toluca at the seventh edition of the "Three Amigos" summit. The event focused more on trade this year and less on security, which topped the agenda in past years.
The leaders also agreed on measures to harmonize customs data, improve infrastructure and increase co-operation with Central America, a transit point for drugs moving north out of South America and a region rife with violence. More educational exchanges were also proposed: Obama said he wanted 100,000 Mexican students studying in the United States every year, up from less than 15,000 now, and more American students going to other parts of the Western Hemisphere.
Increasing trade and improving relations may prove challenging, however. Economic analysts say that previous opportunities have been missed as sometimes the countries prefer working bilaterally — instead of through the NAFTA framework — and that the agreement needs to be updated to reflect a more modern and globalized economy.
"Ottawa wants to return to its bilateral relationship with Washington, and in some ways, Mexico does, too," says Carlos Heredia, professor at the Center for Research and Teaching in Economics.
Eric Farnsworth, vice president of the Americas Society-Council of the Americas, calls NAFTA a work in progress, but he says it has real accomplishments.
"Symbolism is important, especially now in the 20th-anniversary year of NAFTA. Yet unless the leaders strive to make progress, such meetings often become opportunities that are missed," says Eric Farnsworth, vice president of the Americas Society-Council of the Americas.
Farnsworth says NAFTA is a work in progress but has real accomplishments.
"It demystified Mexico to the U.S. business community and vice versa, in a manner that has led directly to the kind of integrated supply chains and production that now benefits all three nations," he says. "The worst is that it's now 20 years old, and the world has changed."
One way of deepening NAFTA would be through the TPP, a trade bloc that would includeCanada, Mexico, Chile, Brunei and several other parties. Obama is in favor of the deal, but Democrats in Congress, such as Senate President Harry Reid, are opposed because labor unions that largely back Democratic candidates say it will cost jobs.
Some friction surfaced in Toluca. Harper wants to win support for the Keystone pipeline extension, which would bring oil from the tar sands of northern Alberta to the U.S. Gulf Coast, but he has encountered opposition from the Obama administration.
Obama lauded Mexican reforms to its state-run oil industry, which would allow for more private participation and increase product by 1 million barrels per day, according to the Mexican government.
On another domestic matter often of interest to Mexico, the president stated, "Immigration reform remains one of my highest priorities."
Under NAFTA, trade has increased significantly among the three countries, from $290 billion in 1993 to more than $1.1 trillion in 2012. Investment and travel have also surged.
Much of the difference between exports and imports has been between Mexico and the United States, which went from a $1.7 billion U.S. surplus in 1993 to a $61 billion deficit in 2012. So the deal has benefited Mexico to a greater degree monetarily, but also U.S. consumers, who have had access to goods that cost less coming from Mexico.
Mexico is now one of the world's large automobile manufacturers; a Chrysler factory on the 40-mile highway between Mexico City and Toluca was recently expanded and now produces vehicles for export — most to the USA. Auto exports from Mexican factories to the USA have quadrupled since NAFTA was implemented in 1994, Bloomberg reported.
Critics of a massive flow of jobs moving south — the "giant sucking sound" predicted by former presidential candidate Ross Perot — were wrong, Farnsworth says. He says that every dollar of imports from Mexican manufacturers contains 40 cents of U.S. content and 25 cents of Canadian content.
Job losses in the United States as a result of the deal have been "modest," according to data from the U.S. International Trade Commission.
"Production in Canada and Mexico directly contributes to job growth in the U.S.," Farnsworth says.
The openness shows how far Mexico has moved over the past 30 years, when its economy was so closed that candy bars smuggled into the country were sold as contraband in itinerant markets.
Today, Walmart stores dot cityscapes as the Arkansas-based retailer is now the country's largest employer. Starbucks recently opened its 400th store, finding a market for beverages that can cost almost as much as the daily minimum wage of $5.
"When President Miguel de la Madrid spoke to us about an opening (in the 1980s), he spoke about having more products with better quality. In part, he was right," says Aldo Muñoz Armenta, political science professor at the Autonomous University of Mexico State.
But the promises changed and NAFTA was pitched hard to a skeptical population that it would provide prosperity in a country where nearly half the population is still considered poor.
"The promise later became more general and abstract: 'We're going to enter the First World,' " Munoz said.
But he calls the results for Mexico a mixed bag. NAFTA helped the country open up to the point that it has signed trade deals with more than 40 countries. Peasant farmers couldn't compete and abandoned their corn plots, though big producer now export tons of tomatoes and avocados. Prices also dropped for imports.
"It allowed them to lower the prices of many products that were previously inaccessible," Muñoz says. "People no longer go now to the United States to by a TV, they just grab one during the sales here in Mexico."