FTA at 15, NAFTA at 10

A Canadian Perspective on North American Integration

Thomas J. Courchene January 12th, 2005

Thomas Courchene, Queen’s University professor and IRPP senior scholar, identifies four challenges that have emerged since NAFTA’s inception. He says Canada is now best viewed as a series of north-south cross-border economies rather than as a single east-west economy. In addition, the process of transforming the three national systems into one continental system is outpacing the physical infrastructure and NAFTA’s institutional structure. Another challenge is how Canada can reconcile deepening international integration while preserving national policy flexibility. Finally, there is the issue of homeland security as an American policy priority that affects the evolution of NAFTA itself.

Courchene says the drive to strengthen economic integration within each of the three federations will continue to propel us forward toward a new NAFTA at 20. Sub-national (provincial and state) governments will become “new motors for energizing NAFTA reform.” In terms of strategic bargains, it is certain that Canada and the US will undertake further initiatives relating to homeland-security and economic-security. But Courchene identifies two issues fundamental to understanding NAFTA at 20: Canada’s flexible exchange rate regime and the proposed Free Trade Area of the Americas.