Twenty years ago NAFTA, the most ambitious free trade agreement negotiation of its time, gave birth to a profound transformation of the economies and the regional value chains of Mexico, the United States and Canada. Trade dramatically changed the relationship between the three countries, though asymmetries of power and economic vitality persist.
This week, at the North American Leaders Summit in Toluca, Mexico, Presidents Obama and Peña Nieto, together with Canadian Prime Minister Stephen Harper, continued a dialogue about trade, economic growth and the energy revolution in North America. A priority for all parties should be the continued economic integration of the three countries — the region’s greatest hope for job creation and prosperity.
Since 1994 NAFTA, in terms of trade, has triggered a rising tide, lifting boats in all three countries. The numbers are compelling: more than $1 trillion of trade in goods and services annually between the three partners; $1.2 billion of daily trade between Mexico and the U.S.; 6 million U.S. jobs directly related to trade with Mexico; and Canada and Mexico buying more U.S. products than any other nation on the face of the earth.
To understand these numbers in the context of the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) — the two ambitious and critically relevant trade negotiations the U.S. is currently pursuing — the combined exports of the United States’ two neighbors is more than six times that of the other TPP nations, and U.S. exports to Mexico and Canada exceeds those to all EU nations.
But beyond the importance of North America as a marketplace, NAFTA led to one of the most significant trade realignments of any economic bloc: today, Mexico, the United States and Canada have become partners in manufacturing. Through production sharing, the countries are actually building products together, such as automobiles and aerospace parts.