Looking retrospectively at the North American Free Trade Agreement's (NAFTA) first five years of existence and given the prevailing political and economic climate in North America, NAFTA should be expected to remain a key fixture of US trade policy throughout the forseeable future. Put simply, NAFTA is here to stay. The age of globalization has arrived and from this point forth, ideas of national sovereignty and state identity will continually be stretched and redefined. While there is no turning back from the collective decision to implement NAFTA, we need to understand, to use three of President Clinton's own terms, how the agreement can be transformed into a sustainable, interdependent bridge to the 21st century.
The question at hand is how we can best assimilate and adjust to the borderless North American market which NAFTA has engendered. While there is definite advantage in globalizing economic activity and in eliminating barriers to trade, the subject of "growing pains" (i.e. infrastructure inadequacies, job dislocations, lack of policy coordination, environmental pollution, etc.) will demand center stage at different intervals throughout the transitional process.
The goal of this Task Force is to go beyond the current NAFTA by exploring regional development strategies that improve the social, democratic and environmental welfare of interdependent border regions. With this in mind, we focus on four interdependent, transnational regions within the context of NAFTA: the larger Great Lakes region and the Cascadia region, located on the US-Canadian border in the Northeast and Northwest respectively; and the San Diego-Tijuana region and the Texas-Mexico region along the southern US border. In the Chapters that follow, we present a detailed discussion alerting policy makers to the critical importance of the increasing regional interdependencies in North America. We also explore in depth the problems that are being created as a result of growing economic interdependency. Finally, we provide policy recommendations for regional development that better address the needs of sustaining socio-economic development together with a healthy environment.
Gabriel Grant addresses the growing importance of trans-border regions. The transnational border regions of North America have increased dramatically in political and economic importance since the implementation of NAFTA. Border regions are important because they facilitate trade. They are the catalysts of increased economic interaction between nations. As such, they enhance the wealth of nations. However, the North American border regions have not yet reached their economic and political potential.
Presently, North American transnational border regions exist suspended between the sovereign politics and economic policies of separate national governments. While economic internationalization has catalyzed increased significance of border regions, NAFTA has revealed that the interests and needs of these regions very often are more similar to those of regional counterparts than is recognized by the geographically distant federal governments.
In an attempt to characterize the heightened interdependency of the trans-border regions and the reduced autonomy of national economies, Gabriel Grant has borrowed the term "glocalization." He shows that while glocalization or economic interdependence of the border regions can be mutually beneficial, it can be mutually detrimental at the same time. This has serious ramifications for the US. The success of the US economy is inextricably tied to its Canadian and Mexican counterparts - especially in the critical border regions. Thus, it is increasingly in the interest of the US to facilitate harmonizing economic policies which are inclusive of the regional and national interests of Canada and Mexico. In the absence of coordination and cooperation, the US, Canada and Mexico all stand to suffer a relative decline within the world economy.
The first half of this task force will focus on the northern border regions of North America. Michelle Wolters begins with an investigation into the socio-economic impact of NAFTA on the larger Great Lakes region. This region has a long history of interdependency, due to both the shared border which passes directly through the Great Lakes and numerous trade agreements which have created a highly specialized and integrated bi-national trade sector. The social and economic effects of globalization are being deeply felt in this region. The trade sector of the Great Lakes region historically centered on low-tech, labor-intensive manufacturing. Since the implementation of NAFTA, the nature of trade has changed dramatically and this region has suffered job losses and unemployment as manufacturing and production has moved to Mexico. The Great Lakes region must restructure its economic base in order to compete successfully in the global market.
Michelle points out that efforts are currently being made to attract hi-tech and hi-value added industries to locate in the Great Lakes border region and to promote the region as the "Gateway for US-Canadian Trade." However, she also discusses the difficulties that arise due to the inherent asymmetrical nature of the US-Canadian relationship. Canada has been hardest hit by the manufacturing relocation encouraged by NAFTA. On the other hand, the US has made it difficult (under NAFTA rules) for Canada to facilitate economic recovery and provincial cohesion. Michelle elucidates that an economic slump on one side of this transnational border region will perpetuate an economic slump on the other side. It may be necessary, therefore, to compromise on certain policy issues and to coordinate action on others.
In Chapter 2, Sarah Mitchell presents the human and economic costs of pollution in the Great Lakes border region. It is imperative that efforts towards pollution control be made in cooperation with governments and businesses on both sides of the border. Otherwise, these efforts will wasted as they will not produce a holistic effect.
Sarah shows that the present pollution levels of the Great Lakes region (inclusive of air and soil pollution which compound the problem) are harming the health of the regional population and thereby threatening the likelihood of future growth. Industrial plants are a major source of pollution in the Great Lakes region, but pollution, in turn, has a detrimental impact on industry through human sickness and by impeding water usage in industrial processes and transportation. The long term success of this transnational border region is therefore closely linked with sustainable development.
The current lack of coordination, funding and proper authority in bi-national institutions impedes the ability of policymakers to implement sustainable solutions for economic expansion in this area. At the end of her chapter, Sarah explores some creative ways in which environmental problems can be mediated through the private sector. However, there are again obstacles to cohesion which block the effectiveness of such policies. Sustainable development in the Great Lakes region remains yet unrealized.
In this Chapter, Ryan Ehlinger discusses the successes and failures of Cascadia's efforts to create an integrated trans-border economic region. Out of all the regions discussed in this document, Cascadia is perhaps the most integrated. Since Washington, Oregon and British Columbia are so far removed from the power centers of the US and Canada, this region has long relied on interdependent, cross-border ties to facilitate growth and environmental initiatives for the Cascadia area.
A major challenge for Cascadia will be to successfully integrate the traditionally competitive markets of the Pacific Northwest into a unified regional market. Ryan explains that if Cascadia were to focus bi-national efforts on trust and cooperation rather than on fear and competition, the Pacific Northwest could create a regional comparative advantage that would greatly enhance Cascadia's competitiveness in the world market.
The shared bioregion and pioneering history of the people of Cascadia has created a strong association between regional identity and environmental values. In this chapter, Amy Kaestner addresses environmental interdependence in the Cascadia border region. She effectively argues that protecting the bioregion is an integral factor in promoting the economic interests of transnational Cascadia. Businesses, tourists, and residents are attracted to this area particularly because of its environmental purity.
As Cascadia grows in leaps and bounds, and the regional infrastructure is stressed to its limits, a heated debate is brewing between bioregionalists and neo-liberalists. Attitudes on both sides are very extreme - there is almost no middle ground. As this area has not yet been environmentally depleted, the key to continued (and sustainable) growth in this area is prevention. It must be addressed immediately. However, enacting environmental policy will demand cooperation from both bioregionalists and neo-liberalists. Amy is concerned that an atmosphere of extremism will inhibit organizational coordination and cohesive bi-national action on this very important issue.
In Chapter 5, Lawrence Writer provides a detailed analysis of the European Union and contrasts it with the North American Free Trade Agreement. The questions is, can the policymakers of NAFTA learn from anything from Europe's experience? Lawrence compares problems that North American border regions and northern EU border regions have in common. By looking at EU solutions, we have a starting ground from which we can begin to assess policy solutions for NAFTA.
The major difference between the EU and NAFTA is the strength of the institutions involved in facilitating regional economic development. The EU has strong institutions that aid in developmental planning and provide funding for projects in the northern EU regions. NAFTA is sorely lacking in strong, effective institutions. Instead, different federal governments dictate policy to distantly located trans-border trade regions. Federal governments are interested in national market shares and national comparative advantage. They are not close enough nor committed enough to make effective policy decisions for trans-border regions. Lawrence argues that national economic competition among federal North American governments will hurt our shared economic interests in the long run. Bi-national institutions are needed to enhance regional comparative advantages. Local governments, businesses, and special interest groups are far better prepared to implement sustainable economic development in their respective regions than are law makers in removed power centers.
In Chapter 6, Colin Johnson provides policy solutions for the northern border within the context of NAFTA. Colin's work focuses primarily on the concept of "deepening." Colin demonstrates that it is important to push forward with "deeper" integration of trans-border regions by strengthening bi-national associations and policy making institutions.
Colin provides detailed policy solutions to socio-economic and environmental problems as discussed throughout the first half of this document. His suggestions include harmonization of bi-national labor, environmental and trade standards; "networking" to increase regional competitiveness; bi-national institution building to aid in planning and funding of regional development projects; "down-loading" of federal responsibilities to the local and state level to facilitate cohesion and effective action on important issues; increasing the "transparency" of policy making within NAFTA; and finally, Colin will provide creative solutions for funding such programs.
With this chapter we begin the second half of our task force, which now focuses on the Southern border regions of North America. Heidi Hall has studied the socio-economic interdependencies of the San-Diego Tijuana border region. The problems of the Southern border are complicated and numerous, stemming primarily from the severely asymmetrical nature of the US and Mexican economies. Mexico, a less developed nation, lacks the physical infrastructure to sustain the incredible growth potential NAFTA has unleashed. The San Diego-Tijuana border, as an interdependent trans-border region, lacks sufficient water supplies to successfully maintain current rates of growth.
Heidi Hall begins by discussing the unanticipated growth of the maquiladora industry. Foreign investors are racing to take advantage of low production costs offered in Mexico and to ensure access to US markets. Since Mexico's interior regions are almost wholly lacking in adequate infrastructure to facilitate trade, the bulk of economic growth is occurring on Mexico's northern border. Internal migration and insufficient infrastructure have created horrific social conditions in this region that include crime, pollution, inadequate housing, sewage treatment, garbage collection, and unsafe water conditions.
Heidi shows that business and industry in the San Diego-Tijuana border region are directly affected by the existing social and physical inadequacies of the area. Job turnover rates and absenteeism are chronic problems for industry, the lack of usable water in the region hinders manufacturing and production processes, and the "free flow of goods" across the border is impeded by grid-lock.
Finally, Heidi addresses illegal immigration from Mexico. The US and Mexico have entirely different points of view on this matter. As the issue stands today, emotions run high and it is difficult to make any progress in solving the problem. Misconceptions relating to illegal immigration have to be resolved in order to for the issue to be given reasonable treatment. Further, controversial issues like immigration have to be depoliticized in order to acheive sustainable solutions that reflect the deep economic and social interdependence of these regions.
Bryan Roe evaluates how the reduction of political and economic barriers between developed and less developed economies can impact the environment and therefore, the economic growth of a bi-national region. Bryan has investigated the environmental conditions of the San Diego-Tijuana border region. He addresses water quantity and pollution as well as air and soil pollution. This is perhaps the most environmentally devastated border region in North America. In this region there is a severe shortage of water and the water resources available. Much of what is available is polluted by raw sewage and toxic waste.
Both US and Mexican companies have contributed heavily to this problem. Human health is particularly at risk in Tijuana where there are no water treatment facilities and raw sewage is dumped directly into rivers, gullies and into the Pacific Ocean. The regional economies suffer as well because tourism is directly affected by beach closures and other by-products of environmental degradation. Also, US and Canadian consumers are at risk because Mexican agricultural products (which are now allowed to cross the border) are irrigated with toxic waters from the Tijuana River.
Further, Bryan reveals that the San Diego-Tijuana border region has become a haven for toxic waste dumping which is illegally (but easily) smuggled across the border from the US into Mexico. Compounding all these problems, Mexico's ancient vehicle fleet and the use of leaded gasoline there, combined with dependence on the automobile by San Diego citizens (which is many times greater than in Mexico) creates severe air pollution in this area. Bryan points out that the lax environmental enforcement of standards in Mexico has facilitated a huge exodus of polluting industries from the US into Mexico in order to escape the strict EPA regulations of the US. This kind of growth will exponentially increase the environmental degredation of this border region. There is no way one side alone can successfully handle the gigantic problems facing the San Diego-Tijuana border region; bi-national cooperation is imperative and immediately necessary.
In this Chapter, Erika Kussmann explains how deeply the interdependencies of the Texas-Mexico border affect its bi-national economy. Texas' economy is more affected by Mexico than by any other state economy in North America as businesses and retail sales rise and fall in relation to the strength of the Mexican peso.
This border region is characterized by a "twin city" arrangement. Since NAFTA, manufacturing and industrial production has been moving to the south of the US border. Texas mirrors this growth pattern because its "twin" cities - which are located directly across the border from their Mexican counterparts - provide the support system for factory owners, managers, and industrial plants in Mexico (i.e. warehousing, retail, and service industries).
Erika alerts us to the serious socio-economic problems that are common to this area due to unsustainable growth patterns. These problems include infrastructure inadequacies; the issue of Mexico's trucking industry; US concerns over job losses and unemployment; and the proliferation of the maquiladora industry in this region. Erika demonstrates that given the gravity of interdependence in the Texas-Mexico border region businesses on both sides of the border stand to lose profits in the face of regional assymetries.
Gerardo Botello discusses the increasing environmental degradation of the Texas-Mexico border region under NAFTA. First, he assesses the adequacy of NAFTA's environmental side agreements. To NAFTA's credit, environmental issues were seen as important in the overall implementation, and as a result, NAFTA is the first international trade agreement ever to encompass (albeit through side agreements) environmental precautions. This is a step in the right direction. However, while nations are "obliged to ensure that its laws and regulations provide for high levels of environmental protection", there are no specific rules mandating exactly what "high levels" are, nor does it provide for adequate policy enforcement. Gerardo sees this as a serious inadequacy.
The Texas-Mexico border region echoes the crucial environmental problems of the San Diego-Tijuana border region, though here they not yet as severe. Environmental degradation has deleterious effects for all sides of the Texas-Mexico border and, again, for the US and Canada. There are immediate impacts upon the physical and economic health of this region's population and there are consumer safety hazards throughout the rest of North America stemming from contaminated agricultural products traded from Mexico.
Plans for sustainable development in this region are crucial for future economic growth. There are lessons to be learned from the "cesspool," to borrow the terminology that Bryan used in Chapter 8, of the San Diego-Tijuana border region. Coherent harmonization of standards and effective policy enforcement must come from both the US and Mexican sides of the border.
Dominik Karelus examines regional development within the context of free trade by contrasting the EU's ability to deal with its poorer "southern" regions with the problems of NAFTA. There are many similarities between the southern regions under the respective trade agreements because of the extremely asymmetrical nature of "North-South" relations. Dominik points out that, "institutionalization of trans-border cooperation at the local and regional levels has proven essential in addressing social, economic, and environmental [issues]" under free trade.
The institutions of Europe have been a crucial factor in the successful planning and building of development projects. They have helped to build desperately needed infrastructure in Spain and Portugal, thereby decreasing the peripheral status of these nations; they have facilitated a developmental program in Ireland which has created local partnerships between business and the Irish population, thereby reducing unemployment and out-migration in the disadvantaged areas; and they are helping to improve the environmental quality of Germany, Poland and the Czech Republic by facilitating cohesive scientific investigation and related policy implementation. By looking at the developmental programs of the EU's "south", Dominik emphasizes the need for strong, adequately empowered bi-national institutions in the southern region of North America.
In this chapter, Valeria Leonardi provides policy recommendations for sustainable development in the southern border region of North America. In the spirit of this Task Force, Valeria stresses the importance of increasing the power and cohesion of bi-national institutions and of delegating decision-making to the local levels. The southern border of North America presently has already built a number of institutions which show great promise for facilitating economic development and environmental safety. However, they are not adequately empowered with enforcement and other "action" capacity. Also, they are not adequately organized to work with and through one another.
Valerias policy recommendations include strengthening and better organizing the institutions now in place; rewarding business and industry for their assistance in building environmental and other forms of infrastructure; harmonizing environmental and labor standards; providing stronger enforcement to ensure environmental and labor laws are met and using noncompliance fees to fund developmental projects; using "micro-credit" to facilitate small business enterprises; coordinating and monitoring dump sites; and commissioning an immigration task force to complete a comprehensive study of immigration between the US and Mexico so that policy suggestions can be made which are considered credible by both sides.