INTRODUCTION

Almost two years have passed since Canada and Mexico commemorated the 60th anniversary of the initiation of diplomatic relations (January 29, 1944). Nevertheless, only by 1994, when Canada and Mexico joined the trilateral North American Free Trade Agreement (NAFTA), did their relationship shape into an active engagement, and just recently did it embark on a new, vigorous, and different trajectory. Unlike its neighbourly relations with the United States, Canada does not share a border with Mexico; even more so, until 1990, when joining the Organization of American States (OAS), Canada did not consider Latin America as a focus of its larger foreign policy. To be sure, Canada joined the NAFTA negotiations only at a later “last minute” stage, after realizing that a bilateral trade agreement between Mexico and the United States was threatening to undo the benefits expected to accrue from the earlier concluded Canada-US Free Trade Agreement (CUSFTA, 1989). Consequently, there is no exaggeration in arguing that the NAFTA marks “a watershed” (Lavertu, 2005) in Canadian-Mexican relations for it is first and foremost the NAFTA which had brought the two countries much closer than ever before. This rapprochement opened an opportunity for coordinated participation in the broader regional and global institutional arena comprising of the United Nations, APEC, OECD, WTO, the G20, and closer to home – the OAS and Summit of the Americas forum, and the work on a Free Trade Agreement of the Americas (FTAA).

In retrospective, ten years since the beginning of the NAFTA reveal impressive gains. Although modest in comparison to the United States-Mexico trade volume, the Canada-Mexico trade has increased more than 200 per cent (Waugh, 2005: 31) benefiting both Canada and Mexico.Canada now follows the United States as Mexico’s second most important export market, and is Mexico’s fourth-largest trading partner after the United States, Japan, and the European Union (Vega-Cánovas, 2004: 2). Mexico is currently Canada’s fourth largest export market and its main trading partner in Latin America with a two-way trade flow of up to $12 billion compared with $4 billion in 1993 (ibidem). However, in the larger scheme, it is China which represents Canada’s second-largest trading partner after the United States (Downe, 2005: 30). In matters investment, Canada has become the third-largest investor in Mexico (Waugh: 31).

NAFTA is generally seen as the major contributor to both the trade growth in North America and the economic growth of Mexico, although this energy has not yet translated into a vehicle for universal prosperity in Mexico. Distribution of economic gains has yet to follow the economic growth (Vega-Cánovas: 2, 4). In terms of economic growth, Mexico has risen to become the thirteenth-largest trading state in the world and the first in Latin America (ibidem: 2).

The trade volume flowing between the three NAFTA partners grew between 1993 and 2003 at an annual rate of 12.5 percent which represents a significant feat compared with the world trade average of 8 percent (ibidem). A comparison of the investment flow among the three countries before and after the NAFTA shows more than a triple increase of total foreign direct investment (FDI): $ 63 billion between 1989-1994 compared with $202 billion between 1995-2001, with Mexico representing the primary beneficiary of this trend (ibidem). The numbers reflect that intra-regional trade and investment were both expanding at the same time. This has given rise to increased expectations regarding the potential for economic growth both within the NAFTA, and especially between Canada and Mexico. It has been recognized by both governments and received distinctive attention by the Canadian government as reflected in its recently released International Policy Statement (IPS).[1]

In this paper, I will review —from a Canadian perspective— Mexico’s status in the IPS. I will also evaluate the prospects for a vital Canada-Mexico relationship as endorsed in the Canada-Mexico Partnership (CMP).[2] Based on this analysis, my argument is that although the Canada-Mexico relationship has entered a new phase characterized by intense efforts to cooperate, it still lacks the enthusiasm that underlies cooperation for the sake of cooperation. The Canadian government’s approach reflects a combination of a pluralist-liberalist strategy to its foreign policy at large promoted by a realist tactical approach. Tightening the relations with Mexico is first and foremost a means to achieve several economic and other ends (or effect “externalities”) –at the regional, trilateral, hemispheric, and global levels. If successful, it may nevertheless transform itself into a relationship for its own sake. The potential is vast and it has so far remained untapped.

THE INTERNATIONAL POLICY STATEMENT

Canada’s IPS follows as a reaction to the “major rebalancing of global power”.[3] As a small nation, Canada is aware of the risks of being swept by the tide of changes, and hence confirms it “doctrine of activism”.[4] This has taken the shape of formulating a pro-active policy statement designed to place Canada within the framework of regional integration structures and processes as well as new alliances. Canada’s approach is guided by a normative “commitment to peace, order and good government, [...] the joint pursuit of democracy, human rights and the rule of law, [... and] [b] y wedding free market principles to a commitment to shared risk and equality of opportunity” (Canada’s International Policy Statement, 2005). It coincides with Canada’s new understanding of sovereignty, represented in the newly conceptualised “responsibility to protect” (R2P). R2P combines an emphasis on the dual inter- and intra-state responsibilities which are a necessary correlate of rights. Both types of responsibility are intrinsic to the concept of sovereignty on the one hand, and are framed within an affirmation of concurrent autonomy and collective action, on the other hand (ibidem).

The IPS identifies five foci of guidance for the next several decades: Canada in North America, Defence and International Security, Trade and Commerce, International Assistance, and the New Multilateralism. That these foci are interfaced is reflected in the IPS’s new concept of “3D+T cooperation,” which stands for diplomacy, defense, development, and trade, and is embedded in the approach of “a ‘whole of government’ […] and a ‘whole of Canada’”.[5] This integrative and holistic approach suggests that, by definition, Canada’s bilateral relations will become interwoven within the new IPS “web”. Consequently, the Canada-Mexico economic relationship cannot escape being addressed through all IPS foci - whether by way of exclusive bilateral interaction, or as part of a trilateral partnership or of alliances within wider regional, global, and multilateral fora.

The five foci rest on four key principles and considerations listed in a descending order and comprising of (I) states and regions as wielding influence, with a particular focus on North America; (II) cross-cutting global issues traversing the domestic-international and state-non-state realms such as the threats of terrorism, organized crime, infectious diseases, and failed and fragile states; (III) the increased relevance of, and nature of relationship between, public and foreign policy, e.g. regarding climate change; and (IV) the diminishing distinction between “domestic” and “international” and its impact on governance relationships within the Canadian federation. In this context, the Foreign Minister emphasized that “[...] the IPS recognizes that Canada’s ability to further our interests and values around the world rests on the strength of our relationships in North America, including Mexico. [...] We are expanding our political and security dialogue with Mexico, as it engages more actively on the world stage” (Pettigrew, 2005).

A study of the details of the IPS displays the primacy of the “North American Partnership” in Canadian foreign policy but at the same time — also the novel, and perhaps unique, place for Mexico in it. In the next section, I will review the various contexts in, and the extent to, which the Canada-Mexico economic relationship may grow and deepen as reflected in, and implied by, the IPS.

CANADA-MEXICO ECONOMIC RELATIONS IN THE “CIRCLES” OF THE IPS

1. The bilateral thread weaving through the circles

The strategic declaration that “[t]oday Canada’s regional strategy must be pursued with even greater vigour [...]. In particular, Canada will engage more actively with Mexico, bilaterally and trilaterally [...]”(Canada’s International Policy Statement, 2005), is evidenced in actual policy making. The principal example is, of course, the Canada-Mexico Partnership (CMP) launched at the occasion of the ten’s anniversary of the NAFTA and the 60th anniversary of the Canada-Mexico diplomatic relations. It states explicitly that the CMP’s role is to “enhance the strategic relationship” (Department of Foreign Affairs, 2005) between the two countries in a wide range of areas encompassing “bilateral trade, investment, publicprivate sector partnerships, business to business links, exchanges on Smart Borders and enhanced security, good governance practices, education, institutional reforms, and citizen-focused government” (ibidem). The CMP’s objectives are multidimensional: They envisage reinforcing existing and past achievements and links, identifying new policy areas for future cooperation, and addressing obstacles and challenges arising in the bilateral, regional, and global arenas. The partnership also spans a broad range of sub-governmental relationships and is inclusive in its “membership” for it is designed to involve government, the private sector, and the policy and academic communities.

Implementation of the CMP commenced by establishing a bi-national group of stakeholders addressing specific sectors of cooperation. Originally, three working groups were formed to address urban development and housing (divided into a sub-group dealing with housing and another focusing on sustainable cities), human capital, and competitiveness. Later, a fourth working group on agribusiness was added (Office of the Prime Minister of Canada). The working groups published their first report outlining the concrete results and prospective objectives, which concluded that “the Partnership effectively complements the North American Free Trade Agreement, the Security and Prosperity Partnership of North America, and other mechanisms designed to grow trade, ensure security and enhance competitiveness”(Department of Foreign Affairs, 2005). Presented to the leaders meeting in Vancouver, the bilateral partnership was mobilized for the first time also as a tool of diplomatic support for Canada in its current disagreement with the United States (culminating in the recent phase of the long drawn Softwood Lumber dispute): In joining Canada in its call for improvements to the NAFTA dispute resolution process, President Fox indirectly criticized the United States for failing to comply with the NAFTA mechanism (The Vancouver Sun, October 1, 2005: A3). The second time this was prominently displayed was at the very recent Summit of the Americas in Mar del Plata, where Canada’s Prime Minister publicly expressed appreciation of President Fox’s support “in efforts to make Washington comply with the North American free-trade agreement dispute-settlement process in the softwood case” (The Globe and Mail, November, 2005: A17).

The IPS refers to the increased commercial activity between Canada and Mexico, which remarkably has surpassed the growth in Canada-United States relations. This has been echoed in the Heads of State meeting in Vancouver, where both leaders announced the addition of the energy sector to the components of the CMP.[6] The Mexican President continued his visit to Alberta to emphasize this new endeavour (Office of the Prime Minister, 2005), reminding his interlocutors of the range of opportunities that existed not only at the bilateral state-to-state level but also as a matter of state-to-province relations.[7] It echoed the sentiment —and recommendations— expressed by members of the Canadian Council of Chief Executives (CCCE) who had during the past year displayed an increased and intensive interest in expanding relations between Canada and Mexico.

The CCCE brings up several supportive arguments. Overall, Mexico’s attractions lie in its “untapped potential” (Waugh, 2005) arising from its economic composition, geography, and demographics. Mexico is an energy producer and shares with Canada the interest of developing a continental energy plan. A bilateral relationship in this sector can benefit from Mexico’s need for investments on the one hand, and Canada’s supply of energy companies with know-how, on the other hand. Other sector candidates for bilateral growth include agri-food, telecommunications, transportation, education, and financial services. Mexico’s untapped potential consists also of a young population which is significantly younger that the Canadian, with a median age of 24 versus 38, respectively (ibidem). Geographically, Mexico’s south, which represents a narrow land mass of 140 miles separating the Pacific Ocean from the Caribbean Sea, is logistically well placed to serve as a gateway to North America. It could supplement the overcrowded capacity of the Californian Port of Long Beach and the Port of Vancouver, and encourage savings in traffic expenses and delays which are currently incurred from use of the longer Panama Canal route. Mexico’s South could, for the first time, become connected to the industrialized world: In addition to the economic benefit of shortened transport time, Mexico and its South could benefit by injecting the under-employed southern economy with warehousing and assembly jobs, and consequently attract the local population to stay in the region and lessen the pressure of northbound migration. Canada’s —and the American— economies will reap the benefits of lower labour costs and a larger selection of transportation alternatives (DeFehr, 2005). The Americans will not object to the CMP as long as it isinstrumental in reversing the immigration trend from Mexico to the United States. Potential CMP resultant diversification in Mexico might be desirous to the United States at least from both (border) security, labour, and demographic perspectives.

2. The Trilateral Circle

Although the IPS upgrades the importance of Mexico in the overall foreign policy framework of Canada, it first and foremost reaffirms the priority of the trilateral endeavour, the NAFTA, and within it —the traditional primacy of the United States. Nevertheless, the interconnectedness underpinning of the IPS coupled with the convergence effected by the NAFTA, combine to pull Mexico into the fold as an indispensable partner. This has been recognized in the IPS and is undoubtedly linked to the rediscovered linkage between the economy and security in the aftermath of 9/11.

The Security and Prosperity Partnership of North America (SPP), a tripartite alliance launched during the Heads of State meeting in Waco, Texas on March 23, 2005, merges with the efforts undertaken by Canada both unilaterally —and bilaterally with the United States— to address the fact that North America had become a theatre of operation for hostile actors. This tripartite alliance, supplementing (or paralleling) the NAFTA, has been perceived mainly as a response to American security concerns. As such, it was faulted for overlooking the commitment to prosperity: It contains little if anything concerning assistance to Mexico’s development through a North American Investment Fund and reducing the development asymmetries between the three parties, and has been reproached for lack of both vision and specifics regarding NAFTA’s global competitiveness (Rozental, 2005: 2). Nevertheless, since the IPS emphasizes security in its 3D+T approach, from a Canadian perspective, the SPP might operate as an intervening variable affecting the nature of the Canada-Mexico economic relationship.

The NAFTA is, of course, still the focal framework for Canadian-Mexican economic relations. Yet, although President Fox had advanced the “NAFTA Plus” proposal as the next stage in intensifying the region’s liberalization and integration processes, it is stakeholders and not governments, which have proven more attracted to this idea. Compared with non-governmental proposals, the NAFTA related targets identified in the Canadian IPS are modest and reflect the traditional Canadian pragmatic approach. This approach favours incremental steps, and clearly, adherence to the “twospeed” model.[8] The next section will review the most significant stakeholder contribution to the discussion on the North American space.

Roughly two months after the announcement in March 2005 of the SPP, the trilateral report on Building a North American Community[9] was published as a white paper (reflecting the goals of the SPP) “to provide specific advice on how the partnership can be pursued and realized” (Council of Foreign Relations, 2005),” and proposing the creation of a community within five years, by 2010. Of particular importance to Mexico —and hence to the relations Mexico-Canada and Mexico-United States— is the shared challenge of uneven economic development. The task force lists the regional disparities in Mexico, their impact on immigration patterns, and the ensuing stimulus to corruption, drug trafficking, violence and human suffering, as crucial threats to the security of North America (ibidem: 2-3). It draws the attention to the narrow scope of government remedies when compared with the task force’s conception of the required development efforts (ibidem: 4-5). Unlike the separate Canada-Mexico bilateral CMP initiative, which bespeaks both parties’ desire to weaken their dependence on the American partner, the task force explicitly identifies the following as a guiding principle: “The three governments should approach continental issues together with a trinational perspective rather than the traditional “dual-bilateral” approach that has long characterized their relationship” (ibidem: 5).

While the task force recognizes the value of a two-speed collaboration in certain policy areas —particularly in the Canada-United States relationship in military and defense— it suggests a simultaneous deepening of these relations coupled with increased efforts to integrate Mexico, on the one hand, and the intensification of the trilateral approach, on the other hand. And while explicitly distinguishing the North American communitybuilding experiment from the European one,[10] it nevertheless implicitly employs exactly the same language that characterized the various phases of the evolution of the European Community.[11]

To be sure, in spite of its overall visionary approach, the tenuous inter201 governmental relationships dominating the NAFTA are reflected also in the task force report, which displays a game of fine-tuning of bilateralism with trilateralism. Both the analysis of the situation and the recommendations address the importance of bilateral relationships: “All countries need to acknowledge that a major regional effort is also necessary. To that end, Canada and the United States should build on their bilateral initiatives supporting Mexico’s development, notably the US-Mexico Partnership for Prosperity and the Canada-Mexico Partnership” (Council of Foreign Relations, 2005: 13). However, representing independent stakeholders, the task force can afford to be more farsighted than the governments involved. It therefore recommends the establishment of a North American investment fund for infrastructure and human capital (as urged by President Fox) coupled with an expansion of the already existing Mexico-United States bilateral North American Development Bank (NAD Bank),[12] and proposes an economic integration plan encompassing a joint resource strategy (including energy but also lumber, fish, beef, etc.) (ibidem: 14-17). Unmistakably, in spite of the desire to distinguish its blueprint recommendations from the European model, the report rehearses much of the European example. It focuses on a wide-scope harmonization of the “economic space” including institution and regime building. Among these, the most relevant to the NAFTA economic realm are a permanent tribunal for North American dispute resolution, a trinational competition commission, various significant regulatory regimes (e.g. customs union, labour mobility and immigration), and inter-governmental practices (summitry policy, etc.). While focused on an inter-governmental approach, the proposals harbour supra-national tendencies and cut into the heart of national sovereignty, which indeed, have been the banner of European integration.[13]

The importance of the task force is in charting a course more cohesive than the original and current NAFTA route. However, in doing so, even the task force itself is speaking in several voices as the section on “Additional and Dissenting Views” shows. That the North American agenda still remains a loosely coordinated web of bilateral relationships transpires clearly from the comments. One remark points the finger at the imbalance underlying the proposed framework, as well as the distance separating it from the North American Realpolitik, in

that the report’s economic recommendations are considerably more extensive than its security recommendations agenda. [...] Because the United States has relatively less to gain from trilateral economic reform, and relatively more to gain from trilateral security reform, the US government in particular should insist on no less than parity between the economic and security agenda (Falkenrath: 37).

Even more forceful is the comment that “North American integration has subtly created a domestic agenda that is continental in scope. The U.S. government is not organized to address this agenda imaginatively. […]” This explains the “frustration of Canada and Mexico” (Pastor: 41) —and, indeed, exposes the realist underpinnings of the new Canadian emphasis on the bilateral path. In the next section, I will address the issue of how cultivating a bilateral partnership is perceived not just as a goal in itself but as a means to promote objectives in the broader rather than immediate bilateral and North American trilateral contexts.

3. The Multilateral Circle

The IPS is a statement of the Canadian foreign policy at large. It reserves a special spot for the Canada-United States relations, and then, in this order, to Canada-Mexico relations within the North American context. However, roughly three quarters of the document address Canada’s global role, as indeed its sub-title states: A Role of Pride and Influence in the World (emphasis added). In this regard, in Canadian eyes, Canada-Mexico relations serve as a valuable building bloc in the hemispheric endeavour and Mexico is considered as an ally in the larger global arena. Yet, the point of departure always remains the NAFTA.[14]

NAFTA is one of a rare breed of free trade arrangements that includes both developed and developing countries. Thus, the lessons learned from the NAFTA experiment —in particular, how it can enhance the quality of life for all Mexicans and consolidate Mexico’s democratic transformation— will be important for policy makers all around the world (Canada’s International Policy Statement: 6).