NAFTA trade partnership is beginning to drift apart

Spats among U.S., Canada and Mexico hindering 20-year bloc

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TOLUCA, Mexico -- President Barack Obama met Wednesday with his Mexican and Canadian counterparts, but little tangible came out of the Three Amigos summit -- a further sign that the world's largest trading bloc is on autopilot, hobbled by spats among members.

Indeed, Mr. Obama spent his first moments of an abbreviated eight-hour stay focused on a public statement about turmoil in distant Ukraine -- a country with which U.S. annual trade doesn't equal even two days' worth of business with Mexico.

In one sign of consensus, Mr. Obama, Canadian Prime Minister Stephen Harper and Mexican President Enrique Pena Nieto agreed to harmonize a "trusted traveler" program, synchronizing a handful of different programs to speed border crossings around the hemisphere.

But the overall atmosphere in Mexico's fifth-largest city was cool, a sign of the strains that separate the leaders and have slowed momentum to modernize the North American Free Trade Agreement, or NAFTA, which celebrates its 20th anniversary this year.

A bilateral spat between Mexico and Canada, and anger in Ottawa over U.S. indecision on whether to build the Keystone XL pipeline from western Canada to the U.S. Gulf Coast did not appear to get resolved at the summit. A White House briefer said Mr. Harper and Mr. Obama discussed Keystone, but in private didn't say anything they hadn't already said publicly.

NAFTA, the world's largest trade bloc, comprises 470 million people from Canada's Yukon to the Yucatan Peninsula in Mexico. The bloc represents nearly 30 percent of global economic output. But leaders face pressures from special interests in each country, and Mr. Obama, speaking in the late afternoon next to Mr. Harper and Mr. Pena Nieto, said the leaders need help from voters to "deepen what are already incredible ties between our three nations."

"We have every incentive to make this work," Mr. Obama said. But he cautioned that, "you just can't leave it to politicians alone."

Issues surrounding NAFTA dwarf the economic impact of other global issues facing any of the three nations, yet more dramatic world events tend to overshadow efforts to strengthen the North American alliance. More than 8 million U.S. jobs depend on trade with Canada, and another 6 million on trade with Mexico. Trade among the three nations tops $1 trillion a year.

As dramatic as televised images of turmoil from Ukraine are, U.S. bilateral trade with that nation came to a mere $2.9 billion in 2013, the equivalent to less than two days' trade between Mexico and the United States.

Experts say the NAFTA alliance has drifted with a lack of strategic vision. "Twenty years later, it's hard for us to talk to each other and reach agreement," said Carleton University political scientist Laura Macdonald in Ottawa, who specializes in the region.

Rather than re-debate NAFTA, Mr. Obama pressed Mr. Pena Nieto and Mr. Harper to speak with one voice as they negotiate the Trans-Pacific Partnership, a proposed trade accord that includes 12 countries around the Pacific Rim.

Minutes before he disembarked from Air Force One, Mr. Obama signed a new executive order to reduce bureaucratic barriers and speed up imports and exports, a move intended to help businesses strengthen supply chains across borders. The move signaled that Mr. Obama would not cede to opposition, much of it within his own Democratic Party, to his trade agenda.

Yet multiple tensions surrounded the summit, and Ms. Macdonald said it unfolded "at the worst moment in the trilateral relationship" since the Sept. 11, 2001, terror attacks in the United States triggered concerns over border security.

Mexico is irked at Canada over visa requirements that have seen its tourism to Canada drop by about 50 percent since 2008, to a level of about 130,000 Mexicans per year. In contrast, 1.9 million Canadians visit Mexico annually. Mexican diplomats say Canada requires 10 times more information from Mexican citizens to grant a visa than the U.S. government requires.

Mr. Harper and Mr. Pena Nieto oversaw the signing Tuesday of an expanded air transport accord that will allow more direct flights between Canada and Mexico, but Mr. Harper made no public mention of whether Canada would ease visa requirements.

Mr. Harper is irritated with Mr. Obama for U.S. delays on deciding whether to proceed with the $5.4 billion Keystone XL pipeline designed to carry oil made from tar sands in the province of Alberta through the Midwest to refineries along the Gulf Coast.



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