The School of Public Policy Report: NAFTA - Underutilized Trade opportunity with Mexico

CALGARY, June 10, 2015 /CNW/ - If Canada's interest in the North American Free Trade Agreement was in deepening regional trade integration between our economy and the U.S. and Mexico, then we could say it certainly succeeded — at least for about five years. By 1999, however, Canada's NAFTA trade had peaked, and it has since only declined as a share of its trade with the rest of the world: From 79 to 66 per cent.

While Canada was scouring the globe for promising new bilateral trade partnerships, we overlooked the transformation happening on our doorstep in Mexico: It has become an especially promising emerging market itself. It has a growing consumer base, with its middle class alone exceeding the entire population of Canada. Its recent economic growth rates have been 1.5 to two times higher than that of either Canada or the U.S. and its GDP is projected to quadruple by 2050, making it one of the world's five-largest economies.

A report released today by The School of Public Policy and author Laura Dawson, Director of the Canada Institute at the Woodrow Wilson Center, examines NAFTA 20 years later. The natural linkages between Canada and Mexico that were not strong during the formation of NAFTA has changed- global production technologies, emerging market competition and Mexico's own efforts at stabilization and reform have reshuffled the deck. According to Dawson "Mexico has also become an enthusiastic trader, eagerly pursuing new global trade opportunities while persistently calling for the expansion of North American trade linkages, including direct bilateral deals with Canada."

The two countries have a head start in pursuing deeper integration, thanks to the common trade rules and dispute-settlement procedures already established through their partnership in NAFTA, and a closer relationship with one another would help both countries form an effective counterbalance against the U.S. on matters of joint interest.

Canada's leadership is needed now to build a stronger relationship with Mexico to exert regional leverage and advance our role in the supply chain. The onus is on the federal government to focus on and exploit this opportunity.

The paper can be downloaded at http://www.policyschool.ucalgary.ca/?q=research

SOURCE The School of Public Policy - University of Calgary

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