NAFTA partners, Canada and Mexico, can’t agree

Canada and Mexico share the fortune, or misfortune, of a border with the world’s most powerful country, which looks down on both of them. For 20 years, as privileged trading partners of the United States, they have had the opportunity to influence it by creating a shared vision for North America. Instead the two have bickered like rivals in a tawdry menage a trois.

Canada plays the part of the wronged partner. It has jealously sought to protect its special relationship with its neighbor, fearing that Mexico may steal its thunder...

That could be shrugged off as irrelevant in a region where the only bond that matters is with the United States. There are economic costs for North America as a whole, however, including the United States, because more could be done to link supply chains and energy markets trilaterally rather than bilaterally.

Canada was a reluctant participant in the negotiations for the North American Free Trade Agreement, which was launched in 1994. It agreed to join largely to safeguard the advantages it had won from a prior free-trade deal with the United States. After the terrorist attacks on Sept. 11, 2001, efforts to strengthen NAFTA through trilateral negotiations lost momentum. Instead the United States, Canada and Mexico have sought to tackle border and security issues bilaterally.

Relations between Canada and Mexico have become more brittle this year, as the leaders of both countries have pointedly snubbed each other.

Visas are the cause of much of the ill will. President Enrique Pena Nieto of Mexico canceled a visit to Canada in June, after the government of Prime Minister Stephen Harper refused to lift a “temporary” visa requirement imposed in 2009 following a sharp rise in Mexican asylum requests. Mexico feels demeaned: It used to enjoy visa-free status in Canada, which is rare for a Latin American country...

Pena had hoped that a meeting with Harper, held earlier this year on the sidelines of the “three amigos” summit with President Barack Obama, would lead to a breakthrough on the issue. Instead Harper publicly refused to budge, saying that visas were a sovereign matter and not open to negotiation.

Mexican experts say that the visa issue represents more than simply wounded pride. They acknowledge that Harper's government originally responded to a rise in spurious asylum claims at a time of soaring crime in Mexico. The situation has improved since then, however, and they are irked by the Canadians' unwillingness to discuss the issue, even though business and tourism between Canada and Mexico have been affected.

Business groups in both countries are eager to see warmer ties. Although trade between the two countries under NAFTA has grown almost sevenfold, most of it is linked to the United States, and two-way investment is modest. There is potential to develop supply-chain linkages of the sort that now crisscross the border between Mexico, the United States and Canada, but only a few Canadian companies — notably Bombardier, the aerospace and rail firm — have taken the plunge.

The most promising area for further integration of the three economies is energy, which could further strengthen North America's competitiveness as a manufacturing hub. Pena's now-scrapped visit to Canada's oil heartland, Calgary, had been intended to give him a chance to promote landmark reforms allowing private investment in Mexico's oil and gas industries for the first time in more than 75 years.

A recent decision to expedite permits for seasoned travelers from Mexico to Canada was seen as a mildly positive step.

Mexican officials have little optimism that Harper will scrap the requirement altogether, however...

This has been excerpted from the 14 August 2014 article by The Chronicle Herald.