Prospects for an Expanded NAFTA and
the Creation of a NAFTA-EU Trade and
Investment “Grand Bargain”
Earl H. Fry
Prof. of Political Science and Endowed Prof. of Canadian Studies
Brigham Young University
University College London
June 8, 2015
Introduction
North American Free Trade Agreement (NAFTA)
Canada-EU Comprehensive Economic and Trade Agreement (CETA)
Transatlantic Trade and Investment Partnership (TTIP)
A “Grand Bargain” between NAFTA and EU?
Trans-Pacific Partnership (TPP)
Notion of “transatlantic drift” and a “global shift” toward the Asian-Pacific region
By mid-century, Asia may account for over ½ of world’s population, GDP, trade, and direct
investment—will the “rules of the game” in international relations change dramatically because of
this shift?
CETA
Euro Commission—”most far-reaching bilateral trade agreement negotiated to
date”
Stephen Harper—”the biggest deal our country has ever made.”
1,600 page document which took 5 years to negotiate
Will provide Canada with preferential access to more than ½ of world’s economy,
including its access to NAFTA
Includes liberalized trade and investment linkages, a controversial investor-state
dispute settlement (ISDS) provision, easing of government procurement rules at all
levels (Canada has a federal system), some easing in agricultural trade, and some
harmonization of rules, standards, and procedures.
Accord must still be ratified by EU members
What is the TTIP?
Proposed Transatlantic Trade and Investment Partnership
◦ Launched negotiations July 2013 involving U.S. with 320 million people and European Union composed of 28
nations and 507 million people
◦ 9th round of negotiations between the EU Trade Commissioner Cecilia Malmström and U.S. Trade
Representative Michael Froman just concluded this week in New York City
◦ U.S. negotiations occurring at same time as ongoing talks on a Trans-Pacific Partnership ( TPP--U.S., Japan,
Malaysia, Singapore, Vietnam, Brunei, Australia, New Zealand, Canada, Mexico, Chile, and Peru)—Most
recent round held in Hawaii in March—TPP should pass before TTIP
Difficult Issues with TTIP
Is their sufficient “value added”?
Agricultural roadblocks, including GMOs
Investor protection--good for multinationals, not so much for small and medium-sized businesses and
the work force?
Is timing right for an EU which continues to face numerous internal issues, including very slow
economic growth and job creation, and major regional disparities?
Concern about transparency in negotiations and the democratic process
Rise in European populism and nationalism
Achieving consensus among all 28 nation-states within EU
Trade Promotion Authority (TPA) in U.S. Congress
The “Vision” of NAFTA
Solidifying North American trade and investment ties and harmonizing some rules and
regulations
Major step toward creation of Free Trade Area of the Americas (FTAA)
Help bring greater prosperity to Mexico which would curtail illegal migration northward
Movement away from branch plants and toward supply chains
Protect Canada and Mexico from bouts of U.S. protectionism
Illustrate that Canada and Mexico could take advantage of the huge U.S. marketplace without
being overwhelmed by U.S. political influence
WHAT IS NORTH AMERICA?
Arctic Ocean to isthmus of Panama
Central America and Caribbean part of North America
24.5 million sq. kilometers, third largest continent after Asia and Africa and covers 4.8% of
earth’s surface
Fourth largest continent in population after Asia, Africa, and Europe
NAFTA largest free trade area in world
Among largest economies in world—2013--US $16.8 trillion, Canada $1.8 trillion, Mexico $1.3
trillion (#1, 11, and 15 in world)
Differences between NAFTA and EU
Free trade agreement vs. common integrated market
NAFTA does promote investment cooperation and limited labor and environmental
cooperation
NAFTA limited movement of labor across national borders
NAFTA institutions are small with very limited power—EU Council of Ministers,
Commission, Parliament, Court of Justice
NAFTA no common currency—eurozone with 19 member-states, EU with 28 memberstates
EU is infinitely more complicated than NAFTA
EU promotes significant regional integration, NAFTA very limited economic
cooperation
Canada-U.S. Relations September 10, 2001
Canada-U.S. Free Trade Agreement in effect 1989
North American Free Trade Agreement (NAFTA) in effect 1994
Canada 30 million people and C$1.1 trillion GDP
US 285 million people and US$10.2 trillion GDP
Canadian dollar worth 64 US cents
2-way trade in goods in 2000 $410 billion
No passports needed to visit either country
“Thin border” and orange cones
World’s “longest undefended border”
Canada-U.S. Relations September 11, 2011
Security trumps trade—NAFTA less important
Canada 34 million people, US 312 million
Canadian GDP C$1.6 trillion, US GDP US$15 trillion
2-way trade US$526 billion in 2010, but Canadian exports to
United States C$50 billion lower in 2010 than 2001
US share of total Canadian exports down to 75% from 87% in 2000
Canadian dollar worth 1.02 US dollars
June 2010, US visits by car to Canada lowest since 1972 when US
had 100 million fewer people
Two-thirds of Americans cannot visit Canada (no passports)
More Canadians visit US annually than Americans who visit
Canada
6-fold increase in US agents along the Canadian border, plus
drone and helicopter surveillance
“Thickened border”--no orange cones, no undefended border,
negative impact on supply chains
Fry’s Recommendations for Improving NAFTA
End U.S. stereotypes of Canada as a peaceful Sleepy Hollow and Mexico as modern-day Tombstone
Disband DHS
Create world-class border infrastructure
Cut back on increase in Border Patrol agents
Push for nearly self-sufficient North American energy sector
Establish customs union between U.S. and Canada
Reject Fortress America mentality—Great Wall of China and Maginot Line along U.S. borders
Create TTIP between EU and NAFTA
The EU and NAFTA “Grand Bargain”
NAFTA is the world’s largest regional economy (475 million people and combined GDP of $19.9
trillion in 2013)
 The EU is the world’s second largest regional economy (507 million people and combined GDP of
$17.4 trillion in 2013)
NAFTA countries a potential energy superpower
A North Atlantic free-trade zone would help establish trade and investment rules globally and
hopefully strengthen WTO rules
A North Atlantic free-trade zone would also bolster security cooperation in an uncertain
international environment (Russia, the Middle East, parts of Africa, East Asia, and the Arctic polar
region)
If NAFTA and EU create a free-trade zone, there would be a combined market of almost 1 billion
people and an annual GDP of over $37 trillion