The 20th anniversary of NAFTA's implementation on Jan. 1 has revived some of the perennial arguments that have surrounded the bloc since its inception. The general consensus has been that the trade deal was a mixed bag, a generally positive yet disappointing economic experiment.
That consensus may not be wrong. The history of the North American Free Trade Agreement as an institution has been one of piecemeal, often reluctant, integration of three countries with a long tradition of protectionism and fierce defense of economic national sovereignty. While NAFTA was a boon for certain sectors of the economy, particularly the U.S. agriculture industry, the net effect of the world's second-largest trade bloc remains somewhat unknown.
The debate over NAFTA can, however, obscure some fundamental realities about the future of North America and its three major countries. While the formation of the trading bloc represented a remarkable political achievement, NAFTA has remained a facilitating institution whose success has mirrored the ebb and flow in the slow but inevitable economic integration of the United States, Mexico and Canada. What lies ahead for the three countries will not so much be the result of NAFTA as NAFTA will be the result of the strong geopolitical imperative binding the three together. Washington, Mexico City and Ottawa are tied into major global and regional trends that Stratfor has been following over the years, trends that continue to point to a comparatively bright future for the North American triad.
Core North America
North America proper extends from the Arctic reaches of Canada to the Darien Gap, a thin, swampy strip of land linking Panama with South America. But given the idiosyncratic and fundamentally different geopolitical realities of the Central American isthmus -- encompassing Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama -- a simpler and more appropriate definition of North America would be the continental landmass from the Arctic to the southern Yucatan Peninsula in Mexico.
There is little question that North America, by this definition, has been blessed by geography. There are only three countries in an area more than twice the size of Europe. Each of them enjoys a coastline on both of the globe's major oceans, providing critical buffers and serving as jumping-off points for domestic and international trade. Natural resources are abundant, as are overall arable lands, all facilitated by naturally integrated river transport networks at the heart of the continent.
The overwhelming beneficiary of these geographic advantages has, of course, been the United States, but its meteoric rise as a global hegemon was also in great part due to the fact that neither of its neighbors has posed a threat. The wealth of the United States, combined with the physical barriers of the three northern Mexican deserts and to a lesser degree the Great Lakes, ensured that America's military power could preserve the borders dividing the three countries -- yet those boundaries are not so insurmountable as to hinder trade. The definition of those borders with Canada and Mexico during the 19th century allowed Washington to concentrate on dominating the world's oceans, eventually giving it control over most of the world's trade and the ability to deploy its power to any corner of the globe.
Canada was not always a friendly neighbor. During the War of 1812, Canada was the launching pad for a British military campaign that resulted in, among other things, the burning of the White House. This stance changed definitively in the aftermath of World War II, when the British Empire -- Canada's previous patron -- began its decline in earnest and Ottawa had to become more integrated with and dependent on the booming U.S. economy. By the time the United States and Canada signed a bilateral free trade agreement in 1988, the two countries had been each other's largest trade partners for decades. Today, China is Canada's second-largest export destination, and yet China takes just 6 percent of the goods that the United States does.
Mexico's role and history in North America are a bit more complex. The country controlled the largest territory and had been the dominant economic and military power on the continent for centuries under the aegis of the Spanish Empire. But the Mexican War of Independence fragmented the already-weakening country and shifted the balance of power in favor of the United States. With the United States having received Florida from Spain earlier in the 19th century, the Texas War of Independence and the Mexican-American War allowed Washington to gain the vast swath of land between Louisiana and the Pacific Ocean -- including the strategic ports of California and the approach to the Mississippi River. With the border settled (figuratively and literally), the two countries finally began economic cooperation in earnest.
With its large pool of cheap labor and its geographic proximity to the United States, Mexico became a vital economic variable for Washington. Setbacks did occur over time, in particular Mexico's expropriation and nationalization of its oil industry in 1938 and the immigrant repatriation crisis of the 1930s. But geography and the economic complementarity between the world's largest consumer market and its neighboring low-end manufacturing