Market and Policy Integration in Times of Crisis

For years following the creation of NAFTA, consistent progress was made in the direction of increased market integration (Doan et al.). Since 2002, however, there have been a number of serious setbacks indicating that basic NAFTA strategic and procedural issues need to be addressed by all three member countries. A primary example of these setbacks would be the impact of the 2002 US farm bill, which institutionalized unprecedented levels of US agricultural subsidies. This set off a new spiral of increased producer support with a dedicated effort from Mexico to match US levels of support among some of its staple crop producers. Another example of a NAFTA setback is the unrelated series of livestock and meat market closures, which might not have happened if proactive, decisive, and comprehensive trilateral NAFTA action had been taken following the fi rst Canadian case of Bovine Spongiform Encephalopathy (BSE) in 1993. When the United States placed a countervailing duty on swine imports from Canada for protectionist reasons in 2004, again the spirit of NAFTA was violated. While these various anti-free trade actions might be attributed to individual spurious events, there are two, alternative strategic and procedural explanations that are of great concern and require the serious attention of policy-makers: