CASE 183 - The North American Union - NAU

The North American Union (NAU) is a theoretical economic union, in some instances also a political union, of Canada, Mexico, and the United States. The concept is loosely based on the European Union, occasionally including a common currency called the Amero or the North American Dollar. While the idea for some form of union has been discussed or proposed in academic, business and political circles for many decades, government officials from all three nations say there are no plans to create such a union and no agreement to do so has been signed.



Since at least the mid-18th century, numerous concepts for a union among Canada, Mexico and the United States, some including Caribbean, Central American and South American countries, have been proposed, such as the North American Technate. In 2003, amid a push for greater integration and concerns in the fallout of the September 11 attacks about the impact of heightened security on trade relations, an effort organized by the Canadian Council of Chief Executives, U.S. Council on Foreign Relations, and the Mexican Council on Foreign Relations called the Independent Task Force on North America was initiated. Several weeks before a meeting of North American leaders on March 23, 2005 the Task Force issued a press release and a statement from the Task Force's chairmen calling for deeper integration of NAFTA highway to form a North American Economic and Security Community by 2010. The Security and Prosperity Partnership of North America (SPP) was formed at the meeting of North American leaders. It was described by the leaders of Canada, Mexico and the United States as a dialogue to provide greater cooperation on security and economic issues. In response to later concerns, a section was put up on the initiative's site clarifying the SPP was not a legal agreement, that the initiative "does not seek to rewrite or renegotiate NAFTA", and that the partnership itself "creates no NAFTA-plus legal status."A number of academics and government officials at the time viewed the SPP as moving North America towards greater integration. The Task Force published a report in May 2005 which praised the SPP initiative and pushed for greater economic integration by 2010.They repeated their call for the "establishment by 2010 of a North American economic and security community, the boundaries of which would be defined by a common external tariff and an outer security perimeter." In the report the Task Force said that a North American Community, which would be similar to the European Community which preceded the EU, should not rely on "grand schemes of confederation or union" and did not suggest a supranational government or a common currency. The Task Force’s recommendations included developing a North American customs union, common market, investment fund, energy strategy, set of regulatory standards, security perimeter, border pass, and advisory council, among other common goals. Former Mexican president Vicente Fox is the only leader involved in the SPP process who has expressed a desire for a North American Union-style body. He noted the success countries like Ireland and Spain had in modernizing their economies and bringing higher standards of living for their citizens by joining what is now the European Union and expressed the hope that Mexico could have a similar experience in a trade body of comparable scope in North America. Fox has, however, expressed frustration with the lack of progress on measures such as immigration reform, which proved to be contentious within the United States.



NAFTA superhighway

Interstate 29 and Interstate 35.

The Trans-Texas Corridor was first proposed by Texas Governor Rick Perry in 2002. It consists of a 1,200 foot (366 m) wide highway that also carries utilities such as electricity, petroleum, and water, as well as railway track and fiber-optic cables.[8] In July 2007, U.S. Representative and candidate for the Republican nomination in the 2008 presidential election Duncan Hunter successfully offered an amendment to H.R. 3074, the Department of Transportation Appropriations Act, 2008, prohibiting the use of federal funds for U.S. Department of Transportation participation in the activities of the Security and Prosperity Partnership of North America (SPP). Hunter stated that:
Unfortunately, very little is known about the NAFTA Super Highway. This amendment will provide Congress the opportunity to exercise oversight of the highway, which remains a subject of question and uncertainty, and ensure that our safety and security will not be compromised in order to promote the business interests of our neighbors. Fellow Republican Congressman and presidential candidate Ron Paul brought the issue to mainstream prominence during the December 2007 CNN-YouTube GOP debate, where he rejected the concept and also called it "the NAFTA Superhighway" and, like Hunter, framed it within "the ultimate goal" of creating a North American Union. The Ministry of Transportation for the province of Alberta displays a diagram on their website that labels I-29 and I-35 as "NAFTA Trade Corridors"



The amero

The "amero" is the appellation given to what would be the North American Union's counterpart to the euro. It was first proposed in 1999 by Canadian economist Herbert G. Grubel. A senior fellow of the Fraser Institute think-tank, he published a book entitled The Case for the Amero in September 1999, the year that the euro became a virtual currency. Robert Pastor, vice-chairman of the Independent Task Force on North America, supported Grubel's conclusions in his 2001 book Toward a North American Community, stating that: "In the long term, the amero is in the best interests of all three countries."Another Canadian think-tank, the conservative C.D. Howe Institute, advocates the creation of a shared currency between Canada and the United States. Although then-Mexican President Vicente Fox had expressed support for the idea, when Grubel brought up the idea to American officials, they said they were not interested, citing lack of benefits for the U.S. The Director of International Economics at the Council on Foreign Relations, Benn Steil, has called monetary nationalism and globalization a dangerous combination. Furthermore, he's recommended that, in order to safely globalize, the world must "abandon unwanted currencies, replacing them with dollars, euros, and multinational currencies as yet unborn." Lending support for the end of national currencies, an economist at the Federal Reserve Bank of New York, Eric van Wincoop, coauthored a journal article that argued the economical prudence of a common currency between nations, "The use of different moneys across borders can form a barrier as there are costs in exchanging currencies in spot and forward markets and traders face uncertainty about currency movements that cannot always be hedged. A common currency also leads to greater transparency of price differentials." Cross border trade costs are likened to that of a tariff roughly equivalent to 170%. Forty-four percent of that "tariff" is attributed to "border related trade barriers" which breaks down as follows, "a 8% policy barrier, a 7% language barrier, a 14% currency barrier (from the use of different currencies), a 6% information cost barrier, and a 3% security barrier."