The Mexican peso crisis struck in late December 1994, coinciding with a new Mexican administration and the end of the first year of the North American Free Trade Agreement (NAFTA). The crisis poignantly highlighted the success and the inadequacy of the treaty -- success in the expansion of trade and capital flows, inadequacy in institutional capacity. The Canadian, Mexican, and US governments defined the agreement so narrowly that they failed to devise a mechanism that could monitor, anticipate, plan, or even respond to such a serious problem. The new president of Mexico, Vincente Fox Quesada, has boldly proposed transforming the free trade area into a common market like Europe's. This has evoked lukewarm responses from the Bush and Chretien administrations, which have not yet developed ways to cope with the new problems stemming from accelerated social and economic integration or to take advantage of North America's opportunities.In this visionary study, Robert A. Pastor seizes Fox's idea and maps out the paths toward making it a reality. He analyzes NAFTA's successes and shortcomings, extracts lessons from the European Union's 40 years of reducing disparities between rich and poor countries, and proposes ways that NAFTA can adapt and incorporate those lessons. The centerpiece of the book is a detailed proposal for new institutions and "North American policies, " including plans for infrastructure and transportation, immigration and customs, a unified currency, and projects aimed to lift the poorer regions. The author addresses issues of sovereignty and national interest and concludes with a look ahead toward a broader Free Trade Area of the Americas.This book is the first topropose a detailed approach to a North American Community -- different from the European Common Market but drawing lessons from its experience. It will be of considerable interest to policymakers in the region as well as researchers and students of international political economy, world trade, and foreign affairs.
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