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For NAFTA, half a happy birthday

Last fall, while teaching at Hong Kong Baptist University, I had a small encounter that spoke to a larger story of changes brewing in global economics and politics.

I was on the jitney bus carrying students and staff from the campus to the nearby subway station and struck up a conversation with the only other person not chatting with pals in Chinese. He was a native of Mazatlan, Mexico, spoke flawless English and was soon to obtain his bachelor’s business degree from a university in San Antonio, Texas. He had studied in Europe and mainland China and was in Hong Kong to further improve his Chinese language skills. He said Asia and China were Mexico’s future. And I responded, “You are the future of the world.”

On a much grander stage, another bit of that story will play out when President Barack Obama meets on Wednesday with his Mexican and Canadian counter parts in Toluca, Mexico. The rapidly growing metropolis is only 40 miles west of the federal capital and 8,000 from China. But, in the words of one analyst, China will be “the elephant in the room” at the formally labeled North American Leaders Summit, more popularly known as The Three Amigos.

Officially, Mr. Obama and President Enrique Pena Nieto of Mexico and Prime Minister Stephen Harper of Canada will be observing the 20th anniversary of the North American Free Trade Agreement coming into force. (NAFTA was negotiated by President George H.W. Bush and pushed narrowly through Congress by President Clinton.)

But it is a sign of how elements of trade-driven international politics are zigging and zagging in new directions and alliances that the three partners are looking as much to the Pacific as to each other for future commercial and diplomatic opportunities. All three nations are part of the 12-nation Trans Pacific Partnership arrangement still in negotiation and now possibly stalemated by the U.S. Congress. All three are eagerly expanding trade and business ties with China and Asia, and Pena Nieto is just back from a summit in Colombia that put a final seal on the newly created Pacific Alliance of four Latin American nations facing that ocean and now by far the most economically dynamic in the region.

Perhaps it is not a surprise that the three NAFTA leaders have wandering eyes. At age 20, the pact is generating more than a trillion dollars of annual trade among them but is still a domestic lightening rod, especially in the United States and Mexico. Mr. Obama and Hillary Clinton, in the 2008 Democratic primaries, promised to revise NAFTA, but changed their minds once in office. But organized labor and its Democratic party allies still assert it has cost at least 700,000 U.S. jobs. The U.S. Chamber of Commerce retorts that NAFTA “supports” 14 million American jobs. Mexicans complain it has decimated their agriculture industry. Canadian leaders extol the global supply chain that NAFTA has helped spawn from the Arctic to the Gulf of Mexico, but it is still easier for a citizen of the Czech Republic to enter Canada visa-free than for a Mexican to gain entry after a much shorter journey north.

Indeed, as a group of analysts assembled on a recent conference call organized by the Mexico Institute of Washington’s Woodrow Wilson Center, all agreed, NAFTA always has been more like two bilateral arrangements (Canada-U.S./ Mexico-U.S.) than a full-fledged three-way partnership.

And those different perspectives and approaches will be visible at the one-day meeting in Toluca. As Duncan Wood, director of the Mexico Institute, pointed out, the meeting takes place against U.S.-Mexican tensions over NSA spying on Mexican leaders and friction between the U.S. and Canada over the Keystone pipeline.

But Wood and other analysts said the summit will primarily be the setting for Pena Nieto to showcase a year of major economic and social reform legislation, enacted with multi-party support in such sharp contrast to Washington’s hyper-partisanship. The most surprising success was winning legislative approval for a major energy reform plan that will allow foreign participation in Mexico’s oil industry, a flashpoint of Mexican nationalism since U.S. oil companies were ejected in 1938.

“It will be a showcase for Pena Nieto to highlight Mexico’s re-emergence as a strong regional partner and that Mexico is seeking due respect from the others,” Wood said.

But another analyst, David Shirk, an associate professor at the University of San Diego, said the Pena Nieto administration still faces the most important issue of establishing the rule of law in the face of continued drug gang violence though the death rate has officially fallen. And in such states as Michoacan, the federal government is trying to figure out how to deal with vigilante groups that have formed to fight the cartels, even though there is evidence of overlapping membership among the two.

“Drug trafficking and new violence in Mexico,” Shirk said, “have dispelled the illusions of the Pena Nieto government that economic reforms are the key issue.”

Shirk and Wood did agree that Pena Nieto may be forced, or choose, to resume the intimate cooperation between U.S. and Mexican security agencies that had developed during the drug war launched by Pena Nieto’s predecessor Felipe Calderon. Traditionally, they said, Pena Nieto’s PRI party was always more suspicious of close ties with the U.S., which has been reflected in the recent cooling off of some security ties.

It was Shirk who used the phrase “elephant in the room” to describe how China will be part of the unspoken agenda of the summit. Wood added that the Pacific Rim is becoming an important arena of Mexican foreign policy.

“It will come front and center quickly,” Wood said.

Michael D. Mosettig, PBS NewsHour foreign affairs and defense editor emeritus, watches wonks push policy in Washington’s multitude of think tanks. From time to time, he writes dispatches on what those scholars and wannabe secretaries of state have in mind for Europe, Asia and Latin America.

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