THE NORTH AMERICAN FREE TRADE AGREEMENT

A farranging free trade agreement was negotiated between Canada and the United States in the mid to late1980s, and the CanadaUnited States Free Trade Agreement became effective on 1 January 1989.1 Early in 1990, the governments of both Mexico and the United States began to speak openly and favorably about the idea of free trade between the two countries.2 Almost immediately, the Canadian government indicated that any free trade agreement between Mexico and the United States would affect Canada and the CanadaUnited States Free Trade Agreement and thus Canada should participate in any free trade discussions between Mexico and the United States.3 Initially, the Bush Administration in the United States was publicly cool to the Canadian suggestion, indicating that it preferred bilateral agreements with its trading partners.4 In Canada, however, the CanadaUnited States Free Trade Agreement had never enjoyed overwhelming public support, and American insistence on freezing Canada out of free trade negotiations with Mexico threatened to create significant additional problems for both the beleaguered

Mulrooney Government and for the Free Trade Agreement, which is

1R. Cardinali, "Trade With Canada Under the FTA," Business, February 1989, 4952.

2L. Fenley, "A Vision of Interdependence," Business Mexico, March 1990, 7071.

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ves a North American free trade agreement as primarily a defensive maneuver, although with respect to both finance and some hightech industries it does see opportunities for Canadian firms. Canada's major goal in relation to NAFTA is to preclude the development of a defacto American economic dictatorship in the Western Hemisphere through the negotiation by the United States of multiple bilateral free trade agreements. Through the NAFTA, Mexico is seeking massive infusions of foreign investment, as a means of dealing effectively with the country's enormous international debt.11 Mexico's current economic environment cannot be considered outside of the  10Bill Blaikie, "The Canadian Clearances," Canadian Forum, May 1992, 23. 11"AmCham in Washington Talking Free Trade," Business Mexico, September 1990, 7071. framework of the country's enormous external debt. This debt stands at US$108 billion, on which principal and interest payments of US$14 billion per year are scheduled. The aggregate numbers of the external debt are so large, however, that it is at times difficult to fully appreciate their meaning. Exportimport trade accounts for more than onequarter of Mexico' gross national product. Mexico is thus general
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