Obama’s Mexican Challenge

When Barack Obama and Hillary Clinton pledged to Ohio Democrats last spring to renegotiate the North American Free Trade Agreement, they were immediately charged by the mainstream press with pandering to labor, thus re-igniting the simplistic “free-trade vs. protectionism” debate that has dominated the discussion of the U.S. role in the international economy for the last quarter-century. It was clearly an over reaction. After all, both candidates merely suggested strengthening the agreement’s labor and environmental protections, which even fierce champions of NAFTA now concede are inadequate. Changing them would have little effect on the rest of the agreement.

The pledge also produced a whiff of the cynicism that has characterized the politics of trade. Obama’s chief economist was alleged to have assured Canadian officials that his candidate, if elected, did not really intend to deliver. And soon after the election, Washington insiders were betting that Obama’s pro–Wall Street economic team would bury the idea—much the way they buried Bill Clinton’s 1992 campaign promise that he would not sign NAFTA unless it had labor and environmental protections with “teeth.” But in a time when unregulated markets—domestic and foreign—have been discredited, Obama may not be as easy to manipulate as was Clinton. At their meeting in January, Obama insisted to Mexican president Felipe Calderón that he wanted to “upgrade” NAFTA. So the ball is still in play.

However, the world has changed dramatically since the treaty came into effect in 1994, making the economic and political assumptions upon which it was based obsolete. What is needed now is not a revision of NAFTA but an entirely new approach to North American integration in light of the two most important changes.

One change is the stunning deterioration of Mexico’s social and political order. While U.S. foreign policy pundits fret over the possibility of “failed states” in the Middle East, central Asia, and Africa, they give short shrift to the slow descent toward chaos of a country of almost 110 million people on our border. Yet, in January 2009, Michael Hayden, the outgoing director of the CIA, told the Baltimore Sun that the two top national security priorities for the new president would be the nuclear threat from Iran and the political instability in Mexico. Earlier, a Pentagon report on future security threats concluded that the most worrisome danger was the prospect of the “rapid and sudden collapse” of Pakistan and Mexico.

Mexico is in the midst of a bloody and chaotic civil war. The war is both between the government and criminal bands of narco-traffickers and among the drug cartels themselves for control of territory, trade routes, and the state itself.

In the opinion of most Mexicans, the government is losing its war. Every day, the media report dozens of drug-related murders of narcos, of soldiers, of police offici...