This paper was published as a Faculty Working Paper (no. 219B) for the Lubin School of Business, Center for Applied Research, May 2006.

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During the past year, relations among the NAFTA partners took on an increasingly two-tier structure. More visible were a widening array of disagreements over issues including BMD, Iraq, US demands on passports, the Senate’s vote to keep the border shut to Canadian cattle, alleged American gun trafficking and, above all, Washington’s efforts to evade the NAFTA ruling on softwood lumber. Yet, despite this mix of genuine grievances and political posturing, we saw substantial movement toward a more efficient North American economic system. Reports from the Security and Prosperity Partnership Working Groups set up after the Bush-Fox-Martin meeting in Waco, Texas, illustrated a wide array of activities under the politico-journalistic radar. Perhaps more important are the myriad of business- and community-driven initiatives underway to expand and improve cross-border links. How much of all of this will actually lead to concrete results is unclear. But several conclusions are evident. One is that this movement is driven by deepening interdependence. The second is that the current two-tier process in which national leaders kick each other in the shins while businesses and bureaucrats in federal, state, and municipal governments and community groups squirrel away to repair problems in the North American system will not work. Third is that "integration-by-stealth" is also unacceptable. The time has come to examine carefully what is happening in North America, to explore what our interests are in this emerging continental system, and to open a dialogue about different, even competing, visions of North America. The dialogue should involve perspectives from different regions, different economic and social sectors, and those who oppose as well as support integration. The process must get outside of the beltways—it must give voice to community and economic leaders who are most deeply involved in this new system.