Twenty Years After NAFTA, Obama Must Lead In the Toluca Two Step

Mexico's President Enrique Peña Nieto hosts his first North American Leaders Summit in Toluca this week. Twenty years after NAFTA took effect, the United States, Canada and Mexico share more than $1 trillion in trade along tightly integrated supply chains fueled by a dynamic sharing of ideas, research and innovation. Supporting the regional economy are more than 320 million legal border crossings each year.

Governing these cross border flows is complicated under NAFTA. Without delegating authority to North American institutions, NAFTA left the three federal governments to cooperate and coordinate regulation and inspection to make it work.

Shortly after NAFTA's tenth anniversary, George W, Bush inaugurated the North American Leaders Summits in 2005 at his ranch in Texas. There, the leaders agreed to a Security and Prosperity Partnership (SPP) comprised of 20 working groups made up of officials from the three countries to address these governance challenges. It was an unwieldy process that sparked fears of secret undertakings and in the end made limited progress.

President Barack Obama attended his first leaders' summit in 2009 in Guadalajara. He and his counterparts scrapped the SPP in favor of a more limited to-do list of ten areas of cooperation. This soon proved insufficient, and the United States in 2010 and 2011 established parallel U.S.-Canadian and U.S.-Mexican working groups on border, regulatory and clean energy cooperation. Reviewing the progress of these groups, and devising ways to get them to do more, will be on the agenda in Toluca.

Condoleezza Rice famously dubbed these the "condominium association issues" of North America, adroitly capturing their importance and tedium. Dry as these matters may be, Obama will prefer discussing these initiatives to three other topics U.S. neighbors will surely raise: immigration reform, the Keystone pipeline, and trade promotion authority.

Peña Nieto is as concerned about the fate of Obama's immigration reform plans and what they mean for Mexican citizens in the United States. As the Wall Street Journal has reported, House Republicans have cooled on moving the legislation this year citing the president's partisan posturing on the issue to tar Republicans in the eyes of Hispanic voters.

Canadian Prime Minister Stephen Harper has called for a decision - yes or no - on the Keystone XL pipeline. Five years after the project was launched, President Obama continues to delay his decision on a presidential permit for the segment of the pipeline that crosses the border. The White House says that it is working toward making a final decision, but it is also milking the issue with environmentalists to help Democrats in 2014 and beyond.

Obama's fellow Democrats in Congress are the source of concern for Canada and Mexico regarding trade promotion authority. Senate Majority Leader Harry Reid poured cold water on the president's State of the Union request for congressional authority to negotiate the Trans Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP). Canada and Mexico are participants in the TPP, and have already negotiated separate deals with the European Union.

Peña Nieto and Harper know that access to key European and Asian markets is key for export growth - preparing for this competition is the reason behind the efforts to improve border, regulatory and clean energy cooperation in North America now. If Congress won't grant Obama trade promotion authority, Canada and Mexico will be left to seek access to global markets independently, and making concessions in North American cooperation talks will be a low priority for Ottawa and Mexico City.

At Toluca, the leaders will laud positive steps toward North American prosperity: solid growth in regional trade and investment, improving economic performance in all three countries, and promising advances in cooperation by the three federal governments.

But U.S. partisan politics will leave Obama standing still - or even moving backward - on issues that matter to Canada and Mexico. Call it the Toluca two-step: a dance in which pairs take incremental moves as they circle the dance floor.