NAFTA has transformed the economies and even the political environment of the three largest North American nations, but further collaboration is necessary to meet the challenge presented by the emerging Asian nations.

That's the opinion of Thomas D'Aquino, president and chief executive officer of the Canadian Council of Chief Executives. D'Aquino, who spoke at a Feb. 28 luncheon co-sponsored by the Canada Arizona Business Council and the Greater Tucson Economic Council, called on Southern Arizona business leaders to see improvements at both borders as the key to Arizona's future prosperity.

"I know I'm in a city that's just a few miles from the border with Mexico. So, I know you don't get up in the morning thinking about Canada," he said. However, with 85 percent of Canadian production going to the United States and 25 percent of what the United States makes going to Canada, what happens in Canada impacts the entire United States

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"More than 100,000 jobs in Arizona depend on trade with Canada," he said. "That's why, even in Arizona, we need to start thinking about what kind of a North America we want in five to 10 years."

D'Aquino, a lawyer and entrepreneur and author, speaks for 150 of Canada's leading companies on public police issues. As an advocate for the North America Free Trade Agreement, he said he has seen how it has transformed Canada's economy from almost permanent depression into a global leader.

"Our government deficits have become a $100 billion surplus, and we've been able to reduce taxes. We have the best growth rate and the best job creation numbers in (the Northern Hemisphere). It has been called the ‘Maple Leaf Miracle' and, because of that, you have in the north a partner who is one of the most dynamic and progressive in the world."

D'Aquino also points to the reforms in Mexico as proof that NAFTA is benefiting that nation, too. "It's inconceivable that Mexico would have democratized without free trade. With the growing income gap and poverty, things aren't what they could be, but there wouldn't be any progress without NAFTA."

However, to maintain that successful three-way relationship, he said all three nations have to begin rethinking their borders in light of both the heightened security concerns following the terrorist attacks of Sept. 11, 2001, and "the challenge that's coming from Asia."

D'Aquino said China has now displaced Mexico as the second-largest trading partner with the United States and it has displaced Japan as the second-most-important trading partner for Canada. "How do we deal with this?"

Trade barriers aren't the answer because 55 percent of all Chinese exports that come into the United States and Canada are being produced on behalf of American and Canadian companies. Instead, D'Aquino called for the NAFTA nations to become more competitive by thinking beyond a 19th century view of national borders.

"There are ongoing concerns about immigration and drug smuggling, so we don't want borders to disappear, but with 225 million people crossing the border each year, there's a need for bold concepts."

One of those would be a pre-clearance system tied to a biometric border card, "so the vast majority of trade can go through quickly." Another would be to work to harmonize common markets, such a beef, pharmaceuticals and transportation.

"Given our high degree of interdependence, it only makes sense to recognize how important it is for the United States, Canada and Mexico to build the highest degree of compatibility in everything."

Finally, he said it was necessary to recognize that none of the NAFTA nations is secure unless all of them are secure. "The United States and Canada already have a high level of interoperability and coordination between military and police. We need that same ability with Mexico."

For the long term, D'Aquino said, the best guarantee of further integration is regular meetings between governments. "There's going to be a meeting of the two Presidents and the Canadian prime minister in Texas on March 22. This is a good start. We need to keep doing this and finding other ways of working intensively with one another."

He said, "In North America, we have an abundance of human resources, a reliable supply of energy and one of the most dynamic and innovative economies there is."

D'Aquino said the opportunities to meet the challenge of Asia and overcome the threat of terrorism are readily available. "That's why I'm here asking that Arizonans understand why our countries should work more closely and efficiently together. Because, if we don't we'll all pay the price for it."

Philip S. Moore may be contacted at pmoore@azbiz.com or at (520) 295-4238.