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Prime Minister Stephen Harper, Mexico's President Felipe Calderon and U.S. President Barack Obama arrive for the official photo at the North American Leaders' Summit in Guadalajara Aug.10, 2009.

CHRIS WATTIE/REUTERS

The paradox of North America's skewed development is that, although Canada and Mexico make extraordinarily large contributions to America's economic strength, homeland security and international effectiveness, they have virtually no influence in Washington's corridors of power.

Starting with the economic realm, Canada and Mexico are the United States' largest external sources of material strength.

Although the GDP of Mexico and Canada taken together would only constitute the world's fifth-largest economy, their intense, proximity-driven economic ties make them America's largest trading and investment partners. This relationship boosts the U.S. economy's productivity and raises its GDP by some 2 to 3 per cent, supplementing the average American's income by a very considerable $1,000 every year. Economic relations with Canada alone support eight million American jobs.

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These bilateral linkages literally fuel the U.S. economy. Together, Canada and Mexico provide a third of U.S. oil imports and almost all of its natural gas imports. Low-wage labour from Mexico has become indispensable in many American service industries and supplies a third of its agricultural work force.

When it comes to security, Canada's and Mexico's land masses are a potential menace, since they could be used by terrorist organizations to infiltrate the United States. But this proximity also turns the Canadian and Mexican governments into Washington's prime associates in its war on terrorism, as they are in its war on drugs. Specifically, Ottawa has focused on financing joint border-toughening measures, harmonizing its visa policies, supplying the Department of Homeland Security with data about its citizens' air-travel movements, and integrating its counterintelligence capacities with Washington's.

In foreign policy matters, Canada and Mexico have occasionally proved to be an essential support for achieving U.S. aims.

Without Canada's and Mexico's participation in developing the precedent-setting North American free-trade agreement, the U.S. would not have managed to pull off its remarkable feat 16 years ago of transforming the limited General Agreement on Tariffs and Trade into the muscular World Trade Organization that reinforced its corporations' power overseas.

There are two reasons why America's material and security dependence on its two next-door neighbours does not translate into their political influence in Washington.

First, the U.S. has shaped the governance structures within which continental policy processes play out ‒ including disempowering any institutions that could give the continental periphery a voice in affecting American policies. Institutionalizing its two bilateral relationships with the Canada-U.S. free-trade agreement and NAFTA was a masterstroke that established rules that, for instance, constrain Canada from turning off its oil taps as a bargaining lever.

The second reason has to do with the historically rooted deference of our business and political elites who will make almost any concession in order to get access to the U.S. market. Their resulting limp bargaining culture causes Ottawa's negotiators to back off from confrontations, then claim the resulting compromises as victories – as we saw with the Harper government's capitulation in the softwood lumber agreement of 2006 and last year's pathetic government procurement deal.

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The impending report of the bilateral Beyond the Border Working Group in which the Canadian government is committing another $1-billion to harmonize its immigration and border operations still further with American practices in the hope that Homeland Security will modify some of its border controls confirms North America's enduring puzzle.

While Canada and Mexico are essential to American prosperity and security, they remain impotent in Washington, unable to prevent it from pursuing its anti-terrorism-fixated border thickening that is strangling the commercial flows that are the lifeblood of North America's economic position in the world.

Stephen Clarkson is a professor of political economy at the University of Toronto. His latest book, with Yale University's Matto Mildenberger, is Dependent America? How Canada and Mexico Construct U.S. Power .

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