Originally created 01/19/99

NAFTA currency unlikely

TORONTO -- The launch of a common currency in 11 European nations is fueling debate in Canada and Mexico over whether North America's three trading partners should adopt a comparable monetary union. But don't expect a NAFTA-style euro any time soon.

Opinion among experts is sharply divided, and Canadian and Mexican leaders don't appear eager for swift action on what would be a politically contentious project.

Even if they were eager, Washington might not be. U.S. Commerce Secretary William Daley said Thursday a North American monetary union is a "very long-term" prospect -- one that might warrant serious discussion "a hundred years from now."

"We expect the euro to be a success," Mr. Daley said of the European Union's new currency. "That will not drive us to some other integration, currency-wise, with the countries that are our neighbors."

But Canada's ambassador to Washington, Raymond Chretien, echoed the views of many Canadian economists when he said the possibility of a single currency "would have to be looked at" if the euro proves a long-term success.

A common currency could provide welcome stability for Canadian and Mexican businesses, which have been buffeted by sharp plunges in the values of their national currencies against the U.S. dollar.

But monetary union also would mean at least partial surrender of control over budget policies, with decision-making almost certainly dominated by the United States.


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