AKRON — The tire and automotive industries must keep a close eye on an issue President Donald Trump has promised to revamp: The North American Free Trade Agreement (NAFTA).
Mr. Trump campaigned tirelessly in 2016 that he would eliminate NAFTA, an agreement signed in 1992 and enacted on Jan. 1, 1994, that created a trilateral trade bloc in North America involving the U.S., Canada and Mexico. At one time or another, the U.S. president has called the pact “defective,” “a horrible deal for the United States,” and “the worst trade deal, maybe ever, signed anywhere.”
So it should have come as no surprise that the administration formally notified Congress recently that it intends to renegotiate the pact. But the tone has softened, as the administration said it plans to improve and update the deal rather than end it altogether when negotiations begin in August.
Some in the industry consider that good news. A pro-NAFTA coalition — the North American Strategy for Competitiveness — wants the agreement “amended, not terminated.” The group, whose members include Bridgestone Americas, the Michigan Department of Transportation, the U.S.-Mexico Chamber of Commerce and the Association of Mexican Importers & Exporters, said renegotiation is the path to preserving jobs and preventing lost imports.
The Auto Care Association (ACA) and the Motor & Equipment Manufacturers Association (MEMA) support improving, not canceling the deal. In fact, an ACA official lauded the pact for establishing “rules that promote consistency and predictability for U.S. manufacturers, retailers, distributors and service providers.”
Others, including some Democrats and the United Steelworkers (USW) union, however, have strong concerns. USW President Leo W. Gerard believes NAFTA has negatively impacted workers in Canada and Mexico “as companies have relocated production and sourcing without allowing workers to properly share in the fruits of their labor.”
The issue is so hot that the Office of the U.S. Trade Representative (USTR) has received hundreds of requests to testify during hearings on how to renegotiate the pact. In addition, the USTR has garnered nearly 12,500 comments.
Tire manufacturers and dealers alike have a vested interest in the outcome. Any renegotiation will affect not only the plants and how they do business, but also the supply of tires available to dealers across North America.
When NAFTA was being debated in the early 1990s, third-party candidate Ross Perot characterized its future effects as a “giant sucking sound” of jobs being lost to Mexico. Whether his words were a foreshadowing, or hollow threat, remains a subject to debate.
That holds true today: Whether the path forward is paved with gold or land mines remains to be seen.
This editorial appeared in the July 3 print issue of Tire Business.