NAFTA pumps up U.S. tire trade. (North American Free Trade Agreement)(includes related article) (Cover Story)

After that 1992, exports resume healthy growth

It wasn't scheduled to take effect until the first of this year, but as far as tires were concerned the North American Free Trade Agreement (NAFTA) apparently got off to an early start in 1993.

Tires flowed relatively unhindered across both the Canadian and Mexican borders, helping to pump up what had been a rather flat U.S. tire export scene.

Shipments to Canada and Mexico rose by 2.5 million tires, while exports to the rest of the world actually declined by 600,000 tires when compared to 1992.

Without the passage of NAFTA, the U.S. would not have shipped a record 28 million units -- worth $1.1 billion -- abroad last year, say industry observers.

In fact, when President Clinton, Congress and a myriad of interest groups argued over the accord's provisions, the Mexican government issued an ultimatum to the U.S., threatening to make trade with Mexico increasingly difficult if NAFTA were rejected.

(Canada was not as concerned since it had already established a free trade pact with the U.S. in 1988.)

Following U.S. ratification of NAFTA, Mexico responded by loosening some of its non-tariff tire trade barriers. This helped the U.S. tire industry to rebound with a strong export growth rate of 7% for last year.

Export levels stalled at a meager 2% rise in 1992 after having increased 8% to 13% since the early 1980s.

At the same time NAFTA created opportunities to send more tires north and south, it permitted more Canadian- and Mexican-built tires to enter the U.S. market.

Canada and Mexico increased tire shipments to their free trade partner by 2.3 million units last year, while shipments from other countries remained flat.

In total, U.S. imports were up 5% to 49.7 million tires worth about $2.1 billion in 1993.

The easing of trade restrictions was not the only reason for the increase. For the second straight year, demand for tires grew faster than domestic production, despite the fact that a number of foreign-owned tiremakers were stepping up manufacturing efforts in their U.S.-based facilities.

More foreign-made tires …