The Agreement entered into force on 1 January 2003. In Brazil, the agreement entered into force on 15 January 2003. Under the new agreement, Brazil and Mexico will allow $1.56 billion in duty-free vehicle imports in the first year of the agreement. This amount will increase by 3% each year until the agreement expires in 2019, when countries will return to a free trade regime. “We need to look at our competition concerns before we enter into a free trade agreement with any nation,” Luiz Moan, president of the Brazilian Association of Automobile Manufacturers Anfavea, said before the new agreement was announced. Mexico and MERCOSUR sign Economic Complementation Agreement 54 MEXICO CITY (Reuters) – Mexico`s government said on Tuesday it had reached an agreement with Brazil on free trade in light vehicles, subject to a 40 percent regional content requirement and paving the way for more open trade between Latin America`s two largest economies. The agreement amending ACE 55 will enter into force on 19 March 2015, under which Mexico will retain privileged access to the Brazilian automotive market, as it is the only agreement of its kind in Brazil with a country that is not part of MERCOSUR. This agreement will ensure duty-free access for exports of light vehicles from Mexico to Brazil as follows: last March, the two countries signed a free trade agreement on the sale of light commercial vehicles and auto parts. The agreement, which will remove quotas and export and import fees, will also include heavy vehicles (trucks and buses) from 2022.

The legislation relating to the implementation of the agreement in each of the countries that have completed their procedures is as follows: the Brazilian automotive industry is protected by subsidies and import taxes. Antonio Megale, president of the Anfavea trade group in the automotive sector, told the newspaper O Estado de S. Paulo that he would have preferred to postpone the free trade agreement for three years. Free trade for heavy vehicles (trucks and buses) and their parts could arrive in 2020, with bilateral negotiations on this front expected in the coming months. The SE pointed out that auto trade with Argentina amounted to $817 million last year, with Mexican exports amounting to $630 million, leaving a surplus of $443 million. However, the scenario could change if Mexico focuses on making cars that the Brazilian market doesn`t really produce (e.g.B. luxury cars). On the one hand, BMW launched last year a new car factory in the city of San Luis Potosí. Mexico`s trade surplus increases by 17% in 2018, official figures show The Brazilian government has also expressed interest in “extending free trade with Mexico in other sectors” and said it plans to resume negotiations for a broader free trade agreement with Mexico, which have stagnated since 2017. In this context, we can see that the trade balance between countries is starting to change in favor of Brazil, but why? To give you the facts, here is a brief snapshot of the scenario in each country. MEXICO Nearly 80% of the vehicles manufactured in the country are manufactured for the American market. According to Brais Álvarez, an automotive analyst for JD Power, these types of cars are simply not aimed at South America.

After the conclusion of the Economic Partnership Agreement (ECA) 55 on Tuesday, Mexico will maintain free trade in light vehicles with Brazil, while it will implement a quota policy with Argentina for a period of three years and then switch to free trade mode. Since 2012, the rapid growth of Mexico`s auto sector has faced trade restrictions with Brazil and Argentina, whose governments have tried to protect local production. Auto trade with Brazil amounted to $4.68 billion, with Mexican exports of $2.77 billion and a surplus of $868 million, triple the $280 million recorded the previous year. . . .