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backLATINtalk April, 2012

Brazil: Mexico Agrees To More Local Auto Components, Talk On Trucks

Mexico's government has agreed to increase the amount of its locally produced components in vehicles shipped to Brazil and consider including truck trade under a renegotiated auto accord, Brazil's Trade Ministry said Friday.

The ministry said Mexico would increase its locally-produced components to 35% in March 2013 from 30% currently and raise the figure to 40% by March 2016. The two sides said they would continue discussions on the possibility of raising Mexico's locally produced components still further to 45%.

Brazil has sought to increase Mexican-produced components in Mexican vehicles entering the country to limit the amount of cheaply-produced parts from other regions that enter the country.

Brazil last year raised taxes on autos with less than 60% Brazilian components, with the exception of cars imported under accords with Mexico and Brazil's Mercosur region partners.

Regarding heavy vehicles such as trucks, the two countries said they would continue consultations to harmonize "technical and environmental requirements" in order to promote reciprocal trade.

The local component and truck trade discussions are part of an agreement announced late Thursday to revise the countries' ACE-55 auto sector free trade accord.

Under the revision, the countries agreed to hold tariff-free imports to $1.45 billion this year and raise that amount to $1.64 billion through 2014.

The revision of the nine-year-old free auto trade accord came at the request of Brazil's government, which has sought to limit the impact of heavy imports brought by the appreciation of the country's currency, the real.

In 2011, Mexico exported $2.1 billion worth of autos and auto parts to Brazil and posted a $696 million surplus in auto trade with the South American country.

Source: Fox News - GAI

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