Brazil and Paraguay signed the automotive free trade agreement. Under the agreement, parts and vehicles sold by the two countries will have minimum or zero tariffs, but the range for free trade will vary between the two countries.
Paraguayan automotive products, parts and vehicles will have immediate free trade in Brazil. Brazilian products, however, will be taxed at up to 2% in Paraguay. Tariffs will gradually fall, through the application of preference margins, until the full release of trade at the end of 2022.
The agreement had been signed in December, at the Mercosur Summit meeting, in Bento Gonçalves (RS). However, it was only made official today (11). This was the latest in a series of automotive trade revision agreements between Brazil and the Mercosur countries. The country signed similar agreements with Argentina last year and Uruguay in 2015.
Wake up
Under the agreement with Paraguay, trade will be released more quickly than with Argentina, which provides for automotive free trade only from 2029. Signed in 2015, the agreement with Uruguay eliminated the marketing quotas and allowed export without tax of all automobiles with a minimum of regional content with 55% of content manufactured in Mercosur for cars sold by Brazil and 50% for those sold by Uruguay.
The conditions are valid indefinitely or until the entire automotive sector adapts to the general Mercosur regime, which provides for a common external tariff (TEC) in 11 tariff levels, whose rates vary from 0% to 20%, with escalation. Inputs have lower rates and products with a higher degree of elaboration, higher rates.
According to the Ministries of Economy and Foreign Affairs, the trade in automotive products between Brazil and Paraguay is low, but it has grown considerably in the last decade, mainly due to Brazilian exports of automobiles and Brazilian imports of auto parts (mainly electrical harnesses) . Last year, Brazil exported US $ 415 million to Paraguay and imported US $ 235 million in automotive products.
On Twitter, President Jair Bolsonaro pointed out that the agreement will stimulate production and increase job creation.
Source: Agência Brasil
