Brazil and Uruguay sign automotive free trade agreement

Brazil and Uruguay signed Wednesday (Dec. 9) an automotive free trade agreement providing for 100% tariff preference for products that meet the requirement of regional content percentage in their components. For Brazilian vehicles and auto parts, the index must achieve a minimum of 55% and, for the Uruguayans, 50%, according to the formula provided by the MERCOSUR. The agreement shall come into force on 1st January 2016.

Products benefiting from the agreement will be passenger vehicles, buses, trucks, agricultural machinery, auto parts, chassis, and tires. For items not fulfilling the minimum regional content requirement, a trade quota has been established: $650 million to Uruguay and $325 million to Brazil.

The agreement has also an escape clause for situations of trade imbalance between the two countries. In such cases, one of them may request a temporary suspension of free trade agreement. If this occurs, a bilateral committee will examine the situation and propose corrective measures to restore the agreement.

The document was signed at the Brazilian Ministry of Foreign Affairs by Brazil's Minister for Development, Industry and Foreign Trade Armando Monteiro, and Foreign Affairs Minister Mauro Vieira, and their Uruguayan peers, Foreign Affairs Minister Rodolfo Nin Novoa, and Industry, Energy and Mines Minister Carolina Cosse.

This year, Brazil renewed an automotive agreement with Mexico for four years, and another with Argentina until July 2016.

Translated by Amarílis Anchieta

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