Mexico will return to free trade with Brazil and Argentina
Vehicle manufacturers could increase the flow of vehicles to the south if Mexico finally returns to free car trade with Brazil and Argentina. This will happen as long as the governments of the two South American countries do not postpone the opening again as happened four years ago.
The automotive trade between Mexico and the two South American countries is regulated by Economic Complementation Agreement Number 55 (ACE 55), which entered into force in 2003 and eliminated tariffs on car trade among the three countries in 2007.
In the following five years, Mexican vehicle exports to the Brazilian market increased 613 percent, from 24,986 units in 2007 to 178,154 in 2012. That year, Brazil was the third most important vehicle import market for Mexico after the United States. and in Germany.
But in March 2012 the Brazilian government asked to limit the car trade with Mexico with quotas. Argentina retorted the measure nine months later with the aim of closing the tap to the growing flow of vehicles of Mexican manufacture.
Between 2007 and 2012 shipments from Mexico to the Argentine market grew 256 percent, from 17,692 to 63,021 units in that period, according to data from the Mexican Association of the Automotive Industry (AMIA).
Then the Mexican government agreed to establish bilateral quotas with both countries with a view to returning to free trade in 2015. But Brazil postponed the opening another four years, until 2019. Argentina retorted the measure of its neighbor.
On March 18 the deadline to release the vehicle trade with Brazil and Argentina expires and the next day, on the 19th, Mexico could start exporting to these markets without quotas.
"We know that the federal government will undertake negotiations with Brazil and Argentina separately, since they are in separate sections within the ACE 55, and we know that these negotiations are aimed at seeking trade opening," said Eduardo Solis, executive president of AMIA, in a press conference last week. "We have reiterated to the government our position to go for free trade," he added.
In 2018, Brazil ranked as the fourth market for Mexican vehicle exports, below the United States, Canada, and Germany. Last year, Mexico exported 78,440 vehicles to Brazil, mainly Volkswagen, General Motors and Fiat Chrysler models.
Argentina occupied the eighth position, with the importation of 33,129 vehicles from Mexico. Nissan is a brand that leads shipments to this destination.