Brazil and Mexico agree deal on trade of light vehicles

Industry News | | MIC Customs Solutions |

A new trade agreement has been reached between Brazil and Mexico.

Mexico has said that it has reached a deal with Brazil regarding the free trade of light vehicles, subject to a 40 per cent regional content requirement.

According to Reuters, the agreement came into effect yesterday (March 19th 2019) and could pave the way for more commerce between the two Latin American nations.

The economy ministry has said that the stipulated content requirement would be subject to current formulas for calculation, but it did not reveal what these would be.

Mexico has been looking to expand its trade partnerships since US president Donald Trump suggested the North American Free Trade Agreement it has relied on for 25 years may be under threat.

On top of the new agreement with Brazil, Mexico has also renewed auto trade quotas with Argentina for the next three years, after which there will be free trade, Reuters has learned.

Meanwhile, Brazil's automotive industry is protected by subsidies and import taxes.

The car-making industry has become a key part of economic development in Latin America, particularly for Brazil and Mexico as the two largest nations in terms of GDP.

Economic Complementation Agreement No 55, which came into effect in 2003, has been instrumental in allowing it to develop by harmonising trade initiatives and further integrating production processes thanks to the free trade of cars and their parts.

Brazil is Mexico's largest trading partner in Latin America and makes up 23 per cent of its trade. The automotive trade represented 46 per cent of bilateral trade flows in 2014.

MIC's customs clearance software solution MIC-CUST supports customs clearance with the Brazilian customs administration's system via broker interface.

As part of our Mexico-specific functionality, we can also offer clients the automation of bonded, duty deferral, reconciliation programs and the IMMEX program, at the same time as automating the creation of import and export declarations (pedimentos). This results in the leverage of one country's export clearance into another country's import clearance.