After intense negotiations in support of the Automotive Industry in Mexico, the Secretary of Economy, Ildefonso Guajardo Villarreal, recently signed in Rio de Janeiro, an agreement with the Brazilian government to modify the Agreement of Economic Complementation 55 (ACE 55, by its initials in Spanish).
The Secretary Guajardo and the Undersecretary of Foreign Trade, Francisco de Rosenzweig, led the negotiation, accompanied by the Ambassador of Mexico in Brazil, Beatriz Paredes, and representatives of the Mexican Association of the Automotive Industry (AMIA) and the Autoparts National Industry (INA), chaired by Eduardo Solís and Óscar Albín, respectively.
As agreed, the modification of ACE 55 will establish the following commitments: I) Increasing and tariff-free export quotas for the trade of light vehicles; II) maintaining the 35 percent of rules of origin in auto parts and light vehicles to reach 40 percent by 2019, which will encourage a larger productive integration; III) valid for four years (March 2015-March 2019); IV) the postponement to 31 December 2018 to agree on the modalities, quotas and deadlines for free trade in heavy vehicles; and V) the back to the free trade starting 19 March, 2019.
The agreed quotas for light vehicles depart from the annual average of the exports of Mexico, registered in the last three years under the quotas of the Fourth Additional Protocol of the ACE 55, which approximates the amount of the quota for 2015.
The agreement reached takes into account the export potential of Mexico and the performance of the Brazilian automobile market in 2014; it posted annual contractions in production and exports around 15.3% and 40.9%, respectively, a trend that accelerated in the first quarter of 2015.
The amending Agreement to the ACE 55 shall enter into force next 19 March 2015, which Mexico will maintain privileged access to the Brazilian automotive market, being the only agreement of this nature in Brazil with a country non-belonging to MERCOSUR. This Agreement will ensure tariff-free access for exports of light vehicles from Mexico to Brazil, as follows:
- March 19, 2015 to March 18, 2016: US $ 1.560 million
- March 19, 2016 to March 18, 2017: US $ 1,606,000 million
- March 19, 2017 to March 18, 2018: US $ 1,655,000 million
- March 19, 2018 to March 18, 2019: US $ 1,705,000 million
- As of March 19, 2019: free trade
- Trade of vehicles Mexico-Brazil US $ 1,965,000 million
- Exports from Mexico to Brazil: US $ 1,608,000 million
- Imports of Mexico originating from Brazil: US $ 356 million
- Trade of autoparts Mexico-Brazil US $ 2,011,000 million
- Exports from Mexico to Brazil: US $ 977 million
- Imports of Mexico originating from Brazil: US $ 1,034,000 million