Mexico, Brazil reach deal on auto exports

MEXICO CITY - Agence France-Presse

Brazil’s Foreign Minister Patriota (L) welcomes Mexico’s Economic Secretary Ferrari (2nd R) and Foreign Minister Espinosa Cantellano in Brasilia last month. REUTERS photo

Mexico and Brazil have agreed to save a decade-old auto trade pact by limiting auto exports for three years, as sought by Brazil, Mexico’s economy ministry said on March 15.

Brazil asked to renegotiate the deal, known as the ACE-55, after the value of Mexican car exports increased significantly -- aided by a rise in the Brazilian real and weakening of the Mexican peso.

Brazil’s trade deficit

“A temporary incremental regime was agreed on for duty free exports of light vehicles for each country, for a three-year period,” said the economy ministry statement.

After three years, the 2002 deal would return to its original conditions.

The Brazilian government had sought a total annual export quota of $1.4 billion from Mexico for three years to correct a deficit in mutual trade which favored Mexico by 1.7 billion dollars.

Under the deal, the sum of exports will be $1.45 billion for the first year before increasing in the second and third years to $1.56 and $1.64 billion respectively, the statement said.

Mexican imports rise

Brazil’s government has increased tariffs on imported autos from other countries but could not do so on products from Mexico due to the 2002 pact.

Auto exports from Mexico to Brazil rose almost 40 percent in 2011.

Mexico is Latin America’s top vehicle exporter, with a total production of 2.5 million units in 2011, including 2.1 million sold outside the country.