The Official Gazette issued on this Thursday (19) the Decree 8.419, that internalizes the fifth additional protocol of the automotive trade agreement between Brazil and Mexico. The treaty was renewed in the beginning of March and it will last until 2019, when a new protocol can be negotiated. Originally, signed in 2002, the agreement imposed an annual quota of nearly US$ 1,5 billion, in which exportations will benefit from free trade of goods. Above this limit, the exportations will have to pay 35% tariffs.
The federal government asked Mexico to maintain the quotas for four more years. Brazil claimed that the quotes were necessary to keep the economic balance between two countries. On the other hand, Mexican government stood for the free trade from 2015.
Fifth additional protocol will come into force on March 19th and it will stay in force until 2019, when a new protocol can be negotiated or free trade can be reestablished. Therefore, exportation quotas between Brazil and Mexico will be maintained. The quota will be annually adjusted by 3% from March 2016. The agreement changes distribution rules of quotas and set that 70% will be distributed by the exporting country and 30% will be distributed by the importing country.
The protocol will keep the 35% regional content index to vehicles until 2019, when it will be increased to 40%. Different regional content index to auto parts have been set as well.
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