Argentina and Brazil extend trade agreement until 2029

In the context of a new meeting of the Argentina-Brazil Automotive Committee and after months of negotiations, the Governments of both countries agreed, under the Economic Complementation Agreement (ACE14), to renew the 38 Additional and Complementary Protocol which expires on June 30 next year through which a new compensated exchange system for the trade of vehicles and parts will be implemented.

The representatives of both Governments signed the new Common Automotive Pact (PAC) which will take effect until 2029 and it replaces the previous one that was initialled on June 27, 2016.

The new terms of trade were established during the meetings which were held by the technical teams of both countries headed in the case of Argentina by the Ministry of Production and Labour, led by Dante Sica and of Economy, led by Paulo Guedes, on the Brazilian side.

In this regard, the president of the Association of Automotive Makers (ADEFA), Luis Fernando Peláez Gamboa, stressed that in the face of the current macro-economic situation and the fall of the main variables at sectoral level, "it is important that in advance, that is, eight months after the expiration of the agreement that established free trade with Brazil, the sector as a whole should have a  framework of sufficient predictability  to continue working on the deepening of the productive  integration between both partners, specially in the area of investment, trade, job generation and production".

The need to preserve the flow of investment in both markets led to keep the trade compensated in the exchange of vehicles and parts with a progressive deviation coefficient for 10 years until reaching Free Trade in 2029.

Likewise, and responsive to the new developments that are approaching, a reciprocal quota of exchange is established between both countries with ICR – differential content index- for vehicles with New Technologies (motorizations) in order to be able to host them in our markets.

With regard to the agreed terms and considering that Brazil positions itself as a relevant destination for export of vehicles produced in Argentina, Peláez Gamboa, highlighted the signature of this new agreement because  "it establishes a long-term legal framework and the possibility of projecting and defining the investments in the next ten years, in addition of deepening the specialization and productive complementation in order to strengthen the region as a bloc in front of the new challenges faced by the automotive sector at international level in terms of the development of new technologies, demands and agreements."

Press 09/06/19

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