Bilateral Automotive Agreement consolidates Uruguay as a strategic partner of Brazil

The authorities in Uruguay and Brazil signed a free trade agreement in the automotive sector. It will come into force on January 1, 2016 and offers 100% tariff preference of goods in the sector, the Ministry of Industry, Energy and Mining (MIEM) of Uruguay. “This agreement is a significant step in the process of bilateral integration”, said the head of the MIEM, Carolina Cosse, while stressing that the signing of the FTA, the new mechanisms will allow protecting and enhancing the domestic industry.

Also it called Cosse very positive agreement because “provides certainty as to the commercial playing field” and said that the document “is not limited to a certain period, but shall have effect until the Mercosur to reach a common automotive policy”. “The agreement includes a clause trigger that activates if either party has unfavorable conditions in the evolution of trade,” said the Uruguayan official. Whereupon “is temporarily suspended free trade mechanisms to restudy”. Among the most favorable conditions of the new agreement new regional content requirements less stringent than in the previous agreement to enter Brazil are established when it comes to vehicles and automotive parts manufactured in Uruguay. Moreover, Brazil does not apply tariff reductions on products for which no production can be imported from Uruguay. It is anticipated that the measure protects the Uruguayan automotive producers for those from outside Mercosur.

He also managed to reduce the access requirements of armored vehicles, which will encourage the development of this niche market in Uruguay. The agreement expressly provides for full implementation of origin regime Mercosur, which contains several mechanisms more flexible requirements to achieve originating status.

Source: MéxicoXport