Trade Agreement Between Mexico And Brazil

As agreed, the ACE 55 amendment will set the following obligations: I) duty-free export quotas and quotas for light vehicle trade; II) Maintaining the 35% of the rules of origin for auto parts and light vehicles at 40% by 2019, which will promote greater productive integration; III) for a four-year term (March 2015-March 2019); (IV) the postponement to 31 December 2018 to agree on the terms, quotas and deadlines for the free movement of heavy vehicles; and V) the return to free trade from 19 March 2019. After intense negotiations in support of the automotive industry in Mexico, Economy Minister Ildefonso Guajardo Villarreal recently signed an agreement in Rio de Janeiro with the Brazilian government to amend the Economic Supplement Agreement 55 (ACE 55, by its initials in Spanish). Monteiro adds that Mexico, which is not one of Brazil`s main trading partners, is not as strategically important for Brazil. It contrasts with the importance of Brazil`s strategic relations with neighbouring Argentina. According to Monteiro, “Brazil and Argentina must find a way to achieve a friendly trade relationship” because both countries are part of Mercosur, the regional trading bloc that plays an important role in South American trade. Brazil and Mexico are Latin America`s largest and second largest economies, respectively, accounting for nearly 65% of the region`s GDP. They are also the countries that receive the largest inflows of foreign investment into the region. Economic and trade relations between the two countries are strong and significant. Reciprocal investment is estimated on both sides at $30 billion. The predictability of the regulatory environment facilitates private investment. The change in the composition of U.S. exports to Mexico over the past decade reflects changes in the composition of exports in the other direction, but in a more moderate way (Table 8). The share of producers in U.S.

exports to Mexico increased from 61 percent between 1982 and 1986 to 75 percent a decade later. Meanwhile, the share of exports on the basis of natural resources rose from about 13% between 1982 and 1986 to about 8% for the period 1992-1996. The two countries are also important trading partners: in 2018, trade flows reached $9.41 billion, including $4.51 billion in Brazilian exports and $4.90 billion in Mexican exports. At their peak, over the 2012-2013 period, bilateral exchanges reached $10 billion. After positive signs of the Brazilian economy and continued Mexican growth, bilateral trade is showing signs of marked recovery. Overall, the parameters of Frankel`s gravity model, adjusted for these differences in size and geography, predict that trade flows between the United States and Brazil would be $56 billion in both directions if Mexico were suddenly attributed all of Brazil`s characteristics, but its NAFTA membership was maintained.3 The fact that trade flows between the United States and Brazil were in fact $25 billion in fact 1997. , indicates that the FTAA effect is potentially quite significant – perhaps a doubling of trade.

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