Agreement with EU reduces car tax by 50%

Brazil will open an annual import quota of 32,000 vehicles from Europe at a tariff of 17.5%, which is half the normal rate, for seven years beginning when the Mercosur-European Union (EU) agreement enters into force.

After the seven years with the quota, the tariff reduction (reduction mechanism) for this sector will start declining until it reaches zero in the following eight years. The automotive area is considered one of the most important in the agreement.

In turn, Brazilian soluble coffee, which is heavily exported to Europe, will have tariff-free access in the 27 EU countries for the first four years after the bi-regional agreement takes effect. The rate is currently 9%, too high by European standards. With its elimination, the Brazilian product with added value will be able to gain market share.

This information was detailed on Friday for the first time by the Mercosur countries and the European Union simultaneously, with the publication of tariff reduction schedules and commitments in the area of ​​services and public purchases under the bi-regional agreement.

The objective is clearly to seek some “movement” so it does not seem that the agreement is at a standstill, despite the resistance of some European member states which say they are concerned about the environmental problems in Brazil.

The European Union and Mercosur want to show that there are huge business opportunities in the bi-regional agreement and that they cannot be passed up. The example of the gain for European vehicle producers illustrates this. Liberalization in Mercosur will take 15 years in total. In the first seven years, the bloc will have a quota for the entry of 50,000 European vehicles with a preferential advantage of 50%. In other words, the European car (within the quota) will be subject to a 17.5% rate, while the US or Japanese car will continue to pay 35%.

Source: Valor Econômico

To read the full original article, visit the link:

https://valor.globo.com/brasil/noticia/2021/07/19/acordo-com-ue-reduz-aliquota-de-carro-em-50.ghtml

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