Automotive free trade agreement between Brazil and Paraguay is made official

The automotive free trade agreement that Brazil´s president, Jair Bolsonaro, signed with Paraguay in February this year, was published in the Federal Official Gazette on August 10.  In a note, the General Secretariat of the Presidency said that the objective of the document is to facilitate trade and customs cooperation between the two countries, especially for automotive products. Under the agreement, vehicles and parts sold by the two countries will have minimum or zero tariffs, but the range for free trade will vary between the two countries.

Paraguayan automotive products, parts, and vehicles will have immediate free trade in Brazil. Brazilian products, however, will be taxed at up to 2% in Paraguay. Tariffs will gradually fall, through the application of preference margins, until the full release of trade at the end of 2022.  Last year, Brazil exported US$415 million to Paraguay and imported US$235 million in automotive products.

Brazil has already signed similar agreements with Argentina last year, and with Uruguay in 2015, within the scope of the Latin American Integration Association (Aladi).  The conditions are valid indefinitely or until the entire automotive sector adapts to the Mercosur General Regime, which provides for a common external tariff (TEC) at 11 tariff levels, with rates varying from 0-20%. Inputs have lower rates and products with a higher degree of elaboration, higher rates.

Source: Agência Brasil

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