Automotive Industry Secures Special Treatment on EU Imports

The automotive industry has received special treatment under the free trade agreement between the European Union and Mercosur.

Currently, Mercosur imposes a 35% import tariff on cars imported from the EU—the highest tariff across all industrial goods categories.

Under the agreement, Mercosur will phase out tariffs on EU-manufactured vehicles over a 15-year period, the most protracted timeline among all product categories. However, additional exceptions in the deal could further extend this timeframe in many cases. Safeguards are also in place to address any potential “boom” in vehicle imports coming from Europe.

Tariffs will be eliminated over 18 years for electric vehicles, while hydrogen-powered vehicles will require a 25-year adjustment period. The timeframe for emerging automotive technologies extends to 30 years.

The agreement also establishes what Brazil’s Ministry of Foreign Affairs describes as an “unprecedented safeguard mechanism aimed at preserving and expanding automotive investments.” If imports of European vehicles rise to a level deemed harmful to the domestic industry in Brazil or Argentina, Mercosur can suspend the trade rules for this sector for up to three years, with a possible two-year extension, without being required to compensate the EU.

“Evaluations will consider factors such as employment levels, sales and production volumes, installed capacity, and the degree of capacity utilization in the automotive sector,” the ministry explained.

Source: CNN

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