Brazil may exclude up to 150 products from Mercosur’s common tariff

Mercosur countries may increase the number of product types (expressed as tariff codes) exempt from the bloc’s common external tariff by 50%. The agreement was signed on Thursday (26) in Montevideo but was only released this Friday (27).

With the change, the number of items that Brazil and Argentina may include in the Exception List to the Common External Tariff (Letec) will increase from 100 to 150 by 2028. In Uruguay’s case, it rises from 225 to 275 by 2029. And in Paraguay, from 649 to 699 by 2030.

Any tariff increases in relation to the Mercosur standard external tariff must still comply with current rules. Reductions for the 50 additional items may only be applied in two situations:
When exports to each Mercosur member state represent less than 20% of the total exports of the tariff code in question,

To avoid concentration in specific economic sectors, the reductions are limited to 30% of the new codes per chapter of the Mercosur Common Nomenclature (NCM).

On Brazil’s side, the rule was negotiated by the Ministry of Foreign Affairs and the Ministry of Development, Industry, Trade and Services (MDIC). In a statement, the MDIC said the decision improves Mercosur’s ability to respond to trade distortions caused by barriers or practices not authorized by the World Trade Organization (WTO).

“The expanded Letec represents an additional instrument at the disposal of the Brazilian government to address issues related to trade deviations, in light of uncertainties surrounding trade barriers stemming from the international context,” said the MDIC’s Executive Secretary, Márcio Elias Rosa, in a statement.

To take effect in Brazil, the Executive Management Committee (Gecex) of the Foreign Trade Chamber (Camex) must issue a resolution.

Customs union
As a customs union, Mercosur requires member countries to apply the same import tax for products. This ensures that a product is imported at the same tariff rate regardless of the Mercosur country. Once a good enters the bloc, it may circulate among member countries duty-free.

A customs union is a more advanced level of integration than a free trade area. The latter only provides tariff exemptions among member countries without harmonizing import tax rates. As a result, a product could enter through the country with the lowest tariff and circulate freely among all countries in the free trade area.

Source: Agência Brasil

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