Mexican Auto Sector Willing to Accept Quotas on Exports to Brazil

MEXICO CITY – Mexico’s automobile industry said it is willing to accept temporary quotas on its exports to Brazil as long as the restrictions are lifted after a period of no more than three years.

The two countries have been reviewing their bilateral free-trade deal on autos over the past several weeks due to Brazil’s concerns about a spike in imports from Mexico and the potential damage that has caused to Brazilian manufacturers.

“We’re willing to maintain a steady flow of dialogue and (Mexican negotiators) can even be more flexible in Brazil’s demands ... as long as a deal is reached quickly to preserve the Economic Complementation Accord,” the president of the Mexican Automotive Industry Association, or AMIA, Eduardo Solis, said Tuesday.

That agreement regulates tariff-free trade in vehicles and car parts between Brazil and Mexico.

The quota arrangement could be applied for “one, two, three years, but we have to be sure that after that time we can return to free trade,” Solis said at a press conference.

Solis made his remarks a day before Mexican and Brazilian ministers meet in Mexico City for another round of talks to revise the trade accord.

In addition to demanding that Mexico reduce its auto exports sharply from 2011 levels, Brazil also wants domestic content requirements for vehicles exported under the accord revised upward, citing concerns that Mexican-made cars have an excessive amount of components manufactured elsewhere.

It also wants Mexico to agree to include heavy vehicles such as trucks in the auto agreement by 2016, four years ahead of the original 2020 deadline.

Solis, however, criticized Brazil for trying to tackle its competitiveness problems with a protectionist strategy.

“The (auto) accord is not the cause of the problems Brazil now has but it’s also not the solution because they say they have a competitiveness problem in terms of their exports, and if they have an internal structural or monetary problem, this instrument won’t resolve either the monetary situation or problems of competitiveness in Brazilian industry,” he said.

Brazil says vehicle imports from Mexico rose last year by 40 percent even as Brazilian auto exports to Mexico declined by the same percentage, resulting in a trade deficit in that sector of nearly $1.7 billion.

Mexico, for its part, acknowledges that it had a significant trade surplus with Brazil in that sector last year, but it says that since the agreement went into effect in 2003 it has accumulated a vehicle-trade deficit with the South American giant of around $10 billion.

Cabinet-level officials in the two countries met in Brasilia on Feb. 29 to discuss the matter and held a second round of talks last Friday in Mexico City.

Brazil’s auto industry, like other manufacturing sectors in the South American country, has been battered by a strong real, while Mexican subsidiaries of General Motors, Nissan and Volkswagen posted strong export results in 2011 due to a weaker peso. EFE

Posted in Automotive