Brazil and Argentina renewed by 2020 the automotive agreement between the two countries, which would win on 30 June. In a statement issued by the Ministry of Industry, Trade and Services, on Saturday (25), the government informs that has kept the system flex, which provides that Brazil can sell tax-free, at most, $ 1.5 for every $ 1 imported from the neighboring country.
The new agreement provides that from 1 July 2019, it achieved the conditions for deepening productive integration and balanced development of productive structures and trade, the flex of bilateral trade in the automotive sector will be $ 1, 7 for every $ 1, after prior agreement between the parties.
“After much negotiation, we reached an agreement for another four years, which brings a lot of predictability for the industry and establishing bases for the free automotive trade from 2020, a great victory for the domestic industry,” said Minister Marcos Pereira in a statement sent to the press.
In June 2014, the two countries signed an automotive agreement, valid until June 2015. At the end of last year, the agreement was extended and the two countries continued negotiating the terms for the renewal of settlement. Brazil is trying to expand the scope of so-called flex system. Argentina have wanted to extend the country’s auto parts Innovating the Auto scheme, which provides tax exemption on Industrialized Products (IPI) for Brazilian manufacturers that meet investment targets in research and development of new technologies.
The mechanism known as flex provides that each $ 1 that Argentina sells to Brazil in auto parts and vehicles, Brazilian automakers could export to the neighboring country $ 1.5 exempt from import tax.
Above that, the Brazilian vehicles pay 35% tariffs to enter the Argentine market. Vehicles need to have at least 60% of parts and components manufactured in Mercosur.