Brazil and Argentina Discuss Trade and Automotive Agreement

By Nelson Belen, Contributing Reporter

RIO DE JANEIRO, BRAZIL – Representatives from Brazil and Argentina met in Brasilia yesterday (April 26th) for the first meeting of the Brazil-Argentina Bilateral Commission to discuss the expansion of trade between the two countries. Among the main topics addressed were the renewal terms of an automobile trade agreement between the two countries that expires on June 30th.

The current agreement provides for a “flex” system, in which Brazil can sell tax-free to Argentina up to the equivalent of US$1.5 for every US$1 they import from its neighboring country.

During the negotiations, Brazilian Minister of Development, Industry and Trade, Armando Monteiro, defended the idea of an automotive free trade agreement while recognizing that renewal, in the short term, should again be based on trade quotas.

“Brazil understands that we need to have a broader framework, which should consider the prospect of a free trade agreement,” said Minister Monteiro. “To achieve [this goal], we need to create conditions so that [the agreement] is balanced and sustainable,” he added.

While noting that the quotas of the flex system are “open for discussion,” Minister Monteiro’s Argentinian counterpart, Francisco Cabrera said that, for now, Argentina’s position is that they remain at the current level.

Acknowledging Argentina’s concern about Brazil’s stagnant industry, particularly the decline in the automotive sector, Minister Cabrera admitted, “We will not yet modify the quotas”. While the two sides were unable to reach an agreement on Monday, Minster Monteiro expressed optimism about the two countries reaching a ‘fit and balanced’ agreement.

In addition to discussions on the automotive agreement, the two countries officially launched negotiations for new government protocols within Mercosur. “We are also very excited about the prospect of an agreement on trade and investment under Mercosur,” said Minister Monteiro.

The Minister stressed that Brazil and Argentina are also negotiating free trade agreements with Mexico and so, it would be reasonable to negotiate similar agreements with each other. The next meeting of the Brazil-Argentina Bilateral Commission is scheduled for June.