President Jair Bolsonaro signed into law the automotive free trade agreement signed with the government of Paraguay in February this year. The decree on the execution and compliance of the agreement was published this Monday (10.08.2020) in the Official Journal of the Federation.
In a note, the General Secretariat of the Presidency of the Republic said that The purpose of the document is to facilitate trade and customs cooperation between the two countries, especially for automotive products.Under the agreement, parts and vehicles sold by the two countries will have minimal or no tariffs, but the range of free trade will vary between the two countries.
Paraguayan products, spare parts and automotive vehicles will immediately be free to trade in Brazil. Brazilian products, however, will be subject to taxes of up to 2% in Paraguay. Tariffs will gradually fall, through the application of preference margins, until full trade liberalization at the end of 2022.
Last year, Brazil exported US$415 million to Paraguay and imported US$235 million worth of automotive products.
Brazil already signed similar agreements with Argentina last year and Uruguay in 2015, within the framework of the Latin American Integration Association (Aladi).
The conditions are valid indefinitely or until the entire automotive sector adapts to the General Regime of Mercosur, which provides for a Common External Tariff (TEC) in 11 tariff levels, whose rates vary from 0% to 20%, with progression. Inputs have lower rates and products with a higher degree of elaboration, higher rates.
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