The governments of Paraguay and Brazil already have an automotive agreement, which is currently being drafted and translated into the respective languages for signature after the second half of December.
The Minister of Industry and Commerce (MIC), Liz Cramer, and the Foreign Minister Antonio Rivas Palacios, made the announcement at a press conference on Monday (09/12/2019).
The agreement retains similarities to the document signed with Argentina at the end of October and prepares the conditions for future negotiations with Uruguay and the foundations are laid for the integration of this sector under the commercial terms of Mercosur.
Cramer outlined the main aspects agreed upon with Brazil, including the gradual increase of the Regional Content Index (RCI) to 10% over a period of 7 years. RCI means that the percentage of what is used for production must be of regional origin.
Currently, maquiladora companies in Paraguay have a 40% share and the agreement will apply for a gradual increase up to 50%. This increase in the ICR is added to the increase in Paraguayan auto parts exports, which are estimated to be US$ 2020 million in 350 and US$ 2027 million by 750.
The agreement also establishes preferential export access for 1.000 passenger transport units with reduced ICR. This applies to both countries, where Brazil will have 35% of ICR and Paraguay a differentiated treatment of 30%.
The minister stressed that this will allow assembly companies to begin an export process with a fairly competitive content index.
Regarding the import of used vehicles, the same agreement was reached as with Argentina, where Paraguay will apply its current laws in this matter, awaiting future negotiations at the Mercosur level where new environmental and public health provisions will be applied.
The National Government announced this morning that negotiations between Paraguay and Brazil on the Automotive Agreement have been concluded positively. The initial objectives of balance, gradualism, convergence and special and differential treatment have been met. pic.twitter.com/f0m6mt2Q8K
— Paraguayan Foreign Ministry (@mreparaguay) December 9, 2019
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