Auto & Transportation

The Mercosur (Mercosul) and the European Union (EU) recently reached an agreement under which Brazil will halve the tariffs on imported cars from the EU (17.5%), giving a preferential quota of 32,000 cars per year. In return, the EU will also reduce import tariffs on Brazilian coffee during the same period. The term of the agreement is 15 years.

Brazil World Wide Web reported on July 22 that, according to this agreement, Brazil’s tariffs on imported cars from the European Union should be gradually reduced in the next seven years, until it drops to zero. The European Union will also reduce the import tariffs on Brazilian coffee, thereby providing more convenience for the production and sales of this primary product in EU countries.

According to the agreement, the Southern Common Market sets up an import quota for 50,000 European cars each year. This part of the car can enjoy tariff reduction or exemption. The import tax rate of cars produced in other markets such as the United States will remain unchanged (still 35%). Among them, Brazil’s quota is 32,000 vehicles per year, and Argentina’s is 15,500 vehicles per year.

It should be noted that Brazil’s annual quota of 32,000 vehicles does not specify the scope of the cars covered. But for European cars exceeding this number, import duties are still levied at 35%. This clause has not yet determined a specific effective date. Although Mercosur signed a trade agreement with the European Union as early as 2019, the specific negotiations have not officially ended. Some countries in the European Union even refused to ratify this agreement due to the situation in Brazil.

It is estimated that the negotiations between the two major economic alliances will eliminate a number of import tariffs or drastically reduce certain tariff rates. Negotiations between the two parties have been going on for more than 20 years, and it is expected that the approval of the agreement may take place after the French election in 2022.