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Bolsonaro Announces Free Trade Agreement, Brazilian Products Will Have Tariffs of Up to 2% with Liberalization by 2022, Creating Jobs and Boosting the Country’s Economy
With this agreement, more job vacancies may arise for Brazil. Under the agreement, the parts and vehicles sold by the two countries will have minimal or zero tariffs, but the timeline for free trade will vary between the two countries.
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Parts and vehicles will have immediate free trade in Brazil. Meanwhile, Brazilian products will be taxed up to 2% in Paraguay. The tariffs will gradually decrease through the application of preference margins until full trade liberalization at the end of 2022. The agreement was signed in December during the Mercosur Summit meeting in Bento Gonçalves (RS). However, it was only formalized today (11).
About the Free Trade Agreement
Under the agreement with Paraguay, trade will be liberalized more quickly than with Argentina, which anticipates automotive free trade only starting from 2029. Signed in 2015, the agreement with Uruguay eliminated marketing quotas and allowed tax-free exports of all cars with a minimum regional content of 55% for cars sold by Brazil and 50% for those sold by Uruguay.
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According to the Ministries of Economy and Foreign Affairs, the trade of automotive products between Brazil and Paraguay is low, but has considerably grown over the last decade, mainly due to Brazilian automobile exports and Brazilian imports of auto parts (mainly electrical harnesses). Last year, Brazil exported US$ 415 million to Paraguay and imported US$ 235 million in automotive products.
On Twitter, President Jair Bolsonaro Highlighted That the Agreement Will Stimulate Production and Increase Job Creation.
“We Signed the Automotive Agreement Between Brazil and Paraguay for Immediate Free Trade for Brazilian Automotive Products Taxed with Tariffs Between Zero and 2%. More Production and Jobs. @MinEconomia and @ernestofaraujo.
The trade of automotive products between Brazil and Paraguay has been growing. In 2019, the trade flow totaled US$ 650 million, with exports valued at US$ 415 million and imports valued at US$ 235 million, resulting in a surplus of US$ 180 million for usage”. Reports President Jair Bolsonaro on his Twitter.
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