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The long-awaited free trade agreement between Mercosur and the European Union is about to come to fruition, and with it comes the promise of eliminating import taxes on European cars. The historic partnership between the blocs, which together form a market of 31 countries and more than 718 million people, aims to increase competitiveness and expand international trade.
What's new? European vehicles will be able to arrive in Brazil without the traditional import tax on European cars – but it won't happen that quickly. The timetable foresees a complete reduction in tariffs only in 30 years. The reduction will be gradual, giving the national automotive industry time to prepare to compete on equal terms with the European market.
How will the import tax on cars be reduced?
According to the Planalto Palace, the reduction schedule varies depending on the type of technology used in vehicles. Electrified cars, for example, will have their tax reduced to zero in 18 years. For hydrogen-powered vehicles, the full exemption will be achieved in 25 years, with a grace period of 6 years. For new technologies, the term is 30 years, also with a 6-year grace period before the reduction begins.
The government highlighted that the agreement includes an unprecedented safeguard clause. If the increase in European imports causes imbalances in the national industry, such as a drop in employment levels or losses to local production, Brazil may temporarily suspend the tariff reduction schedule. This measure may be applied for up to 5 years, resuming the standard rate of 35%.
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Impacts and expectations
By eliminating import taxes on European cars, the Mercosur-European Union agreement seeks to diversify Brazil's trade partnerships, reducing dependence on China as its main market. In addition, it is expected to stimulate the modernization of the automotive industry in Brazil, promoting investments in more sustainable technologies.
On the other hand, there are still uncertainties. Anfavea (National Association of Automotive Vehicle Manufacturers) has not commented on the impact of the agreement so far. However, experts point out that the gradual nature of the process is essential for Brazil to adapt its production and avoid a market shock.
A historic landmark
The agreement between Mercosur and the European Union marks a significant progress in trade relations between the blocs and establishes solid foundations for the creation of a common market worth more than 22 trillion dollars in GDP. Despite the challenges and the long time required for full implementation, the partnership promises to redefine the Brazilian and European automotive landscape.
For now, the question remains: will we be ready to receive European vehicles without the European car import tax within the next few decades? Only time will tell.
And will the sales prices decrease? Because a popular car in Brazil costs 70 thousand reais.
European cars will not compete in this market category. European compacts are made for markets with an average per capita income three times higher than ours, so they are not very suitable for Brazil. This reduction will boost the market for mid-size models and premium brands.
Brazilians ****. They don't know how to go without buying without protesting. **** people are fools.