[São Paulo News] The Brazilian government announced a new resolution on Wednesday, announcing that entire vehicles and auto parts from the Common Market of the South (Mercosur, whose members include Argentina, Paraguay and Uruguay) will no longer need to apply for an import license in advance when entering Brazil. The Brazilian Ministry of Economy said in an announcement that the measure will take effect immediately starting Thursday, with the goal of reducing existing entry procedures and accelerating the efficiency of border traffic.

According to the explanation of the Ministry of Economic Affairs, after the abolition of "import pre-licensing", trade supervision will be transferred to the "customs clearance first, verification later" model, that is, after customs release, post-event supervision will be carried out through other means. The announcement quoted Foreign Trade Secretary Lucas Ferraz as saying that removing the pre-licensing requirement issued by the Ministry of Economy's Foreign Trade Secretariat (Secex) would "speed up the import process and reduce costs", thereby benefiting importers and Brazilian consumers.

Brazil also stressed that this move is trade facilitation and will not change Brazil's current automobile trade arrangements with the three countries mentioned above. The Ministry of Economy pointed out that quotas, proportions and other constraints contained in the relevant bilateral automobile agreements will continue to be implemented, so "local Brazilian producers will not be harmed."

The report also mentioned that although MERCOSUR is positioned as a customs union and one of the largest free trade areas in Latin America, automobile trade has not been completely liberalized for a long time and relies more on bilateral agreements between member states; according to existing plans,"complete liberalization" of automobile trade will not be achieved until 2029.

Take the Brazil-Argentina agreement as an example. The core rule signed by the two parties in 2015 is the "coefficient of elasticity"(flex): for every US dollar of automotive products imported by Brazil from Argentina, Brazil can export US$1.8 to Argentina; any part exceeding this proportion will be subject to tariffs. The agreement arranges for the gradual increase of this ratio to "US$3 exports for US$1 imports" by 2028, and plans to achieve comprehensive free trade from July 2029. The agreement with Paraguay (signed in February 2020) stipulates that it will be easier for Paraguay vehicles and parts to enter Brazil, while the tariff on Brazilian exports to Paraguay was set at 2% and gradually reduced to zero. The arrangement signed between Brazil and Uruguay in 2015 has also eliminated quotas, but requires the proportion of parts and components of origin: at least 55% of the parts and components produced in Uruguay must come from MERCOSUR, and at least 60% for Brazilian vehicles.

[Brief Comment] For China automobile exporters, this policy itself is not targeted at China, nor does it involve Brazil's tariff framework for foreign vehicles, but it will actually reduce the time and administrative costs of MERCOSUR vehicles entering Brazil. Considering that the Brazilian passenger car market is highly sensitive to price and supply cycles, models from Argentina and other countries may form stronger "intra-regional competition" in some market segments after improved customs clearance efficiency.

Sources of information: https://www.montevideo.com.uy/Airbag/Brasil-facilita-importacion-de-autos-procedures-de-los-paises-del-Mercosur-uc796929? plantilla=1733&proceso=amp

Source: Guangdong Good Car

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