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Automotive sector: How does the opening between Mexico and Argentina work?

Through its participation in Mercosur, Argentina signed an agreement (ACE 55) with Mexico in September 2002 in order to eventually create a free trade zone for the automotive sector.

While Mexican car exports to the Argentine market were 73.2 million dollars in the first half of 2021, purchases in the opposite direction were practically nil.

By virtue of the Fourth Protocol to the ACE, as of July 1, 2011 the automobile trade was liberalized; vehicles with a total weight with a maximum load less than or equal to 8,845 kg; car bodies; trailers and semi-trailers; and self-propelled agricultural tractors, combines, agricultural machinery and road machinery, but the application of the agreement was suspended for three years in 2012.

In March 2015, Argentina and Mexico signed the Fifth Additional Protocol to Appendix I of ACE 55, which imposed reciprocal quotas expressed in US dollars for four years, with a 0% tariff for the import of cars and vehicles weighing less than or equal to 8,845 kg.

Although it was planned to enter a stage of free trade in the automotive sector on March 19, 2019, Argentina and Mexico agreed to continue with a trade managed based on quotas for three more years, with an annual increase of 10% the first year, 5% the second year and 5% the third year.

After this period, free trade in cars will come into force.

Automotive sector

Quotas are assigned to exporting companies and administered by the exporting party and verified by the importing party.

Despite the quota, there is no maximum limit for imports with full tariff preference, as long as the amounts are equivalent to the exported values.

A Regional Content Index (ICR) of 35% is applied from March 19, 2019 until the establishment of free trade in vehicles, and 40% from the entry into force of free trade. The formula for calculating the ICR from free trade has not yet been established.

Likewise, new automotive products (cars and other light vehicles) are considered original when, as a result of a production process carried out entirely in the territory of any of the Parties, the ICR is at least 20% in each one. of the first two years. In the third year, the ICR of 35 percent will apply.

For some products a lower ICR was temporarily set.

 

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