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Mexico Trade War With Brazil Brewing

 

Mexico has sent a high-level ministerial and diplomatic delegation to Brazil to try to save a trade deal worth billions of dollars to the automotive, bus and truck industries in both countries.

Brazil is unhappy that in the past two years the auto trade surplus it once enjoyed with Mexico has turned into a deficit.

Mexico’s economy ministry said the so-called Economic Complementation Agreement 55 (Ace 55) had allowed auto trade between the two countries to grow to $2.5 billion last year from $1.1 billion when it was signed in 2003, according to a news release announcing the departure for Brazil of deputy trade minister Francisco de Rosenzweig, diplomat Rogelio Granguillhome Morfín and others.

"The agreement has also allowed for greater integration and complementation of automotive production, including major benefits for both countries’ auto parts sectors," the ministry said, adding that it "has no intention of renegotiating" Ace 55.

The statement posted on the ministry’s website said that according to Brazil "there has been a growing deficit with our country in the trade of light vehicles in the past two years, a situation that contrasts with the notable surplus enjoyed by Brazil during the first six years of the agreement. In the 2003-11 period, Mexico’s accumulated trade deficit with Brazil in products covered by Ace 55 was close to $10 billion."

It added that bilateral trade between the two countries not covered by Ace 55 also had favored Brazil. "From 2003 to 2011, Mexico has had an accumulated total deficit of $22 billion with Brazil."

The ministry said that organizations in Mexico that represent light and heavy-duty vehicle manufacturers and producers of parts and components "have expressed their total support" for the government’s stand against Brazil.

Mexico is among the world’s top 10 auto producers and the sixth largest car exporter, according to Lorenza Martínez Trigueros, head of the economy ministry’s industry and trade section.

Mexico exported more than 2.14 million vehicles last year, up 15.3 percent from 2010, accounting for 83.3 percent of total production, of which 63.5 percent went to the United States and 15 percent to Latin America (up from 11.1 percent in 2010), according to Mexico’s automotive industry association, Amia.

 

 
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