MercoPress. South Atlantic News Agency

Argentina and Brazil closer to an auto industry agreement

The agreement worked out by Giorgi and Borges leaves out non Mercosur suppliers

Argentina and Brazil have 'cut differences' and advanced significantly in negotiations for an auto integration understanding that could be ready to be signed next week, according to industry sources in Buenos Aires.

 The deal will make more flexible the imports/exports mechanism and an increase in the supply of local auto-parts, to the disadvantage of non Mercosur suppliers.

Discussions advanced following a meeting in Brasilia of Argentina's Industry minister Debora Giorgi and a team of experts with Brazilian counterpart Mauro Borges.

Borges and his delegation of experts are scheduled to visit Buenos Aires next week, when it is expected a definitive agreement can be reached regarding the long standing trade differences between the two neighboring countries.

Apparently the trade flex, in which the discussion was stalled, 2% as Brazil demanded, and 1.3% Argentina's position, was reached with an intermediate number, while the transitory agreement terms will extend until next December, when a new auto industry accord, 2015/2020 becomes effective.

A short time period was agreed to determine the auto parts to be manufactured in the Mercosur block plus increasing the input of auto parts from Argentina and Brazil, and if necessary lower the volume of imports from non Mercosur members.

Apparently the main auto manufacturers are aware of the terms of the agreement being worked out and are fully supportive of the initiative.

In Argentina the slowdown of the economy and weaker demand from Brazil has forced several auto plants to temporarily shut down and send workers on paid leave or to claim unemployment benefits.

Brazil is Argentina's main client for manufactured goods and among those the leading item are autos and other vehicles.