MercoPress. South Atlantic News Agency

Mercosur widens list of external tariff-free goods

Certain restrictions apply to avoid concentration in any economic sector

The Southern Common Market (Mercosur) countries will be allowed to add 50 product types to the bloc's common external tariff-free items, per an agreement signed in Montevideo.

Hence, the amount of goods that Brazil and Argentina will be able to include on the list of exceptions will rise from 100 to 150 by 2028. For Uruguay, it goes from 255 to 275 by 2029. For Paraguay, from 649 to 699 by 2030.

The tariff reduction for the 50 additional items can only be applied to a product when its exports to a given Mercosur member do not surpass 20% of the total for the product’s tariff code, it was explained. Also, exemptions are limited to 30% of the new tariff codes to avoid concentration in any economic sector.

In Brazil, the regulation was negotiated by the Ministries of Foreign Relations and Development, Industry, Trade, and Services. In a statement, the Development Ministry said the decision improves Mercosur’s ability to react to trade distortions created by barriers or practices not authorized by the World Trade Organization.

“The [list of exceptions] represents an additional instrument at the disposal of the Brazilian government to address trade detour in the face of uncertainties about trade barriers,” said Márcio Elias Rosa, executive secretary at the Development Ministry.

For the new deal to come into force in Brazil, the country’s Foreign Trade Chamber must issue a resolution.

As a customs union, Mercosur requires member nations to apply the same import tax to products, ensuring that a product is imported at the same rate by any member country. Once a good has entered the bloc, it can transit between member countries at a zero rate.

A free-trade area, on the other hand, exempts tariffs between member countries without the alignment of import rates, allowing goods to enter a country that charges the lowest tariff and circulate freely between the countries in the free-trade area. (Source: Agencia Brasil)