BRAZIL: Some see EU-Mercosur FTA accord close
An automotive accord between the European Union and the Mercosur region countries has never been so close, some auto industry sources have told just-auto.
Viktor Klima, Volkswagen group's board coordinator for South America, and executive president of the German brand's Argentine subsidiary, is willing to talk on the record.
During the recent launch of the Amarok pickup in near Buenos Aires, Klima reaffirmed his belief that a deal would be announced this year.
An accord was near completion in 2007 but a disagreement over European agricultural subsidies derailed it.
A final accord would see the EU would set a zero tax rate for auto products made in Mercosur, essentially from Brazil and Argentina. But very few models made here would attract European buyers.
On the other hand, Mercosur consumers would appreciate cheaper imports, particularly from German brands.
There would be an initial yearly quota of 60,000 vehicles and a timescale for reducing import tax from the present 35%, the highest accepted by the WTO.
The current idea is zero tax in 10 years but there is pressure from the local auto industry to stretch that to 15 years and boost the annual unit quota slowly to the point of free trade.
But automakers association Anfavea's president Jackson Schneider is sceptical.
"I do not believe in reaching such an accord this year," he told just-auto.
"There are political and diplomatic barriers to overcome, not very different from those that have been stalling negotiations for three years."