The Brazilian industry and the government will have to prepare the automotive sector to the commercial agreement between the MERCOSUR (common market of South America) and the European Union, said Luis Carlos Moraes, head of the National Association of automobile manufacturers of Brazil (Anfavea). He noted that the competitiveness of automakers in the country should be strengthened in the light of the liberalization of imports from the EU.
The agreement between the two economic blocs was signed last week and includes the lifting of import barriers on 90 percent of goods.
Despite the fact that the timing of the entry into force of the Agreement has not been ratified by the parliaments of the participating countries and the implementation of the new rules will happen gradually over 15 years, in Brazil, are already preparing for the expansion of the European automobile industry after the reduction of import tariffs, which currently amount to 35 percent.
“Yes, it is a threat, and we must go to eliminate it,” said Moraes at the briefing dedicated to the automotive industry.
In his opinion, necessary tax reform in addition to improving the bureaucratic and logistical conditions for the Brazilian industry.
Given the protracted crisis in Argentina, which is the main external market of Brazilian automotive industry, the future tax reform must open the way for a successful market entry the EU, according to Anfavea.
It is also expected that efforts to improve competitiveness in Europe will reduce prices in the domestic market of Brazil.
In the first half of 2019 car production in Brazil increased by 2.8 percent compared to the same period last year and amounted to 1.47 million units. At the same time, exports of vehicles decreased by 41,5%, abroad sold about 221,9 thousand vehicles, against 379 thousand units a year earlier.