Brazil may increase auto trade quota for Mexico
After booming sales of Mexican cars in Brazil, the Brazilian government is considering raising the auto trade pact quota it agreed to with Mexico.
Brazil¬†is considering raising a three-year bilateral auto trade pact quota it agreed to with¬†Mexico¬†in March, potentially allowing Mexican exporters to sell around $350 million worth of additional vehicles to the Brazilian market annually.
A¬†Mexican government¬†source familiar with the matter and a Brazilian official said the two sides had raised the possibility of increasing the quota after booming sales of Mexican cars to¬†Brazil¬†this year.
Companies in¬†Brazil¬†that import and sell cars are pressuring the¬†Brazilian government¬†over the trade quota, which was used up in the first six months of the modified pact, which took effect in March.
After breaching the limit, Mexican exporters must pay tariffs that significantly increase the cost of sales.
"We understand that they're interested in raising the quota, even though there still hasn't been any official contact," said the¬†Mexican government¬†official. "Our understanding is that they want to raise it to the tune of around $350 million."
The Brazilian official told Reuters that¬†Brasilia¬†was eyeing lifting the quota by between $300 million and $500 million.
Brazil¬†made the move after the value of Mexican car exports jumped around 70 percent in 2011 to $2.4 billion, aggravating a glut of cheaper imports that hurt Brazilian manufacturers.
Asked on Wednesday if¬†Brazil¬†planned to raise the quota, a separate¬†Brazilian governmentofficial said no talks were underway. Any possible talks would take place after incoming president¬†Enrique Pena Nieto¬†takes office in December, the official added.
Mexican exports to¬†Brazil¬†rose by 135 percent to some 109,000 units in the first six months of 2012. In dollar terms, this was a rise of around 112 percent to nearly $1.6 billion.
Additional reporting by Esteban Israel; Editing by Dave Graham, Simon Gardner and Lisa Shumaker.