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Latino Daily News

Thursday June 28, 2012

Dissatisfied by Brazil-Mexico Agreement, Argentina Suspends Auto-trade Accord

Dissatisfied by Brazil-Mexico Agreement, Argentina Suspends Auto-trade Accord

Photo: Members of the Mercosur trade bloc

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Argentina announced Tuesday a three-year suspension of the automotive portion of a 2002 economic accord with Mexico, citing the impact on the Argentine auto sector of a side agreement Mexico City signed in March with Brazil.

The Argentine government said the protocol limiting exports of Mexican vehicles to Brazil “constitutes a grave violation” of the ACE 55 pact between Mexico and the Mercosur trade bloc, comprising Argentina, Brazil, Paraguay and Uruguay.

ACE 55 mandates that any change in terms must be approved by all signatories, Argentine President Cristina Fernandez said in her executive order suspending the automotive part of the accord.

The Brazil-Mexico side agreement represents “a threat of serious, imminent and irreparable damage to Argentine automotive product manufacturers,” the order said.

Argentina posted a deficit of around $1 billion last year in automobiles and automotive parts with Mexico, up from $380 million in 2010.

Buenos Aires’ initial reaction to the March deal between Mexico City and Brasilia was to seek a similar arrangement. But Mexico flatly refused to consider any modification to the automotive clauses of ACE 55.

The move by Buenos Aires to suspend the auto clauses comes as the Mexican government is preparing to accuse Argentina before the World Trade Organization of erecting barriers to imports from Mexico.