News
Print PDF

Professionals

General Manager vCard
  • STTAS

Extended Mexican Auto Trade Pacts Pose Difficulties for Parts Manufacturers

Friday, March 27, 2015

New information made available by the Mexican government this week suggests that auto parts manufacturers may have a hard time meeting the revised requirements in the ACE 55 agreements Mexico recently updated with Argentina and Brazil concerning trade in light-duty motor vehicles and auto parts. These agreements provide for duty-free trade in these items up to specified amounts, which will increase each year for four years.

Sandler & Travis Trade Advisory Services’ Mexico City office reports that under the updated agreements, which took effect March 19, the regional value content requirement that auto parts (both OEM and spare parts) are generally required to meet has been lowered from 50 percent to 35 percent. However, the formula for calculating the RVC has been revised so that it will be more difficult for parts to meet this requirement.

OEM parts will continue to have the option of meeting the previous requirements of 50 percent RVC, using the old formula, or the appropriate tariff shift. Spare parts, on the other hand, will have to fulfill the 35 percent RVC requirement using the new formula.

There are also two separate lists of auto parts that have a lower RVC requirement: 18, 19 or 20 percent on one list, until 2019, or 20 to 30 percent on the other list, increasing to 35 percent for March 2017 through March 2019 and 40 percent beginning in March 2019. The new RVC calculation formula will have to be used for these parts.

The value of light-duty vehicles and auto parts that may be shipped between Mexico and Brazil and Mexico and Argentina under the updated agreements is as follows.

Year beginning March 19

Argentina

Brazil

2015

$575 million

$1.56 billion

2016

$592.25 million

$1.606 billion

2017

$612.98 million

$1.655 billion

2018

$637.5 million

$1.705 billion


For more information contact Mirsha Saynes in STTAS' Mexico City office at +52 (55) 5263 8440, Flavio Siqueira in STTAS' São Paulo office at +55 (11) 3045 3080, or Leandro Gonzalez in STTAS' Buenos Aires office at +54 (11) 5984 3955.

Customs & International Headlines