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Mexico, Argentina Extend Limit on Duty-Free Trade in Light Motor Vehicles

Wednesday, March 18, 2015
Sandler, Travis & Rosenberg Trade Report

Mexico and Argentina have signed an agreement that will extend for four years the so-called ACE 55 agreement setting limits on the value of light-duty motor vehicles and automotive parts that may be traded between the two countries free of duty each year.

Under this extension each country will be able to export US$575 million worth of light-duty vehicles to the other duty-free during the year beginning March 19, 2015. That amount will grow to US$592.25 million during the year beginning March 19, 2016, US$612.98 million during the year beginning March 19, 2017, and US$637.5 million during the year beginning March 19, 2018. However, it appears that each country can also export duty-free to the other an additional amount of vehicles equivalent to the value of vehicles it imports from the partner country. The agreement anticipates a resumption of bilateral free trade in light vehicles beginning March 19, 2019.

In addition, Mexico and Argentina have agreed to preserve the origin rule that requires at least 35 percent regional content in vehicles traded under these tariff-rate quotas, a share that will be increased to 40 percent in 2019.

Finally, the revised agreement seeks to further facilitate auto trade by allowing the exporting companies to manage the TRQs directly.

For more information contact Mirsha Saynes in STTAS' Mexico City office at +52 (55) 52 63 84 40 or Leandro Gonzalez in STTAS' Buenos Aires office at +54 (11) 5984 3955.

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