Ace 55 Free Trade Agreement

Mexico`s trade surplus with the United States reaches a record high of $81.5 billion in 2018 Under the auto deal, countries negotiate annual bilateral import quotas for duty-free car imports. Such annual quotas have been established between Mexico and Argentina; Mexico and Brazil; And Mexico and Uruguay. Negotiations on the agreement on the automotive sector, concluded on 5 July 2002 at the XXII Summit of MERCOSUR Presidents. The agreement signed on 27 September 2002 provides for free trade in cars from July 2011. Brazil is Mexico`s largest trading partner in Latin America and accounts for 23% of Mexican trade. In this bilateral relationship, the replacement of vehicles and parts is essential as motor trade accounts for almost half (46%) of bilateral trade flows (2014). The agreement takes into account Mexico`s export potential and the evolution of the Brazilian automotive market in 2014; it recorded annual declines in production and exports of 15.3% and 40.9% respectively, a trend that accelerated in the first quarter of 2015. ACE 55 was an agreement signed in September 2002 between Mexico and the Mercosur Bloc, Brazil, Argentina, Paraguay and Uruguay. The agreement laid the foundation for the establishment of a free trade agreement in the automotive sector, while promoting the integration of regional supply chains in Latin America. Full implementation of free trade conditions is expected to arrive on 1 July 2020. However, a three-year extension has been agreed between Mexico and Brazil.

The Agreement entered into force on 1 January 2003. In Brazil, the agreement entered into force on 15 January 2003. „Once this transition period is over, free trade in cars will enter into force at the same time as the expansion and deepening of the Mexico-Argentina ACE 6,“ the SE said. ECA55, which entered into force in 2003, has enabled the Mexican and Brazilian automotive industries to harmonize business initiatives and further integrate their production processes through free trade in cars and their parts, thus generating economic growth in both countries. Auto trade with Brazil amounted to $US 4.68 billion, with Mexican exports of $US 2.77 billion and a surplus of $US 868 million, triple the $280 million recorded the previous year. Mexico and MERCOSUR sign trade agreements (Economic Complementation Agreement 54) 2011 notably showed Mexican automobile exports to Brazil by 70%. As a result, Brazil has threatened to abandon the ACE 55 agreement if Mexico does not agree to stick to forced cuts in car sales to the country. These cuts, introduced in March 2012, artificially used Mexican auto imports, contrary to the long-standing pact for vehicle trade between Mexico and Mercosur. Compared to car sales in 2011, the restrictions that have been introduced are more important. This measure could pose problems for Mexico and generally reflects negatively the spirit of free trade between the MERCOSUR countries and itself. In 2015, the two countries began a negotiation process for the expansion of ACE 55. .

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