Ace 55 Agreement

On 10 March 2015, the Brazilian and Mexican governments agreed to amend the Economic Supplement Agreement 55 (ACE 55). A few days later, on March 16, 2015, Argentina and Brazil signed with Mexico the fifth additional protocol in Schedule I and the fifth additional protocol in Schedule II amending ACE 55. On March 19, 2019, Argentina and Mexico agreed to continue trading on a quota basis for a new three-year year. From March 19, 2019, the rate of car traffic between Mexico and Argentina will increase by 10% per year in the first year, 5% in the second year and 5% in the third year. Once this transition period is over, free trade in cars will enter into force simultaneously with the expansion and deepening of ACE 6 Mexico-Argentina. The agreement takes into account Mexico`s export potential and the development of the Brazilian automotive market in 2014; It recorded annual declines in production and exports of about 15.3% and 40.9%, a trend that accelerated in the first quarter of 2015. The two countries began a negotiation process in 2015 to expand ACE 55. The agreement will give companies additional time for heavy vehicle supply chains to adapt to future competition standards, while maintaining their operations under truly “unfavourable” conditions defined by the pandemic. In addition to low costs, high productivity, skilled labour and geographic proximity, Mexico has numerous free trade agreements with dozens of countries that make Mexican automotive products more globally competitive. Brazil`s President Dilma Rousseff is grappling with an economic policy aimed at maintaining Brazil`s GDP growth, while the country`s currency continues to gain strength. Brazil`s protectionist measures may do so at the expense of the country`s status as a trading and investment partner in the future. The renegotiation of the ACE-55 agreement is of concern to many potential partners.

The agreement entered into force on January 1, 2003. In Brazil, the agreement came into force on 15 January 2003. The amendment agreement to ACE 55 will enter into force on 19 March 2015 and Mexico, the only such agreement in Brazil with a country that is not a member of MerCOSUR, will retain privileged access to the Brazilian automotive market. This agreement will guarantee duty-free access for the export of light vehicles from Mexico to Brazil as follows: in 2011, Mexican motor vehicle exports to Brazil, in particular, increased by 70%.