Automakers Seek to Extend Argentina-Brazil Trade Pact After 2029

The vehicle production chains in Argentina and Brazil have operated under a mutual protection scheme since 1990, allowing the circulation of units and parts without customs costs. This mechanism, part of the Economic Complementation Agreement (ACE 14), is valid until June 2029. Executives in the sector are pushing for negotiations for a long-term extension, seeking operational stability. Decisions regarding new capital disbursements are planned years in advance, so companies require clear signals about the future of trade. While the Brazilian private sector favors unrestricted exchange, Argentine companies seek to preserve protection clauses. The Flex mechanism determines the proportion of dollars that a country can dispatch in relation to what it imports. Currently, Brazil can send up to two dollars in products for every dollar imported from Argentina, with gradual increases to three dollars by 2028-2029. The common external tariff of 35% acts as a barrier against products from outside the bloc. Trade dynamics vary according to the strategy of each automaker: Ford exports without importing from Brazil, Peugeot ships from its plant without importing, while Toyota, Volkswagen, Fiat, General Motors, and Renault maintain bilateral flows. Citroën, Jeep, Nissan, and Hyundai import Brazilian models without local shipments.

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