The misfortune of some makes the happiness of others. Yes European farmers are worried about the consequences of a free trade agreement between the European Union and the Mercosur countries (Brazil, Argentina, Uruguay, Paraguay), car manufacturers rejoice, hoping “Take advantage of the reduction of customs duties” provided by the text.
Currently, customs tariffs on cars rise up to 35%, between EU countries and Brazil or Argentina in particular. However, the agreement provides the removal of 91% of these taxes. “The Association of European Automobile Manufacturers (ACEA) welcomes” the signing of this text offering “a real growth potential to the European automotive industry, given the size of the market,” she writes in a communicated.
Market shares to take
In 2018, no less than 3.3 million new cars were sold in the Mercosur countries. The European Union has exported 73,000 vehicles to the region, ie 2.2%. “On the other hand, about 234,000 were imported from other countries”, representing nearly 8% of the total market. The association sees in this gap the possibility of increasing the share of European manufacturers.
Beyond the elimination of tariffs, industrialists will benefit “from the elimination of non-tariff barriers and the creation of new import and export synergies”. In addition, the agreement provides for the Mercosur countries to accept certified motor vehicles that comply with international UN regulations. All these measures will facilitate exports.
Counterweight to the trade war
For European manufacturers, this text counterbalances the trade war between the United States and China. This has already affected several European automakers, like Daimler and BMW.
If the threat issued by US President Donald Trump, to tax up to 25% on cars manufactured outside the United States has not yet been put in place, steel taxes have had an impact on manufacturing costs. Finally, European manufacturers are being retaliated by China. The latter tax up to 40% cars manufactured in the United States.