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3 40% of its components be manufactured in the country of origin. This demand, according to sources, could curtail a bit the import of Mexican vehicles, given that its industry is very integrated with that of the United States. At any rate, the decision runs counter to the automakers’ wishes. The president of Anfavea, Antonio Megale, said Monday 11 that the industry was favorable to the maintenance of quotas that had been in place since 2012 at the request of the Brazilian administration, which, back then, was concerned about the prospect of increase in imports from Mexico. In the last twelve months, the quota was set at US$ 1.7 billion, for both imports and exports, and Mexico had a surplus. The Mexican manufacturers send to Brazil models with higher added value, such as the Chevrolet Tracker, Nissan Sentra and Volkswagen Jetta, whereas the models going from Brazil to Mexico are of smaller value. In addition to this, the Mexican market has recorded smaller volumes of late, as opposed to the domestic market, which is in ascent. Megale suggested taking time this year, with newly elected governments in both countries, to discuss a new quota, a little bit more generous, as well as other terms, such as local content, which should have been put on the table last year, and decisions to improve competitiveness of local manufacturers. Execs in the sector say that one study commissioned by Anfavea shows that the Mexican automotive industry is about 20% more competitive than Brazil’s. The executives’ concern is to lose leverage to negotiate new investments. The possibility of importing products from Mexico without an import duty, and without a ceiling, could lead the companies’ headquarters abroad to place their money on their North America neighbors. Governments of the two countries have decided to maintain the terms of their bilateral agreement signed in 2015 and trade between the two countries becomes tax-free.