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2 S ão Paulo – Governments of Brazil and Mexico will return to the negotiation table to review some of the terms of the bilateral automotive trade agreement, which from last March on started to operate under the free trade system. According to Anfavea president, Antonio Megale, the main issue involves rules for the origin of local content, whose current format satisfies none of the sides. These rules should have been addressed in last year’s discussions -- which did not take place given that both countries were in an election year. In opting for the free trade, the countries had agreed on rising from 35% to 40% the level of local content, but many companies are struggling to get to that goal. “The biggest hurdles are in the trade flow from Mexico to Brazil, but some Brazilian companies are facing problems as well.” The rule of origin established in the agreement defines a calculation based on the value of the original materials on the final price of the product, discarding potential production processes locally done. Should the steel be imported, for instance, the handling of raw material for the production of a component made on- premises is disregarded – and the price of the imported steel goes fully into the calculation. To Megale, ideally, we should use the formula that applies to Mercosur, which includes these productive processes: Brazil and Mexico to resume discussions on the trade agreement ASSESSMENT FROM ANFAVEA By André Barros The purpose is to review the rules concerning the origin of local content; return to quotas for both sides is not to be ruled out Photo: Ivan Bueno/APPA