Mexico to drop WTO suit after auto pact with Argentina

MEXICO CITY Sat Dec 15, 2012 3:27am IST

1 of 3. Argentina's Industry Minister Debora Giorgi and Mexico's Economy Minister Ildefonso Guajardo applaud during a joint news conference in Mexico City December 14, 2012.

Credit: Reuters/Bernardo Montoya (MEXICO - Tags: POLITICS BUSINESS)

Stocks

   

MEXICO CITY (Reuters) - Mexico said it would drop a complaint over import curbs against Argentina before the World Trade Organization after the two countries signed a more limited automobile trade pact.

Mexican economy minister Ildefonso Guajardo said the country would withdraw its complaint over Argentina's trade restrictions, which also have drawn challenges from the European Union, the United States and Japan.

"We have instructed our ambassador before the WTO to withdraw the request from a dispute panel," Guajardo said in Mexico City. "We also communicated this to the countries that had accompanied us in the process."

The WTO dispute centers on import licensing rules, which critics say amount to a blanket restriction on imports, and is a separate issue from the countries' recent spat over automobiles.

The auto trade deal announced on Friday cuts the number of cars that Mexico can ship duty-free to Argentina. Under the new three-year accord, Argentina will buy up to $600 million in Mexican cars tariff-free per year.

The new deal "reduces the amount of cars imported from Mexico by about 33 percent, and should restart the flow of trade between the two countries," Argentina Industry Minister Debora Giorgi said, speaking to Argentina's Radio Continental.

Argentina pulled out of a previous auto trade pact with Mexico in June after Brazil, the region's biggest economy, negotiated a cut the number of vehicles it was importing from Mexico. Global automakers have ramped up operations in Mexico in recent years, lured by lower costs.

Argentina had served notice in March that it planned to seek more favorable terms in the pact with Mexico, known as ACE-55, aiming to follow in the footsteps of Brazil.

Mexico refused to renegotiate with Argentina, however, leading to the South American country pulling out of the auto pact in June and a general deterioration in trade relations between the two countries. In August, Mexico complained to the WTO over trade restrictions in Argentina.

Argentina had a $1 billion deficit in vehicles trade with Mexico in 2011. Volkswagen (VOWG_p.DE), Renault (RENA.PA), Nissan (7201.T), Honda (7267.T) and Chrysler had all increased shipments to Argentina from plants in Mexico.

The South American grains exporting country has been tightening controls on imports and foreign-exchange purchases to improve its balance of trade, which is crucial to boosting the international reserves it uses to pay government debt.

Last week, the European Union and the United States formally requested a WTO dispute panel rule that the South American country's import restrictions are illegal.

(Reporting by Adriana Barrera and Alejandro Lifschitz in Buenos Aires; Editing by Michael O'Boyle and Leslie Gevirtz)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

TCS Results

TCS Results

TCS net profit rises 51.5 percent, sees stronger sales growth.  Full Article | Quote 

Google Results

Google Results

Google Q1 revenue misses Wall Street targets.  Full Article 

Ambitious Aim

Ambitious Aim

In green car race, Toyota adds muscle with fuel-cell launch.  Full Article 

Sparking Boom

Sparking Boom

BlackBerry: the crash that launched 1,000 start-ups.  Video 

Telecom Sector

Telecom Sector

RComm to raise mobile call tariff by up to 20 percent  Full Article 

Chinese Economy

Chinese Economy

China economic growth slows to 18-month low in first quarter  Full Article 

Breakingviews

Breakingviews

Diageo throws money at Indian empire-building  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage