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Brazil won't budge on auto demands with Mexico-official
March 14, 2012 / 7:28 PM / 6 years ago

Brazil won't budge on auto demands with Mexico-official

MEXICO CITY, March 14 (Reuters) - Brazil and Mexico resumed talks to save a decade-old auto trade deal on Wednesday, but a Brazilian official told Reuters Latin America’s top economy was unlikely to back down from its demands.

Brazil is threatening to pull out of the trade deal, signed in 2002, after Mexican exports jumped almost 70 percent in 2011. Mexican-made cars are contributing to a glut of imports to Brazil that is worrying Brazilian manufacturers who are battling a strong local currency.

Brazil wants Mexico to slash its auto exports to Brazil by more than a third to about $1.4 billion a year. Mexico rejected that demand, saying it was willing to limit exports for several years at 2011 levels.

Brazil’s bid to reduce Mexican auto exports could upset countries like the United States, which provide components for cars made in Mexico, and dent operations of international carmakers with production plants in the country.

Brazil’s Trade Minister Fernando Pimentel and the country’s Foreign Minister Antonio Patriota are meeting with Mexico’s Economy Minister Bruno Ferrari and Foreign Minister Patricia Espinosa in Mexico City.

“The mission arrived with practically the same position that has been already laid out. We want what we want, and now we will talk face-to-face,” a Brazilian official with knowledge of the talks told Reuters. They are due to wind up later on Wednesday.

“We want to grease the wheels a bit, but there is not much flexibility on Brazil’s part, so let’s see how this turns out,” the official said.

Brazil’s tough line in the auto talks follows a sharp slowdown in Latin America’s largest economy after a sustained period of strong growth that drove the country to the front ranks of global economies.

Mexico is a leading proponent of free trade and its exports make up nearly a third of its economy. Brazil has been far more skeptical of tearing down trade barriers and exports make up little more than one-tenth of its economy.

Besides an import quota for Mexico, Brazil wants to liberalize trade on heavy vehicles and make Mexico raise the amount of Latin American-made auto parts used in its cars.

U.S. carmakers Ford Motor Co. and General Motors Co were the two biggest car exporters from Mexico last year, followed by Germany’s Volkswagen.

Brazil’s strong local currency is making local-made models less competitive against imports.

Data on Tuesday showed Mexico’s auto production and exports leaped 24.1 percent in February after exports to Brazil more than doubled in the first two months of the year.

Mexico’s exports to Brazil accounted for little more than 6 percent of its total exports last year, but that rate had jumped from around 1.5 percent in 2007.

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