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Mercosur's Auto Repairs.

ARGENTINA AND BRAZIL ARE RUSHING TO REACH a permanent agreement on autos and auto parts, which together represent 20% of the US$22 billion in annual internal trade within the South American Common Market, known by the Spanish-language acronym as Mercosur.

At the end of 1999, the countries failed to reach a long-term agreement, forcing a temporary two-month fix ending Feb. 29,2000 to keep the industry rolling.

Under the interim accord, Argentina and Brazil imported vehicles at tariffs of 32% and 35%, respectively, instead of the 23% common tariff called for under the Mercosur pact.

Already reeling from the impact of the Brazilian recession, Argentina's auto industry, which made one out of 12 cars sold in Brazil last year, would be the hardest hit if tariffs remain at the temporary levels.

The near head-on collision over cars culminates a year of accusations of dumping--selling goods below the cost of production--in the trade of various products.

Indeed, after the Brazilian real devaluation at the start of 1999, the two countries spent most of last year "temporarily" rebuilding trade walls that the Mercosur pact had knocked down.
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Author:Fabey, Michael
Publication:Latin Trade
Article Type:Brief Article
Geographic Code:3ARGE
Date:Mar 1, 2000
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