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Commercial Panorama - Brazil/Uuguay

Last Thursday, June 9, in the midst of the celebration of the Summit of the Americas, which took place in the city of Los Angeles, the governments of Uruguay and Brazil, represented by their Ministers of Foreign Affairs Francisco Bustillo and Carlos França, managed to achieve great advances with regard to bilateral trade relations between the two countries and in relation to Mercosur.

This is consolidated through the conclusion of an agreement between the two nations in which several sensitive points of the commercial relationship between the two countries and those related to the economic bloc are established. One of the main sealed points is Uruguay's commitment to supporting and adhering to the much-requested reduction of the Common External Tariff for imports from the countries that make up MERCOSUR, an issue that Brazil has been complaining about for some time, seeking to improve inflation levels and amortize the economic damage suffered by the pandemic and the war in Ukraine.

With this possible reduction, which will have to be discussed among the member countries of the bloc, it is estimated that the customs tariff on imports from non-Mercosur countries should decrease by an average of 20%.

The Ministers recognize that the Mercosur Common External Tariff is not meeting the current needs of its member countries and that, by reducing it, they could favor and contribute to increasing levels of competitiveness among them.

On the other hand, the countries agreed the conditions for industrial goods produced in the free zones of both countries to have preferential access to the neighboring country, which implies that the products can access the markets of each country with a tariff of 0%. This agreement is granted for an unlimited period, unlike the previous regime, where it had to be renewed year after year, in addition to covering all the free zones of each country, excluding only the automotive and sugar industry sectors.

This type of agreement generates great opportunities for binational investments that combine production in Uruguayan free zones with the possibility of inserting these products in the Brazilian market.-

In addition, Uruguay has authorized the importation of yerba mate produced in Brazil even when the levels of the chemical element cadmium in the product reach the maximum limit imposed by health regulations within the scope of Mercosur. It can be considered that this fact is of great importance for Brazil, since Uruguay is the main importer of this product in the Brazilian industry, representing 60% of the imports of this item.

Last but not least, both countries understand the need for a process of modernization and flexibility of the economic bloc's negotiation policies so that they can respond to the current situation of their members. To this end, Brazil committed to working on the bloc's external agenda and discussing the flexibilities in negotiations required by eventual agreements with countries that are not part of Mercosur. _______________________________________________________________________________________________________

Carolina Bender - member of the Institutional Ambassy of IBREI in Uruguay


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