São Paulo – The president of the National Association of Vehicle Manufacturers (Anfavea), Cledorvino Belini, said on Monday (6), in São Paulo, that the “worst” for Brazil would be the break of the agreement that Brazil has with Mexico, which allows car trade between the two countries without payment of import tax. He said that what would be ideal, instead of ending the agreement, would be to expand it to other products. The government has already shown this intention.
The Anfavea president, who is also the president of FIAT Latin America, said that the expansion of the agreement could help Brazil balance trade with Mexico. “Cancellation would be the worst possible, but I see an opportunity of increasing the agreement to other products in which Brazil is competitive,” he said.
The trade balance with Mexico generates a US$ 1.5 billion deficit for Brazil, but has already generated a surplus. Belini said that, if Brazil’s deficit in trade with Mexico and the surplus the country has in sales to Argentina are added, the country has greater revenues than expenses. Cars produced in Argentina also do not pay tax to enter Brazil.
The executive added that the models of Mexican cars imported by Brazil complement the Brazilian market.
“It is part of a global production strategy. Larger cars, which do not have economy of scale for production in Brazil, are made in other countries, like Mexico, to complement national production,” he said.
Early this month, the government of Brazil mentioned the possibility of abandoning the agreement with Mexico due to the negative trade balance.
On Friday (3), the president of Mexico, Felipe Calderón, telephoned the Brazilian president, Dilma Rousseff, to propose renegotiation. On the same day, the minister of Development, Industry and Foreign Trade, Fernando Pimentel, said that other products could be included in the agreement, and that it could be expanded, not cancelled. Today, the treaty is valid only for passenger cars. The idea is to start contemplating other items, like buses and lorries.
Exports
Anfavea also presented the sector results for the first month of the year. In January, 268,300 vehicles were licensed, 9.6% more than the 244,900 licensed in the same period in 2011. The group of vehicles includes light vehicles, lorries and buses. Among agricultural machinery, sales last month totalled 4,700 units, 16% more than the 4,000 traded in the same period in 2011. Vehicle production dropped 11.4% as against the same month in 2011 as there were stocks and factories decided to send their employees on leave.
Despite the greater sales of agricultural machinery, the director for the area at the institution, Milton Rego, stated that the forecast this year is for sales to be equal to those of last year, which, according to her, “is good”. “When we see the January results, it is strange to forecast growth of 0% for this year. But maintenance at the same level as 2011 must be celebrated, as the market is adequate for the Brazilian crop,” he said.
Vehicle exports in January grew: in the period, 33,075 units were shipped abroad, or 6.9% more than the 30,940 units exported in the period in 2011. In revenues, the growth was 22.9%, reaching US$ 1.164 billion.
Despite the result for January, the private sector forecasts export of 5.5% less vehicles than in 2011, with the same volume of machinery exports (65,300) and 3% lower revenues than last year (US$ 15 billion). According to Belini, unfavourable exchange causes car exports not to be competitive.
*Translated by Mark Ament
