Mercosur Meeting to Focus on Trade Disagreements

Officials from Brazil, Argentina, Paraguay and Uruguay will meet this week in a bid to hammer out trade spats that are souring relations within Mercosur, the world’s third-largest trade bloc. Beginning today, trade representatives said they will converge on Rio de Janeiro in hopes of finding solutions to trade wars raging over cars, chicken and sugar between the biggest partners, Brazil and Argentina. The most polemic talks will center on the auto accord between Brazil and Argentina after negotiations were suspended last week in a fresh controversy about assembly quotas. At the center of the dispute is a new Argentine decree that includes the origin of raw materials when determining whether a car can qualify for preferential tax treatment when bought from Mercosur members. Under the accord signed in June, cars containing at least 30% locally produced parts qualify for preferential treatment. But Brazil argues that examining the origin of raw materials, such as the steel used to build an engine, would make Brazilian car sales inviable in the Argentine market. The car industry accounts for 25% of Mercosur trade.