February 4, 2016 / 7:14 PM / 2 years ago

Exclusive: Brazil aims to free auto trade with Argentina, Mexico - minister

BRASILIA (Reuters) - Brazil wants to liberalize trade in vehicles and auto parts with Argentina and Mexico, Trade Minister Armando Monteiro told Reuters on Thursday, in a major shift away from protectionism.

Vehicles sit parked in a lot at a General Motors vehicle factory in Sao Jose dos Campos near Sao Paulo, February 23, 2015. REUTERS/Roosevelt Cassio

“Our auto industry is very competitive and will benefit from those deals,” Monteiro said in a short interview. “We need to move in the direction of free trade.”

President Dilma Rousseff’s government is moving to bolster trade to ease the pains of local manufacturers and take advantage of a weakening Brazilian real BRBY BRL= that has made Brazilian products more competitive abroad.

Monteiro, the former head of a powerful trade group who will travel next week to Mexico and Argentina, has been under pressure from local auto producers who are struggling in Brazil’s recession.

The minister said the government’s priority is to rework a bilateral auto deal with Argentina that expires in late June and advance talks to expand overall trade with Mexico.

He added that the auto trade liberalization with Argentina could be gradual. Despite being major partners of the South American trading bloc Mercosur, the two countries have automobile trade quotas.

A Brazilian government source told Reuters earlier on Thursday that Argentina’s new center-right President Mauricio Macri has signaled he is willing to free auto trade as part of his drive to overhaul the economy.

The same official involved in negotiations with both countries said Mexico needs to limit the imports of used vehicles from the United States before Brazil can fully liberalize trade. Importing cars from its northern neighbor curbs Mexican demand for Brazilian cars, the source said.

Brazil was until recently one of the world’s five biggest auto markets, and it remains a major base of operations for Fiat Chrysler Automobiles NV (FCHA.MI), Volkswagen AG (VOWG_p.DE), General Motors Co (GM.N) and Ford Motor Co (F.N).

Reporting by Alonso Soto; Editing by Cynthia Osterman

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