Mercosur extends list of goods exempt from external tariff
Mercosur countries will be allowed to increase by 50 the number of product types exempt from the bloc’s common external tariff. The agreement was signed by the Common Market Council in Uruguay’s capital Montevideo on Thursday (Jun. 26).
This means that the amount of goods that Brazil and Argentina will be able to include on the list of exceptions to the tariff will rise from 100 to 150 by 2028. For Uruguay, it goes from 255 to 275 by 2029. For Paraguay, from 649 to 699 by 2030.
The tariff reduction for the 50 additional items can only be applied to a product when its exports to a given Mercosur member do not surpass 20 percent of the total for the product’s tariff code. Also, to avoid concentration in any economic sector, exemptions are limited to 30 percent of the new tariff codes.
In Brazil, the regulation was negotiated by the Ministry of Foreign Relations and the Ministry of Development, Industry, Trade, and Services. In a statement, the Development Ministry said the decision improves Mercosur’s ability to react to trade distortions created by barriers or practices not authorized by the World Trade Organization.
“The [list of exceptions] represents an additional instrument at the disposal of the Brazilian government to address trade detour in the face of uncertainties about trade barriers,” said Márcio Elias Rosa, executive secretary at the Development Ministry.
To come into force in Brazil, the country’s Foreign Trade Chamber must issue a resolution.
Customs union
As a customs union, Mercosur requires member nations to apply the same import tax to products, ensuring that a product is imported at the same rate by any member country. Once a good has entered the bloc, it can transit between member countries at a zero rate.
A free-trade area, on the other hand, exempts tariffs between member countries without the alignment of import rates—allowing goods to enter a country that charges the lowest tariff and circulate freely between the countries in the free-trade area.
