Brazil accepts Argentina’s trade proposal

10/02/2006

Following a meeting held on February 1, negotiators from Brazil and Argentina have announced that a Competitive Adaptation Mechanism (MAC) is to be established. The MAC system will work to prevent flooding of the Argentine market by Brazilian products and vice versa. The mechanism, which was proposed by Argentina as far back as 2004, will allow the application of safeguards in order to limit imports from a given industrial sector that may be negatively affecting companies in the country of destination. The quotas applied by either country may be enforced for a maximum of four years.

Reacting to the announcement of the MAC, Brazilian President Luiz Inácio Lula da Silva said that the agreement marked a historic event which will contribute to the integration of South America. Argentine Minister of Economy, Felisa Miceli, stated that her country's economy needed time to become strong.

Should either country exceed any quota imposed, the volume of products over the quota limit will be taxed according to the Mercosur Common External Tariff minus 10%. This condition was imposed by Brazil.