Yesterday the Argentine government announced it would suspend the Acuerdo de Complementación Económica (Economic Complementation Agreement, also known as ACE-55) with Mexico for three years, discontinuing tariff preferences in the automotive sector for the latter. The agreement was suspended following Brazil and Mexico’s agreement in March of this year to limit their trade in automobiles and set specific export and import quantities for the next three years, which violated the established terms of the ACE-55, the Argentine government said.

The ACE-55 was signed in 2002 between Mexico and the countries of the Mercosur bloc, comprising Argentina, Brazil, Uruguay, and Paraguay, and entered into force on January 1, 2003. Its principal objective was to promote free trade between Mexico and Mercosur countries and integration of their automotive sectors. In 2007 Mexico and Argentina signed a Strategic Partnership Agreement to increase economic cooperation and coordinate trade approaches. In the agreement signed with Brazil earlier this year, Mexico agreed to limit automobile exports to Brazil to help prop up Brazil’s ailing automobile industry.

Mexican Minister of the Economy Bruno Ferrari requested that the Argentine government reconsider the decision to cancel the ACE-55, which he said “has proven to be beneficial to the bilateral trade relationship.” Further, Ferrari said that Mexico will maintain a strong position in this situation and will use every legal means at the international level to defend its interests. Mexico and other countries are currently preparing to challenge Argentina before the World trade Organization over protectionist policies.