On December 9 and 10, 1998 the XV meeting of the Common Market Council took place at the city of Rio de Janeiro, with the participation of the heads of state of the members of Mercosul: Fernando Henrique Cardoso (Brazil), Carlos Menem (Argentina), Raul Cubas (Paraguay), Julio Maria Sanguinetti (Uruguay) and the presence of associated states heads Hugo Banzer (Bolivia) and Eduardo Frei Ruiz-Tangle (Chile). At this time, several issues were discussed and decisions were made in areas of relevant importance.
It was agreed that a new common automotive system was to come into force in the year 2004 following a period of transition to begin on January 1, 2000.
Until the 15th Summit, in the matter of interzonal commerce, manufacturers were able to import cars of their own brands paying an average rate of 9%, while importers were to pay a rate of 23%. The 15th Summit of Mercosul brought a novelty: the zero tariff rate was confirmed for the interzonal negotiation of vehicles starting from the date of free trade, January 1, 2000. Nevertheless, a period of transition was established in certain areas. During this period trade will undergo a governmental group monitorial action to evaluate the results of the system.
Regarding the matter of importation from countries outside of Mercosul, before the mentioned meeting, the rates of importation of automobiles were, respectively, 49% for Brazil, 33,5% for Argentina, 23% for Uruguay and between 10% and 15% for Paraguay. During the meeting, it was established that there will not be preferential rates for import of already assembled vehicles.
From the 2000 year, Brazil and Argentina will have to pay an Common External Tariff Rate (ETR) of 35% for the importation of automobiles, light commercial vehicles and automobiles bodies from countries that do not belong to Mercosul.
For the buses, trucks, trailers, and highway tractors, the ETR will be 35%. It was established that Argentina will be able to import trucks and buses from countries outside the Mercosul with the rate of 30% starting from the year 2000 with progressive increase until 2004 when it will have to apply a rate of 35%.
For agricultural tractors, harvest machines and highway construction vehicles, the ETR will be 18%.
For autoparts, before the meeting, imports from countries outside the Mercosul were subject to a rate of 2%. Now, starting in the year 2005, for autoparts, parts and components, including pneumatics, the ETR will vary from 14%, 16% or 18% depending on the product. A period of preferential rates was inaugurated for import of autoparts, to be gradually increased between years 2000 and 2005. During this period, manufacturers will be able to import parts outside of the Mercosul with a rate between 4% and 6%. To that end, manufacturers will have to guarantee that more than 60% of the parts are from regional manufactures.
It was also established, that after year 2005, there will no longer exist any state subsidy of manufacturers.
Uruguay and Paraguay remained outside of this harmonization because they considered the rate of 35% far too high, raising the final price of the imported cars, whereby, in the near future a lower rate of importation to the two countries will have to be established.
In the sugar sector, there was a minimal progress in the matter of the free trade of sugar in the Mercosul and principally in litigation, between Brazil and Argentina. The sole progress was a symbolic reduction of the rates applied to the Brazilian sugar from Argentina, settled at 20,7%.
Nevertheless, there was progress in consumer rights. Previously, consumers did not have access to manufacturers and could not complain in case of product´s defect. At the 15th Cupula, the directors reaffirmed their political wish to progress with the process of harmonization of subject legislation. The technical groups approved the determination that the importers would be the responsible for the specifications of imported products negotiated in Mercosul country. With that, importers will have to answer for defective products sold by them and will no longer be allowed to shift the responsibility to the manufacturers. All importers will have to comply with these to these rules in their respective countries and will be subject to monitoring by Procon.
Regarding the labor sector, a forum of debate will be probably be created for those committees within the ambit of the Common Trade Group (CTG), however free circulation of labor was not discussed.
Regarding education sector, a triennial plan was elaborated to guarantee the acknowledgment of educational and professional study of citizens of each Mercosul country.
Regarding the fiscal sector, government representatives were willing to proceed with the long term process of coordination of macroeconomic and sectorial policies.
Lawyer admitted in Brazil, England and Wales and Portugal. GATT and WTO panelist. Brazilian government ad-hoc representative for the Uruguay Round of the GATT. Post-graduation professor of the law of international trade.