BRASILIA, March 8 (Reuters) - Brazil has negotiated the renewal of its car quota treaty with Mexico, Brazil's foreign ministry said on Sunday, trumpeting a deal designed to protect its struggling automotive sector.
The original 2012 treaty imposed tariffs of up to 35 percent on exports above an annual limit of about $1.5 billion, with free trade of vehicles allowed after its expiration on March 19 this year.
The two countries have now agreed to renew the treaty for four years, a Brazilian foreign ministry spokesman said, adding that the quota amount and other details will be released in a press briefing with authorities from both countries on Monday.
Struggling with dwindling car sales, Brazil urged Mexico to extend the agreement to ease the pain for an industry that has fired hundreds of workers in recent months. Mexico, meanwhile, had wanted free trade to bolster its own flourishing car sector.
Brazil sees unrestrained Mexican exports as a big threat to its domestic auto industry. A car sold in Mexico can cost as little as half the retail price in Brazil, where high taxes, transportation bottlenecks and powerful unions have hurt competitiveness.
Hit by falling demand in the face of a weakening economy, Brazil was overtaken by Mexico last year as Latin America's biggest car producer. Brazil posted its first annual trade deficit in 14 years in 2014. (Reporting by Alonso Soto; Editing by David Goodman)