Abstract

The auto industry is an international oligopoly that has a long tradition of influencing
trade negotiations and national policies. Due to the industry’s size and production
linkages, the investment decisions made by the assembly firms often generate economic consequences
that can be easily transformed into political power. This paper discusses the rules
implemented by the European Union during this decade to face this challenge, highlights the
differences in regard to the measures applied by the Brazilian government since 1995 and
suggests that the European policies are especially suitable for Mercosur.

JEL Classification: L52; L62; L13; F13.