The protection of the automobile industry in Europe and Mercosur

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.

KEYWORDS:
Industrial policy; protectionism; oligopoly; auto industry