Mexico City, Mexico - After running up a $2 billion deficit, Argentina has announced a three year suspension of its 10-year-old free trade agreement with Mexico centered on their respective auto industries, discontinuing tariff preferences for the latter.

The Argentine government said the protocol made in March between the two countries that limited exports of Mexican vehicles to Brazil, "constitutes a grave violation" of the ACE 55 pact between Mexico and the Mercosur trade bloc, comprising of Argentina, Brazil, Paraguay, and Uruguay.

ACE 55 mandates that any change in terms must be approved by all signatories, Argentine President Cristina Fernandez said in her executive order suspending the automotive part of the accord.

Mexico's Minister of the Economy, Bruno Ferrari, said that his country would lodge a complaint with the World Trade Organization against Argentina

The move was in keeping with President Kirchner's "battery of measures taken recently to reduce the trade deficit."

The Brazil-Mexico agreement represents "a threat of serious, imminent and irreparable damage to Argentine automotive product manufacturers," the order said.

Mexico's Minister of the Economy, Bruno Ferrari, said that his country would lodge a complaint with the World Trade Organization against Argentina for restricting Mexican imports and seek a settlement of the trade dispute within the Latin American Integration Association.

The suspension means 36 percent tariffs will be slapped on Mexican auto imports, and auto parts will be hit with tariffs ranging from 16 to 18 percent.

The trade agreement, signed in 2002, had set a schedule for eliminating trade barriers between the two countries in the automotive sector and aimed to promote complementary production schemes. But, Argentina ran a $700 million deficit in the automotive trade with Mexico in 2011, and a $2 billion trade deficit overall with the country.

While Mexican exports to Argentina rose 130 percent between 2006 and 2011, Argentina's exports to Mexico fell by 40 percent, a source in Argentina's ministry of industry said.