Agoa revs up SA-US motor trade

26 Jan 2001 - By Staff reporter

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Two-way trade expected, writes Ed Richardson

THE INCLUSION of certain motor vehicles and motor components in the list of products qualifying for duty and quota free access to the United States through the African Growth and Opportunity Act (Agoa) is expected to boost motor-related trade between the US and South Africa.
The double benefit of MIDP support and duty free access into the United States market should make it attractive for South African vehicle manufacturers to consider additional manufacturing operations in South Africa with a view to exporting into the largest automotive market in the world, says the Automotive Industry Export Council (Aiec) of South Africa.
In particular, the duty reduction benefit of 25% in respect of various types of goods vehicles should prove of interest to South African commercial vehicle manufacturers, says the Aiec.
The African Growth and Opportunity Act (Agoa) was signed into law by President Clinton on 18th May, 2000 and is aimed at the growth and development of sub-Saharan African states by extending duty free and quota free access into the United States market in respect of a broad range of approved products for a period of eight years.
South Africa is one of 33 countries to qualify in terms of the Act. The effective commencement date of the duty free access
provisions in terms of
the African Growth and Opportunity Act was January 1, 2001.
Products which will enjoy duty-free status include V-belts, fittings for coachwork, iron or steel leaf springs and bearings.
Vehicles that qualify include a wide range of passenger cars, as well as road tractors for semi-trailers and motor vehicles specially designed for travelling on snow.
South African exports into the United States are required to comply with US rules of origin requirements and specifically the local content of South African products exported to the United States must represent at least 35% of the FOB import value of the product into the United States (i.e. the imported content of the product
cannot exceed 65%), says the Aiec.
Products and vehicles may, however, be sourced and manufactured in more than one of the qualifying sub-Saharan countries.
The trade will not be all one way, however. Where components are sourced from the United States, up to 15% of the FOB value of the final product shipped to the US will qualify as South African content.
This should see containers returning with US components.