Drop in EU import duties opens market access for SA auto industry

ALAN PEAT DECEMBER 15 signalled an end to European Union (EU) import duties on SA automotive parts with these products becoming part of the trade, development and co-operation agreement (TDCA). Most automotive consignments are now entitled to preferential tariff treatment, if they meet the product-specific rules of origin contained in Protocol 1 of the trade pact, and if they are accompanied by an EUR1 certificate of origin form from SA Revenue Service (Sars) customs. In the agreement, EU customs duties on automotive components immediately dropped to zero, while the duties on fully-built-up cars will be phased down from 10% to zero by January 1, 2008. A spokesman for the department of trade and industry told FTW that this was expected to substantially improve SA’s market access into the member states of the EU, and ought to encourage further investment in the auto sector. In SA’s reciprocal deal, the duties on some components for the after-market will come down – some to zero and some to a lower level. The duty on fully-built-up cars and light commercial vehicles (LCVs), meantime, will be phased-down from 25% to 18% in 2012. Duty on heavy commercial vehicles (HCVs) is to drop from 20% to 12%, while duties on components for original equipment (OE) assembly remain unaffected. According to DoT&I reckoning, these duty reductions ought to put further downward pressure on cost structures affecting imports from the EU, which should – in the case of trucks – have a positive effect on the cost of transport. The department also feels that the gradual reductions in duty will allow the industry to adapt to the new competitive pressures from EU product imports.