(EU)
14 December 2006
On 14 November 2006 an announcement was made in Brussels, Belgium,
concerning a trade agreement on automotive products concluded between South
Africa and the EU. The agreement is effective as from today, 15 December
2006.
From today, most automotive consignments would be entitled to preferential
tariff treatment, subject to two important conditions:
a) the consignments must meet the product specific rules of origin contained
in protocol one of the trade, development and co-operation agreement between
South Africa and the EU, that can be accessed at http://www.sars.gov.za/ce/general/trade/tradeeuandsa.htm
b) the consignments must be accompanied by certificates of origin form EUR.1
issued by Customs.
The main features of the agreement are as follows:
* On the EU's side the customs duties on automotive components would drop to
zero with effect from the entry into force of the agreement, whilst the duties
on fully built up cars would be phased down from the current level of 10
percent to zero by 1 January 2008. This is going to substantially improve South
Africa's market access into the 25 Member States of the EU and ought to
encourage further investment into the auto sector.
* On South Africa's side the duties on some components for the after market
would come down in some instances to zero and in some other to a lower level;
the duty on fully built up cars and light commercial vehicles would be phased
down to reach a level of 18 percent in 2012, compared to a normal duty of 25
percent whilst an additional three percentage points would be added to the
existing five percentage point margin of preference on heavy commercial
vehicles, which would bring the duty down to 12 percent instead of a normal
duty of 20 percent. South Africa's duties on components for industrial (OE)
assembly would not be affected. These duty reductions ought to put further
downward pressure on cost structures affecting imports from the EU. In the case
of trucks this could have a positive effect on the cost of transport. The fact
that the reductions will be gradual would enable the industry to adapt to these
new competitive pressures to come from products originating in the EU.
Background
The automotive sector was not fully covered by the disciplines of the South
Africa-European Union (SA-EU) Trade, Development and Co-operation Agreement
(TDCA) that was signed in 1999. However, articles 11.5 and 12.7 of the
agreement do make provision for the sector to be incorporated into the TDCA at
a later stage.
On 14 November 2006 after protracted negotiations, South Africa and the EU
signalled their intention to include most of the automotive products into the
TDCA. The agreement was today signed into legal text by the co-chairs of the
joint SA-EU Co-operation Council, namely the Minister of Foreign Affairs on
behalf of South Africa and the President of the Council of the EU, on behalf of
the EU. It is to enter into force on 15 December 2006.
Issued by: Department of Trade and Industry
14 December 2006
