agreement
3 February 2006
On 5 November 2005, South Africa and the EU reached an agreement to include
most of the automotive products under the free trade area agreement that has
been in place since 1 January 2000. However, the agreement on automotives has
not as yet been implemented. Negotiations to resolve outstanding issues
relating to the conversion of the agreement into legal text are still underway.
An announcement containing all the details would be made as soon as consensus
has been reached.
In the mean time, South Africa has been graduated out of the EU's
Generalised System of Preferences (GSP) applicable to section XVII of the
tariff nomenclature, covering vehicles, aircraft, vessels and associated
transport equipment. This was with effect from 1 January 2006. These are
products that are classified under chapters 86, 87, 88 and 89. The most
pertinent one is chapter 87: "vehicles other than railway or tramway
rolling-stock and parts and accessories thereof". The practical implications
are the following:
* South African economic operators exporting under chapter 87 were, inter
alia entitled to a 3,5 percentage point rebate on the normal customs tariff
applicable to these products upon entering the EU. This GSP rebate has now been
suspended.
* To benefit from the rebate, consignments had to be accompanied by a
certificate of origin Form A. The fact that the rebate has been suspended means
that the Form A is no longer applicable to products classifiable under chapter
87.
* Components classifiable under chapter 87 complying with the rules of origin
are now subject to a rebate of 50% upon entering the EU. This is in terms of
Article 11.5 of the free trade area agreement between South Africa and the EU.
Although this is not as advantageous as the GSP rebate, it is a lot better than
the normal duty. This rebate means that the applied duty on most components
destined for industrial assembly is 1,5%, instead of 3%, whilst the one on
components destined for the aftermarket is 2,2%, instead of 4,5%. To benefit
from this lower duty, consignments have to be accompanied by a form EUR.1
issued by SARS (Customs).
Enquiries:
Ms Thobile Mathata
Tel: (012) 394 1194
Issued by: Department of Trade and Industry
3 February 2006
