Vehicle and component exports have been the biggest beneficiaries of the African Growth and Opportunity Act (Agoa). Norman Lamprecht, manager Automotive: Exports Trade and Investment SA (Tisa) says R2,4 billion or 10,5 per cent of automotive component exports in 2002 went to the USA, making it SA’s second largest export destination next to Germany. Passenger vehicle exports to the USA during the year amounted to R3,9 billion. In Rand terms the USA, with 23 per cent of light vehicle exports, was SA’s main destination for that category and with 14 per cent of medium and heavy commercial vehicle exports, SA’s third largest destination of that category during 2002. Eastern Cape component manufacturers are among the biggest suppliers to the USA. The main components exported to the USA included: catalytic converters, road wheels/parts, engine parts, tyres, axles, automotive glass, automotive tooling, radiators, silencers/exhausts, jacks, seatbelts, and clutches/shaft couplings – most of which are made in the Eastern Cape for both the local and export markets. SA’s top five AGOA exporting sectors currently are: Transport equipment, Minerals and metals, Agricultural products, Apparel and chemicals. The Eastern Cape is also a centre for apparel manufacturing and agricultural production. “AGOA provides especially the SA automotive industry with potentially huge opportunities to access the largest consumer market in the world on a duty free and quota free basis, on approved products, for a period of 8 years,” says the Lamprecht. “The double benefit of the Motor Industry Development Plan (MIDP) support and the duty free access into the USA should make it attractive for OEMs to consider additional manufacturing operations in SA with a view to export to the USA,” he adds. The MIDP allows passenger car distributors in South Africa to offset import duties against credits earned on exports of vehicles and components. Automotive qualifying products eligible in terms of AGOA include: cars and other passenger vehicles, light, medium and heavy commercial vehicles and buses, road tractors for semi-trailers, chassis fitted with engines, bodies, including cabs, silencers and exhausts, automotive bearings (ball bearings and tapered roll bearings), vulcanized rubber belting, transmission belts, fan belts, steel springs for motor vehicle suspensions. Duty rates into the USA range from 2,5 per cent to 25 per cent in respect of various types of commercial vehicles. More information can be accessed at www.agoa.gov. Tisa points out that a number of South African products already enjoy duty free access into the USA a part of the Generalised System of Preferences programme or by virtue of the fact that they are zero duty rated. Duty free components under the GSP include: bumpers and parts, body stampings, seat belts and airbags, door assemblies, gearboxes and axles, brake linings, mounted, brakes and servo brakes and parts, road wheels and parts, shock absorbers, radiators, clutches and parts, steering wheels and columns, steering boxes, suspension parts, shock absorbers, rubber mountings, half shafts and drive shafts. The African Growth and Opportunity Act represents a non-reciprocal gesture by the USA aimed at liberalizing trade and assisting growth and development of sub-Saharan African countries by extending duty free and quota free access into the USA market in respect of a broad range of products for a period of 8 years. SA, together with 37 other African countries, had been designated as an eligible country in terms of the Act. AGOA builds on existing USA trade programmes and expands the benefits previously only available under the Generalised System of Preferences programme (GSP). In the order of 6 100 products, of which 1 800 under AGOA, currently qualify for duty-free access into the USA market. The effective commencement date of the duty free access provisions in terms of AGOA was 1 January 2001 until 30 September 2008. Various automotive components and, importantly, motor cars as well as motor vehicles for the transportation of persons and of goods will, subject to certain conditions, qualify for a duty free and quota free access into the USA. The Rules of Origin underlying AGOA require that a product be the “growth, product or manufacture” of an AGOA-beneficiary Sub-Saharan African country. The general Rules of Origin which apply are as follows: The product must be imported directly from the AGOA-beneficiary country into the USA. Items must be “growth, product or manufacture” of one or more AGOA-beneficiary countries. Products may incorporate materials sourced from outside countries (i.e. non AGOA-beneficiaries) provided that the sum of the direct cost or value of the materials produced in the AGOA-beneficiary country(ies), plus the direct costs of processing undertaken in the AGOA-beneficiary country(ies), equal at least 35 per cent of the products free on board (FOB) value or appraised value at the USA port of entry. (The imported content of the product cannot exceed 65 per cent). In addition, up to a total of 15 per cent of the 35 per cent value may consists of USA parts and materials. (Where a SA OEM/supplier uses USA materials/components in the SA manufacturing operations - up to a maximum of 15 per cent of such USA inputs of the FOB customs value will qualify as SA local content).