SOUTH AFRICA-AUTO INDUSTRY/ AGOA South African automakers eye increased investment in extended AGOA trade program

Record ID: 143407

  • Title: SOUTH AFRICA-AUTO INDUSTRY/ AGOA South African automakers eye increased investment in extended AGOA trade program
  • Date: 20th August 2015
  • Summary: ROSELYN, PRETORIA, SOUTH AFRICA (FILE) (REUTERS) VARIOUS OF BMW VEHICLE PARTS BEING ASSEMBLED VARIOUS OF CAR BEING INSPECTED CAR LEAVING INSPECTION POINT
  • Embargoed: 4th September 2015 13:00
  • Keywords:
  • Location: South Africa
  • Country: South Africa
  • Topics: General
  • Reuters ID: LVA35FNKL3NASVDY1LFYLOHWNKEF
  • Aspect Ratio: 16:9
  • Story Text: Workers in South Africa assemble car parts at the German automaker BMW plant in Rosslyn near Pretoria, where the company builds models like the 3 series sedan for export.
    The auto industry is one of the sectors under the African Growth and Opportunity Act or AGOA, a trade program that allows African countries duty-free access to U.S. markets.
    Established in 2000, AGOA has already been renewed past its original 2008 expiry date. The program was set to expire in September this year but President Barack Obama signed an agreement in July, renewing a deal allowing Sub-Saharan African countries to export thousands of products to the United States, for a further 10 years.
    Many companies had been awaiting the trade extension before moving ahead with their investments.
    Edward Makwana is the group automotive communications manager at BMW South Africa.
    "From our export perspective the USA is one of the biggest export markets that we export our 3 series sedan, so quite important quite a huge benefit on that because of the rebates we obviously that we get with the exports. And it is quite positive that at the moment there has been the renewal over the next ten years, so we busy obviously in talks with the relevant parties to make sure that, that relationship benefits both South Africa, well I guess us as a brand BMW, South Africa and obviously on the US side relevant parties on the USA side. So it has been quite positive to date so we really grateful that there has been the extension over the next ten years," said Makwana.
    Major carmakers in South Africa, include Ford F.N, General Motors GM.N and Nissan 7201 among others.
    The South African auto industry, which accounts for about 6 percent of the continent's most developed economy, and 12 percent of its total exports, has been hit directly and indirectly by worker strikes in recent years and manufacturers are looking to recover.
    Under AGOA, nearly 40 African countries export products such as cars, base metals, chemicals, citrus fruit, wines and nuts to the world's number one economy.
    Dumile Cele the Durban chamber of commerce and industry chief executive says the trade partnership has helped advance the country's manufacturing sector.
    "Since the introduction of AGOA, South Africa has been able to grow the export of besides the citrus which are agricultural goods besides those we have been able to export an enormous amount of vehicles, parts into the USA market. And by exporting vehicles, these are high valued goods what that means is that there has been a lot of economic activity or there is manufacturing ensures economic activity, which creates the jobs that South Africa needs. So that is really the real benefit of AGOA within a developing country like South Africa but I think more so within sub-Saharan Africa," said Cele.
    While AGOA has helped create jobs in some African countries, the trade program has been criticized for disproportionately benefiting certain industries and a handful of countries.
    Some African leaders have also said their countries lack the skilled labour and infrastructure to take advantage of it. Several African countries, for instance, are plagued with poor roads and shortages of electricity, which leads to power rationing that interrupts manufacturing.
    In South Africa AGOA creates over 62,000 jobs in a country where jobs remain a sensitive issue.
    The ruling African National Congress (ANC) has protected the auto sector to provide relatively well-paying manufacturing jobs in a country where unemployment has been stuck at around 25 percent for years.
    Sthenjwa Majola is a clerk at Transnet shipping which transports cars assembled for export.
    "It is a great opportunity not only for me but also my family, because I am in a better position to actually provide and support my family," he said.
    South Africa has also agreed to end punitive duties on U.S. chicken and renew imports, initially 65,000 tonnes a year, under an agreement reached by the two countries.
    South Africa imposes "anti-dumping" duties of above 100 percent on certain chicken products and industry groups said removing those import barriers opened a market which had been closed for the last 15 years.
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