SA, EU clear car trade hurdle

16 November 2006

South Africa and the European Union (EU) have cleared the way for long-planned tariff cuts on car exports between the two markets, Business Day reports.

The breakthrough came during the 7th meeting of the South Africa-EU Joint Co-operation Council in Brussels this week, attended by Foreign Minister Nkosazana Dlamini-Zuma.

According to Business Day, EU countries have now backed the details of the previously agreed plan, and both sides would try to implement the agreement by 1 December.

“In terms of the agreement, South Africa will cut duties it levies on car imports from Europe to 18% by 2012 from 25% now and also reduce duties on components and trucks,” Business Day reported this week.

“In return, the European Commission has agreed to phase down the import duty it applies on cars from SA to zero in 2008.”

Iqbal Meer Sharma, deputy director-general in the Department of Trade and Industry, told Business Day that EU duties on SA car imports had risen from 6.5% to 10% earlier this year, due to SA’s moving out of the EU’s generalised system of preferences for poor countries.

However, Sharma said, these tariffs would now return to 6.5% before being phased out completely.

Speaking after talks in Brussels on Tuesday with Erkki Tuomioja, foreign minister of current EU president Finland, Dlamini-Zuma explained that the tariff cuts favoured South Africa “because the EU is more powerful economically than we are”.

Trade agreement to be reviewed
South Africa and the EU also said this week that they would start negotiations for a review of the Trade, Development and Cooperation Agreement that has been the cornerstone of SA-EU trade relations since 2000.

According to the Department of Foreign Affairs, the EU is South Africa’s largest trade partner, accounting for €37-billion worth of trade in 2005 – just under 40% of South Africa’s total imports and exports.

Its foreign direct investment into South Africa in 2004 was worth €4.6-billion.

In addition, the EU has dedicated grants of €125-million per annum to SA through the European Programme for Reconstruction and Development, while the European Investment Bank was mandated with €825-million for infrastructure investments in South Africa between 2000 and 2006.

SouthAfrica.info reporter

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