TRALAC - Trade Law Centre

Multinational BMW to benefit from AGOA scheme

Friday, 08 November 2002

Source: Business Day

BMW SA said yesterday that it was due to export cars worth R3,8bn (about $ 380 million) to the US this year under Washington's duty-free provisions of the African Growth and Opportunity Act (Agoa).

Although US legislators intended ordinary Africans to benefit from Agoa, the German firm is by far the biggest local beneficiary to date.

Agoa offers exporters from many African countries tariff-free access to the US market for thousands of products.

BMW SA CE Ian Robertson said he expected BMW's exports to the US to reach 22000 units, up from 11000 last year.

This R3,8bn business would account for the bulk of the R4,5bn total SA exports expected to be shipped to the US under Agoa this year.

"The 22000 units compare with our expected total output in SA of 55500 units," Robertson said. Output would remain the same in 2003.

BMW is planning to expand its range, by shipping vehicles with two engine types to the US. These are the 325 and the new 330 engine types.

"Unquestionably, we are one the successful companies in terms of Agoa," Robertson said. "However, it's a question of time before a lot more people get on board."

Although he would not name the company, he said he was aware of another major manufacturer which was expected to start assembling vehicles in SA for export to the US.

"There is a lot of scope," he suggested. "We would not be able to use Agoa if we didn't already have a competitive product. We compare in terms of quality with plants in Europe, and we now get tax savings from Agoa."

He said the tax benefits under Agoa amounted to about $600 a car.

"Overall, it's a benefit to the BMW group, and it is a very strong anchor for their investment in SA. "

BMW's workforce of 3000, with downstream employment of 20000 mainly in empowerment companies, benefits from the arrangement. He said BMW's Agoa success arose from being the first global vehicle maker to invest in the export market.