TRALAC - Trade Law Centre

Agoa drives 115% rise in clothing exports

Thursday, 04 July 2002

Source: Business Report

Cape Town - The exemption on import duties provided for by the Africa Growth and Opportunity Act (Agoa) had helped clothing exports to the US jump 151 percent in the past two years, Jack Kipling, the chairman of the Export Council for the Clothing Industry, said yesterday.

He said clothing exports last year were worth almost R2 billion, with exports to the US growing at a faster rate than to Europe, where import duties were being phased out gradually.

The US and Europe had, historically, both absorbed about 40 percent of South African clothing exports, but the US share had grown to 60 percent.

He said the Duty Credit Certificate Scheme (DCCS), under which manufacturers were allowed to use export credits to pay customs duties on materials imported for the domestic market, had "proved to be a highly successful intervention by the government to boost

exports".

The DCCS had been extended for five years in 2000, "giving exporters the necessary horizon from which to seriously embark on export drives".

On the updating and simplifying of the DCCS, Kipling denied there had been any misuse of the scheme. He said efforts had been put into educating exporters on its proper use and administration, as well as helping the Board on Tariffs and Trade to tighten up controls to prevent abuse.

"It is widely accepted within industry that responsibility for ensuring the effectiveness of incentive schemes rests as much with exporters as with government," he said.

Kipling said that successfully penetrating foreign markets required "a real team effort from E business, labour and the government E and having the working relationships to stay ahead of the competition".

Garth Naude, a director of PricewaterhouseCoopers, said the DCCS had "been tightened up to prevent fraudulent or erroneous claims".

Measures to eliminate round-tripping and fraudulent claims included mandatory export of goods under customs supervision, and benefits being paid only to parties able to provide documentation from their bankers to prove that they had received payment from their foreign customers, Naude said.

Applicants would also have to prove that everything used to manufacture the items for export originated in the SA Customs Union or, if imported, that the full duty had been paid.

All claims would also have to be supported by export documentation and a report from a professional claims administrator. The administrator must be qualified as a chartered accountant and accredited by the trade and industry department.

Claims would also have to be audited by an external auditor accredited by the department, Naude said.