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Erwin Hopes Ford SA Will Join Growing Ranks of Exporters

Published date:
Tuesday, 08 July 2003

The SA Government was hoping for an announcement soon that Ford SA would join the growing ranks of automotive multinationals using SA as an export platform for vehicles, Trade and Industry Minister Alec Erwin said yesterday.

He was briefing journalists on this week's visit to SA by US President George Bush which comes as SA and its Southern African Customs Union (Sacu) partners are in negotiations on a free trade area agreement with the US.

Erwin suggested that a free trade area would lock in many of the benefits SA enjoyed under Washington's African Growth and Opportunity Act (Agoa), and said that this already had led to "a major surge in SA exports, for example of automobiles".

Before Agoa came into effect in 2000, SA had exported significant amounts of vehicle components to the US. After Agoa, BMW began to export motor cars, with Mercedes to follow, he said.

"We hope that some time in the near future, Ford will do the same."

Ford SA has been negotiating for some time with its US parent for new contracts to build vehicles in SA for export, which could include Volvo cars or light trucks.

Erwin, who met Ford executives in Detroit during a recent investment promotion tour to the US, said the automotive sector ranked second only to platinum for SA exports to the US.

The US is SA's largest export destination and is the secondlargest source of SA imports.

" Trade has grown quite remarkably. In 1994, SA annual exports to the US were R6,7bn, and now we export R29,7bn a year. From 2000, SA began to run a trade surplus with the US."

Erwin's aim was to go beyond Agoa with a Sacu-US free trade area, which was a more permanent, two-way trading link. He noted that Agoa benefits could be withdrawn at Washington's whim, which would not be the case under a free trade area.

He predicted that negotiating the free trade area with the US should be "nowhere near as problematic" as negotiating with the European Union (EU). For instance, the US supported SA's stance on the labelling of port and sherry a seemingly trivial issue which caused serious delays in SA's negotiations with the EU.

Erwin said there would be difficulties on agriculture, with SA wary of having to compete against subsidised US exports of farm products, "but this is nowhere near as problematic as with the EU".

Erwin stressed that government would consult local business and sectoral interest groups to draw up both "offensive and defensive" lists of areas where SA exporters and producers saw opportunity or felt threatened by a Sacu free trade area agreement with Washington.

Discussions between Presidents Bush and Thabo Mbeki are expected to include detailed discussions on a US veto over a World Trade Organisation deal to allow developing nations to produce and import generic drugs for treating serious diseases like AIDS, malaria and TB.

SA steel access to the US market, and the dumping of US chicken products on the SA market, are high on the agenda.

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