Trade agreements and origin
Companies globally are incorporating trade agreements in their import and export strategies in order to be more competitive.
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Are you taking advantage of trade agreements to eliminate or reduce costs of duties on your imports?
Are your export products benefitting from preferential duty rates?
Do you know you can influence how your products will be treated in trade agreements currently being negotiated?
What are trade agreements?
Trade agreements allow importers to import certain products at preferential duty rates from countries which which South Africa has trade agreements with.
If you are an exporter, your export products can enter certain markets duty free and in some cases at preferential duty rates in the country of destination. Although the scope of what a trade agreement covers differs from one agreement to the other, a common aspect is that trade agreements prescribe what products are eligible for duty free status or preferential duties. More comprehensive agreements will typically cover issues such as protection of investments, competition, intellectual property among others.
How can your business use trade agreements?
- Access new export markets competitively by ensuring your products attract preferential duties
- Import raw materials and components competitively by paying lower or no duties
- Determine the best location to set up manufacturing plants to gain preferential access to important markets
- Lobby for the reduction and elimination of specific non tariff barriers
- Protect intellectual property and geographic indications
- Protection of investments
Contact us now for help with trade agreements
Which countries does South Africa have trade agreements with?
As of 25 October 2016, South Africa is party to the following trade agreements:
|Agreement name||Agreement type||Status|
|1||Southern African Customs Union (SACU)||Customs Union||In force|
|2||Southern African Development Community (SADC)||Free trade agreement||In force|
|3||European Free Trade Area (EFTA) - SACU||Free trade agreement||In force|
|4||EU Economic partnership agreement||Free trade agreement||In force|
|5||SACU - Southern Common Market (Mercosur)||Preferential trade agreement||In force|
|6||Zimbabwe - South Africa||Bilateral trade agreement||In force|
|7||Malawi - South Africa||Bilateral trade agreement||In force|
|8||Generalised system of preferences||Unilateral non-reciprocal agreement||In force|
|9||Africa Growth and Opportunity Act (AGOA)||Unilateral non-reciprocal agreement||In force|
|10||SACU - India||Preferential trade agreement||Under negotiation|
|11||SADC - EAC - COMESA Tripartite Agreement||Free trade agreement||Under negotiation|
Rules of origin – how a benefit can turn to a risk
To ensure that preferential Customs duty rates available to importers and exporters of the contracting countries or trade blocs are only accessed by products produced in the contracting countries or trade blocs, specific rules of origin, as described in the trade agreement in question, need to be complied with for products to qualify for preferential access.
By example, if a shirt is manufactured in China and then sent to Mozambique to have the buttons sewn on, we would not say this shirt of of Mozambican origin. The process of correctly identifying origin is known as the rules of origin and non-compliance with these rules can result in losing the duty preference. The rules are not homogeneous, even within a single agreement. The specific product and agreement has to be looked at to determine if the preference can be accessed.
Trade agreement questions to ask
How can my company benefit from preferential access provided by Trade Agreements?
Does my company comply with rules of origin when my export clients access preferential Duty rates in terms of a Trade Agreement?
Does my supplier meet Origin requirements on products I clear under preferential Customs duty rates provided by a Trade Agreement?
XA can help you to
- ensure you are fully benefitting from preferential duties in trade agreements
- ensure compliance with trade agreements and minimise the risk of non-compliance
- determine whether your products are eligible for preferential duties
- assess manufacturing location decisions to benefit from as many trade agreements as possible
- successfully lobby for the best possible duty position in trade agreements under negotiation
- determine correct foreign tariff schedule interpretation and product classification
- develop an import and export strategy around trade agreements
- answer any trade agreement questions