The Australian government has threatened to lodge a complaint with the World Trade Organisation (WTO) over the South African Motor Industry Development Programme.

The Australian government has threatened to lodge a complaint with the World Trade Organisation (WTO) over the

South African Motor Industry Development Programme.


According the , South African government officials are now in talks with their Australian counterparts in a bid to resolve the problem outside the WTO.


SA chief trade negotiator Xavier Carim said a solution was unlikely to lead to the MIDP being amended, even though the programme has long been said to defy the spirit of WTO rules.


Motor industry specialist Tony Twine of Econometrix told the newspaper that the programme was seen by many as a form of subsidisation, a burning issue in global trade and if other countries joined the protest, the WTO might want to see it scrapped or changed among many possible outcomes.

"If it does get to a full-scale fight in the WTO, it is difficult to foresee a favourable outcome for SA," Twine said, adding South Africa’s only defence was that it was not a major global competitor, and represented only 0,7 per cent of global vehicle output.


Australian supplier to Holden complained


According to a report, General Motors’ Austalian subsidiary, Holden, switched from buying components from another Australian company to sourcing them from a South African supplier, prompting the company that lost the contract to lodge a complaint with Australia's government.


Carim, who met Australian government officials in Paris last week, said it was unlikely the MIDP would be amended as a result of the Australian complaint.


It was more likely that the Australian and South African automotive industries would come to "some arrangement".


Carim said the MIDP, the benefits of which will be phased out gradually by 2012, had "altogether increased trade, which is what the WTO is all about."


Carim said the MIDP did not necessarily constitute a contravention of WTO rules, adding that there were many similar projects in other countries, and readings of the programme differed substantially.


Duties well below GATT bindings – Pitot


Two years ago, CARtoday.com quoted MIDP expert Roger Pitot as saying that South Africa had reduced duties on vehicles and components to levels below the GATT bindings (unlike many South-East Asian and South American countries which retain high duties and have failed to meet their promised reductions).


“We could put a standstill on these duty reductions for several years and still be within our WTO commitments. Not only are duties below our commitment, but the MIDP also assists the importation of vehicles and components by providing a duty rebate mechanism,” Pitot was quoted as saying. “In our view, the MIDP is a trade facilitation scheme, not an export incentive as some claim”.


“Our import duties on cars and light commercials will reduce to 25 per cent in 2007. That is the same duty that the US applies on light commercial imports in a market of several million pickups a year. The fact that vehicle prices in SA are among the cheapest in the world is also a strong indication that we have low protectionism - actual duties can be zero after rebates earned,” he added.

Original article from Car