From January 2006, South African automotive leather product suppliers for the motor industry will no longer be able to rely on the support of the motor industry development programme (MIDP) when exporting goods to Australia after the Australian government threatened to challenge the programme at the World Trade Organisation. Benefits of the MIDP are also to be limited on exports to other markets.

The decision of the South African government to yield under pressure from Australia is bound to affect the competitiveness of local production for the automotive industry. Currently, automotive stitched leather components come second after catalytic converters in the country’s exports of automotive components. Their value reached R2.9 billion ($487.6 million) in 2003 and accounted for 13.6% of all automotive components exports in 2003.

The threat was reportedly instigated by an Australian automotive company that lost a contract to Aunde South Africa for supplying Holden Australia, part of General Motors Corporation.

Christoph Kópke, chairman of DaimlerChrysler SA, warned against tampering with MIDP earlier this month stating that the programme could be reformed to meet the world trade rules under WTO without detracting from the core benefits. He said the MIDP would be reviewed by the Motor Industry Council, representing the government, the industry and organised labour.

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