UK Developing Countries Trading Scheme (DCTS) – Changes to UK Trade with Developing Countries
The way that UK businesses trade with developing countries is set to change in the coming years, following the Department for International Trade (DIT) announcing the new Developing Countries Trading Scheme (DCTS). Government is also seeking the views of businesses as to how trade with developing countries should look moving forward. The link to the consultation and the full list of countries within the DCTS can be found at the bottom of this page.
The scheme will determine tariffs and the terms of trade between the UK and 70 developing countries, granting their exporters preferential access to the UK market and helping developing economies to grow, with reduced or sometimes zero tariffs.
While members of the European Union, the preference granted to developing economies to the UK market was determined by the EU’s ‘Generalised Scheme of Preferences’ (GSP). The GSP is split into three Frameworks that will be replicated in its replacement:
- General Framework: for low and lower-middle income countries, as categorised by the World Bank. This offers full or partial removal of tariffs on two-thirds of goods.
- Enhanced Framework: for low and lower-middle income countries that also ratify and effectively implement 27 international conventions. This offers full removal of tariffs on two thirds of tariff lines.
- Least Developed Country Framework or ‘Everything but Arms’: for all countries classified as least developed countries by the World Bank. This offers duty-free, quota-free access for all products except arms and ammunition.
Since the UK left the EU, the GSP has been carried over, but this new scheme will be tailored specifically by the UK. The International Trade Secretary, Liz Truss, has stated that the UK wishes to go further with their own scheme, reducing tariffs, bureaucracy and simplifying Rules of Origin for exporters in developing countries. The new UK scheme will hopefully come into force in 2022.
While there are few concrete plans for how the Developing Countries Trading Scheme will look upon completion, a ‘Direction of Travel’ document gives some ideas as to the government’s general aspirations for the programme. The 27 international conventions that countries will be expected to uphold have remained the same, and there are a few policy proposals where the new UK scheme may alter from GSP:
1. Simplify product-specific rules for Least Developed Countries (LDCs) to make it easier for these countries to meet Rules of Origin requirements and benefit from preferential access to the UK market.
2. Expand cumulation for Least Developed Countries (LDCs) meaning that goods including material from multiple LDC countries can qualify for preferential treatment. This would allow more LDC countries to export to the UK tariff-free and support regional supply chains across multiple LDC countries (primarily in Africa).
3. Extend the overall number of goods that can enter the UK tariff-free, from ‘low income and lower-middle income’ countries, when compared to the current GSP scheme.
4. Change the process of ‘graduation’. Under GSP, ‘graduation’ assessment can suspend the preferential treatment granted on a range of goods where a country is deemed ‘highly competitive’. The proposed change would reduce the number of goods that a suspension would cover and increase the amount of time between assessments to provide greater certainty for businesses.
Government are seeking views on the proposed changes to trade between the UK the 70 listed developing countries. The consultation will be open until 12 September 2021.
|Least Developed Countries Framework||General Framework||Enhanced Framework|
|Bangladesh||Cook Islands||Cape Verde|
|Central African Republic||Kenya||Sri Lanka|
|Sao Tome & Principe|