A new UK trade preference scheme to grow trade with developing countries is being proposed by the Government. The so-called Developing Countries Trading Scheme will take effect in 2022 and will replace the UK’s current Generalised Scheme of Preferences (GSP) which itself replaced and largely replicated the EU’s GSP from 1 January 2021.
The Government wants to introduce changes to the GSP to improve access to the UK market for beneficiary countries and increase trade, thereby supporting their economic growth. Greater access to imports from developing countries will also reduce costs and increase choice for UK businesses and consumers.
The three frameworks in the UK GSP
The General Framework is for low and lower-middle income countries which benefit from the full or partial removal of customs duties on two-thirds of tariff lines. The Enhanced Framework is for low and lower-middle income countries that also ratify and effectively implement 27 international conventions. They benefit from the full removal of customs duties on two-thirds of tariff lines. The Least Developed Country Framework is for all countries classified as least developed by the UN. They benefit from duty-free, quota-free access for all products except arms and ammunition.
The more generous UK trade preferences proposed will apply to countries that already benefit under the GSP. This includes 47 countries in the Least Developed Country Framework and 23 additional countries or territories classified by the World Bank as low income and lower middle-income countries. It does not apply to countries classified by the World Bank as upper-middle income for three consecutive years or to low and middle income countries with a free trade agreement with the UK.
The proposed changes
Simplifying rules of origin requirements for LDCs
The improved scheme with modern and appropriate rules of origin would mean more goods can qualify for GSP tariffs. The aim is to simplify and liberalise the rules of origin policy for LDCs so that the GSP is more generous to the most vulnerable developing countries. The Government is considering introducing a new list of more liberal product specific rules just for LDCs. It also proposes expanding cumulation for LDCs, which are predominantly African countries, to make it easier for imports from LDCs to qualify for lower tariffs.
Reducing tariffs for low-income and lower middle-income countries
The UK will consider offering greater tariff reductions or removing tariffs completely on goods in sectors such as agri-food, certain chemicals, raw hides, skins and leather and certain base metals, plastics, rubber, wood products, textiles, apparel, footwear, articles of stone, ceramic products and glass, machinery and equipment, and road vehicles, bicycles, aviation and space, boats and parts thereof.
Reassessing the approach to goods graduation
The goods graduation assessment applies to countries in the General Framework and suspends access to preferential tariffs on specific groups of goods where a country has been deemed highly competitive. The current list of graduated goods is due to expire on 31 December 2022. The Government is looking at the best way to introduce a new graduated goods list.
Reassessing conditions of the GSP
The UK GSP has a set of conditions which apply to all GSP countries. The Government is considering simplifying the conditions that could lead to a suspension or variation of preferences for any GSP country. It is also looking at the conditions and reporting requirements of the Enhanced Framework which provides more generous trade preferences.
The Department of International Trade has launched a consultation seeking views from businesses and all sectors of society on the UK’s future tariff schedule and policies in relation to the GSP which will close on 12 September 2021.
See the consultation here.