GSP to be replaced with the Developing Countries Trading Scheme in the UK

GSP to be replaced (Teal Digital Pathways)

Since Brexit, Britain doesn’t need to conform to the EU’s trade rules, and can negotiate its own deals. Recently, an agreement was announced that will allow The Philippines to benefit from duty-free tariffs on 99% (by value) of their exports to the UK.

Additionally, tariffs will be removed for 80% of Filipino-originating goods, and there will be greater flexibility for the rules of origin so that more exporters can benefit.

This new deal moves the preference away from the GSP, and will be under the new Developing Countries Trading Scheme (DCTS).

So, what is the DCTS, and how could it affect your trade in future? Find out in this article.

What is the DCTS?

The Developing Countries Trader Scheme (DCTS) is replacing the Generalised System of Preference in the UK. By amending some of the conditions around origin, the DCTS seeks to remove blocks to usage to improve on the benefits that developing countries get from using the scheme.

Britain announced the new Developing Countries Trading Scheme in June 2022, and officially launched it on the 16th of August 2022. 

Currently, the Developing Countries Trading Scheme covers:

  • 37 countries in Africa.
  • 18 countries in Asia
  • Eight countries in Oceania.
  • Two countries in the Americas.

Under the scheme, countries in the Commonwealth are also due to benefit by reducing tariffs on foodstuffs, clothing, and other items. This is estimated to save £250 million a year for businesses in these countries.

What is the GSP?

The Generalised System of Preference (GSP) is a preferential trade agreement that allows commodities from certain countries to benefit from reduced import duty. It is commonly used by countries within the European Union when trading with developing countries.

The GSP preference has two tiers: GSP and GSP+.

GSP+ is reserved for the most underdeveloped countries, and provides a 0% duty rate for goods where the normal GSP only reduces the tax rate.

Currently, there are only eight countries that benefit from the GSP+:

  • Bolivia.
  • Cabo Verde.
  • Kyrgyzstan.
  • Mongolia.
  • Pakistan.
  • Sri Lanka.
  • The Philippines.
  • Uzbekistan.

To be granted GSP+ status, countries need to implement the 27 conventions relative to human rights, good governance, and sustainable development.

The Philippines have come under scrutiny recently from the EU recently for alleged violations, but Trade and Industry Assistant Secretary Allan B. Gepty committed on Wednesday (19th October 2022) to review and resolve these[CS1] . The GSP+ is worth 150 million Euros per-annum to The Philippines when trading with the EU.

How will The Philippines benefit from the Developing Countries Trader Scheme?

Trade between the UK and The Philippines is estimated at £2 billion a year, with the majority of Filipino exports benefiting from the GSP+.

The DCTS will continue to provide most, if not all, of the same benefits as the GSP+. However, it will also reduce the tariffs on approximately 150 tariffs, and simplify seasonal quotas so that more traders can benefit. It is estimated that these changes will save £21 million a year in taxes.

His Majesty’s ambassador to The Philippines, Laure Beaufils, said in a government press release

“The launch of the Developing Countries Trading Scheme is a great opportunity for the UK and the Philippines to build on our strong existing bilateral trade and investment relationship. More than 80% of exported Filipino products, and 99% of total goods by value exported from the Philippines, will be eligible for duty free access to the UK. The scheme will boost our trade and provide new opportunities for Filipino and British businesses.”

Need advice on the GSP or DCTS?

Customs Support are clearance agents, with over 1500 declarants in 70 locations across 12 countries. Alongside our customs clearance services, we also provide businesses like yours with customs consulting so that you can keep up to date, save money where possible, and remain compliant.

If you could benefit from customs services in the EU and UK, or need advice on keeping your supply chain compliant, contact us for more information.

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