99% of PH exports to UK granted enter duty-free

Majority or 99 percent of total Philippines exports (by value) to United Kingdom will be eligible for duty free access, saving around £21 million (P1.4 billion/$25.3 M) of tariffs each year, through the British's new Developing Countries Trading Scheme (DCTS) that replaces the UK Generalized Scheme of Preferences (GSP).

The British Embassy in Manila released this statement following the announcement of the UK government to reshape trade with developing countries through its new trading framework. DCTS will come into force in early 2023.

Ambassador to the Philippines Laure Beaufils said, “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 with 65 developing trading partners, including the Philippines.”

Under DCTS, Beaufils said, more than 80 percent of exported Filipino products, and 99 percent 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.”

UK said that total trade (goods and services) between the UK and Philippines amounts to £2 billion (P134.5 billion/$2.4 billion) each year.

Under the DCTS, the Philippines will continue to benefit from duty free exports to the UK on more than 80 percent of eligible products. In addition, the DCTS will remove tariffs on over 150 additional products.

The DCTS will also simplify some seasonal tariffs, meaning additional and simpler access for the Philippines’ exports to the UK.

The DCTS, announced by the Prime Minister at Commonwealth Heads of Government Meeting (CHOGM) on 23 June and launched on August 16 by the Secretary of State for International Trade, offers generous rules of origin, making it easier to produce goods using components from other countries without losing duty-free status. It will be one of the most generous sets of trading preferences of any country in the world, helping to grow trade, boost jobs and drive economic growth.

According to UK, the DCTS benefits 65 developing countries and is more generous and simpler than the existing UK GSP. The DCTS has been designed to harness the power of trade to help developing countries grow and prosper.

As one of the most generous preferential trading schemes in the world, the DCTS demonstrates the UK’s commitment to building long term, mutually beneficial relationships with emerging economies that are home to more than 3.3 billion people.

The scheme includes zero tariffs on almost £4.5 billion of imports of clothing and apparel, £300m of foodstuffs and millions of pounds worth of other consumer products such as bicycles and children’s toys. DCTS covers 37 countries in Africa, 18 in Asia, 8 in Oceania and 2 in the Americas.

The government is applying a narrower basis for goods graduation, ensuring that only goods which are genuinely competitive are graduated out of the scheme. The DCTS reduces and simplifies the threshold of when products graduate and bases goods graduation decisions on UK import data. The interests of LDCs and our EPA partners are also protected.

LDCs make up around 13 percent of the world’s population but only account for around one percent of global trade in goods. Addressing barriers to trade such as rules of origin can be an effective way to support LDCs entering global value chains.

Simpler RoOs can increase trade with the UK, increase the manufacturing capacity of LDCs and encourage economic development. The UK also benefits from supporting LDCs in this way which strengthens supply chains, making them more resilient to economic shocks. LDC integration can support greater consumer choice and lower consumer prices in the UK. Addressing barriers to trade makes it easier for UK and overseas partners to bring goods into the UK.

Overall, the DCTS provides duty free, quota-free trade to LDCs on everything but arms and duty-free, quota-free trade on 85 percent of eligible goods to most LICs and LMICs.

The UK government is introducing a new list of more liberal PSRs designed solely for LDCs. The scheme has tailored rules and avoids using overly restrictive requirements so that product specific rules (PSRs) are easier for businesses to understand and use.

The DCTS also expands cumulation for LDCs to allow extended cumulation with other DCTS countries and countries with Economic Partnership Agreements (EPAs) with the UK.

This makes it easier for LDCs to participate in regional and global supply chains serving the UK. The government is making more goods eligible for tariff reductions and tariff removals for low –income countries and low- or middle-income country and simplifying the tariff schedule to get rid of nuisance tariffs and some seasonal tariffs.

But being a unilateral act of the UK government, the DCTS retains powers to suspend a country on the grounds of human rights and labor rights violations and broadens these powers to include violations in relation to anti-corruption, climate change and environment conventions.