The Department for Business and Trade recently introduced its new post-Brexit trading scheme for developing countries. The Developing Countries Trading Scheme (DCTS) which has been hailed as a landmark scheme entered into force on 19 June.

The Scheme (DCTS) replaced the UK Generalised System of Preferences (UK GSP) that was in place when the UK was a part of the EU. It removes or reduces tariffs and simplifies trading rules so that more products qualify for the scheme, making it more generous than the former scheme. In addition to countries that previously benefitted from the former scheme, the new scheme also covers 18 additional low-income countries (LICs) and lower middle-income countries (LMICs) as classified by the World Bank. In total, the scheme which has been designed to improve access to the UK market for developing countries, cuts tariffs on products entering the UK from 65 developing countries.

It provides least developed countries LDCs with duty-free, quota-free trade to LDCs on all but arms, while most LICS and LMICS are provided with duty-free, quota-free trade on 85% of eligible goods.

The scheme is seen by the government as a benefit of the UK’s status as an independent trading nation and an initiative that produces win-win solutions for both the UK and developing countries. According to the government, the reduction of tariffs, liberalisation of rules of origin requirement and simplification of conditions will help developing countries to diversify and increase exports. It is also expected the scheme would save UK businesses over £770 million per year by removing or cutting tariffs on over £9 billion of imports while increasing choice and potentially reducing prices for UK consumers on a wide variety of items.

Customs information 

Customs processes will remain the same as under current preferential trading arrangements but new tariffs and rules of origin for Least Developed Countries will apply.

Although there is no transition period from the UK GSP to the DCTS, a grace period to allow the use of UK GSP documents to claim preference for goods eligible for a preferential duty rate under UK GSP and DCTS will be in place. A UK GSP proof of origin issued before 19 June 2023 will be accepted by HMRC provided the goods are released to free circulation in the UK on or before 31 December 2023.

HMRC will also accept a UK GSP proof of origin issued before 19 June 2023 for goods that qualify for DCTS which are in a customs warehouse or in transit on 19 June 2023. That is, if the goods are released to free circulation in the UK on or before 31 December 2023.

The following data elements should be included in the declaration to free circulation, in order to claim DCTS on the Customs Declaration Service (CDS):

DE 2/3 – either 9001 (origin declaration) or N865 (Form A)

DE 4/17 – a code from the 200 series of preference codes.

You can access to the detailed guidance on using the scheme.

Produced by Esenam Agubretu – LCCI Parliamentary and Regulatory Affairs Manager.