New post Brexit-trading scheme to benefit Malawian businesses

* We have been crying for trade not aid in Malawi. The new scheme will help business Malawians to grow and trade in the UK

* This opportunity has come at a right time and Malawians will be able to export goods to the UK without paying tariffs

By Levison Lester, MANA

The new post Brexit-trading scheme for least developed countries (LDC) which United Kingdom (UK) has introduced will benefit Malawians to grow in trade and businesss.

This was said by spokesperson for the British High Commission in Malawi, Benson Linje, adding that individuals who do different businesses in the country will be able to export various products to the UK on a duty free basis.

“We have been crying for trade not aid in Malawi,” he said. “So the new scheme will help business Malawians to grow and trade in the UK. This opportunity has come at a right time and Malawians will be able to export goods to the UK without paying tariffs.”

While nodding to Linje’s observation, macroeconomic expert at University of Malawi, Innocent Makuta said Malawi can take advantage of the new post Brexit-trading scheme only if Government can enact deliberate measures to support companies and individuals who may wish to venture into this arrangement.

“Government must deliberately put in place measures to support companies and individuals that wish to export goods under this arrangement,” Makuta said. “This may include helping with identification of markets, targeted subsidies for such exports, and provision of assistance on administrative requirements for such trades.”

However, economics lecturer at Lilongwe University of Agriculture & Natural Resources (LUANAR), Samson Katengeza said the new post Brexit-trading scheme will not benefit Malawians, saying the country will be like a raw product producer with minimal gains.

“Malawi’s products are often sold without any value addition and this will limit Malawi’s profitability gains,” he said. “Other countries in the region could take advantage of Malawi’s lack of value addition to buy goods from Malawi, add value and sell them.”

He further said the products produced in the country have low quality and demands a lot of money for investment to produce good quality products.

A statement from the British High Commission in Lilongwe on Monday, said the UK has introduced what was described as a landmark developing countries trading scheme that has entered into force on Monday, June 19 with Malawi as part of the list to benefit from the scheme that covers 65 countries that are home to over 3.3 billion people — with over half are Africa.

The statement said the scheme is set to “radically simplify trading rules and cut tariffs on products from developing countries, saving UK businesses and consumers millions of pounds a year”. 

“It removes or reduces tariffs and simplifies trading rules so that more products qualify for the scheme, making it more generous than the European Union (EU) scheme the UK was previously a member of.

“It will benefit developing countries looking to diversify and increase exports, driving their prosperity and reducing their need for aid.”

The statement further says the scheme “saves UK businesses over £770 million per year by removing or cutting tariffs on over £9 billion of imports — increasing choice for UK consumers and potentially reducing prices on a wide variety of items such as clothes, food and children’s toys, as well as creating opportunities for UK businesses to trade internationally and grow the UK economy”.

“Over time, we are developing countries to increase trade with the UK under the scheme, businesses could save millions more on import costs.”

It further says UK’s Minister for International Trade, Nigel Huddleston launched the scheme while on a visit to Ethiopia’s largest industrial business park, Bole Lemi, saying Ethiopia already has a trading relationship with the UK worth £838 million that sees it paying zero tariffs on 100% of goods exported to the UK.

Under the new scheme, Ethiopia and 46 other countries will be able produce goods using components from many more countries, growing their opportunities to trade with the UK. 

On his visit at the Bole Lemi park, Minister Huddleston is quoted as saying: “This scheme is a brilliant example of the UK taking advantage of its status as an independent trading nation and I am excited to see it implemented today.

“It will create opportunities for businesses around the world, supporting livelihoods, creating jobs and diversifying local and international supply chains. It will also benefit UK businesses and consumers by lowering import costs on a whole range of products.” 

Foreign, Commonwealth & development office’s Minister for Development and Africa, Andrew Mitchell is quoted in the statement as saying UK’s new trading scheme for the 65 developing countries, shows how the British can use trade to deliver development.

“It will benefit traders around the world, including women-owned businesses, which we are supporting through the UK Trade Partnership programme.”

The DCTS covers 37 countries in Africa, 26 in Asia/Oceania/Middle East and 2 in the Americas, representing varied and exciting trade opportunities around the world and the scheme which was announced last year, and legislation has since been finalised to bring it into force. 

The statement further said the UK imported an average of £22.8 billion worth of goods from DCTS countries over the last three years, adding that when combined with the UK’s network of 8 economic partnership agreements, the DCTS means over 90 developing countries now benefit from duty-free or nearly duty-free trade.

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.—Additional reporting by Duncan Mlanjira, Maravi Express