UK introduces new post-Brexit trading scheme for developing countries including Malawi

* Scheme cuts tariffs on products entering the UK from 65 developing countries

* It will help reduce import costs by over £770m per year, benefiting UK consumers and businesses

By Duncan Mlanjira

The United Kingdom (UK) has introduced 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.

A statement from the British High Commission to Malawi in Lilongwe says 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.” 

While in Addis Ababa, Ethiopia’s capital city and home to many international corporations, Minister Huddleston met with UK and Ethiopian companies where they discussed how they will benefit from the developing countries trading scheme (DCTS) and new ways they can work with local businesses and other governments to grow trade. 

The scheme benefits businesses all over the world and British companies that trade with these countries in everyday products such as bicycles and camping gear.  

Executive vice-president at Specialized Bicycle Components Inc, Robert Margevicius, is quoted as saying the DCTS enables them to maintain their supply chains in countries like Cambodia and continue to incorporate components from around the region, including from Vietnam.

“We are committed to supporting our workforce and maintaining quality. We manufacture high-value frames in Cambodia and specialized uses preference scheme benefits to invest in this higher level of production.” 

Head of International Logistics & Trade Compliance at Halfords, Ben Price said “the revised rules of origin under the DCTS will be hugely beneficial for least developed countries and companies who are sourcing products from them”.

“Under the previous regime many articles were precluded from benefitting from 0% duties due to the complexity of the rules of origin,” he said. “The further liberalisation and rule options that have been introduced under the DCTS are incredibly helpful and will support business and economic growth in some of the poorest countries.

“A great example of this is camping equipment, such as tents, from developing countries in Southeast Asia.”

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.