What is the Developing Countries Trading Scheme?

The Department for International Trade Philippines recently announced that The Philippines will benefit from duty-free tariffs on 99% (by value) of their exports to the UK. This will be under the new Developing Countries Trading Scheme (DCTS), which will remove tariffs on 80% of Filipino-originating-goods. Additionally, there will be greater flexibility around the rules of origin for products that are exporting from The Philippines. 

But what is the Developing Countries Trading Scheme, and what could it mean for your business?

DCTS is replacing the Generalised System of Preference (GSP)

The Generalised System of Preferences is a type of preferential trade agreement that is commonly used with countries inside the EU. Under the scheme, some commodities are granted a reduced duty rate from certain countries. 
There is also a second tier of GSP, called the GSP+. This provides 0% duty on commodities that the normal GSP agreement only offers a reduced rate for. The GSP+ is reserved for a very small list of eight countries, which includes The Philippines.
Now that Britain is outside of the European Union and forming trade deals, the UK Government is changing the GSP system to the DCTS. The scheme was announced in June 2022 and launched on 16th August, 2022. 
The Developing Countries Trading Scheme seeks to improve on the Generalised System of Preference. The rules of origin are expected to be fairer as the scheme is focused on helping developing countries grow and prosper. The DCTS currently covers 37 countries in Africa, 18 in Asia, eight in Oceania, and two in the Americas.
It will also aim to benefit businesses in Commonwealth countries by reducing tariffs on foodstuffs, clothing and other items. This will save an estimated £250 million per year.

How will The Philippines benefit?

Trade with The Philippines is estimated at around £2 billion per annum, with a lot of Filipino exports to the UK benefitting from GSP+ preference. Under the DCTS, this will continue for more than 80% of Filipino-originating commodities. There are approximately another 150 tariffs that will be reduced, as well as simplified seasonal tariffs for more accessible trade. In total, it is estimated that the DCTS will save The Philippines £21 million per year.
Her 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.”

Will your GSP imports be valid under the Developing Countries Trading Scheme?

The Developing Countries Trader Scheme is due to come into effect early 2023. Until the DCTS is finalised, and official preference is reflected in the HMRC tariff, your GSP imports will keep their rates. If you would like to speak to a customs agent about what this means for your customs clearancecontact us for more information.


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