UK Replaces GSP with DCTS System for Indian Exports
·
United
Kingdom (UK) has replaced its existing origin declaration process under
Generalized Scheme of Preferences (GSP) with the UK Developing Countries
Trading Scheme (DCTS) effective from 19th June 2023
·
The
transition period for this change was extended until 31st December 2023.
·
Starting
from 1st January 2024 onwards, Indian Exporters to the UK are required to
adhere to the new rules under DCTS to avail concessions on their exports to the
UK.
·
The
origin criteria necessary for satisfying the Rules of Origin to avail
tariff concessions on exports from India to the UK must be filled in
through self-certification.
[DGFT Trade Notice No. 39/2023-24
dated 18 March, 2024]
Subject: Changes in origin declaration for
Self-Certification under UK Developing Countries Trading Scheme (DCTS).
It is hereby informed to all concerned that
the United Kingdom (UK) has replaced its existing origin declaration process under
Generalized Scheme of Preferences (GSP) with the UK Developing Countries Trading
Scheme (DCTS) effective from 19th June 2023. The transition period for this
change was extended until 31st December 2023. Starting from 1st January 2024 onwards,
Indian Exporters to the UK are required to adhere to the new rules under DCTS to
avail concessions on their exports to the UK.
Goods that meet the UK DCTS Rules of Origin
(RoO) requirements shall be eligible to claim a concessional
rate of import duty for exports to the UK. Consequently, the origin criteria necessary
for satisfying the Rules of Origin to avail tariff concessions on exports
from India to the UK must be filled in through self-certification.
Indian Exporters accordingly are directed
to use origin declaration wording under DCTS scheme, in place of origin declaration
wording under GSP is filled through self-certification.
Details provided by UK on DCTS can be accessed
at the following URLs:-
https://www.gov.uk/government/publications/developing-countries- trading-scheme-dcts-new-policy-report/developing-countries- trading-scheme-government-policy-response
https://www.gov.uk/guidance/using-an-origin-declaration-for-the- developing-countries-trading-scheme
This is issued with the approval of the competent
authority.
(Issued from File No. 01/02/82/AM-19/EDI-Part(1))
DCTS Summary
The
DCTS is one of the most generous preferences schemes in the world. It provides
duty-free, quota-free trade to LDCs on everything but arms and duty-free,
quota-free trade on 85% of eligible goods to most LICs and LMICs. The DCTS will
replace the UKs Generalised Scheme of Preferences
(GSP) in early 2023.
The
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 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.[footnote
1] 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 LICs and LMICs and simplifying the tariff schedule to get rid of
nuisance tariffs and some seasonal tariffs. Goods that are being brought in
scope of the scheme include tomatoes, olive oil, animal feed and pet food
ingredients.
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.
The
government is granting access to enhanced preferences based purely on the
economic vulnerability of LICs and LMICs. This approach is more generous, with
8 countries (Algeria, Congo, Cook Islands, Micronesia, Nigeria, Niue, Syria,
Tajikistan) becoming immediately eligible for enhanced preferences. The DCTS
retains powers to suspend a country on the grounds of human rights and labour rights violations and broadens these powers to
include violations in relation to anti-corruption, climate change and
environment conventions.[footnote
2]
Finally,
the government is renaming the tiers of preferences within the DCTS. The GSP
LDC Framework is the DCTS Comprehensive Preferences. The GSP Enhanced Framework
is the DCTS Enhanced Preferences. The GSP General Framework is the DCTS
Standard Preferences. This is intended to reflect the UKs offer in each tier
and the progression of most countries as their economies grow from DCTS
Comprehensive Preferences to DCTS Enhanced Preferences and then DCTS Standard
Preferences.
Rules
of Origin
Rules
of origin (RoOs) are used to determine where goods
are from, for example, where they have been produced or had substantial work
done to them. This is used in determining appropriate tariff rates, access to
preferential trade arrangements or application of trade sanctions.
Rules
of origin provide the criteria for testing whether a good can be considered to
have been produced in a particular country. They determine whether a good
qualifies for any reduction in tariffs.
The
government is committed to supporting LDCs by providing one of the most
generous preferential schemes in the world through both low tariffs and simpler
RoOs.
LDCs
already receive duty-free, quota-free access for all products other than arms
and ammunition.
Therefore,
improvements for LDCs in the DCTS are being made through the simplification of RoOs by:
·
simplifying and liberalising PSRs
·
extending cumulation
LDCs
make up around 13% of the worlds population but only account for around 1% of
global trade in goods. Addressing barriers to trade such as RoOs
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.