UK to slash import duties for 65 countries, but SA does not qualify | Fin24

A new scheme by the UK will allow lower tariffs for exports from the world’s poorest nations.

• The UK will cut import duties for 65 developing countries, but South Africa does not qualify.
• The scheme does not apply to lower-middle income countries with a free trade agreement with the UK.
• South Africa is part of an Economic Partnership Agreement that allows 96% of its goods to enter the UK duty-free.
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The UK will be extending its import tariff cuts to hundreds more products such as clothes and food from 65 developing nations, but South Africa does not qualify for the benefit.

The Developing Countries Trading Scheme (DCTS) comes to effect in January and replaces a previous scheme – the Generalised System of Preferences (GSP), Reuters reported. The new scheme will apply to existing beneficiaries of the GSP – these include 47 countries in the Least Developed Countries Framework, such as Angola, Malawi, Mozambique and Zambia. It will also apply to 18 additional countries – classified as low-income and lower-middle-income countries by the World Bank.

According to a policy paper issued by the State Secretary for the UK’s Department of International Trade, Anne-Marie Trevelyan, the scheme will offer lower tariffs and simpler rules of origin requirements for products exported to the UK. This will make it easier for the world’s poorest nations to export to the UK. BBC reported that the scheme will affect 99% of goods exports from Africa.

South Africa is classified as upper-middle income by the World Bank, which the scheme does not apply to. Nor does the scheme apply to low and lower-middle-income countries with a free trade agreement with the UK. If countries are considered least developed, they can choose to trade with the UK under the DCTS or on free trade agreement terms.

The British High Commission also highlighted that South Africa is part of the economic partnership agreement between the UK and the Southern African Customs Union and Mozambique (SACUM).

The agreement allows for 96% of South Africa’s goods to be imported into the UK, duty-free. South Africa and the other SACUM members, in turn, remove tariffs and quotas for 85% of the UK’s exports. SACUM countries account for 0.9% of UK trade, with South Africa taking the lion’s share of 91%.

READ | Delayed decisions on custom duties costing SA R1.25bn, report finds

Meanwhile, the UK has halted development aid payments – that are considered non-essential – due to concerns of overspending, Bloomberg reported. It is however, prioritising humanitarian support for Ukraine.

In response to questions about how this might affect South Africa, the British High Commissioner to South Africa, Antony Phillipson, highlighted that the UK works closely with the government and other stakeholders in society on various development issues, including the just energy transition and gender-based violence.

“We will keep partners updated as necessary, and work with them to understand any possible implications,” Phillipson said.