Islamabad, 20 June 2023 (TDI): United Kingdom launched Developing Countries Trading Scheme (DCTS), replacing the Generalised Scheme of Preferences (GSP) which is boosting trade with Pakistan and 64 other nations. This scheme benefits both countries economically while reducing the need for aid.
UK Implements Developing Countries Trading Scheme
The United Kingdom (UK) has officially introduced the Developing Countries Trading Scheme (DCTS), replacing the previous Generalised Scheme of Preferences (GSP). This new trade scheme is aimed at fostering economic growth between the UK and developing countries, including Pakistan and 64 other nations. The DCTS offers tariff reductions and simplified terms of trade to facilitate increased business activity while reducing the dependency on aid.
Pakistan under DCTS
Under the DCTS, Pakistan will maintain its enhanced preferences status, enabling duty-free exports to the UK for 94% of goods exported. In addition, the scheme will eliminate tariffs on more than 156 additional products, including some seasonal tariffs.
This advantageous position is expected to bolster Pakistan’s exports to the UK, reinforcing the economic ties between the two countries. Currently, the annual trade (goods and services) between the UK and Pakistan stands at £4.4 billion. It is estimated that the DCTS will save approximately £120 million in tariffs on exports to the UK.
Support for Developing Countries
To ensure the active participation of developing countries in the global trading system, the UK has established the Trade Centre of Excellence. This center will provide specialized support to countries, including Pakistan, to meet trade standards and engage in multilateral trade forums. The aim is to equip these nations with the necessary tools and knowledge to maximize their potential within the international trading system.
UK’s Commitment to Free and Fair Trade
The DCTS covers a total of 65 developing nations, comprising 37 countries in Africa, 26 in Asia/Oceania/Middle East, and 2 in the Americas. This expansive scheme provides preferential trade access to countries collectively exporting over £21 billion in goods to the UK. It represents one of the most generous trade preference systems worldwide, offering varied and exciting trade opportunities.
The UK government retains the authority to suspend countries from the scheme if they systematically violate human rights and labor rights. Moreover, the DCTS extends this authority to include climate change and environmental agreements. This move demonstrates the UK’s dedication to addressing climate change and reducing trade activities that harm the environment.
Specific Trade Benefits for Pakistan
Within Pakistan, certain goods will experience substantial benefits under the DCTS. For example, bed linen, with an average annual export value of over £250 million to the UK, will receive a 12 percent reduction in import duties. Similarly, jeans, accounting for nearly £100 million in exports to the UK, will also enjoy a 12 percent reduction in import duties.
The implementation of the Developing Countries Trading Scheme by the United Kingdom marks a significant milestone in trade relations between the UK and Pakistan, as well as other developing nations.
This scheme offers preferential trade access, tariff reductions, and simplified terms of trade, fostering economic growth and reducing dependency on aid. It symbolizes the UK’s commitment to free and fair trade while promoting sustainable development globally.