The UK Government has launched the Developing Countries Trading Scheme (DCTS) in Nigeria. DCTS offers one of the most generous sets of trading preferences in the world and demonstrates the UK’s commitment to building long term, mutually beneficial relationships with countries like Nigeria.
The launch took place today at the EKO Hotel in Lagos, and the DCTS will come into force in the Spring of 2023, replacing the UK’s Generalised Scheme of Preferences.
The DCTS benefits 65 countries, 37 of which are African, and will mean that Nigeria benefits from duty free trade on over 9200 products.
This is significantly more generous than both the EU’s GSP scheme and the US’ AGOA scheme and, based on current trade volumes, would mean that 99% of goods exports to the UK are duty free.
Key aspects of the DCTS are:
- Dramatically cutting tariffs for Nigeria so that 3000 new products are duty free for the first time. The average existing tariff on these goods is 7% meaning these changes make Nigerian exports more competitive in the UK.
- Many tariff reductions are on value added goods such as processed sesame oil, cotton clothing and cocoa butter and paste and complement existing duty free trade on raw products.
- Making it simpler for Nigeria to get and retain these enhanced tariffs by removing the need for Nigeria to ratify and implement certain international conventions. At the same time, the basis for potential suspension from the scheme has been broadened to include environmental as well as human right and labour rights considerations.
- Making rules of origin more generous for Nigeria’s least developed country neighbours to make it easier for them to use components from Nigeria in their duty free exports to the UK
- Ensuring that goods which are genuinely competitive from countries like India and Indonesia do not get preferential tariffs, protecting the preferences of Nigerian businesses in key sectors such as leather goods and textiles.
- The comprehensive government policy document which sets out changes to UK preferential trading arrangements under the new scheme is available here: www.gov.uk/government/publications/developing-countries-trading-scheme-dcts-new-policy-report
- A summary of responses to the Developing Countries Trading Scheme public consultation is published here: https://www.gov.uk/government/consultations/designing-the-uk-trade-preferences-scheme-for-developing-nations
According to a statement from Ndidiamaka Eze, Senior Press & Public Affairs Officer | Comms Lead, Prosperity and Economic Development, “Nigeria is eligible for enhanced trade preferences in the DCTS. This means it benefits from new tariff cuts on over 3000 products and in total benefits from duty free trade on approximately 9200 products. A number of key products have been identified which Nigeria already exports to the world but not the UK.”
These include:
Cocoa – Tariffs removed for cocoa butter (2.5%) and paste (4.5%). Cocoa remains duty free. Nigerian global exports of around £40m (butter) and £10m (paste) a year. UK imports of around £250m of cocoa butter annually of which Nigeria currently accounts for less than 2%. UK imports of cocoa paste around £40m annually with none from Nigeria. Identified by Nigerian Export Promotion Council as key opportunity.
· Cotton – Tariffs removed for woven cotton (6.4%) and tariffs on cotton clothes and apparel have been removed. Raw cotton remains duty free. Identified by Nigerian Export Promotion Council as key opportunity.
· Fertilisers – Tariffs removed for urea (6%). Nigerian global exports of over £650m in 2021 – tenth largest global exporter. UK global imports of over £200m with none from Nigeria. Fertilisers identified by Nigerian Export Promotion Council as key opportunity.
· Flowers – Tariffs removed for fresh cut (4.5%) and prepared (6.5%) flowers. Nigerian global exports of over £10m in 2021. UK global imports of over £600m a year.
· Frozen shrimp/prawns – Tariffs lowered for frozen shrimp from 4.2% to 3.6%. Nigerian global exports of over £30m a year. UK global exports of over £300m per year with no imports from Nigeria.
· Petrochemicals – Tariffs removed for many products including polyethylene (2.5%) and polypropylene (2.5%). Over £20m of Nigerian global exports. UK global imports in the £billions a year with very low volumes from Nigeria. Petrochemicals identified by Nigerian Export Promotion Council as key opportunity.
· Plantain – Tariffs removed for plantain (12.5%). UK global imports of around £25m a year with very low amounts from Nigeria. Identified by Nigerian Export Promotion Council as key opportunity.
· Sesame – Tariffs removed on sesame oil (2.5%-4.5% depending on usage) and sesame cake. Nigerian global exports of sesame oil are around £10m a year. UK global imports of around £15m a year with none from Nigeria. Sesame identified by Nigerian Export Promotion Council as key opportunity.
· Tomatoes – Tariffs removed for fresh tomatoes (8% between November-May) and prepared tomatoes (14%). UK global imports of around £500m (fresh) and £350m (prepared) a year. Currently low Nigerian exports but identified by Nigerian Export Promotion Council as key opportunity.
Speaking on the launch, UK Deputy British High Commissioner in Lagos, Ben Llewellyn-Jones said: “Nigeria is one of the UK’s most important partners in Africa and the UK Government is committed to working with Nigerian businesses and exporters to boost trade between our two great nations. The UK’s Developing Countries Trading Scheme harnesses the power of trade to help Nigeria and other emerging economies grow and prosper.
“One major benefit of this new UK trading scheme is that it abolishes tariffs on over 3000 everyday products that Nigeria currently exports including cocoa, cotton, plantain, flowers, fertilizers, tomatoes, frozen shrimps and sesame. The overarching aim of the new scheme is to grow free and fair trade with developing countries, boosting the economy and supporting jobs in those countries, as well as in ours.”
The statement said that “tis work is part of a wider push by the UK to drive a free trade, pro-growth agenda across the globe, using trade to drive prosperity and help eradicate poverty.”