The British government published this week a new plan to lower import taxes on hundreds of products from the world’s poorest countries, with the aim of tightening trade relations with them and lowering the cost of living in a period of rampant inflation, which rose to 9.4% in June.
The program for trade with developing countries (DCTS) will enter into force in January and is based on a similar program in which the United Kingdom participated before its withdrawal from the European Union. However, in London they claim that the new plan is more extensive than that of the Union, and it was even defined as “the most generous trade plan in the world with developing countries”. The European program came into force in 2014 for a decade with the aim of “focusing on aid to countries that need more prioritization in trade”, according to the Union’s website.
As part of the British plan, import taxes on goods such as clothes, shoes and food that is not produced in the Kingdom, such as olive oil and tomatoes, will be reduced, and in some cases the customs duty will be completely abolished. The program applies to 65 developing countries in Africa, Asia, Oceania and America, which are considered the poorest countries in the world, including Bangladesh, Bhutan, Cambodia, Liberia and Mali.
These countries can already export thousands of duty-free products to Britain, but the new plan will expand this to apply to about 99% of imports from Africa, for example.
The UK International Trade Office said that the program is part of wider efforts to leverage trade “as a way to promote prosperity and help eradicate poverty”. However, the benefits can be canceled for countries accused of violating human rights or labor laws, as well as for countries that will not meet their climate commitments.
“Regaining control”
“As an independent trading nation, we are taking back control of our trade policy and making decisions that will support British businesses, help lower the cost of living and support the economies of developing countries around the world,” International Trade Minister Anne-Marie Trevelyan said in an official statement. “Businesses in Great Britain will benefit from less bureaucracy and lower costs, which will be an incentive for companies to import goods from developing countries.” So, for example, the program eliminates seasonal tariffs on products such as cucumbers, which cannot be grown in the UK in winter. Other products include silk, wool, carpets, pearls, precious metals and aircraft parts. According to the government announcement, British companies will be able to benefit from an annual decrease of 750 million pounds in import costs, which should diversify the choice and lower prices for consumers.
At the same time, the program simplifies laws and should reduce bureaucratic clumsiness. Thus, for example, the laws determining the proportion of the product that must be produced in the country of origin will be relaxed. Mohammad Jaber, director of the textile company DBL Group from Bangladesh, told the BBC that this was a “turning point” for his company. “It means we can buy cotton from many more countries than we could until now, it will make the business more competitive and our supply chains will be more resilient,” he explained.
The trade deficit is at a record high
According to World Bank data, Britain’s largest trading partners are of course developed countries, led by the United States. The value of trade between the two countries was $223.4 billion in the four quarters to the end of the first quarter of 2022, an increase of 11.5% compared to a year earlier. After The USA is ranked by Germany, France and the Netherlands, with China being the fifth largest partner. In contrast, Bangladesh, one of the countries on the list of benefits, is Britain’s 48th largest trading partner and represents 0.3% of all British trade. According to British government data, trade between the countries was 746 million pounds in the four quarters to the end of the first quarter of 2022, an increase of 27.3% compared to the same period a year earlier. British imports from Bangladesh amounted to 2.7 billion pounds in the same period, a jump of 25.6%.
The details of the plan were published amid reports that Britain’s trade deficit widened in the second quarter to a record 27.9 billion pounds, partly due to a drop in imports from Russia following the sanctions, to 33 million pounds, the lowest figure since records began and down from 1.8 billion pounds in January and February. According to the data, British imports climbed in the second quarter by 14.3 billion pounds to 206.6 billion pounds, while exports strengthened by 12.3 billion pounds to 178.6 billion pounds.