ISLAMABAD: Pakistan’s export sector is expected to receive a significant boost as the United Kingdom introduces its Developing Countries Trading Scheme (DCTS), allowing duty-free access to 94% of export goods from Pakistan. This move comes after the UK launches its own preferential trade system for developing nations after its departure from the European Union.
The Ministry of Commerce officials have stated that Pakistan is among the 65 countries benefiting from the DCTS, presenting new export opportunities and an estimated tariff and duty relief of approximately $120 million. The scheme simplifies trading rules and reduces tariffs on products from developing countries entering the UK market, including Bangladesh.
The UK currently stands as Pakistan’s fourth-largest export market and textiles, apparel, cotton, and leather products constitute 85% of Pakistan’s exports to the UK, which have previously enjoyed duty-free access under the EU’s Generalised Scheme of Preference (GSP+). The UK is also the 15th largest source of imports for Pakistan, including items such as iron, steel, machinery, electrical equipment, textiles, and chemicals. The UK extended the GSP+ scheme to Pakistan after Brexit, providing 96% preferential market access.
With bilateral trade volume stands at $4.4 billion, both Pakistan and the UK anticipate a significant increase in trade volume and economic cooperation with the implementation of the DCTS.
Minister of Commerce Naveed Qamar has lauded the DCTS, acknowledging its potential to improve trade opportunities for Pakistan and 64 other countries through tariff reductions and simplified terms. He emphasized that Pakistan will benefit from one of the most generous sets of trading preferences in the world. The DCTS officially replaced the UK’s GSP on June 19, 2023.
It is projected that Pakistan’s export sector will save approximately $120 million in tariffs under the DCTS, which will enhance the competitiveness of Pakistani exporters in the UK market. This development is seen as a positive step toward strengthening the economic partnership between the two countries.
According to officials of the Ministry of Commerce, an impressive 94% of goods exported from Pakistan will be eligible for duty-free access to the UK under the DCTS. This measure is expected to encourage the expansion of various sectors within the Pakistani economy, including textiles, agriculture, and manufacturing.
Furthermore, Pakistan’s “Enhanced Preferences” status has been retained, providing the country with added advantage in terms of trade incentives and market access. This recognition underscores the UK’s commitment to fostering trade relationships with developing countries like Pakistan.
The tariff reductions and simplified trade terms introduced by the DCTS may encourage increased bilateral trade, leading to enhanced prosperity and development for Pakistan. The Ministry of Commerce will closely collaborate with stakeholders to ensure Pakistani exporters are aware of the scheme’s benefits and can capitalize on the new opportunities it presents.
With increased access to the UK market, Pakistani businesses can expand their exports, tap into new consumer bases, and diversify their product offerings. The Ministry will provide guidance and support to facilitate the seamless integration of Pakistani businesses into the UK market, further enhancing bilateral trade relations.
As per a report the DCTS is expected to promote trade growth, job creation, and sustained economic development. The DCTS will contribute to the integration of developing countries into the global economy, creating stronger trade and investment partnerships for the future, and strengthening supply chains.
The DCTS also emphasizes free and fair trade, human rights, and good governance. Retention of DCTS preferences is contingent upon respect for human and labor rights, compliance with relevant international conventions, and adherence to standards on civil and political rights, anti-corruption, climate change, and the environment.
