1/ Explainer thread on what this is, and why it's a good thing to explore.
Many wealthier countries, including the EU and now the UK in its own right, allow a range of developing countries to sell them goods tariff free or tariff reduced, without a free trade agreement.
Many wealthier countries, including the EU and now the UK in its own right, allow a range of developing countries to sell them goods tariff free or tariff reduced, without a free trade agreement.
https://twitter.com/trussliz/status/1417019783388835844
2/ The logic is simple.
By providing developing countries an advantage in your market over (some) wealthier competitors, you give them the chance to build up export industries that create jobs and upskill their human capital.
(Not uncontroversial but won't get into that here)
By providing developing countries an advantage in your market over (some) wealthier competitors, you give them the chance to build up export industries that create jobs and upskill their human capital.
(Not uncontroversial but won't get into that here)
3/ EU programs on this are called:
- The GSP, reducing some tariffs for developing countries.
- The EBA (Everything But Arms) eliminating tariffs for LEAST developed countries
- The GSP+ Plus, reducing GSP tariffs to 0% conditioned on joining 27 int. conventions
- The GSP, reducing some tariffs for developing countries.
- The EBA (Everything But Arms) eliminating tariffs for LEAST developed countries
- The GSP+ Plus, reducing GSP tariffs to 0% conditioned on joining 27 int. conventions
4/ The UK has largely rolled over these programs, and through this consultation is going to look at ways to make them more accessible.
But why might they be hard to access?
As so often with trade, the answer lies in paperwork and requirements.
But why might they be hard to access?
As so often with trade, the answer lies in paperwork and requirements.
5/ The UK don't want much richer industrial powerhouses exploiting this access as a back door into the UK market.
Eg. A car that's made in China then sent to Lesotho for a final coat of paint and "Made in Lesotho" sticker to dodge the UK car tariff.
Eg. A car that's made in China then sent to Lesotho for a final coat of paint and "Made in Lesotho" sticker to dodge the UK car tariff.
6/ Not only would this be a circumvention of the UK tariff regime, but it would also mean very few actual jobs created in Lesotho.
It takes far fewer workers to paint a car than it does to build one.
Hence, these schemes have Rules of Origin requirements.
It takes far fewer workers to paint a car than it does to build one.
Hence, these schemes have Rules of Origin requirements.
7/ You've heard about Rules of Origin before (@AnnaJerzewska and @SamuelMarcLowe can tell you all about them).
These are basically rules on "how locally made" a product has to be in order to qualify for lower tariffs under a trade deal, or a scheme like this.
These are basically rules on "how locally made" a product has to be in order to qualify for lower tariffs under a trade deal, or a scheme like this.
8/ The challenge is that these rules can be both hard to meet, or simply very onerous to prove in terms of paperwork.
A Snickers bar has like 30 ingredients, some with sub-ingredients and involves multiple value addition steps and transformations. Good luck tracking all that.
A Snickers bar has like 30 ingredients, some with sub-ingredients and involves multiple value addition steps and transformations. Good luck tracking all that.
9/ This has meant some exporters in the developing world who should be taking advantage of these schemes aren't, either because the rules are too strict or because the cost and effort to demonstrate compliance with them to the satisfaction of customs authorities is too high.
10/ There may also be other areas of trade related paperwork where these schemes can improve, which is why this consultation isn't just limited to rules of origin.
For example: are some product certifications even theoretically possible to acquire in a least developed country?
For example: are some product certifications even theoretically possible to acquire in a least developed country?
11/ This review is going to look at where the system can be made more accessible while balancing:
1⃣ Accessibility for developing country exporters
2⃣ Ensuring the schemes can't be exploited by 3rd countries
3⃣ Protecting the UK market from products that shouldn't be there.
1⃣ Accessibility for developing country exporters
2⃣ Ensuring the schemes can't be exploited by 3rd countries
3⃣ Protecting the UK market from products that shouldn't be there.
12/ Brexit angle?
This is not a reform the UK could unilaterally launch while part of the European Union, and leading a process inside the EU to do this would be harder.
Of course flipside is end result will improve access to 64m, not 450m consumers and bifurcated requirements.
This is not a reform the UK could unilaterally launch while part of the European Union, and leading a process inside the EU to do this would be harder.
Of course flipside is end result will improve access to 64m, not 450m consumers and bifurcated requirements.
12a/ Great thread from @AnnaJerzewska (aren't they all) on some of the detail of what reforms may or may not accomplish for traders:
https://twitter.com/AnnaJerzewska/status/1417048508444692482?s=20
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