Making the most of UK's DCTS

The UK-announced Developing Countries Trading Scheme (DTCS) due to be introduced soon is indeed a silver lining in the dim, if not murky, export prospect of most developing countries. Marking a departure from the EU GSP scheme, this new preferential scheme with greater incentive for eligible exporting countries does promise greater market access with better facilitations. Within months, the DCTS will replace the UK's current Generalised System of Preferences (GSP). This new move has been officially hailed as a means to improving market access of lower income countries to the UK market in the light of UK's commitment to improve preferences for these countries after Brexit and strengthen UK's position as an independent trading nation.

The new scheme, by offering lower tariffs, is expected to help developing countries diversify their exports, while also expanding UK's sourcing mechanism as well as lowering the cost for UK businesses, and increasing choices for UK consumers across a range of everyday products. At a discussion meeting held in the capital early this week, businesses expressed optimism that under the new scheme, Bangladesh can benefit by considerably expanding its export of some selected products, particularly leather goods and footwear. At present, Bangladesh's export of leather and footwear to the UK is negligible. A report published in this newspaper states that in 2021 the country exported only 0.7 per cent of UK's overall imports of over $5.3 billion in that year. The figure may have remained more or less the same in the following year too. Bangladesh's global export of leather goods and footwear in the fiscal 2021-22 was US$1.7 billion-- 3.2 per cent of total export earnings worth US$52 billion. In spite of this, it is widely believed that the country is well poised to increase export of these products manifold.

What is notable in the DCTS is that Bangladesh can still enjoy duty-free market access, and after its graduation to a middle income country in 2026, the facility will continue for another three years until 2029. Bangladesh will also get duty-free benefit on more than 85 per cent of its UK-bound product lines under DCTS' Enhanced Preferences. Bangladesh also stands to benefit from generous Rules of Origin (RoO) requirements as the minimum value-addition requirement for LDCs has been reduced to 25 per cent from 30 per cent in half of the 2-digit HS headings.

A rosy prospect no doubt! But in order to tap the prospect, complying with the UK procurement norms is a must. Among the major compliance issues, CETP (central effluent treatment plant) continues to be a stumbling block to export. Leather Working Group (LWG) certification is now a prerequisite for accessing global market but the certification would be a far cry without a functional CETP, solid waste management, and chrome recovery units in the tannery estate at Ashulia. Given the prevailing situation, there has to be a concerted move, including a clear road map, to revamp the country's leather industry for it to rise up to its potential.  The country's leather industry is desperately in need of a meaningful change in the overall management so that the prospect in sight is not spoiled.