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Nigeria to Benefit from Duty Free Trade on 99% of Goods Exported to the UK
From various parts of Nigeria, including Abuja, Kano, Portharcourt, Ibadan, Bauchi, among others, stakeholders converged at the Developing Countries Trading Scheme launch by the UK Government held at Eko Hotel, Nigeria.
The 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.
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.
In this post, we shall look at the key aspects of the DCTS:
First, it dramatically cuts 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.
DCTS makes 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.
It makes 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
This will ensure 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.
A summary of responses to the Developing Countries Trading Scheme public consultation is published here.
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:
1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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.
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