Preference tiers under the Developing Countries Trading Scheme

Question

Accepted Answer

You need to know your preference tier to identify the benefits you can access under the DCTS and how long you can access them for.

1. Find out your country preference tier

There are 3 country preference tiers under the DCTS:

Category	Comprehensive Preferences	Enhanced Preferences	Standard Preferences
Country classification	Least Developed Countries (LDCs)	Low Income Countries (LICs) and Lower-Middle Income Countries (LMICs) that are not LDCs	Remaining LICs and LMICs that do not satisfy economic vulnerability criteria
Criteria for determining country classification	The United Nations (UN) classifies LDCs	The World Bank classifies income levels	Economic vulnerability is assessed by export diversification
Number of countries covered	47	16	2

Country classifications under each preference tier may change when they are reviewed.

The DCTS does not apply to:

countries classified by the World Bank as Upper-Middle Income Countries (UMICs) for 3 consecutive years
non-LDCs with a Free Trade Agreement (FTA) or Economic Partnership Agreement (EPA) with the UK

The measure for assessing economic vulnerability is currently export diversification. However, the UK government will review this measure within 1 year of launching the Scheme.

Country preference tier list

Comprehensive Preferences

Afghanistan
Angola
Bangladesh
Benin
Bhutan
Burkina Faso
Burundi
Cambodia
Central African Republic
Chad
Comoros
Democratic Republic of the Congo
Djibouti
East Timor
Eritrea
Ethiopia
Gambia
Guinea
Guinea-Bissau
Haiti
Kiribati
Laos
Lesotho
Liberia
Madagascar
Malawi
Mali
Mauritania
Mozambique
Myanmar
Nepal
Niger
Rwanda
Sao Tome & Principe
Senegal
Sierra Leone
Solomon Islands
Somalia
South Sudan
Sudan
Tanzania
Togo
Tuvalu
Uganda
Vanuatu
Yemen
Zambia

Enhanced Preferences

Algeria
Bolivia
Cape Verde
Congo, Rep.
Cook Islands
Kyrgyz Republic
Federated States of Micronesia
Mongolia
Nigeria
Niue
Pakistan
Philippines
Sri Lanka
Syria
Tajikistan
Uzbekistan

Standard Preferences

India
Indonesia

2. Understand the benefits under each preference tier

Countries in each preference tier have access to different benefits under the DCTS.

Product tariff	Comprehensive Preferences	Enhanced Preferences	Standard Preferences
Tariff free products (0%)	99.8%	92%	65%
Products with 0% to 5% tariffs	0.2%	0.4%	10%
Products with 5% to 10% tariffs	0%	0.4%	12%
Products with more than 10% tariffs (including Specific Tariffs*	0%	7.2%	13%

*Specific tariffs are tariffs calculated as a fixed charge on a unit of the product. The product unit could be weight, volume, number of items or other criteria.

Comprehensive Preferences

Exporters in countries entitled to Comprehensive Preferences receive 0% import tariffs on 99.8% of products – all products except arms and ammunition. These are the most generous preferences under the Scheme to give LDCs the most support in diversifying their exports and growing their economies. Forty-seven countries are eligible for Comprehensive Preferences.

Enhanced Preferences

Enhanced Preferences entitle exporters in eligible countries to 0% import tariffs on 92% of their product lines under the DCTS. Sixteen countries qualify for Enhanced Preferences, because the DCTS includes 8 additional countries compared to the UK Generalised Scheme of Preferences (GSP). Products not covered under Enhanced Preferences are subject to tariff rates under the UK Global Tariff (UK GT).

Standard Preferences

Standard Preferences entitle exporters in eligible countries to 0% import tariffs on 65% of product lines, while a further 26% of product lines have reduced tariffs.

Countries eligible for Standard Preferences are also subject to goods graduation. Goods graduation is the suspension of preferential tariff rates on highly competitive products. There are 2 countries eligible for Standard Preferences (India and Indonesia). Product lines that Standard Preferences do not cover are subject to rates under the UK GT.

3. Tier graduation criteria and transition periods

Country classifications under preference tiers can change, because countries may move from one tier to another.

Graduation from Comprehensive Preferences to Enhanced Preferences

A country graduates from Comprehensive to Enhanced Preferences once they move from LDC status as defined by the UN. These countries must also be considered as economically vulnerable. The criterion for economic vulnerability under the DCTS is export diversification.

View the full list of Least Developed Countries as classified by the UN.

Within 1 year of launching the DCTS, the government intends to review alternative options for assessing economic vulnerability.

When a country graduates from LDC status, its transition period before moving to Enhanced Preferences is 3 years.

Graduation from Enhanced Preferences to Standard Preferences

Countries that do not meet the economic vulnerability criteria will graduate from Enhanced Preferences to Standard Preferences.

Transition period for countries entering FTAs or EPAs with the UK

LDCs which enter an FTA or EPA with the UK can continue to use DCTS Comprehensive Preferences.

Non-LDCs within regional groups that sign trade agreements with the UK, can access benefits under the DCTS for 2 years. After 2 years, one-way extended cumulation will apply between the UK-FTA partner and the regional DCTS members.

For example, Vietnam, a group 1 member under the DCTS, signed an FTA with the UK and transitioned out of the DCTS, effective January 2023. As a result, other DCTS countries can use extended cumulation with Vietnam, but Vietnam cannot cumulate with the DCTS countries.

Upper Middle-Income Country (UMIC) status and the DCTS

A country that moves to UMIC status will transition out of the DCTS if it retains UMIC status for 3 consecutive years.

If a country moves from UMIC to LMIC status, it will get re-admitted to the DCTS.

This guidance is also available as a PDF: