Download Briefing Paper 83 Briefing Paper 83 - July 2024 Adriana Brenis, Michael Gasiorek and Manuel Tong Koecklin Key points Introduction UK exports and MFN tariffs Preference utilisation rates Rules Of Origin Determinants of preference utilisation Conclusion Key points The UK has signed continuity agreements with South Korea (2019) and Canada (2020), to maintain the terms of the previous EU deals with both trading partners, as well as the Trade and Cooperation Agreement with the EU (2021). In 2022, the EU, Canada and Korea accounted for 45.2%, 1.5% and 1.1% of UK exports respectively. These deals provide for zero preferential tariffs on most UK exports to these countries. In practice, not all exports utilise the preferential tariff rates. In 2021, under the UK-EU deal, the ‘Preference Utilisation Rate’ (PUR) was 69%, rising to 74% in 2022. For UK-Korea, the rates were 60% and 56% respectively, while for Canada they were only 30% and 52%. Preference utilisation will typically depend on the level of the Most Favoured Nation (MFN) tariffs. The higher the tariff, the greater the incentive to use the preference. Other factors such as the value of trade; as well as how difficult it is for firms [...]

Download Briefing Paper 75 Briefing Paper 75 – July 2023 Guillermo Larbalestier, Minako Morita-Jaeger, Nicolò Tamberi, and Manuel Tong Koecklin Key points Introduction Assessing the economic potential from the CPTPP Further policy considerations Political and institutional dilemmas that can arise from expansion Conclusion Key points: Accession to the CPTPP will not lead to substantial economic gains for the UK. Any such gains will largely depend on possible future expansion of the CTPPP, primarily should China ever accede, and to a lesser extent Taiwan, Costa Rica, Ecuador and Uruguay who have also applied to join. The UK’s current engagement in CPTPP supply chains is limited especially when compared to its relations with the EU and the US. However, further expansion of the CPTPP could create possibilities for the UK to strengthen supply chains with acceding CPTPP countries. In part this arises from a set of standardised CPTPP ‘rules of origin’ across all members. However, for some products, these are more restrictive than the UK has with those countries through recently signed bilateral agreements. Product-specific analysis is required to understand which products could benefit from the CPTPP ROOs arrangements. China’s accession into the CPTPP seems highly unlikely both on geopolitical [...]

Download Briefing Paper 74 Briefing Paper 74 – April 2023 Mattia Di Ubaldo, Guillermo Larbalestier and Manuel Tong Koecklin Key Points Introduction No more conditions, deeper preferences and less uncertainty Who will really benefit from the changes in the Enhanced DCTS access criteria? More favourable rules of origin for LDCs Conclusion Key Points Non-reciprocal trade preferences are a policy tool that can promote export-led growth in developing countries. In the UK, the current scheme – the Generalised Scheme of Preferences (GSP) – will be replaced by the Developing Countries Trading Scheme (DCTS) in 2023. The new DCTS introduces minimal changes to the preferential tariff schedules across the three sub-schemes. Instead, there are changes in the eligibility criteria for countries to access the more preferential Enhanced Preferences sub-scheme; and changes in the rules of origin (RoOs) enabling use of the preferences under the Comprehensive Preferences sub-scheme offered to Least Developed Countries (LDCs). Potential duty savings for countries moving from the GSP General Framework to the DCTS Enhanced Preferences are very small, as these countries do not trade much in products benefiting from GSP or DCTS preferences. However, the new system offers greater certainty which can contribute to growth and [...]

Download Briefing Paper 72 Briefing Paper 72 – December 2022 Nicolò Tamberi and Manuel Tong Koecklin Key Points Introduction Distribution of PURs across products and between the UK and EU Composition issues Conclusion Key points For UK-EU trade, the TCA grants tariff-free trade – providing that the product originates in the partner country and can be shown to originate. Obtaining proof of origin can be costly, and in some cases, the cost may outweigh the duty saving under the preferential regime. While in principle the trade barriers imposed by the TCA are the same for trade going in either direction across the Channel, the utilisation of preferential tariffs differs between the EU and the UK. EU exporters are utilising preferences more than UK exporters – 8 percentage points more on total trade. UK exporters tend to use preferences more where the value of trade is larger, while this does not apply to EU exporters, who use preferences more generally. There are also big differences in the use of PURs in the Textile and Clothing sector. As well as the bureaucratic costs of proving origin, the underlying restrictiveness of the rules of origin themselves, is likely to affect the [...]