The Government has today, 13th February, released data outlining the extent to which preferential tariffs have been utilised when UK businesses import or export. The data dates back to 2022 when the UK had 36 trade agreements in place, as well as the Generalised Scheme of Preferences (now known as the Developing Countries Trading Scheme).
Essentially, the data looks at every case where a preferential tariff rate was available and sees whether the preferential rate was utilised in each situation. This information is usually presented in a percentage known as the Preference Utilisation Rate which is calculated by taking the value of goods imported under trade preferences as a share of the total value of eligible goods for that particular preference.
What does the Data say?
Importing:
86.3%
Of all goods imported into the UK, 86.3% were imported tariff free. Of this percentage, a huge 62.1% were imported tariff free simply due to a 0% MFN (or standard duty rate) applying to their product. The rest of the 86.3% was made up by 22.8% utilising FTA preference, and 1.4% accessing 0% under GSP preferences.
149
Overall goods from 149 countries or territories made use of a preferential tariff rate when they were imported into the UK.
86%
UK importers utilised a preferential rate where one was available 86% of the time.
76.8%
This figure dropped to 76.8% when taking out the EU and only considering goods imported into the UK from non-EU partners.
Turkey
Outside the EU, Turkey was the top country in terms of the value of preference eligible imports.
Egypt
Outside the EU, Egypt had the highest Preference Utilisation Rate (95.2%) out of the top 10 non-EU countries by value of preference eligible imports.
90.3%
The average Preferential Utilisation Rate for imports from all EU countries was 90.3%
Exporting:
82.8%
For goods exported to the EU, 82.8% were exported under preferential rate when one was available.
South Korea
Of all the non-EU partners who provided data, South Korea was the top country in terms of the value of preference eligible goods.
28.4%
Only 28.4% of exported goods to Vietnam utilise the preferential rate when they are eligible to do so.
92.6%
Of all the goods that were exported to the EU, 92.6% were exported tariff free. The majority (58.8%) simply due to a 0% MFN (or standard duty rate) applying to their product. The remaining 33.8% was due to utilising a preferential tariff.
Which Products Best Utilised Preferential Tariff Rates When Imported?
Regardless of whether you consider all imported goods together, or split it down to consider EU and non-EU separately, Animals and Animal Products has the highest utilisation rate out of any HS Section (21 in total). The rate is 97.6% for non-EU imports and an impressive 99.6% for EU imports.
When comparing agricultural imports (HS01-24) to non-agricultural imports (HS25-97), the utilisation rate is 94.9% and 80.4% respectively.
Which Products Best Utilised Preferential Tariff Rates When Exported?
Despite more limited data on exports, the data from GB exports to the EU mirrors that of importing. Animals and Animal Products is again the highest HS Section with 98.8%. Similarly, agricultural utilisation rate outperforms non-agriculture (93.7% to 81.1% respectively).
What the Data Tells Us:
The data shows that, generally speaking, preference utilisation is high, particularly on goods that are imported into the UK.
However, despite more limited data, the percentage for preference utilisation does vary more considerably when looking at exporting. This is particularly the case when exporting to non-EU countries which potentially demonstrates that either:
Businesses are simply not aware of the rules of origin and the potential for claiming a preferential tariff rate
The UK business may find the rules of origin more difficult to interpret and cannot confidently claim preferential tariff rates, particularly in FTAs where the rules of origin are not as user friendly.
Overall, this demonstrates a need for businesses to be able to access greater support to help them understand and utilise preferential rates which in turn will boost their exporting.
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