The Ministry of Commerce has urged exporters to adhere to the UK’s rules of origin (RoO) in order to benefit from their Developing Countries Trading Scheme (DCTS), a system of graduated tariffs on imports.

In an October 3 notice, it said the UK government has launched the programme to promote sustainable economic growth in developing and least developed countries (LDCs), including Cambodia. Unlike conventional schemes, the DCTS not only offers duty and quota-free benefits to LDCs but also aims to ease the RoO and simplify various requirements.

The DCTS allows for a maximum of 75 per cent non-originating content with at least 25 per cent local content, or the change of tariff classification from four to six digits, for a product to be eligible.

Ministry spokesperson Pen Sovicheat highlighted on October 4 that Cambodia is among 65 countries that have accessed the framework since its inception in April.

“While the DCTS bears some resemblance to the Generalized System of Preferences [GSP], it’s notably distinct. For instance, the GSP includes only 47 countries, whereas the DCTS encompasses an additional 18 low-income to upper-middle-income countries as categorised by the World Bank,” he stated.

“The DCTS provides Cambodian enterprises with trade preferences, bolstering the export of our goods to the UK,” he said, emphasising the benefits of the scheme.

Lim Heng, vice-president of the Cambodia Chamber of Commerce (CCC), noted that the system could significantly benefit the country, especially in the exports of clothes, bicycles and cashews – all key Cambodian products.

“The DCTS’s scope surpasses that of the GSP and mirrors the ‘Everything But Arms’ [EBA] trade agreement. Adhering to the RoO is crucial to ensure we don’t merely re-export goods from other nations. The registration of companies wanting to participate in the agreement is of paramount importance,” he added.

The British embassy clarified on its website that DCTS permits Cambodian bicycle manufacturers to source raw materials from neighbouring countries such as Singapore and Vietnam, while still enabling tariff-free exports to the UK. Similarly, Cambodian cashew nut exporters can ship value-added items, like cashew butter, without incurring tariffs.

It also stated that as social gatherings resume in the UK post-pandemic, there’s a growing demand for clothing. Under the programme, Cambodian apparel enjoys a competitive edge, with clothing from other regional suppliers, such as Vietnam and China, facing tariffs.