These Regulations, made by the Treasury and the Secretary of State under the Taxation (Cross-border Trade) Act 2018, introduce various amendments to UK customs regulations, primarily focused on updating the Developing Countries Trading Scheme (DCTS) origin rules and linked preferential arrangements, effective January 1, 2026.
Key changes involve differentiating origin rules for Enhanced Preference (EP) and Standard Preference (SP) countries, updating the criteria for 'economically vulnerable countries,' reclassifying Vanuatu from a Least Developed Country (LDC) to an 'other eligible developing country,' and updating the version numbers of several foundational customs reference documents.
Arguments For
Update the UK's tariff and trade preference schemes to reflect current international arrangements and economic statuses, such as Vanuatu's reclassification.
Clarify and refine the rules of origin criteria (important stage of manufacture) for goods traded under the Developing Countries Trading Scheme (DCTS), particularly concerning textile assembly and processing.
Ensure crucial customs documents (like the Tariff Suspension Document, Quota Table, and various Preferential Tariff documents) are kept current with the latest version numbers and administrative decisions.
Adjustments to the DCTS framework—introducing separate rules for EP (Enhanced Preference) countries versus SP (Standard Preference) countries—provide tailored trade benefits based on economic need.
Arguments Against
Frequent updates to referenced tariff and origin documents (e.g., version number changes) create administrative complexity and potential confusion regarding which rules apply at any given time.
Amending rules of origin for textiles, such as permitting assembly from pre-cut pieces as sufficient processing, could be argued to dilute the scope of "manufacture" for origin purposes.
The necessity for frequent, broad amendments across numerous existing EU Exit customs regulations suggests ongoing instability or complexity in post-Brexit trade regulation frameworks.
The consolidation and restructuring of cumulation regional groups in Schedule 3 may alter established trade flows and administrative requirements for businesses currently utilizing those schemes.
These Regulations are made by the Treasury in exercise of the powers conferred by sections 8, 9(1), 11(1), (3) and (7), 12(1) and (3), 17(6) and (7), 19(1), 31(6) and (7), and 32(7), (8) and (13) of, and paragraph 13 of Schedule 2 to, the Taxation (Cross-border Trade) Act 2018 (“the Act”) and by the Secretary of State in exercise of the powers conferred by sections 10(1) and (2) and 32(7) of, and paragraph 2(1) of Schedule 3 to, the Act.
Any powers of HMRC Commissioners to make regulations under Part 1 of the Act are exercisable concurrently by the Treasury by virtue of section 32(13) of the Act.
In considering the rate of import duty that ought to apply to goods in a standard case for which provision is made by these Regulations, the Treasury have had regard to the matters in section 8(5) of the Act and to a recommendation about the rate made to them by the Secretary of State, in accordance with section 8(6) of the Act.
Further to sections 9(3) and 17(8) of the Act, the Secretary of State recommends that these Regulations be made.
Further to section 11(7) and 12(5) of the Act, in considering what provision to include in the regulations made under sections 11(1) and (3) and 12(1) and (3) of the Act, the Treasury have had regard to recommendations made to them by the Secretary of State.
The Secretary of State, in accordance with paragraph 2(1) of Schedule 3 to the Act, is satisfied that Vanuatu has ceased to be a least developed country and has become a country that is similarly situated to the other countries and territories listed in Part 3 of Schedule 3 to the Act, in terms of its economic characteristics.
In accordance with Part 4 of Schedule 3 to the Act, in determining whether Vanuatu has ceased to be a least developed country and become a country that is similarly situated to the other countries and territories listed in Part 3 of Schedule 3 to the Act, the Secretary of State has had regard to its classification by the United Nations and the World Bank.
Further to section 28 of the Act, the Treasury and the Secretary of State, in exercising their functions under Part 1 of the Act, have had regard to the international arrangements to which His Majesty’s government in the United Kingdom is a party that are relevant to the exercise of those functions.
The primary power to enact these Regulations comes from the Taxation (Cross-border Trade) Act 2018, exercised concurrently by the Treasury and the Secretary of State for specific sections.
The Treasury can use powers granted to HMRC Commissioners for regulations under Part 1 of the Act due to a specific provision in the Act.
When deciding on standard import duty rates for goods covered by these Regulations, the Treasury considered statutory matters under section 8(5) of the Act and a recommendation from the Secretary of State.
The Secretary of State recommended that these Regulations be made, pursuant to sections 9(3) and 17(8) of the Act.
In deciding on regulations concerning rules of origin provisions (sections 11 and 12), the Treasury took into account recommendations provided by the Secretary of State.
The Secretary of State confirmed, based on economic characteristics criteria in Schedule 3 of the Act, that Vanuatu no longer qualifies as a Least Developed Country and is now comparable to countries listed in Part 3 of that Schedule.
When making this determination about Vanuatu, the Secretary of State reviewed its classification provided by the United Nations and the World Bank, as required by Part 4 of Schedule 3.
Both the Treasury and the Secretary of State considered relevant international arrangements when carrying out their functions under Part 1 of the Act.
Part 1 Preliminary
This initial part covers preliminary matters.
Part 2 Amendment of the Customs (Origin of Chargeable Goods: Developing Countries Trading Scheme) Regulations 2023
This part details amendments made to the regulations governing rules of origin for goods under the Developing Countries Trading Scheme (DCTS).
Part 3 Amendment of the Trade Preference Scheme (Developing Countries Trading Scheme) Regulations 2023
This section amends the Trade Preference Scheme (DCTS Preference Regulations) concerning criteria for enhanced preferences.
Part 4 Amendments to the Taxation (Cross-border Trade) Act 2018
This part makes consequential changes to the primary Act itself by updating the lists of eligible countries.
Part 5 Miscellaneous provisions
This concluding part addresses necessary version updates across various other related EU Exit customs statutory instruments.