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The government should consider allowing the sale of products manufactured in Special Economic Zones (SEZs) in the domestic market on payment of duty foregone on inputs as that would help promote value addition, think tank GTRI said on Tuesday. At present, units in SEZs are allowed to sell their products in the Domestic Tariff Area (DTA or domestic market) on payment of duties on an output basis (finished goods).

The Global Trade Research Initiative (GTRI) said the government already allows DTA sales on payment of duty foregone on input basis to firms operating under the ‘Manufacturing and Other Operations in Warehouse Regulations (MOOWR)’ scheme.

The government can “extend the same concession to the SEZs for parity sake. This will encourage value addition within the SEZ, as in most cases, the tariff on finished products is higher than on inputs,” GTRI Co-Founder Ajay Srivastava said.

He added that SEZ units could be incentivised to increase value addition to avail the benefit of DTA sales, which could further enhance technological advancement and skill development.

These zones are treated as foreign territories for trade and duties, with restrictions on duty-free domestic sales.

Companies operating within SEZs are allowed to import materials and components duty-free, with the condition that the finished goods produced are meant to be exported out of India and sold in the Indian domestic market on payment of applicable duties on the output.

On demand of units in SEZs that they should be permitted to sell their products in the domestic market without paying import duties, the GTRI said and added that this would distort the export focus as well as lead to a loss of revenue for the government.

“SEZ units are intended to be export-oriented. If goods from SEZs are allowed into the DTA on the same terms as free trade agreement imports, this might disincentivise exports and turn these zones into back doors for importing goods duty-free for the domestic market, defeating the purpose of having export-focused zones,” it said.

Such a move would also adversely affect the domestic industry by the influx of SEZ-made goods sold at lower prices due to duty exemption.

“This could lead to unfair competition and potential job losses in domestic manufacturing sectors,” Srivastava said.

Courtesy: economictimes.indiatimes.com

The UAE is planning to launch a new Services Export Strategy to make it easier for the service sector leverage the country’s trading relationships, which continue to expand thanks to the success of the Comprehensive Economic Partnership Agreements (CEPA) programme, a top official says.

Dr Thani Al Zeyoudi, Minister of State for Foreign Trade, said new Services Export Strategy will be launched in partnership with the private sector.

“The aim of the Export Services Strategy is clear — to enhance the competitiveness of the UAE’s services sector and promote the growth of the country’s services exports. With our strong value proposition, we have established a distinct competitive edge,” Dr Thani told BTR.

In an exclusive interview, Dr Thani discusses how a new Services Exports Strategy is set to expand their contribution to UAE’s foreign trade, which is on track to hit Dh4 trillion ($1.09 trillion) by 2031. He said services exports constitute more than two thirds of the world’s economic output.

“We have an ambitious, holistic approach to trade. With the Services Exports strategy now underway, we are well positioned to achieve the targets set, and look ahead to leveraging a diversified trade mix to meet shifting global demand,” Dr Thani said.

Excerpts of the interview:

Firstly, why are services exports so important to the UAE?

The nature of trade is changing and services exports — the cross-border sale or supply of services rather than goods from one country to another — is flourishing. While trade in goods remains a bedrock of the global trading system, trade in services is becoming an ever-larger part of the trading mix, growing 60 per cent faster than trade in goods over the past decade. And the UAE’s performance is outstripping the global trend.

In the last eight years, as the nation’s economy has grown and diversified, services exports have increased four times faster than the rest of the world, which has helped to bolster our status as a knowledge-driven, service-based economy. Today, nearly 20 per cent of the UAE’s overall foreign trade comprises services trade – which equates to $250 billion.

Why the need for a services exports strategy?

In 2022, according to the World Trade Organisation (WTO), the UAE was the world’s 12th largest service exporter, with a total value of $154 billion accounting for 2.2 per cent of global services exports. While this is an enormous achievement, global services exports hit $7.2 trillion in 2022, representing 25 per cent of the value of total global exports and 11.8 per cent of the world’s GDP, which underlines the huge potential for us to diversify our economy in this direction.

This is why we are launching a new Services Export Strategy in partnership with the private sector: to make it easier for the service sector in the UAE to leverage our trading relationships, which continue to expand thanks to the success of the Comprehensive Economic Partnership Agreements (CEPA) programme.

What are the key sectors and areas of focus?

Travel and tourism, two key service exports driven by Emirates, Etihad and our unrivalled offering as a global travel destination, are prime examples of how the UAE has taken an increasing share of the global market in recent years. They also offer a template for success in a range of sectors, and our strategy is focused on nine industry verticals in which we have proven capabilities, namely: travel and tourism, ICT, professional services, financial services, education, medical tourism, Islamic financial services, the creative economy, and logistics.

The aim of the Export Services Strategy is clear: to enhance the competitiveness of the UAE’s services sector and promote the growth of the country’s services exports. With our strong value proposition, we have established a distinct competitive edge.

What are the pillars of the strategy?

We understand that, as a government, we are not the experts. Business knows what is best for business, and we see our role as establishing the framework to enable companies succeed both here and in new markets. To that end, we are setting up taskforces for each sector, which will be public-private collaborations charged with formulating a clear, sector-specific roadmap, creating data-backed targets, identifying new markets and in-demand products, developing new enhancement initiatives and working with different trade agencies and offices here and abroad to promote opportunities. We have already started the process of recruiting industry leaders to join these task forces.

What is your strategy to formulate data?

When it comes to formulating a strategy, having the right data is essential and we are making sure the data collection is best-in-class. This is being handled by the Federal Competitiveness and Statistics Centre (FCSC), which will harmonise data collection across all government entities and work with the WTO to ensure that the processes are fully aligned with global standards.

Part of our overall economic diversification strategy rests on increasing digitisation across government services and the wider economy. This also applies to trade, and data analytics is in line with our wider goals of building a new era of technology-led, evidence-driven, positively disrupted trade — which is a message we will be taking into the discussions as host of the WTO’s MC13 in February 2024.

Can you talk a little more about how this initiative fits with broader national objectives?

We have an ambitious, holistic approach to trade. Our Comprehensive Economic Partnership Agreement programme, which is opening up important new markets for our exporters by removing tariffs and boosting investment flows, is supported by our re-exports strategy, which is consolidating our status as a global supply-chain hub, and our NextGenFDI programme, which is bringing some of the most exciting and dynamic digital businesses to our rapidly expanding ecosystem. In time, these companies will become future export success stories.

These are all critical pillars our long-term diversification ambitions. With the Services Exports strategy now underway, we are well positioned to achieve the targets set, and look ahead to leveraging a diversified trade mix to meet shifting global demand.

Courtesy: khaleejtimes.com

The Government has announced the new rates of duty drawback and a few products have had a significant increase in rates.

Cotton T-shirts now have a drawback rate of 3.1 per cent compared to 2.1 per cent of earlier, rates for man-made T-shirts also increased by 0.5 per cent, babies garments (blended and cotton) do have a little increase.

Regarding drawback value cap per unit, there is a significant revision, as for babies garments, now the cap is Rs. 29.4 which was earlier Rs. 13, similarly in blended babies garments, earlier the cap was of Rs. 6 which is now Rs. 12.5.

This revision has come more than after three years as prior to this, the last revision was done on 28th January 2020.

The Department of Revenue, Ministry of Finance, Government of India has issued a Notification recently by revising the Drawback schedule. This notification shall come into effect from 30th October 2023.

The notification also says that in  respect  of  the  tariff  items  in  Chapters  60,  61,  62  and  63  of  the  said  schedule,  the  blend containing cotton and man-made fibre shall mean that content of man-made fibre in it shall be more than 15 per cent but less than 85 per cent by weight and the blend containing wool and man-made fibre shall mean that  content  of  man-made  fibre  in  it  shall  be  more  than  15 per cent  but  less  than  85 per cent  by  weight.  The garment or made-up of cotton or wool or man-made fibre or silk shall mean that the content in it of the respective fibre is 85 per cent or more by weight.

K.M. Subramanian, President, Tirupur Exporters Association (TEA) said, “We are happy with this decision as we have appealed for the revision of drawback rates and value cap upwards for knitwear garments.”

Courtesy: apparelresources.com

The European Union has begun the rollout of a world-first carbon border tariff that will tax importers of emissions-intensive goods, but fears have been raised over the scheme’s impact on global supply chains.

On October 1, the EU initiated the transition phase of the new carbon border adjustment mechanism (CBAM) which is aimed at imports of iron and steel, cement, aluminium, fertilisers, electricity and hydrogen.

Companies importing these products have been told to collect import volume data and calculate emissions released during the production process – with the first quarterly report due by the end of January 2024.

Once the permanent system enters into force in 2026, the EU will begin taxing imports based on their CO2 emissions profile, partly to prevent so-called “carbon leakage”, where companies based in the bloc relocate carbon-intensive production to countries with lower environmental standards.

Experts say the move will have far-reaching supply chain consequences for major trading partners, such as the UK, China and Turkey.

In the metals market, for example, the tariff covers upstream ores as well as downstream goods including screws, bolts and nuts.

“CBAM could be devastating to the sector,” a British steel industry representative tells GTR, flagging the impending impact of administration barriers and financial penalties on exporters.

The EU is the largest export market for UK steel and accounts for about three-quarters of foreign sales, they note.

China and India have also raised concerns over CBAM and the damage it could inflict on their domestic metals producers who often rely on heavy emitting blast and basic oxygen furnaces.

According to research from ING, CBAM could drive up the cost of importing Chinese aluminium products into the European bloc by around 17%, unless Beijing manages to decarbonise the sector in the coming years.

ING says the outlook for Indian flows is a “bit more worrisome” and predicts the total cost of India-produced aluminium products will leap by over 40%.

Brussels has argued the carbon tariff is compliant with World Trade Organization (WTO) rules and is necessary to ensure its climate objectives – part of a push to be climate neutral by 2050 – are not undermined.

The bloc’s trade commissioner, Valdis Dombrovskis, said in a speech in late September that the EU would be “encouraging global industry to embrace greener and more sustainable technologies”, and added that CBAM will “contribute to the wider discussion about greater use of carbon pricing globally”.

Exporters in developing countries are likely to be harder hit.

Analysis by the African Climate Foundation and the London School of Economics and Political Science (LSE), finds that African states with a greater share of their exports destined for Europe will ultimately be the worst affected by the tariff.

In a report published in May, they say that – at current carbon prices – CBAM could reduce Africa’s exports to the EU by up to 5.7%, knocking off 0.91% from the continent’s gross domestic product, or around US$25bn, as compared to 2021 levels.

Courtesy: gtreview.com

An international consortium says it has executed the first fully digitised shipment of goods following the enactment of UK legislation giving legal recognition to paperless trade documents.

A consignment of valves were shipped from the UK to Singapore using the blockchain platform of supply chain solutions provider LogChain shortly after the UK’s Electronic Trade Documents Act (ETDA) entered force on September 20.

An electronic air waybill was used to ship the goods by Singapore Airlines and  LogChain says it is the first to use a full suite of digital logistics documents such as the purchase order, driver and vehicle checklists, gate in and out receipts, packing lists, security declarations and product paperwork.

“Placing a bill of lading on the blockchain is a commendable feat, but if the hands-on – on-ground and on-site – staff at the heart of our operations are still tethered to manual methods like clipboards, then the essence of a fully digitalised supply chain eludes us,” says Andrew McKeown, LogChain’s CEO.

“We sought to highlight the logistical element, demonstrating the potential for comprehensive digitalisation across the entire spectrum of the supply chain, transcending mere transactional boundaries,” he tells GTR.

While the focus of global reforms to digitise trade paperwork has been on documents of title such as the bill of lading, McKeown says this shipment seeks to achieve the “broader intent of ensuring end-to-end digitalisation in line with the ‘spirit of the agreement’ of the ETDA”.

“To cite an example, warehouse receipts and ship’s delivery orders, while not traditionally recognised as documents of title under common law, have an operational significance attached to their possession. In practice, holding these documents might sometimes be a prerequisite for a party to assert performance of a duty, or to activate certain statutory effects, as seen under statutes like the Sale of Goods Act 1979,” he says.

The shipment was sent from Burnley in the UK by Fort Vale, a valves and fittings manufacturer, to its own facility in Singapore, meaning no buyer or seller was involved.

“A significant number of our key accounts are based in Singapore and as such, the opportunity to be part of this historic moment was something not to miss,” says Graham Blanchard, Fort Vale’s global sales and marketing director.

“Fort Vale sees the benefits of security, efficiency, cost savings and reduced risk of delays as real positives not only for our organisation but as a contribution to frictionless trade between the UK and Singapore as a whole.”

Courtesy – gtreview.com

September 20, 2023 is a landmark date for the digitisation of trade. The UK’s Electronic Trade Documents Act is now in effect, giving paperless versions of documents such as bills of lading (BLs) the same legal standing as their physical counterparts. 

After decades of slow progress – just 2.1% of BLs and waybills were issued electronically last year in containerised trade – the reforms have been hailed as a transformational opportunity to move away from paper, improve efficiency, cut costs and reduce trade’s carbon footprint. 

A survey published this week by the Institute of Export and International Trade (IOE&IT) finds that 75% of businesses surveyed believe the Act will have a positive or very positive impact on their business. None said it would affect them negatively. 

Lloyds Bank announced in the early hours of September 20 it had already completed what it believed was the first transaction under the Act, issuing a digital promissory note to retailer Matalan to facilitate the purchase of garments from a supplier. 

However, uncertainties remain. The Act is deliberately technologically neutral and does not offer prescriptive definitions of the systems that can be used to issue electronic trade documents. The IOE&IT finds that a quarter of business owners are concerned about data security, and nearly a third worry about IT skills and implementation. 

And despite substantial industry efforts to encourage adoption, the survey finds that 36% of respondents cite the biggest barrier to progress as “ensuring partners are on board”. 

Courtesy: gtreview.com

Prime Minister Shri Narendra Modi along with the leaders of UAE, Singapore, Bangladesh, Italy, USA, Brazil, Argentina and Mauritius, launched the Global Biofuel Alliance on 9 September 2023, on the sidelines of the G20 Summit in New Delhi.

The Global Biofuel Alliance (GBA) is an initiative by India as the G20 Chair. The Alliance intends to expedite the global uptake of biofuels through facilitating technology advancements, intensifying utilization of sustainable biofuels, shaping robust standard setting and certification through the participation of a wide spectrum of stakeholders.

The alliance will also act as a central repository of knowledge and an expert hub. GBA aims to serve as a catalytic platform, fostering global collaboration for the advancement and widespread adoption of biofuels.

Additionally, at the G20 Summit, India, the US, UAE, Saudi Arabia, France, Germany, Italy and the European Union signed a Memorandum of Understanding (MoU) to establish the India-Middle East-Europe Economic Corridor. Biden called it a “game-changing” regional investment. The economic corridor of rail and shipping links aims to bolster trade between India, the Middle East and Europe, a modern-day SpiceRoute to bind regions that account for about a third of the global economy.

Courtesy: LinkedIn – UAE-India Business Council (UIBC)