On November 2, the ASEAN Secretariat, the custodian of the Regional Comprehensive Economic Partnership (RCEP), issued a notice announcing that Brunei, Cambodia, Laos, Singapore, Thailand, Vietnam and other 6 ASEAN member countries and China, Japan, New Zealand, Australia and other four non-ASEAN member states have formally submitted the approval letter to the ASEAN Secretary-General, which has reached the threshold for the agreement to enter into force. According to the agreement, RCEP will take effect for the ten countries mentioned above on January 1, 2022.
In fact, as early as March 22 this year, China had completed the approval of the RCEP agreement and became the first country to ratify the agreement.
It is reported that after the RCEP takes effect, it will abolish 91% of the tariffs on goods trade between member states, regulate investment standards, intellectual property protection, e-commerce and other trade activities, and will promote the optimization of the supply chain in the free trade zone. At a critical moment when the world is facing the rise of unilateralism and protectionism, the signing and entry into force of the RCEP agreement has injected new vitality into free trade and multilateralism.
01
RCEP helps
Deepen regional textile and apparel industry chain and supply chain cooperation
For my country's textile industry, RCEP will have a far-reaching positive impact on the industry's expansion of the scale of foreign trade and the deepening of the industry chain supply chain cooperation within the region.
RCEP members are my country`s important economic and trade partners. According to data from the Ministry of Commerce, from January to September 2020, my country`s total trade with other RCEP members reached US$1,055 billion, accounting for about one-third of China`s total foreign trade.
In terms of exports, ASEAN and Japan are our industry`s third and fourth largest export markets after the European Union and the United States. The total exports accounted for more than 20% of my country`s total annual exports of textiles and garments; South Korea and Australia are important textiles and garments in the world. The consumer market has relatively sufficient purchasing power and is also an important destination for the export of industry end products. In terms of imports, my country's annual imports of textiles and clothing from ASEAN exceed US$7 billion, accounting for about 30% of the industry's annual imports. ASEAN has become my country's largest source of imported textiles and clothing. For example, my country imports a large amount of cotton yarn and clothing from Vietnam, and imports cotton knitted clothing from Cambodia. At the same time, Japan and South Korea are also important import sources for my country's functional fabrics, chemical fiber textiles and garments, and textile dyes. In addition, Australia and New Zealand also provide my country with a large amount of high-quality wool and other textile raw materials.
In addition, through the connection of this agreement, China and Japan, which did not have a bilateral trade mechanism before, will have further development in economic and trade relations. The original import tax rate of 5% to 8% for the main categories of products we import from Japan will basically be reduced to zero in 11, 16 or 21 years. For example, the original 8% tax rate of textile machinery products such as shuttleless air-jet looms and flat weft knitting machines imported from Japan will be reduced to zero within 11 or 16 years after the RCEP takes effect, which will help the industry to accelerate industrial innovation and upgrading. And improve production efficiency.
South Korea is an important trading partner of China's textile industry in East Asia, and one of the important export markets of my country's textile and apparel. In 2019, my country's textile and apparel exports to South Korea were 8.99 billion U.S. dollars, accounting for about 3.2% of the total industry exports that year. In the same year, my country imported US$1.502 billion in textiles and apparel from South Korea, accounting for 5.9% of the industry`s total annual imports. As far as South Korea is concerned, my country is also its largest source of textile and apparel imports, accounting for more than 1/3 of South Korea's total annual textile and apparel imports.
The China-Korea Bilateral Free Trade Agreement came into effect on December 20, 2015. Various concession rules have been implemented for 6 years, and most textile and apparel products have enjoyed tariff reduction or exemption. The signing of the RCEP this time has little effect on the existing textile and apparel trade tariffs of the two countries, but there are still some export products with the best tariffs under the RCEP rules. For example, after the implementation of RCEP, the tax rate of my country's chemical fiber knitted sweaters, men's and women's down jackets, women's jeans, men's cotton shirts, etc., will be halved from the basic tax rate to 6.5%. The cost of ore, rubber, PX and other commodities will help improve the competitiveness of related industrial chains in the long run.
It can be said that the achievement of RCEP will help expand China`s export market space, meet the needs of domestic import consumption, strengthen the supply chain of the regional industrial chain, and help stabilize foreign trade and foreign investment. In order to form a domestic and international dual cycle with the domestic cycle as the main body The new development pattern that promotes each other provides effective support.
02
under RCEP
Opportunities and challenges coexist in China's textile industry
Of course, RCEP is not only good for my country's textile and apparel exports, but also good for ASEAN countries such as Vietnam. For example, the garments produced in Vietnam are now exported to China, and they have to pay tariffs. After joining the free trade agreement, the regional value chain will come into play. In fact, all enterprises in the local area can participate in the value accumulation of the place of origin, which is of great benefit to promoting mutual trade and investment within the region.
RCEP`s cumulative rules of origin are more beneficial to companies. The greatest achievement in the field of RCEP`s trade in goods is the provision of regional rules of cumulative origin. Under the rules of origin in most bilateral free trade agreements in the world, goods entering another free trade partner country B from country A need to meet the value-added standards or production requirements in country A, and the goods are identified as originating from country A in order to enjoy the benefits of country B. tariff. The RCEP regional accumulation rule means that when goods enter from country A to another free trade partner country B, intermediate products of multiple contracting parties in the agreement can be used to meet the required value-added standards or production requirements, so that country A enjoys B The threshold of national zero tariff can be significantly lowered. A large-scale regional origin accumulation system such as RCEP will make it easier for companies to obtain preferential tariffs. At the same time, it will have an impact on the company's procurement of raw materials and parts, industrial chain layout, and foreign investment decisions. After the RCEP takes effect in the future, when importing and exporting products that are included in the tariff reduction schedule and meet the standards of origin, they should actively apply for the issuance of the certificate of origin, so as to enjoy tariff preferences and customs clearance convenience in time, and enhance the competitiveness of the products in the international market. .
There is no doubt that RCEP will also promote the transformation and upgrading of domestic textile enterprises and industries. However, it should be noted that after the signing of RCEP, it means that China's textile and garment industry will be more closely connected with East Asia and Southeast Asia, domestic enterprises will be integrated into a larger market, and the flow of resources, technology, and talents in the region will accelerate. These countries will rely on resource and price advantages to increase their share of the internal market in the RCEP region. If my country's textile and apparel industry has not yet changed to a high-end and high-value-added direction, its effects will do more harm than good. At the same time, with the reduction of tariffs on some imported products, the domestic market will face more intense competition, which will also force domestic enterprises to accelerate their transformation and upgrading in the competition and improve product quality and added value.
Undoubtedly, through RCEP, the market access of goods, services, investment and other fields between member states will be further relaxed, customs procedures, technical standards, etc. will gradually be unified, and the adoption of regionally accumulated rules of origin will promote the freedom of economic factors in the region. Mobility, strengthen cooperation in the division of labor among members, stimulate the expansion and upgrading of the consumer market in the region, and promote the further development of the industrial chain, supply chain and value chain in the region.