OnNovember15,2020,the”RegionalComprehensiveEconomicPartnershipAgreement”(RCEP)wasofficiallysigned.The15memberstatesincludethetenASEANcountries,China,Japan,SouthKorea,AustraliaandNewZealand,coveringThetotalpopulationis2.27billion,thetotalGDPis26.2trillionUSdollars,andthetotalexportvolumeis5.2trillionUSdollars,accountingforabout30%oftheworld’stotal.Aftereightyearsofnegotiationsandconsultations,RCEPmemberstateshavejointlypromotedtheworld’slargestfreetradeareafromconcepttoreality.ThisisnotonlyalandmarkandimportantmilestoneforEastAsiaregionalcooperation,butwillalsobecomeanimportantengineforglobaleconomicgrowth.
After the signing of RCEP, each member country still needs to complete its own domestic ratification process. The agreement will be submitted to at least six ASEAN member states and three non-ASEAN member signatories. The document will take effect after 60 days. As the world’s largest free trade arrangement, after RCEP takes effect, the final number of zero-tariff products in goods trade will exceed 90%. The overall level of openness in service trade and investment is significantly higher than the original “10+1” free trade agreement, and it also incorporates high-level Intellectual property rights, e-commerce, competition policy, government procurement and other modern issues. For my country’s textile industry, RCEP will have a far-reaching positive impact on the industry’s expansion of foreign trade scale and deepening cooperation in the industrial chain and supply chain within the region.
China has close trade relations with RCEP member countries
Textile and clothing trade
China and the other 14 RCEP member states have always had close exchanges in the field of textile and apparel trade. In terms of exports, ASEAN and Japan are the third and fourth largest export markets in our industry after the EU and the United States. Their combined exports account for approximately 20% of my country’s total annual exports of textiles and apparel (the total export value to the above two major markets is approximately US$60 billion); South Korea and Australia, as important global textile and apparel consumer markets, have relatively sufficient purchasing power and are also important destinations 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 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 apparel, 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.
According to Chinese customs statistics, the total import and export trade of textiles and clothing between my country and other RCEP member states reached US$88.26 billion in 2019, accounting for approximately 28.8% of the industry’s total foreign trade that year. Among them, my country exported US$76.19 billion in textiles and clothing to the above-mentioned countries, accounting for 27.1% of our industry’s global exports. At the same time, my country imported US$12.07 billion in textiles and clothing from these countries, accounting for 47.4% of the industry’s total annual imports.
China and Japan established a free trade partnership for the first time
Achieving a historic breakthrough
Accelerating the implementation of free trade The regional strategy is an important part of my country’s new round of opening up to the outside world. Up to now, my country has signed 19 free trade agreements with 26 countries and regions, including most RCEP member countries. Among them, the China-New Zealand Free Trade Agreement came into effect in October 2008, the China-ASEAN Free Trade Area was fully completed in January 2010, and the China-South Korea and China-Australia Free Trade Agreement came into effect at the same time in December 2015. By signing RCEP this time, my country has established a new free trade partnership with Japan. This is the first time that my country has signed a free trade agreement with one of the top ten economies in the world. It is also a major historic breakthrough in my country’s implementation of the free trade area strategy.
The scale of Sino-Japanese textile industry trade is expected to continue to expand
Currently Japan is the fourth largest export market in our industry. In 2019, my country’s textile and clothing exports to Japan were US$20.88 billion, accounting for approximately 7.4% of the industry’s total exports for the year; during the same period, China’s textile and clothing imports from Japan were US$3.25 billion, accounting for approximately 12.8% of the total global imports (the above data are based on China Customs statistics) ). After RCEP came into effect, the industry originally faced a Japanese import tariff of about 4% to 11% for most products exported to Japan. Except for a small number of products (masks, bedding filled with textile materials, etc.) that did not receive a tax reduction, the main exports to Japan were Tariffs on clothing (such as sweaters, men’s and women’s tops, pants, suits, T-shirts, socks, dresses, etc.) will be reduced to zero within 16 years.
Since Japan has signed free trade agreements with ASEAN, Vietnam, Thailand, Indonesia, India and other countries, textile and clothing products exported to Japan from the above countries can enjoy tax-free treatment. After the implementation of RCEP comes into effect, it will help our industry gradually and fairly participate in international competition in the Japanese market, reduce the export costs of foreign trade companies, and enhance the international competitiveness of products.
At the same time, the original 5% to 8% import tax rate for the main categories of products imported from Japan by our industry will basically be divided into 11 years, 16 years or 21 years. stage down to zero.For example, the original 8% tax rate for 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 RCEP takes effect, which will help the industry accelerate industrial innovation and upgrading. and improve production efficiency.
China-South Korea textile and apparel trade has the best tariff under RCEP rules
South Korea is an important trade player for our textile industry in East Asia It is also one of the important export markets for my country’s textiles and clothing. In 2019, my country’s textile and apparel exports to South Korea were US$8.99 billion, accounting for approximately 3.2% of the industry’s total exports that year. In the same year, my country imported US$1.502 billion in textiles and clothing from South Korea, accounting for 5.9% of the industry’s total annual imports. For South Korea, my country is also its largest source of textile and apparel imports, accounting for more than one-third of South Korea’s total annual imports of textiles and apparel.
The China-South Korea Bilateral Free Trade Agreement came into effect on December 20, 2015. Various concession rules have been implemented for five years. Most textile and apparel products have enjoyed tariff reductions and exemptions. The signing of RCEP has little overall impact on the existing textile and apparel trade tariffs between the two countries, but there are still some export products with optimal tariffs under RCEP rules. From the list of clothing products with different tax rates under each agreement listed in the table below, we can see that after the implementation of RCEP, the tax rates for my country’s chemical fiber knitted sweaters, men’s and women’s down jackets, women’s jeans, men’s cotton shirts and other products will all be at the basic level. The tax rate is halved to 6.5%. After RCEP takes effect in the future, it will help expand the export of these products to South Korea.
RCEP helps deepen regional cooperation
Textile and apparel industry chain and supply chain cooperation
RCEP The signing is a shot in the arm for international cooperation in the textile industry at a time when anti-globalization thoughts are emerging and the epidemic has severely damaged cooperation in the global textile industry chain. RCEP member states not only include the most important textile and apparel production bases in the world (China, ASEAN, Japan, South Korea), but also cover many important textile and apparel consumer markets around the world, providing an active participation in regional industrial cooperation and construction for our country. The highly efficient and coordinated textile and apparel industry chain in the region adds support. After RCEP comes into effect, especially in terms of increasing exports to Japan, it will promote trade and investment interactions among our industry among Lancang-Mekong countries and establish a more linked production capacity cooperation system, which will help accelerate the formation of new developments in which domestic and international dual cycles promote each other. pattern.
Through RECP, market access for goods, services, investment and other fields among member countries will be further relaxed, customs procedures, technical standards, etc. will be gradually unified, and through the use of regionally accumulated origins The rules will promote the free flow of economic factors within the region, strengthen production division of labor and cooperation among members, promote the expansion and upgrading of the regional consumer market, and promote the further development of the regional industrial chain, supply chain and value chain.
RCEP’s cumulative rules of origin are more conducive to enterprises benefiting
The biggest achievement of RCEP in the field of goods trade is the provision of cumulative rules of origin within the region. Under the rules of origin of most bilateral free trade agreements around the world, goods from country A to another free trade partner country B need to meet the value-added standards or production requirements in country A and be deemed to be goods originating in country A in order to enjoy the benefits of country B. tariff. The RCEP regional accumulation rule means that goods from country A to another free trade partner country B can use intermediate goods from multiple parties in the agreement to meet the required value-added standards or production requirements, so that country A enjoys the benefits of country B. The threshold for national zero tariffs can be significantly lowered. A large-scale regional origin accumulation system like 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 RCEP takes effect in the future, when companies import and export products that are included in the tariff reduction schedule and meet the origin standards, they should actively apply for and issue a certificate of origin in order to enjoy tariff preferences and customs clearance convenience in a timely manner and enhance the competitiveness of their products in the international market. . </p
