The Regional Comprehensive Economic Partnership Agreement (RCEP) officially came into effect on January 1, 2022. For China’s textile and apparel industry, RCEP, which covers services trade, e-commerce, intellectual property, government procurement and other issues, will have a positive impact on the industry’s expansion of foreign trade scale, deepening intra-regional supply chain cooperation and industrial chain security.
5 sets of data reveal textile and apparel opportunities:
According to statistics, the total import and export trade of textiles and clothing between my country and 14 other RCEP member countries reached US$88.26 billion in 2019. The tax reduction agreement in the RCEP terms will help strengthen my country’s trade with other member countries.
Among the RCEP member countries, China and ASEAN are each other’s largest trading partners. ASEAN has a population of more than 600 million and an average age of less than 35 years old. It is a large and dynamic consumer market.
After RCEP takes effect, tariffs on my country’s main exports of clothing products to Japan will be reduced to zero within 16 years.
The value component of product origin can be accumulated within a region composed of 15 member countries, and the value component from any party in RCEP will be taken into account, significantly improving the utilization rate of the preferential tax rate in the agreement.
Customs clearance procedures will be simplified. Where possible, express cargo and perishable goods will be released within 6 hours after arrival, and general cargo will be released within a maximum of 48 hours.
RCEP is a free trade agreement that includes the ten ASEAN countries and five partner countries including China, Japan, South Korea, Australia, and New Zealand, and establishes a unified market for 15 countries by reducing tariffs and non-tariff barriers. As of now, RCEP is the world’s largest free trade agreement. It covers a population of 2.2 billion, accounting for approximately 30% of the world’s total population; its GDP reaches US$32 trillion, accounting for 32% of global GDP. It is a huge market covering 15 countries. According to China Customs statistics, the total import and export trade of textiles and clothing between my country and 14 other RCEP member states reached US$88.26 billion in 2019, of which my country exported US$76.19 billion in textiles and clothing to the above-mentioned countries, accounting for approximately 28% of the industry’s total foreign trade that year. .
RCEP aims at a comprehensive, modern, high-quality and inclusive free trade agreement and benchmarks high-level free trade rules. After the agreement takes effect, more than 90% of goods trade in the region will eventually achieve zero tariffs, which will significantly reduce the cost of goods trade and commodity prices in the region. With its commitment to open up goods, services and investment, simplify customs procedures, use rules of origin to promote trade development, and reduce trade barriers, RCEP will create job opportunities, enhance regional supply chain cooperation, and promote regional and global value chains. links to further assist the economic development of member countries.
The large ASEAN market brings regional development opportunities
China and the other 14 RCEP member states have always had close exchanges in the field of textile and apparel trade. Taking ASEAN as an example, driven by the China-ASEAN bilateral trade agreement, economic and trade cooperation between China and ASEAN has developed rapidly. In 2019, ASEAN surpassed the United States to become China’s second largest trading partner in textiles and apparel. In 2020, due to the impact of the epidemic, which led to a reduction in trade exchanges and the deviation of epidemic prevention material data from the norm, China-ASEAN bilateral textile and apparel trade volume once again fell behind the United States, with a cumulative total of 46.63 billion US dollars, an increase of 0.65%.
In terms of exports, China’s apparel exports to ASEAN in 2019 were US$10.068 billion, making it the fourth largest export market for Chinese apparel that year. In 2020, under the influence of the epidemic, apparel exports to the ASEAN market increased by 14.1%, making it the only major Chinese market to achieve apparel export growth. area.
ASEAN has a population of more than 600 million, with an average age below 35 years old. It is a very large and dynamic consumer group. Judging from the World Bank’s 2019 per capita income data in Southeast Asian countries, the ASEAN market has great development potential.
Per capita income of the ten ASEAN countries
Deepening market development in Japan and South Korea has important incremental significance
It is worth noting that under the RCEP framework, China and Japan reached a bilateral tariff reduction arrangement for the first time. This is the first time that my country has signed a free trade agreement with one of the top ten economies in the world, achieving a historic breakthrough.
Japan is the third largest export market for China’s apparel industry. In 2019, China’s apparel exports to Japan were US$15.432 billion (affected by the epidemic, exports in 2020 were US$12.89 billion). The industry originally exported to Japan, which generally faced Japanese import tariffs of about 4% to 11%. After RCEP came into effect, the main clothing exports to Japan (such as sweaters, men’s and women’s tops, pants, suits, T-shirts, socks, etc.) Dresses, etc.) product tariffs 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 China’s garment 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 its products.
In addition, through the RCEP agreement, further cooperation in the textile and apparel industries between China and South Korea also has broad prospects.
South Korea is one of the important export markets for my country’s textiles and clothing. In 2020, China’s clothing exports to South Korea were US$5.1 billion. For South Korea, China isIts largest source of textile and apparel imports accounts 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 will have 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. According to statistics from the Textile Industry Branch of the China Council for the Promotion of International Trade, after the implementation of RCEP, the tax rate on China’s chemical fiber knitted sweaters, men’s and women’s down jackets, women’s jeans, men’s cotton shirts and other products will be halved from the basic tax rate to 6.5%. After RCEP comes into effect in the future, it will help my country expand exports of such products to South Korea.
In addition, since Japan and South Korea are important import sources for my country’s functional fabrics, chemical fiber textiles and apparel, textile dyes, etc., after RCEP comes into effect, my country’s textile and apparel companies will also enjoy the benefits of tax reductions on these imported products.
Build a mutually beneficial and win-win industrial chain system
Image source丨CCTV News
The epidemic has brought a major impact to the economies of various countries. It has also brought opportunities for regional economic and industrial structural adjustment and innovative development. Strengthening industrial docking and cooperation is an important task in the current RCEP construction.
According to data from the World Trade Organization, in 2019, the total apparel exports of the fifteen RCEP member countries accounted for 44.5% of the world’s total apparel exports and 12.4% of the world’s apparel imports. From a supply chain perspective, China, Japan, South Korea and many ASEAN countries have formed an interdependent textile and clothing production and manufacturing network in recent years. China, Japan and South Korea are the main suppliers of clothing raw materials such as fiber yarns and fabrics. China and some Southeast Asian countries are the main producers of clothing products, and most of the products are exported to the United States, Europe, Japan and other countries. The signing and entry into force of the RCEP Agreement will be conducive to the emergence of a unified supply chain market and consumer market in the region, significantly promote the Chinese garment industry to deepen international production capacity cooperation, expand investment in the region, and better build a mutually beneficial and win-win industrial chain supply chain cooperation system.
Specifically, first, RCEP uses a negative list approach to market opening in the investment field, and China’s level of openness commitments in RCEP are quite high. Similarly, other countries are also very open to their investment fields, which brings opportunities for Chinese companies to “go out” to invest in other RCEP member countries, and also for investors from other countries. China’s investment provides many opportunities.
The second is the setting of production bases. Enterprises can choose the most ideal place as a production base to optimize regional preferential policies after in-depth and systematic research and analysis of the arrangements for the liberalization of goods trade, liberalization of service trade and preferential investment policies in RCEP countries. ,maximize.
The third is to provide benefits for the reconstruction of the industrial chain value chain. In terms of rules of origin, RCEP uses the principle of regional accumulation in this region, so that the value components of the origin of products can be accumulated within the area composed of fifteen member states. The value components from any party in RCEP will be taken into account, significantly improving Utilization rate of agreed preferential tax rates.
Improvement of comprehensive business environment
In terms of trade facilitation, RCEP has simplified customs clearance procedures and adopted efficient management methods such as advance ruling, pre-arrival processing, and the use of information technology to promote customs procedures. Where possible, it strives to achieve the arrival of goods for express cargo, perishable goods, etc. It will be released within 6 hours, and general cargo will be released within a maximum of 48 hours. This will promote the development of new cross-border logistics such as express delivery, and also indirectly promote the development of the clothing industry that pursues fashion trends.
In terms of intellectual property protection, after RCEP comes into effect, there are more comprehensive regulations, covering all-round protection of copyrights, trademarks, patents, geographical indications, designs, etc. For Chinese clothing companies, copyrights, patents, trademarks, and designs applied for in one member country can also be protected in other RCEP countries.
In terms of promoting the development of the digital economy, RCEP has made very clear provisions on the standardized development of the e-commerce data economy and the promotion of e-commerce use and cooperation. RCEP strengthens electronic authentication, signature authentication, consumer protection, and personal information protection in the field of e-commerce. Such an environment greatly reduces the cost of business operations and transaction costs, is conducive to creating a good e-commerce development environment, and greatly promotes The development of e-commerce in the region. The e-commerce application and innovation capabilities of Chinese clothing companies are highly competitive, and a stable and good e-commerce development ecosystem will bring more business opportunities to the companies.
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