On November 2, the ASEAN Secretariat, the custodian of the Regional Comprehensive Economic Partnership (RCEP), issued a notice announcing that six ASEAN member states, including Brunei, Cambodia, Laos, Singapore, Thailand, and Vietnam, and China and Japan Four non-ASEAN member states, including China, New Zealand and Australia, have formally submitted approval letters to the ASEAN Secretary-General, reaching the threshold for the agreement to take effect. According to the provisions of the agreement, RCEP will enter into force for the above ten countries 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 to ratify the agreement s country.
It is reported that after RCEP takes effect, tariffs on 91% of goods trade between member countries will be eliminated, investment standards, intellectual property protection, e-commerce and other trade activities will be regulated, and free trade will be promoted. Optimization of supply chains within trade zones. 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 will help deepen regional textile and apparel industry chain and supply chain cooperation
For my country As far as the textile industry is concerned, 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.
RCEP members are all important economic and trade partners of my country. According to data from the Ministry of Commerce, from January to September 2020, the total trade volume between my country and other RCEP members reached US$1.055 billion, accounting for approximately One-third of our total foreign 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 export share exceeds my country’s total annual exports of textiles and clothing. About 20%; 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.
In addition, through the connection of this agreement, China and Japan, which had no bilateral trade mechanism before, will further develop their economic and trade relations. The original 5% to 8% import tax rate for the main categories of products we import from Japan will basically be reduced to zero in stages in 2011, 2016 or 21. 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.
South Korea is an important trading partner of China’s textile industry in East Asia and 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 6 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. For example, after the implementation of RCEP, the tax rate on my country’s chemical fiber knitwear, 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 takes effect, my country’s imported iron and steel products will also be reduced. The cost of commodities such as ore, rubber, and PX 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 domestic import consumption needs, strengthen regional industrial and supply chains, and help stabilize foreign trade and foreign investment. Provide effective support for the formation of a new development pattern with the domestic cycle as the main body and the domestic and international dual cycles reinforcing each other.
02 China’s textile opportunities and challenges coexist under RCEP
Of course, RCEP is not only for my country’s textile industry Clothing exports are good, and they will also be good for Vietnam and other ASEAN countries. For example, if the clothing produced in Vietnam is exported to China, it will have to pay tariffs. If it joins the free trade agreement, the regional value chain will come into play. In fact, all enterprises in the region can participate in the accumulation of value in the place of origin, which is of great benefit to promoting mutual trade and investment in the region.
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 enter another country from country A.A free trade partner, country B, needs to meet the value-added standards or production requirements in country A and identify the goods as originating in country A in order to enjoy country B’s preferential tariffs. 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. .
There is no doubt that RCEP will also play a role in promoting the transformation and upgrading of domestic textile companies and industries. However, it should be noted that after the signing of RCEP, it means that China’s textile and apparel industry will be more closely connected with East Asia and Southeast Asia, domestic enterprises will integrate into a larger market, and the flow of resources, technology, talents, etc. within the region will accelerate. These countries will rely on their 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 transformed into a high-end, high-value-added direction, the effect will be more harmful 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 companies to accelerate transformation and upgrading in the competition to improve product quality and added value.
There is no doubt that through RCEP, market access among member countries in the fields of goods, services, investment and other fields will be further relaxed, customs procedures, technical standards, etc. will be gradually unified. The regional accumulated rules of origin 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. </p
