On December 1, a message that “32 countries will cancel the Generalized System of Preferences for Chinese export products starting today” attracted attention. This news ranked first on the hot discussion list on a news APP, with more than 540,000 netizens discussing it.
The editor noticed that as early as the end of October this year, the General Administration of Customs issued an “Announcement on No longer Issuing Generalized System of Preferences Certificates of Origin for Goods Exported to EU Member States, the United Kingdom, Canada, Turkey, Ukraine and Liechtenstein” (Announcement No. 84 of 2021) mentioned that starting from December 1, 2021, the customs will no longer issue GSP certificates of origin for goods from the above 32 countries that no longer grant China’s GSP tariff preferential treatment.
It is worth noting that with the continuous improvement of my country’s economic development and people’s living standards, my country has gradually “graduated” from the GSP benefits of various developed economies. From 2012 to 2019, Ukraine, Canada, Switzerland, Liechtenstein, the European Union, Turkey, Japan, etc. have successively canceled the preferential tariff treatment granted to my country’s export goods under the Generalized System of Preferences. In 2021, the Eurasian Economic Union announced that it would cancel the preferential tariff treatment granted to my country under the Generalized System of Preferences. Currently, there are still three countries: Norway, New Zealand, and Australia that grant my country GSP treatment.
Image source: Website of the General Administration of Customs
So, what exactly is the GSP? What impact will the cancellation of GSP treatment by 32 countries have on my country? How are companies responding?
What is GSP?
What is the difference between it and most-favored-nation treatment?
The Generalized System of Preferences (Generalized System of Preferences), referred to as the Generalized System of Preferences (GSP), is a universal, non-standard preferential treatment system provided by developed countries (giving countries) to developing countries and regions (beneficiary countries) exporting finished products and semi-manufactured products. Discriminatory and non-reciprocal tariff preference system. Relevant products imported from beneficiary countries will be granted tariff concessions based on the most-favored nation tax rate, or even zero-tariff access treatment. Since the implementation of the GSP in 1978, 40 countries have granted my country GSP tariff preferences, most of which are my country’s important trading partners, such as EU member states and the United Kingdom, Russia, Canada, Japan, etc.
However, with the rapid development of our country’s economy and the continuous improvement of people’s living standards, our country is no longer a low-income or lower-middle-income economy according to the World Bank standards. For this reason, many GSP benefit-granting countries have successively announced in recent years that they will cancel the GSP treatment for my country. After the favor-giving country notified the cancellation of the GSP treatment, my country’s export commodities can no longer enjoy tariff preferences with the GSP certificate of origin. Correspondingly, the relevant visa measures of the customs will also be adjusted accordingly. Previously, after the Japanese Embassy and the Eurasian Economic Commission announced the cancellation of the GSP treatment for China, the customs has stopped issuing GSP treatment to Japan and the Eurasian Economic Union from April 1, 2019 and October 12, 2021 respectively. Preferential Certificate of Origin.
However, it needs to be emphasized that the GSP is different from the most-favored-nation treatment we often hear.
The Generalized System of Preferences is a one-way tariff preference system granted by developed countries to developing countries and regions exporting manufactured and semi-manufactured products. For economies that are no longer low-income or lower-middle-income according to World Bank standards, developed countries can cancel the GSP treatment (commonly known as “country graduation”).
Most-favored-nation treatment is one of the basic principles of the World Trade Organization (WTO). It requires WTO member states to grant each other equal tariff treatment, also known as “non-discriminatory treatment.” After my country joins the WTO, it automatically obtains WTO most-favored-nation status, and the most-favored-nation tax rate applies when goods are exported to other member countries.
Experts: This change is unlikely to affect
What impact will my country’s foreign trade exports have?
So, what impact will the cancellation of GSP treatment by 32 countries have on my country?
According to the Beijing Youth Daily, foreign trade professionals told reporters that the cancellation of GSP treatment by 32 countries to my country will temporarily cause some export companies to lose tariff preferences and bring certain pressure. But generally speaking, this impact is limited: as Chinese-made products become more and more competitive, it is difficult for a simple tariff policy to affect the overall international trade of Chinese products. Therefore, it will not affect the long-term future of my country’s export enterprises. Strive for greater market opportunities.
The Economic Daily article pointed out that the cancellation of GSP benefits will have an adverse impact on the exports of some companies, but the overall impact is relatively limited. One of the most convincing examples is the trade friction between China and the United States. Although the trade friction has lasted for many years, it has not affected the rapid growth of trade volume between China and the United States.
���Global Times, Huo Jianguo, vice president of the China WTO Research Association, believes that the normal tariffs in European and American countries remain between 2-3%. Even if the GSP is canceled and restored to the normal tariff levels of these countries, the impact on Chinese products will The impact is not big.
Mei Xinyu, a researcher at the Institute of International Trade and Economic Cooperation of the Ministry of Commerce, said that in fact, the EU has gradually reduced its preferential trade arrangements with China since the 1990s. As early as 1996, the EU canceled the GSP treatment for all Chinese chemical products, clothing and accessories, glass, and ceramics except fertilizers. In 1998, it again canceled the GSP treatment for seven categories of Chinese commodities. Under the new GSP arrangement implemented in advance on April 1, 2005, 16 categories of Chinese products with Chapter 50 were eliminated from the GSP treatment product categories implemented by the EU, leaving only 11 categories with Chapter 44 products that continue to enjoy GSP treatment. preferential treatment. By the second decade of this century, there were no longer many types of export commodities that China enjoyed the EU’s GSP treatment, but the scale of China’s exports to the EU had doubled.
Mei Xinyu said that over the past two decades, many Chinese products have “graduated” one after another, which shows that China’s economic development has achieved considerable results. Now, the EU and some other countries will cancel the GSP treatment for China. Some of the original benefit-giving countries have completely lagged behind China in manufacturing. We should treat it with a normal attitude. This change will not affect my country’s foreign trade exports. What an impact.
Mei Xinyu further said that to be honest, the EU’s GSP reform in this century has been touted as being simple, transparent and targeted. It has the advantages of simplified procedures and improved transparency, and is also beneficial to all beneficiary countries and the EU itself. . China has already provided preferential trade treatment to a number of underdeveloped countries. In the future, China may also provide GSP treatment to some countries. my country also needs to establish a “graduate” system for implementing preferential trade treatment. To this end, it needs to learn from the experience of European and American Western countries in this regard. lessons learned.
How do companies respond?
In the face of 32 countries canceling the GSP treatment for my country and customs adjustments to relevant visa measures, how should export companies respond?
China’s General Administration of Customs suggests that for goods exported to developed economies that no longer grant China’s general preferential treatment, companies can apply for a non-preferential certificate of origin to apply the most-favored-nation tax rate.
In addition, the General Administration of Customs has two suggestions:
First, communicate and explain to foreign customers as soon as possible to avoid inconvenience caused by different types of certificates of origin applied for.
The second is to make full use of the achievements of my country’s free trade zone construction. Explore emerging markets, optimize the export market structure, improve the utilization rate of free trade agreements, and create new competitive advantages. Export products to countries and regions that have signed free trade agreements with us and enjoy tariff reductions or even zero-tariff market access.
The Economic Daily article pointed out that for relevant foreign trade companies, in the short term, they must make full use of the results of my country’s free trade zone construction and transfer orders to countries and regions that have signed bilateral and multilateral free trade agreements with my country to cope with export impacts; In the long term, export companies should take advantage of this opportunity to accelerate the pace of transformation and upgrading, develop towards innovation and efficiency, and fundamentally enhance their ability to participate in international market competition.
The editor noticed that in September this year, Wang Shouwen, Vice Minister of Commerce and Deputy Representative for International Trade Negotiations, said that the current development of free trade agreements in the world is very vigorous. So far, our country has reached 19 free trade agreements with 26 countries and regions signed these agreements. By last year, free trade agreement partners accounted for nearly 35% of my country’s total foreign trade.
Wang Shouwen introduced that the free trade agreement has played a very good role in my country’s opening up to the outside world. In terms of trade in goods, my country’s average most-favored-nation tariff is 7.5%. The free trade agreement enables more than 90% of the trade between my country and its free trade partners to achieve zero tariffs, so the level of tariff liberalization in goods trade is very high. In the field of investment, there is no agreement on investment openness in the WTO, but the Free Trade Agreement has made many provisions in terms of investment openness, investment access, investment facilitation, and investment protection, which is beneficial to the relationship between my country and its free trade partners. The development of two-way investment is conducive to the regional integration development between my country and its free trade partners, thereby forming a more stable industrial chain and supply chain.
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