RCEP will take effect on January 1, 2022-
Hebei accelerates its integration into the world‘s largest free trade “circle of friends”
After 8 years of “long-distance running”, especially since 2020, the members of the Regional Comprehensive Economic Partnership Agreement (hereinafter referred to as RCEP) have overcome the difficulties caused by the new crown epidemic and formally signed the agreement on November 15, 2020. On January 1, 2022, RCEP officially entered into force for 10 countries including Brunei, Cambodia, Laos, Singapore, Thailand, Vietnam, China, Japan, New Zealand and Australia. South Korea will also join the effective implementation on February 1.
RCEP currently has 15 member countries, and its total population, economic volume, and total trade account for about 30% of the global total, making it the largest free trade zone in the world. After the RCEP takes effect, what opportunities will this world‘s largest free trade “circle of friends” bring to Hebei?
Seize the opportunity to shape new advantages in foreign cooperation
RCEP has achieved fruitful results in the liberalization of trade in goods. The “zero tariff” commitment and the rules of accumulation of origin have become the highlight of the policy. In fact, before RCEP, my country has signed 18 free trade agreements with many countries and regions. The power of RCEP can be foreseen from these existing free trade agreements.
Recently, Huayao International Pharmaceutical Co., Ltd. exported a batch of US$310,000 worth of goods to Peru. Relying on the China-Peru Free Trade Agreement Certificate of Origin issued by Shijiazhuang Customs, the tariffs that need to be paid for this batch of goods when imported into the secret recipe have been reduced from 9% to 0, thus realizing a tariff reduction of approximately US$28,000.
The Certificate of Origin of the Free Trade Agreement is called the “economic passport” of import and export commodities. From January to November 2021, Shijiazhuang Customs issued a total of 66,000 certificates of origin under the Free Trade Agreement, with a value of 28.19 billion yuan, which provides export companies with a tariff reduction of approximately 1.66 billion yuan in importing countries.
It is understood that our province has close cultural exchanges with the member states of RCEP, has a sound foundation for economic and trade cooperation, and has great potential for development. In 2020, the total import and export volume between our province and RCEP member countries was 163.23 billion yuan, an increase of 11.8% year-on-year, accounting for 37.0% of the province’s total import and export volume.
Under the RCEP framework, more than 90% of the goods trade between approved members will eventually achieve zero tariffs. On the day RCEP took effect, the immediate zero tariff rate between China and ASEAN, Australia, and New Zealand exceeded 65%. In terms of rules of origin, the materials of other member states used in the production process of enterprises in RCEP member countries can be regarded as local materials of origin, which can cumulatively increase the proportion of original value components.
According to Zhang Shaopu, Chief of the Origin Management Section of the Shijiazhuang Customs Tariff Department, the “zero tariff” commitment and the rules of accumulation of origin will effectively promote the minimization of production costs and the optimization of trade efficiency in the region, which will have a significant impact on the trade of goods among RCEP member states. The incentive effect will also help release Hebei’s foreign trade potential.
Compared with traditional free trade agreements, RCEP not only covers trade in goods, but also covers trade in services, investment, personnel mobility, etc., and incorporates emerging issues such as intellectual property rights, e-commerce, and government procurement.
At the same time, RCEP changed the fragmented status of free trade agreements in the region and formed a unified trade and investment rule system, which laid the institutional foundation for deeper economic and trade exchanges among RCEP member states.
Li Qing, a professor in the Department of International Trade of the Business School of Hebei University of Economics and Business, believes that the economic structure of Hebei and RCEP member states is highly complementary. After the RCEP takes effect, it will promote the free flow of economic factors in the region and strengthen cooperation in the division of labor among members, which will help Hebei enterprises to more flexibly and independently carry out overseas deployment. The formation of unified rules will reduce the operating costs and risks of enterprises’ foreign investment, and stimulate the growth of enterprises’ trade and investment in the RCEP area. This provides an opportunity for Hebei to reshape and optimize the industrial chain and supply chain.
It is worth mentioning that RCEP is the first free trade agreement signed between China and Japan. It places China, Japan and South Korea under the same free trade agreement for the first time. Prior to this, Japan, South Korea, and China had not reached a free trade agreement, which largely hindered the industrial chain cooperation in Northeast Asia.
“Under the new free trade framework, the cooperation space between Hebei and Japan and South Korea in terms of parts procurement and technological innovation will surely be further expanded.” Li Qing said.
Play first move and embrace the market of RCEP member countries
On the morning of December 22, 2021, an international train full of tires, mechanical equipment, daily necessities and other goods departed from Shijiazhuang International Dry Port and will go directly to Vientiane, the capital of Laos, via the China-Laos Railway. This is the first international route from Shijiazhuang to ASEAN, and it is also the first China-Laos (Thailand) international train from Beijing-Tianjin-Hebei.
Liu Jinpeng, general manager of Shijiazhuang International Dry Port, introduced that on the basis of stabilizing the “north” of Europe, the “west” of Central Asia, and the “east” of sea-railway, the new “south” international route will be added this time. Extend the coverage of Thailand, Cambodia, Malaysia and other countries, thereby leveraging the South Asian and Southeast Asian markets. After the operation of the train, it can help companies save more than half of the transportation time, effectively reduce transportation costs, and promote multilateral economic and trade exchanges between Hebei and ASEAN.
The breaking of many barriers has made the international trade road wider and wider, and more companies have chosen to play first moves and take the express train of RCEP effective. From January to October 2021, the total value of our province’s imports and exports to RCEP countries was 162.54 billion yuan, a year-on-year increase of 20.8%.
Relevant departments in our province plan ahead and make full preparations to help enterprises accelerate the embrace of RCEP.
Recently, the Provincial Department of Commerce invited 10 experts and scholars from Tsinghua University, Provincial Council for the Promotion of International Trade, Shijiazhuang Customs, Hebei University of Economics and Business and other units to serve as the first batch of Hebei FTA seed trainers to carry out RCEP publicity training.
“The entities participating in RCEP are enterprises. To allow enterprises to fully enjoy the dividends brought about by the agreement, they must first understand the policy.” Ding Ligang, director of the International Economic and Trade Relations Office of the Provincial Department of Commerce, said that they organized more than 10 events through online and offline methods. More than 200,000 person-times participated in the special training. The training content includes not only policy interpretation, but also typical enterprise sharing experience to ensure that the enterprise can understand and use it. Not long ago, our province also launched the “RCEP Yan Zhao Xing” activity, through a series of activities such as organizing policy presentations, carrying out project docking, and holding high-end forums to further intensify the exchanges and cooperation between Hebei and RCEP member states.
Zhang Shaopu told reporters that in order to help enterprises make full use of the preferential policies, Shijiazhuang Customs has compiled the “Comparison List of Tariff Concessions of Hebei Province’s Key Import and Export Companies RCEP Free Trade Agreement” and provided “point-to-point” assistance to key foreign trade companies.
Docking rules, share the RCEP landing bonus
Today, my country’s economy has entered a stage of high-quality development, and a new development pattern has accelerated. Hebei’s inner ring of Beijing and Tianjin and the outer border of the Bohai Sea have outstanding advantages in industries such as steel and textiles. They have unique development advantages and are able to better integrate into the new development pattern and become an important hub node.
Based on characteristic industries and comparative advantages, how can Hebei seize the opportunities brought by RCEP in the docking rules and share the dividends of the implementation of policies?
The implementation of RCEP will create a fair, transparent, stable and predictable policy environment for foreign trade and related enterprises, and it will also bring potential new requirements to enterprises. Shijiazhuang Customs reminds companies that the tax rates and rules of origin for the same goods in the same country of origin under different preferential agreements may also be different, and companies need to choose the best. Export companies should also pay attention to the tariff reductions of the RCEP contracting parties on the relevant goods for their export products. When the goods cannot meet the rules of origin, they can adjust the source of raw materials. Export companies can also incorporate relevant tariff concessions into business negotiations as an advantage, and share the dividends brought about by tariff concessions with importers of the contracting parties.
From the perspective of industrial development, Hebei, as a major manufacturing province, can use the opportunity of RCEP to take effect to accelerate industrial transformation and upgrading and improve the quality of international cooperation in the process of integrating into the regional supply chain and trade chain.
In this regard, Li Qing took the steel industry as an example to analyze that after the RCEP takes effect, it will promote the inflow of cost and quality competitive steel products in the region into the domestic market, which will force Hebei steel companies to reorganize and intelligently manufacture, and further expand the industrial chain. The overseas layout has promoted Hebei’s iron and steel industry to move upstream in the value chain.
Opening up forces reforms. In the integration of RCEP rules, the changes brought about by openness are not only reflected in the market entities and the industry level, but also put forward new requirements for in-depth and systemic institutional innovation.
Ding Ligang said that RCEP contains many high-standard international rules, which requires our province to further establish a business environment that is more in line with international economic and trade rules. Focusing on industrial development, we should also focus on shifting from the openness of commodities and factor flow to the institutional opening of rules, regulations, management, and standards, so as to reflect Hebei’s actions in accelerating the construction of a new development pattern.
Relevant experts suggest that according to Hebei’s actual conditions, plans to build RCEP pilot demonstration areas. It can also build a pilot zone for international scientific and technological cooperation, promote the joint development of the Hebei Pilot Free Trade Zone and the Cross-border E-commerce Comprehensive Pilot Zone, strengthen cooperation with RCEP member countries such as Australia, Japan, Singapore and other RCEP members in the field of technological innovation, and explore the construction of a pilot free trade zone An offshore innovation and entrepreneurship base for overseas talents. (Hebei Daily reporter Feng Yang)