RCEP Takes Effect and Creates Lasting Value

By Qi Li

The Regional Comprehensive Economic Partnership（RCEP） formally took effect from January 1， 2022. By February 1， it was enforced in six ASEAN countries （Brunei， Cambodia， Laos， Singapore， Thailand and Vietnam）， as well as China， Japan， South Korea， Australia and New Zealand. As a free trade agreement that covers the largest amount of people in the world， and with the largest trade scale and development potential， the RCEP has been promoting trade in the region and the effects have started to show.

Foreign trade companies receive benefits

On January 1， Liu Kun， Business Manager of Qingdao Haiwan Group Co.， Ltd.， received the first RCEP certificate of origin issued by Qingdao Customs at the certificate of origin examination and signing center of the RCEP Qingdao Economic and Trade Cooperation Pilot Innovation Base in the North District of Qingdao. With this certificate， the tariff rate will be reduced from 3.3% to 3% for Qingdao Haiwan Group’s goods upon arriving in Japan. The tariff reduction and exemption for this batch of goods will total RMB 10，000. During its first year， the RCEP will save the companies’ exports to Japan a total of about RMB 1 million.

Su Feili is the head of a small company from Guangxi that sells medical devices.

Its products are sold to nearly 100 countries and regions around the world. “The RCEP is both an opportunity and a challenge for us，”Su said that first of all， the tariff reduction will bring more overseas business opportunities. Buyers and inquirers from exhibitions and social media are increasing. Also， the price competitiveness of crossborder e-commerce products is also increasing， forcing enterprises to keep upgrading their products. “We have started to make personalized and customized products， and our personalized after-sales services include online video guidance on operation and maintenance， so that we can track each medical device we sell. For our customers， they can enjoy better products and services while spending less money，” she pointed out.

According to the agreement， after the RCEP comes into force， more than 90% of the trade in goods between approved member states will be subject to zero tariff. Statistics from Nanning Customs show that in 2021， Guangxi’s foreign trade reached another record high， with foreign trade volume reaching RMB 593.06 billion， a year-on-year increase of 22.2%. Among them， the trade with other RCEP member countries also reached a new high， amounting to RMB 320.91 billion and up by 18.9% from the previous year. Thanks to a solid foundation for cooperation， Guangxi has been studying the new rules and grasping the opportunities brought by the RCEP， to promote a new round of high-level opening-up and accelerate the formation of a new development pattern.

“By January 27， CCPIT Guangxi had issued 9 preferential certificates of origin under the RCEP agreement. Exports include aluminum foil and yeast， and the destination country is Japan. The total value of exported goods is about USD 837，000， saving a tariff of about RMB 4，200 for enterprises.” Li Xiaoli， Vice Director of the Legal Affairs Department of CCPIT Guangxi， said that according to the RCEP agreement， the export of aluminum foil to Japan will enjoy tariff reductions year by year， until they reach zero tariff.

It is said that the certificate of origin under the RCEP is a necessary certificate for foreign trade companies to enjoy preferential RCEP tariff rates. Relevant companies can apply for such certificates for free through the certificate of origin declaration system of the CCPIT. “The CCPIT Guangxi takes the issuing of the RCEP certificates of origin as an important action to implement the RCEP and serve foreign trade companies. It has timely met the RCEP visa application needs of enterprises through the window of commercial certification， to help enterprises enjoy tariff reduction and exemption to the greatest extent and enhance market competitiveness of products，” Li Xiaoli said.

Luoyang Wanji Aluminum Processing Co.， Ltd. exports aluminum foil to Japan all year round. As early as November 2020， when the RCEP was officially signed， the company started to focus on the tariff commitment form issued by Japan. After finding that aluminum foil is subject to preferential tariff rates in Japan， the company contacted with its Japanese customers to discuss how to make good use of tariff concessions after the RCEP came into force. On January 7， the company applied for and received RCEP certificates of origin for three batches of aluminum foil exported to Japan for the first time.“According to Japan’s RCEP tariff concession commitment to China， the tariff rate of aluminum foil in Japan has been reduced from 7.5% to 7% this year. Although the 0.5% reduction is small， with the RCEP certificate， our export of goods to Japan will save RMB 7，600 on tariffs. The RCEP has effectively improved the competitiveness of our products in the Japanese market. At present， we have reached a preliminary consensus with our Japanese customers for larger cooperation，” the person in charge of trade business of the company said.

Since the RCEP came into force， Hunan’s export companies have applied for 139 certificates of origin and statements of origin for export products under the RCEP agreement， with a total value of RMB 138 million. The products mainly include electrolytic manganese， lamps， antimony trioxide， fireworks and firecrackers. The total tariff reduction of export destination countries reached RMB 1.656 million.

Coincidentally， in the first month of the RCEP coming into force， Zhejiang Province issued 5，190 preferential certificates of origin， and the covered goods have a total value of more than USD 240 million. The tariff concession amounted to more than RMB 13 million. It is said that in the first week after the RCEP took into effect， the cities of Zhejiang Pilot Free Trade Zone applied for certificates of origin under the RCEP. For example， an enterprise in Zhoushan enjoys a tariff reduction of 0.2% for its export of frozen surimi to Japan by virtue of the export certificate of origin. It is expected to save about RMB 220，000 in tariffs this year.

According to data released by Nanjing Customs， in January， Jiangsu Province imported 25 batches of goods under the RCEP， with a total value of RMB 121 million and a tariff concession of RMB 2.428 million.Nanjing Customs issued a total of 4，134 RCEP certificates of origin for enterprises in the province， with a certificate amount of RMB 1.67 billion. It is estimated that the goods will enjoy tariff reductions of RMB 16.705 million in importing countries. Nanjing Customs assessed and approved 22 qualified exporters， and issued six RCEP statements of origin for three exporters， covering a total value of goods of RMB 1.0976 million. It is estimated that these goods will enjoy preferential tariffs from importing countries saving RMB 10，900.

In the first month， the CCPIT Hebei issued 162 RCEP preferential certificates of origin and more than 1，490 preferential certificates of origin of other FTAs， involving more than USD 80 million worth of exports for a total of more than USD 1.6 million of tariff reductions. This has effectively improved the competitive advantage of export products.

By January 29， the CCPIT Guangdong has issued 583 RCEP certificates of origin， helping enterprises reduce tariff costs by USD 430，000， and certificate costs of more than RMB 20，000.

Help companies grasp opportunities

“The RCEP is the largest free trade agreement in the world. We are glad to see that enterprises are eagerly looking forward to and actively sharing the dividends brought by the RCEP，” said Yu Benlin， Director of the Department of International Economic and Trade Relations of the Ministry of Commerce. The RCEP is conducive to expanding the export of China’s advantageous products. The trade volume between China and RCEP member countries accounts for about a third of China’s total trade. These member countries are important economic and trade partners of China. For example， China and Japan have reached free trade agreements for the first time. Both sides have significantly reduced tariffs in many fields such as mechanical equipment， electronic information， chemical industry， light industry and textiles. In particular， China has achieved zero tariffs on 57% of Japan’s exported products this year， which has greatly promoted bilateral trade.

Yu Benlin said that based on research， the Ministry of Commerce found that local governments and enterprises have high expectations and strong enthusiasm for seizing the opportunities brought about by the RCEP， but they still have difficulties using the RCEP agreements. It is hoped that relevant departments will increase guidance with time. To this end， the Ministry of Commerce， together with six departments including the National Development and Reform Commission， have recently issued the Guiding Opinion on the High-quality Implementation of the Regional Comprehensive Economic Partnership （RCEP） （hereinafter referred to as the Opinion）.

Focusing on the opening commitment and rules in RCEP trade in goods， trade in services， investment， rules of origin， intellectual property rights and e-commerce， the Opinion raised 30 measures， to provide guidance for local governments， industries and enterprises to better cater to the open environment and competition of the regional market.

The RCEP will also bring significant opportunities for the manufacturing industry. Luo Junjie， Director of the Operation Monitoring and Coordination Bureau of the Ministry of Industry and Information Technology， said that the RCEP will eventually achieve zero tariff for more than 90% of traded goods. Industrial products account for about 82% of the trade in goods and more than 90% of the trade volume. The Ministry of Industry and Information Technology will support enterprises to make full use of the RCEP tariff concession commitments and rules of origin accumulation to expand the export of advantageous products such as textiles， light industry， electronic information， automobile and parts， mechanical equipment and so on， and explore new market spaces. The Ministry will also support enterprises and their counterparts of RCEP member states to carry out international top-level benchmarking and increase investment in technological upgrading； it will also encourage enterprises to strengthen cooperation with RCEP member countries in production division and production system optimization， and build an industrial and supply chain based on mutual promotion and benefit.

In order to help enterprises solve the difficulties in enjoying RCEP benefits， the Opinion specifically proposed that Customs should implement the approved exporter system and guide enterprises to make full use of the declaration of origin. Di Jie， Deputy Director of the Department of Duty Collection of the General Administration of Customs， said that at present， the Administration of Approved Exporters has taken into force. Approved exporters can issue a declaration of origin on their own without applying for the certificate of origin. Such measures will help facilitate exports. As of January 25， 107 approved exporters have been identified and 306 declarations of origin have been issued， with a total value of RMB 130 million for export.

As Fang Lixu， Chairman of the CCPIT Guangdong， said： “the same goods may be subject to different tariff rates in different RCEP member countries. Foreign trade companies shall study the clauses of RCEP agreements， fully understand the regulations about tariff concession and rules of origin， and find the best solutions based on the production and sales， to optimize their supply chain in a larger scale.”

Mutual tariff reduction creates more opportunities for the regional market

Recently， Yang Zhengwei， Deputy Director of the International Department of the Ministry of Commerce， said in an interview that China has fulfilled all commitments and obligations under the RCEP agreement. In terms of market opening， the proportion of immediate zero tariff between China and ASEAN countries， Australia and New Zealand exceeds 65%. The proportion of immediate zero tariff between China and South Korea is 39% and 50% respectively. China and Japan have newly established free trade relations， and the proportion of mutual immediate zero tariffs has reached 25% and 57% respectively.

“M u t u a l t a r i f f reduction will create more opportunities for the regional market，”s a id Zh a n g Wei ， Deputy Director of the China Academy of Internationa l Trade and Economic C o o p e r a t i o n o f t he M i n i s t r y of Commerce. He said that besides mutual t a r i f f re duc t ion ， according to RCEP rules， there are some new measures among member states in customs clearance facilitation， rules of origin， certificate of origin， standard mutual recognition， trade in services and investment. These measures will greatly promote the development of regional economic integration， and bring more opportunities for foreign trade enterprises.

Zhang Wei said that the reduction of tariffs has increased the profiting opportunities for foreign trade enterprises. On the basis of WTO rules， the RCEP has made detailed provisions in anti-dumping， anti-subsidy and safeguarding measures， and included the “no return to zero” clause in the free trade agreement for the first time. This will further improve the external environment for trade companies.

Zhang Wei believes that the RCEP has many innovations in international economic and trade rules. The research and practice of these new policies will make the regional development more adapted to the changes of international trade rules and bring more opportunities to enterprises.

More and more countries have received benefits from the RCEP. Malaysia’s Ministry of International Trade and Industry recently announced that Malaysia has submitted the approval of the RCEP to the ASEAN Secretariat. The RCEP entered into force in Malaysia from March 18. In this regard， the Malaysian Ministry of International Trade and Industry predicts that Malaysia will become the ASEAN member that benefits most from the RCEP. The service providers including e-commerce will see a broader market.

The Ministry of Commerce of Cambodia expects that agricultural and industrial products of Cambodia will enjoy preferential tariff treatment. The RCEP can increase Cambodia’s GDP by about 2%， with exports and investment increasing by 7.3% and 23.4% respectively. According to the data of Thailand’s Ministry of Commerce， after the RCEP takes effect， the RCEP member states will exempt more than 30，000 types of Thai products from tariffs， of which more than 20，000 types of products can immediately enjoy zero tariffs. This will greatly promote Thailand’s export. According to data of the Philippine Ministry of Trade and Industry， in 2020 about 51% exports， 68% imports and 58% of foreign direct investment of the Philippines are related to RCEP member states. After the RCEP takes effect， the turnover of Philippines’export of fruits， seafood clothing and paper to China， Japan and South Korea will increase significantly.