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    Home > Chemial News > Policies > China officially approves RCEP! How can exporters enjoy tariff preferences?

    China officially approves RCEP! How can exporters enjoy tariff preferences?

    Echemi 2021-03-11

    On November 15, 2020, the "Regional Comprehensive Economic Partnership" (RCEP) was officially signed, which marked the official sailing of the free trade zone with the largest population, the largest economic and trade scale and the most development potential in the world. set sail.

    This regional organization was initiated by 10 ASEAN countries (Indonesia, Malaysia, the Philippines, Thailand, Singapore, Brunei, Cambodia, Laos, Myanmar, Vietnam) and invited (China, Japan, South Korea, Australia, New Zealand and India) to participate in order to reduce Tariff and non-tariff barriers, the establishment of a 16-country unified free market trade agreement, and the implementation of regional economic integration through the mutual opening of markets among member states. (India exits at the last minute)

    After the agreement comes into effect, more than 90% of the goods trade in the region will eventually achieve zero tariffs, and it will mainly be reduced to zero immediately and gradually to zero. The prerequisite for import and export enterprises to achieve tax reduction and zero tariffs is that the products comply with the RCEP rules of origin, and declare and enjoy the relevant agreed tax rates in accordance with the customs requirements of the importing party.

    According to regulations, the RCEP agreement needs to be approved by at least 9 of the 15 members before it can enter into force, including at least 6 ASEAN member states and at least 3 countries among China, Japan, South Korea, Australia and New Zealand. At present, all members have started the domestic legal approval process, aiming to promote the early entry into force and implementation of the agreement.


    Some important recent processes are as follows:

    February 3
    The Guangzhou Municipal Bureau of Commerce issued the "Guangzhou City Seizes RCEP Opportunities to Promote the Innovation and Development of Cross-border E-Commerce (Draft for Comment)" through its government affairs website. This is currently the country’s first local supporting measures to promote RCEP, from optimizing the port business environment, Cultivating innovation development entities, strengthening independent innovation capabilities, and expanding international marketing networks, and put forward 25 measures. To download the announcement in PDF, please follow the subscription number "focusvision" (ID: focusvision) and reply to "Guangzhou" to get it.
    February 24
    The Japanese government passed the approval procedure for the Regional Comprehensive Economic Partnership (RCEP) at the Cabinet meeting, and strives to be approved by the current Congress. (Japan's 204th regular parliament opened on January 18 this year and will end before the end of June.)
    February 28
    According to the General Administration of Customs of my country, it is currently comprehensively advancing the technical preparations for the implementation of the "Regional Comprehensive Economic Partnership Agreement" (RCEP) rules of origin and tariff concessions. At present, the drafting of Chinese proposals such as the transition of the standard of origin and the implementation guidelines for the rules of origin has been completed. At the same time, the RCEP origin management information system, which includes functions such as export visas and the application of agreed tax rates, is stepping up preparations for system adjustments.
    March 4
    The official website of the General Administration of Customs released the draft of the "Administrative Measures for Approved Exporters of the Customs of the People's Republic of China", and will open the public for comments before April 5. Download the "Administrative Measures for Approved Exporters of the Customs of the People's Republic of China (Draft for Soliciting Opinions)", please follow the subscription number "Focus Vision" (ID: focusvision), and reply to the "Draft of Comments" to obtain.
    March 8
    Minister of Commerce Wang Wentao confirmed in an interview with the "Ministerial Channel" that the Chinese government has formally approved the agreement.

    So, what should exporters pay attention to when enjoying tariff preferences in the future?



    RCEP Cumulative Rules of Origin

    RCEP achieves accumulation among 15 member states, breaking the original restrictions that China and South Korea, China and Australia, China and ASEAN cannot accumulate across agreements. In the process of product processing, the value-added part realized as long as it belongs to 15 member states and the value-added value exceeds 40% is regarded as the product of origin.



    Back-to-back certificate of origin concept

    The exporters of the intermediate contracting parties shall flexibly issue the certificate of origin in batches and installments for the goods that have issued the certificate of origin. The relevant goods still enjoy the agreed tax rate when they are sold to other contracting states.

    This means that after the export products of the contracting states are separated in the intermediate contracting states, they can use the back-to-back certificate of origin to re-export the goods and enjoy the agreed tax rate in the importing country within the quantity and validity period contained in the initial certificate of origin, which greatly improves the company’s sales strategy and Flexibility in logistics arrangements.



    Large-scale use of declaration of origin

    The declaration of origin issued by the approved exporter will be used in conjunction with the traditional certificate of origin on the date of entry into force of the agreement.

    Enterprise independent declaration of origin means that in addition to the traditional certificate of origin issued by the visa agency, the declaration of origin independently issued by the approved exporter will also be a valid certificate of enjoyment. This system will effectively enhance the free trade agreement. The degree of facilitation of implementation.



    New China-Japan Free Trade Partnership

    Prior to this, China has established a free trade area with the ten ASEAN countries, and the zero tariff of the China-ASEAN Free Trade Area has covered more than 90% of the tax items of both parties. Therefore, one of the biggest breakthroughs of RCEP is the establishment of a zero-tariff agreement between China and Japan for the first time in a free trade zone, achieving a historic breakthrough.

    Under the RCEP, Japan has promised to gradually reduce tariffs on some commodities until it drops to zero 15 years later. Among the main categories of commodities that China exports to Japan, textiles may be the most profitable industry sector. Most textiles and apparels originally faced import tariffs of 8%-11% imposed by Japan.


    Customs authority guidance


    Clarify the rules of origin

    Products produced in China or other member states of the contracting parties do not automatically enjoy the RCEP treaty tax rate. They should also be determined in accordance with the relevant rules of origin and obtain a certificate of origin that meets the requirements. The rules of origin under the RCEP agreement are characterized by complexity and diversity. It is recommended that enterprises clarify the concepts of origin qualification and direct transportation based on the characteristics of their products to improve the accuracy of relevant information declaration.


    Accurate selection of preferential agreements

    In addition to implementing 5 tariff reduction schedules with 14 other member states under RCEP, my country has also signed China-ASEAN, China Singapore, China South Korea, China Australia, China New Zealand Free Trade Agreement and Asia-Pacific Trade Agreement, etc. 6 The two regional trade agreements have formed cross-tax rates. It is recommended that companies consider the scope of the tax reduction list, the degree of lenient standards of origin, the extent of tariff reductions, and the convenience of operating procedures, and choose the free trade agreement that best suits their needs.


    Pay attention to the declaration of origin system

    The form of the RECP certificate of origin has been expanded. In addition to the traditional certificate of origin, various forms of declaration of origin have been added. It is recommended that companies understand the relevant systems of the declaration of origin in advance and choose a suitable model of the certificate of origin to improve the efficiency of customs clearance.


    Optimize the layout of the supply chain on a larger scale

    RCEP provides more possibilities and choices for the majority of operators to optimize the supply chain layout in the Asia-Pacific and even the world. Therefore, it is recommended that the majority of enterprises combine different free trade agreements, as well as the aforementioned provisions on regional value determination, regional component accumulation, back-to-back certificate of origin, etc. Optimize the industrial layout and enhance the efficiency of corporate management.

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