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Home > Chemial News > Policies > RCEP Officially Take Effect in 3 Days!

RCEP Officially Take Effect in 3 Days!

ECHEMI 2021-12-29

The Regional Comprehensive Economic Partnership Agreement (RCEP) will come into effect on January 1, 2022. At present, China has announced that preparations for tariff reduction, implementation of rules of origin, and performance of binding obligations of agreements are ready.

 

As the world's largest free trade zone, after the RCEP agreement takes effect, more than 90% of the goods trade between approved members will eventually achieve zero tariffs.

 

For foreign trade companies, this is a huge bonus. After the RCEP takes effect, nearly 30% of China's exports can achieve zero-tariff treatment, covering China's US$1.4 trillion trade volume.

 

From January 1 next year, which products will be exported to which countries can enjoy benefits? What are the requirements for rules of origin?

 

 

Country approval status

On January 1, 2022, RCEP will be the first to be implemented in six ASEAN member states including Brunei, Cambodia, Laos, Singapore, Thailand, and Vietnam, and four countries including China, Japan, New Zealand and Australia. The remaining five countries (Indonesia, Malaysia, Philippines, Myanmar, South Korea) will also be included in the scope of entry into force after completing the approval process.

 

In the latest news, after the National Assembly met on December 2, 2021, after passing the RCEP approval bill, it formally submitted the approval letter to the ASEAN Secretariat, which is the depository of the agreement, the next day. The Secretariat informed that the RCEP is expected to take effect for South Korea 60 days later, that is, February 1, 2022.

 

It should be noted here that Japan is the only country that has not signed a free trade agreement with China among the other member states of RCEP. This is the first time that China and Japan have reached a tariff reduction arrangement.

 

As of 2018, Japan’s tariff level on Chinese imports was 2.47%. In the first year of RCEP's tax reduction (2022), 55.5% of the tariff lines of Japan's imports from China will be reduced to zero; of China's imports from Japan, 24.9% of the tariff lines will achieve zero tariffs.

 

70%-80% of products in the electrical machinery, nuclear reactors, boilers, vehicles and their parts and accessories, medical equipment and other industries that China exports to Japan will achieve zero tariffs immediately after the RCEP is signed.

 

In addition, in addition to implementing 5 tariff reduction schedules with 14 other contracting parties under the RCEP, my country has also signed the China-ASEAN, China-Singapore, China-South Korea, China-Australia, China-New Zealand Free Trade Six regional trade agreements, including the Agreement and the Asia-Pacific Trade Agreement, have crossed tax rates.

 

The proportion of my country's zero-tariff product tax items under RCEP to Australia, New Zealand and ASEAN countries will also reach 64.7%, 65% and 66.8% respectively. Although my country has already had bilateral tariff reduction arrangements with these effective members, there will be some new tariff reduction products under RCEP, and the two will form a mutually complementary and mutually reinforcing relationship. There will be new preferential tax rates for products such as motorcycles exported to ASEAN by China.

 

Therefore, it is recommended that on the basis of accurately understanding the relevant information of import and export goods, enterprises should comprehensively consider the product scope of the tax reduction list, the degree of lenient standard of origin, the extent of tariff reduction, and the convenience of operating procedures, and choose the most suitable for their own needs. Free Trade Agreement.

 


RCEP rules of origin

A few days ago, the China Council for the Promotion of International Trade has issued a notice:

 

Starting from January 1, 2022, in accordance with the relevant provisions of RCEP and the "Administrative Measures for the Origin of Imported and Exported Goods under the Customs of the People’s Republic of China under the Regional Comprehensive Economic Partnership Agreement", applicants can apply to the China Council for the Promotion of International Trade and its local authorities. The visa agency applies for the issuance of the certificate of origin under the RCEP and the back-to-back certificate of origin, and the export goods with the aforementioned certificates enjoy preferential tariff treatment in RCEP members in accordance with the relevant regulations of RCEP.

 

The certificate of origin and back-to-back certificate of origin exported to Singapore, Thailand, Japan, New Zealand and Australia under the RCEP project of CCPIT will be fully electronically issued, providing independent printing services for the certificate; the certificate of origin exported to Brunei, Laos, Vietnam, and Cambodia will be temporarily issued. Do not use electronic signatures, you need to manually sign and stamp on the certificate.

 

When understanding the rules of origin in the RCEP agreement, you need to pay attention to the "region of origin cumulative rules", that is, as long as the value-added part of the product in the processing process belongs to 15 member states, and the cumulative value-added exceeds 40%, it is regarded as a product of origin , Enjoy the corresponding tariff preferences.

 

Take the 10-seater passenger car assembled in my country and exported to South Korea as an example. The parts of this car come from Japan, South Korea, Australia, China, ASEAN countries and other non-RCEP member countries. According to the original accumulation rules of the China-Korea Free Trade Agreement, only the parts and accessories made in Korea and China can be regarded as made in China, and according to the RCEP regional accumulation rules, except for China and South Korea, the parts and accessories made in Japan, Australia, and ASEAN It can also be regarded as accumulation of Chinese-origin materials, so that cars assembled in China are more likely to enjoy tariff preferences.

 

Cumulative rules will further lower the threshold for products to obtain tariff concessions, expand the scope of choice of original materials for enterprises, and help Chinese enterprises to expand their exports.

 

In addition, RCEP will implement the system of independent declaration of origin by approved exporters on a large scale for the first time, that is, a system in which enterprises recognized by the customs independently issue declarations of origin and enjoy preferential treatment under preferential trade agreements. Approved exporters can enjoy tariff reductions by independently declaring the place of origin, and do not need to apply for a certificate from the visa agency.

 

This not only improves the convenience of customs clearance, but also puts forward higher compliance requirements for the management of enterprise origin. At the same time, similar to other free trade agreements, RCEP also empowers the customs of each contracting party to conduct origin verification.

 

Therefore, it is recommended that when applying the treaty tax rate, companies should strengthen the management of system records, data storage, and issuance of certificates of origin through methods such as the origin management information system, so as to avoid the loss of eligibility to benefit products due to non-compliance matters, or even Facing consequences such as administrative penalties and downgrading of enterprises.

 

Since 2009, China’s exports to other member states of RCEP accounted for an increasing proportion of China’s total exports, from about 23% in 2009 to nearly 28% in 2020 (including 15% of ASEAN, 5% of Japan, and 2% of Australia) , The average annual growth rate is about 9.1%, much higher than the 7.6% growth rate of China’s total exports.

 

It is recommended that foreign trade companies pay close attention to the RCEP rules of origin and tariff reduction policies, and forward-looking optimization of the supply chain and industrial chain layout in order to achieve the goal of enjoying the lowest tariffs and making full use of trade facilitation measures.

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