The RCEP Dividend: Tangible Benefits for All Member States as Agreement Takes Full Effect

On June 2, that is, tomorrow, the “Regional Comprehensive Economic Partnership Agreement” (RCEP) will come into effect for the Philippines, which marks that RCEP will take full effect for 15 member countries, and the world’s largest free trade zone will enter a new stage of full implementation. stage.

From the official entry into force on January 1, 2022, to the full entry into force of the 15 member states to complete the last piece of the “puzzle”, what has RCEP brought to China and the world? What new challenges and opportunities will it face after it is fully implemented? Starting today (June 1), the Financial Channel will launch a special report on “RCEP Takes Full Effect”. Together, we will follow the trajectory of global trade to find answers to open cooperation.

RCEP dividends enhance the competitiveness of foreign trade enterprises going overseas

Our reporter visited a foreign trade company in Nanning, Guangxi and learned that since RCEP took effect in 2022, the company’s export volume has increased significantly. At the same time, the Philippines has always occupied half of the company’s Southeast Asian market. What new atmosphere will RCEP bring to foreign trade enterprises when it comes into full effect? Let us follow the reporter’s lens to see.

CCTV reporter Bai Yue:This is a paper product manufacturer in Nanning, Guangxi. Now the workers in the production workshop are rushing to produce a batch of cup paper that will be exported to the Philippines on June 2. This batch of goods has 112 tons and the value of the goods has reached 980,000. Yuan. With the RCEP coming into effect for the Philippines on June 2, with the RCEP certificate of origin, the tariff on this batch of goods will be reduced from the previous 15% to zero.

The person in charge of the company told the reporter that they have been doing export business of paper products for many years, and the Southeast Asian market accounts for 40% of their overseas business, and the Philippines occupies half of the business volume of the Southeast Asian market. Since RCEP took effect, in 2022, the company’s export volume has reached 280 million yuan, which is double that of 2021. With the entry into force of RCEP to the Philippines, it will undoubtedly bring more export business to enterprises.

It is understood that Guangxi and the Philippines have strong trade complementarity and close economic and trade cooperation. In 2022, Guangxi’s import and export volume to the Philippines will be 9.41 billion yuan, a year-on-year increase of 128.4%. Among them, the export is 7.21 billion yuan, and the export products include yeast, paper products, dump truck compartment assembly, etc. The main commodities imported by Guangxi from the Philippines include live eels, nickel ore, integrated circuits and other products.

Liu Hao, deputy chief of the comprehensive business section of Yongzhou Customs under Nanning Customs:After RCEP takes effect for the Philippines, the agreed tax rate of RCEP can be applied to imported and exported goods, which can better reduce business costs, improve product competitiveness, and open up overseas markets.

Not only in Guangxi, but also in many places in Shandong and Zhejiang, relevant companies are also looking forward to the full effect of RCEP. In an enterprise in Qingdao, Shandong Province, a batch of container flexitanks are undergoing final processing, and they will be sent to the Philippines in early June. The person in charge of the enterprise told the reporter that with the RCEP taking effect in the Philippines, these products will directly receive zero-tariff benefits, which improves the competitiveness of enterprises.

Li Wenjuan, general manager of a liquid bag company in Qingdao, Shandong:The reduction of the tariff from 3% to zero (tariff) will also become an advantage for us in the local market, which will strengthen our competitiveness with some other tax-free countries.

Over 90% of trade in goods within the RCEP region will achieve zero tariffs

What benefits has RCEP brought to member states since it came into effect on January 1, 2022? What convenience has it brought to consumers in various countries? Let’s find out with a short video.

The Regional Comprehensive Economic Partnership Agreement, also known as RCEP, is a free trade agreement with the largest population, the most diverse member structure, the largest economic and trade scale, and the greatest development potential in the world.

Since RCEP came into effect nearly one and a half years ago, the cost of trade in goods among members has been significantly reduced. According to the agreement, more than 90% of the goods trade in the region will eventually achieve zero tariffs. For merchants of agricultural products in ASEAN countries, the major benefit of RCEP’s entry into force is that lower tariffs will bring about lower import costs and more export opportunities. For Chinese consumers, the facilitation of cross-border trade means more choices and more convenient consumption.

In Vientiane, Laos, a special train loaded with summer seasonal fruits such as durian, longan, and green coconut leaves departs from Vientiane Railway Station. After entering the country via the China-Laos Railway, it is transported to Chengdu and Chongqing through cold-chain containers, and then distributed to various places. The smooth opening of this cross-border channel can more than double the timeliness of transportation, greatly shorten the time and cost of cross-border fruit transportation.

In the border trade zone of Dongxing City, Fangchenggang, Guangxi, China, early in the morning, vehicles loaded with goods such as lobsters, blue crabs, peppers, etc. passed through the pontoon bridge of the mutual zone, and drove into the customs berth for inspection. Soon these products from ASEAN were transported to the ground Processing enterprises for sorting or processing.

In the Dongxing Port (Second Bridge) not far away, the trade of goods is also frequent. Thanks to the joint inspection department’s concerted efforts and the current vehicle integration model, the trade volume and customs clearance volume have been effectively improved. High-value silicone oil, non-woven fabrics, cotton yarn and other ASEAN products are continuously entering China, and a large number of Chinese products such as shoe materials, lamps and construction machinery are shipped from here to Vietnam and other ASEAN countries.

Today, trade with RCEP member countries accounts for 30.8% of China’s overall foreign trade. Since 2020, ASEAN has become China’s largest trading partner for three consecutive years. In 2022, the total trade value between my country and ASEAN will reach 6.52 trillion yuan, a year-on-year increase of 15%, much higher than the 7.7% year-on-year growth rate of my country’s total import and export of goods trade in 2022.

While RCEP brings closer trade exchanges between countries, it is also conducive to building a more complete industrial chain, supply chain and value chain system in the region with complementary advantages and clear division of labor.

And these new changes and new trends are inseparable from the cumulative rules of origin. According to this rule, except for some specific products, most products can enjoy the corresponding tariff preference as long as the value-added part realized during the processing belongs to 15 member countries, and the cumulative value-added exceeds 40%.

Take a company in Guangzhou that mainly produces automotive interior products as an example. The company’s car seat covers use imported raw materials from Japan, accounting for about 60% of the value. According to the cumulative rules of origin, it enjoys RCEP tariff preferences, and the tax rate is reduced from 3.8% to 3.4%. Benefiting from this rule, this company can enjoy tariff reductions of hundreds of thousands of yuan every year.

Institutional dividends such as tariff reductions and exemptions, cumulative rules of origin, and trade facilitation have brought real growth and benefits to RCEP member countries. And this vitality is also being transformed into the driving force for the recovery of the world economy.

Resource allocation is more optimized, RCEP origin accumulation rules will be fully applied in the region

As RCEP is about to take full effect, the cumulative rules of origin just mentioned will also be fully applied in the region. How will this rule affect intraregional trade? Continue to read the report.

In a canning company in Heze, Shandong Province, a batch of canned pineapples imported from the Philippines has just arrived, and they will be further processed here before being exported to Australia. The person in charge of the company told the reporter that their products are mainly for export, and the Australian market accounts for about 40% of their overall exports. In 2015, the China-Australia Free Trade Agreement was signed, and most commodities achieved zero tariffs. However, these canned pineapples, papayas, etc., cannot enjoy the tariff preferences of the China-Australia Free Trade Agreement because a large number of raw materials are imported from ASEAN.

Under RCEP, when determining the origin qualification of goods, the free trade area can be regarded as a whole. During the data analysis, Qingdao Customs staff found that this company can apply the RCEP’s accumulation rules of origin, and regard the fruits imported from ASEAN as the origin of China, so that when exporting to Australia, the tariff can be reduced from 5% to zero. Tariffs, so enterprises were guided.

Industry insiders told reporters that RCEP’s cumulative rules of origin have enabled the existing bilateral free trade agreements in the region to expand from point to point. With RCEP taking effect for the Philippines, the cumulative rules of origin will play a greater role in optimizing the allocation of resources in the region.

Zhao Guangying, Chief of Origin Management Section of Qingdao Customs Tariff Office:At present, from the perspective of Shandong, the textile, clothing and food industries have a relatively large number of cumulative applications in the origin. After June 2, the 15 member countries under the RCEP came into full effect, and our cumulative scope of origin has been further expanded, and the industrial and supply chains in the region have been further optimized.