China Joins The World'S Largest Free Trade Zone With Over 90% Of Goods Or Zero Tariff

According to the Ministry of finance's website, the regional comprehensive economic partnership agreement (RCEP) was officially signed on November 15, 2020. The Ministry of finance actively participated in and promoted the RCEP agreement, and carried out a lot of detailed work on the tariff reduction of goods trade. In the next step, the Ministry of finance will actively do a good job in the related work of tariff reduction.

According to the Ministry of finance, the RCEP agreement has achieved fruitful results in goods trade liberalization. The tariff reduction among the members is mainly based on the commitment to reduce tariff to zero immediately and within 10 years. It is expected that the FTA will achieve significant phased construction results in a relatively short period of time. China and Japan have reached a bilateral tariff reduction arrangement for the first time, achieving a historic breakthrough. The agreement is conducive to the realization of high-level trade liberalization in the region.

The Ministry of Finance pointed out that the successful signing of RCEP will play an extremely important role in promoting the economic recovery and long-term prosperity and development of various countries. The further acceleration of trade liberalization will bring greater promotion to regional economic and trade prosperity. The preferential results of the agreement directly benefit consumers and industrial enterprises, and will play an important role in enriching consumer market choices and reducing trade costs of enterprises.

Over 90% of goods or zero tariff

What is the impact of China's accession to the world's largest free trade zone, with over 90% of its commodities or zero tariff?

From November 12 to 15, the 23rd China ASEAN (10 + 1) leaders' meeting, the 23rd ASEAN and China, Japan and South Korea (10 + 3) leaders' meeting, the 15th East Asia Summit (EAS), the fourth regional comprehensive economic partnership agreement (RCEP) leaders' meeting and the ASEAN Business and Investment Summit (ABIS) were held by video. According to Xinhua, the regional comprehensive economic partnership agreement (RCEP) was officially signed on the 15th during a series of East Asian Cooperation leaders' meetings.

The signing of RCEP means that the level of trade liberalization and facilitation in the region will be further improved. It is understood that more than 90% of the goods covered by tariff reduction in goods trade. At the same time, different from the traditional free trade agreement, the agreement closely follows the development trend of Global trade and includes many new trade forms, including e-commerce, intellectual property rights, competition policy, government procurement, and small and medium-sized enterprises, which exceeds the scope stipulated by the WTO.

Under the current international situation, after eight years of negotiation, RCEP has been signed, which makes people see light and hope in the haze. It shows that multilateralism and free trade are the main road and the right path, and still represent the right direction for the world economy and human progress.

Population, GDP, exports, etc

About 30% of the global total

The RCEP negotiation was initiated by 10 ASEAN countries in 2012, and six countries including Australia, China, India, Japan, South Korea and New Zealand were invited to participate. The goal is to further improve the "10 + 1" free trade agreements signed with these countries and reach a new large-scale free trade agreement. The negotiations began in 2013. In November 2019, the third RCEP leaders' meeting was held in Bangkok, Thailand, and a joint statement was issued to announce that 15 countries had concluded all text negotiations and substantially all market access negotiations.

According to the data in 2018, the population, GDP, export volume and foreign investment attraction of 15 RCEP member countries account for about 30% of the global total, which is the free trade zone with the largest population, the most diversified member structure and the most potential for development in the world. Therefore, the signing of RCEP agreement is considered to be of great historical significance and influence and has attracted much attention.

RCEP contains a wide range of content. According to the people's daily client, the agreement follows the development trend of Global trade and includes many new forms of trade, among which e-commerce is one. In addition to e-commerce, the agreement also includes intellectual property rights, competition policy, government procurement, and small and medium-sized enterprises, which is beyond the scope stipulated by the WTO.

RCEP will benefit countries in the region

Under the background of global economic and trade cooperation, regional trade and economic cooperation will be promoted under the background of global economic and trade cooperation.

The market believes that RCEP means great business opportunities for the whole Asia Pacific region. First, rcep15 is a collective upgrade of the existing "10 + 1" free trade agreements. It will form a unified rule system in the region, which is conducive to solving the "spaghetti effect" in the current region. Prior to that, 10 ASEAN countries and 5 other countries signed agreements respectively. With so many agreements, the rules of origin, investment opening rules and service trade rules are all different, and they are wrapped together like "spaghetti". Second, it is conducive to the formation of supply chain and value chain in the region according to its comparative advantages, which will be of great benefit to the flow of goods, technology, services, capital, including cross-border flow of people in the region, forming the "trade creation" effect. Third, for investors outside the region, entering a country means entering the countries of the whole region, and the market and space for development will be greatly increased, so it is helpful for the region to attract investment from outside the region.

The other 14 RCEP members are all important trade partners of China. Since this year, ASEAN has historically become China's largest trading partner. Trade and investment between the two sides have increased against the backdrop of the world economic downturn. In the first nine months of this year, the bilateral trade volume between China and ASEAN was close to that of last year. China's direct investment in the whole industry of ASEAN increased by 76.6% year on year. South Korea is China's fifth largest trading partner, the third largest source of import, and China's second largest source of trade deficit. Australia is China's eighth largest trading partner, the fourteenth largest export destination, the seventh largest source of import, and the third largest source of China's trade deficit. China has become the largest trading partner of ASEAN, South Korea, Australia and New Zealand for many years in a row.

However, there is still much room for economic and trade cooperation between China and these countries. Taking ASEAN as an example, Cheng Shi, chief economist of ICBC international, believes that as China moves up the global value chain, the intra industry division of labor relationship between China and ASEAN is expected to accelerate from competition to cooperation. China provides ASEAN with key technologies, parts, equipment and market demand, thus ASEAN will be able to give full play to its resources, labor force and other elements endowment, and form scale production advantages in downstream links.

It is worth noting that RCEP is the first time that Japan has signed a trade agreement with China and South Korea. China and South Korea were Japan's first and third largest trade partners in import and export last year. Japan is China's fourth largest trading partner.

Liu Junhong, director of the globalization research center of the Chinese Academy of modern international relations, said in an interview with the media that the total trade volume between China, Japan and South Korea is more than US $500 billion, and the total trade volume of China ASEAN is also more than US $500 billion, which are close to the total trade volume between China and the United States. Australia and New Zealand are the main sources of China's resources, energy and agricultural products (6.710, - 0.12, - 1.76%). None of the RCEP member states can be spared.

China's free trade "circle of friends" has expanded steadily

Against the background of the new pneumonia epidemic, China's efforts to open up to the outside world have not decreased, but increased. China has continued to promote the signing of free trade agreements and regional trade agreements with businesses in many countries and regions.

In addition to pushing for the signing of the RCEP agreement, the free trade agreement between the government of the people's Republic of China and the royal government of Cambodia was officially signed on October 12. At the same time, China South Korea free trade agreement, China EU investment agreement and other existing trade agreements are progressing in an orderly manner as planned.

Qian Keming, Vice Minister of Commerce, said at the previous policy briefing that China will strive to complete the negotiations on the China EU investment agreement, implement the China EU agreement on geographical indications, promote institutional opening up, and accelerate the formation of a basic system and regulatory model that connects with international investment and trade rules.

Chi Fulin, President of China (Hainan) reform and Development Research Institute, believes that China should significantly enhance the actual driving effect of regional free trade agreements on trade, and enhance the level of liberalization and facilitation of regional free trade agreements. By 2025, the proportion of trade volume between China and the target countries that have signed regional free trade agreements will increase from 35.2% in 2019 to more than 50%.

Huang Qifan, vice president of the China International Economic Exchange Center, said, "the proposal of the CPC Central Committee on formulating the fourteenth five year plan for national economic and social development and the long-term goal for the year 2035" points out that "implementing the strategy of promoting free trade zones and building a global network of high-standard free trade zones" is an initiative to deal with the dispute over rules and actively participate in international economic governance Major initiatives. The promotion strategy adopted by China is to build trust based on rules by seeking common ground while reserving differences and seeking the maximum common divisor, so as to boost the construction of an open world economy.

Cheng Shi believes that the new round of globalization in the future is not a simple repetition of the previous round, but will present a completely different new structure. The world is no longer flat, but turns to "multi peak structure", which is composed of many regional communities, forming a nested system of intra industry trade regionalization and inter industry trade globalization. The development of regional economic integration will lead globalization and become the pillar of globalization system. In line with this historical trend, North America and Europe have accelerated the regional construction. Among them, the United States announced its withdrawal from the TPP and signed a new tariff free agreement between the United States and Mexico. The European Union has seized on the change of the epidemic situation and used the EU recovery fund to further strengthen internal unity. In this regard, as one of the three pillars of the future globalization system, Asian regionalization is facing the huge challenge of either advancing or retreating.

At present, China has become the world's second largest single market on the demand side, and China is expected to become the world's largest consumer market in 2020. At the same time, on the supply side, China has unique advantages of complete industrial chain and is the only hub of Asian value chain system. China has become the de facto dual center of supply and demand in Asia.

Cheng Shi said that China's choice is not only related to its own opening up, but also to the future of regionalization and globalization.

(comprehensive zhongxin.com, renmin.com, sina.com)