National Development And Reform Commission: Alleviating Cotton Consumption Dilemma

A few days ago, the national development and Reform Commission announced that the first batch of cotton import quota with preferential tariff rate beyond tariff quota in 2022 will be issued recently, with a quantity of 400000 tons, all of which are non-state-owned trade quotas, which are restricted for processing trade import.

According to the detailed rules for application and distribution of cotton import tariff quota in 2022 promulgated by the No.7 announcement of the national development and Reform Commission on September 26, 2021, the total import tariff quota is 894000 tons, of which 33.3% is state-owned trade quota.

Based on this calculation, the total import tariff quota of non-state-owned trade will be about 600000 tons in 2022. In addition, the total amount of tariff quota + sliding standard tax quota of non-state-owned trade will be about 1 million tons.

In 2021, the national development and Reform Commission also issued a quota of 700000 tons of cotton import sliding standard tax, all of which were non-state-owned trade quotas.

In 2021, the total import tariff quota of cotton is 894000 tons, of which 33% is state-owned trade quota.

The total amount of non-state-owned trade tariff quota this year is the same as that of last year, and the sliding standard tax quota is currently less than 300000 tons.

However, different from previous years, the announcement also pointed out that this is the first batch of import sliding standard tax quota, which may be issued in the future according to market demand. From the whole announcement, the determination of the state to guarantee supply and price stability is very great.

The 400000 tons of this sliding standard tax is limited to import by processing trade. This allocation method is the same as that in 2020, and there is no change with the 400000 tons restricted for processing trade import in 2021. However, in 2021, a total of 700000 tons of sliding standard tax quota will be issued. In addition to 400000 tons restricted for processing trade import, the other 300000 tons are not restricted to the trade mode, In addition, enterprises that have obtained quotas in 2021 can choose their own trade mode when applying for quota certificate: enterprises can apply for processing trade quota alone or quota without limited trade mode, or apply at the same time.

According to the announcement of the national development and Reform Commission, the application materials shall be submitted to the authorized institutions (provinces, autonomous regions, municipalities directly under the central government and cities specifically listed in the plan, and the development and Reform Commission of Xinjiang production and Construction Corps) in the registration place from March 14 to 25. The cotton imported by the enterprise through the use of the quota of cotton import sliding standard tax shall be processed and operated by the enterprise and shall not be resold. The enterprise that forges, alters or buys or sells the certificate of cotton import quota with preferential tariff rate beyond tariff quota shall be investigated for criminal responsibility in accordance with relevant laws and regulations.

Looking at the cotton market in the past two years, both domestic and international cotton prices are at a historical high in the past decade. It can be seen from the data in the table above that in 2022, the price of cotton in Xinjiang will increase by 6500-6900 yuan / ton, or 40.00% - 41.57%, and the price of imported cotton will increase by 6650-6950 yuan / ton, or 36.14% - 47.16%. Textile enterprises in the face of high prices of cotton, cotton costs increased significantly.

Since the fourth quarter of 2021, the domestic textile market is weak, the order follow-up is weak, and the high cotton price makes the problem of cotton used by yarn enterprises more and more prominent. After the Spring Festival in 2022, the price transmission between upstream and downstream is not smooth, and yarn inventory continues to increase. At the same time, the high cost of cotton and the decrease of yarn price make the textile profit greatly reduced.

Textile enterprises are in urgent need of low-cost cotton to cope with the current difficulties in using cotton. The state issued quota of cotton import sliding standard tax to a certain extent eased this situation, guaranteed the cotton demand of textile enterprises, and adjusted the industrial structure.

　　 Import tariff on cotton

According to the tariff adjustment plan of 2022, cotton is one of the eight categories of commodities subject to tariff quota management. A certain amount of cotton imported outside the quota is subject to sliding standard tax.

　　 The specific tax rates are as follows:

General tax rate 125%

MFN tax rate of 40% (a certain amount of cotton imported outside the quota is subject to the provisional tariff in the form of sliding standard tax)

Tariff quota rate 1%

According to the Announcement No. 7 of the national development and Reform Commission in 2021, 894000 tons of cotton can be imported at the tariff rate of 1%. The 400000 tons issued this time belong to the import quota with preferential tariff rate beyond the tariff quota, and the import sliding standard tax is applicable.

　　 Calculation method of sliding standard tax

　　1. When the duty paid price of imported cotton is higher than or equal to 14.000 yuan / kg, ad valorem tax of 0.280 yuan / kg shall be levied;

　　2. When the duty paid price of imported cotton is lower than 14.000 yuan / kg, the provisional ad valorem rate is calculated as follows:

　　Ri=9.0/Pi ＋ 2.69% × Pi － 1

The calculation result of the above formula shall be rounded to three decimal places. Where RI is the provisional ad valorem tax rate. When the value calculated by the above formula is higher than 40%, RI is taken as 40%;

PI is the customs value, unit: yuan / kg.

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Announcement of the national development and Reform Commission of the people's Republic of China

No. 2 of 2022

In order to ensure the cotton demand of textile enterprises, the first batch of preferential tariff rate import quota (hereinafter referred to as cotton import sliding standard tax quota) in 2022 will be issued in the near future. The quota quantity, application conditions and other related matters are hereby announced as follows:

　　 1、 Quota quantity

The quota of cotton import sliding standard tax issued this time is 400000 tons, all of which are non-state-owned trade quotas, which are limited to import by processing trade.

　　 2、 Application conditions

Register with the market supervision and management department before March 1, 2022; Good financial condition, tax record and good faith; There is no violation of the Interim Measures for the administration of import tariff quota of agricultural products.

On the premise of meeting the above conditions, the applicant must also meet one of the following conditions:

(1) cotton spinning enterprises with spinning equipment (self owned) of 50000 spindles or more;

(2) enterprises with an annual production capacity of 8000 tons or more of all cotton spunlaced nonwovens (the capacity of production lines with Spunlaced equipment width less than or equal to 3 meters is recognized as 2000 tons, and that of production lines with width greater than 3 meters is 4000 tons).

　　 3、 Application materials

(1) the first batch of cotton import sliding standard tax quota application form in 2022, the electronic version can be obtained from the website of the national development and Reform Commission（ http://www.ndrc.gov.cn ）Download.

(2) a copy of the business license (duplicate) of the enterprise legal person.

(3) a special VAT invoice (copy) for sales of cotton yarn, cotton cloth and other cotton products in 2022.

　　 4、 Distribution principle

According to the applicant's actual production and operation capacity (including historical import performance, processing capacity, etc.) and other relevant commercial standards.

　　 5、 Application time limit

(1) the application enterprise shall submit the application materials to the authorized institutions (provinces, autonomous regions, municipalities directly under the central government and cities specifically listed in the state plan, and the development and Reform Commission of Xinjiang production and Construction Corps) in the place of registration from March 14 to 25, 2022.

(2) the entrusted institutions shall deliver the enterprise application materials to the national development and Reform Commission (Government Affairs Service Hall) before March 29, 2022, and send a copy to the Ministry of Commerce. Meanwhile, the information contained in the application form shall be uploaded to the import tariff quota management system of important agricultural products. The national development and Reform Commission will timely issue quota of cotton import sliding standard tax.

　　 6、 Information publicity

(1) in order to facilitate the public to assist the national development and Reform Commission in verifying the authenticity of the information submitted by the application enterprise, the national development and Reform Commission will publicize the information of the application enterprise on the official website (the publicity period and the submission method of the reporting opinions will be specified at the same time).

(2) during the publicity period, any subject can report the authenticity of the public information. After the time limit for the public to submit the reporting opinions has expired, the national development and Reform Commission will entrust the entrusted organization in the place where the reported enterprise applies for registration to conduct verification.

(3) during the verification period, the reported application enterprise has the right to raise objection to the entrusting organization on the reported related issues in writing or other ways. After reviewing the objection raised by the reported application enterprise and completing the investigation and verification, the entrusted institution shall feed back the verification on the authenticity of the reported opinions to the national development and Reform Commission.

　　 7、 Other rules

(1) the enterprise shall be responsible for the authenticity of the application materials and information submitted by the enterprise, and the relevant departments shall take corresponding disciplinary measures in accordance with the relevant provisions of the state for the dishonest enterprise that makes false declaration or refuses to fulfill the promise made in the application form.

(2) the cotton imported by the enterprise through the use of the quota of cotton import sliding standard tax shall be processed and operated by the enterprise and shall not be resold.

(3) enterprises that have obtained the quota of cotton import sliding standard tax shall actively cooperate with the national development and Reform Commission and its entrusted institutions to organize the supervision and inspection of the application and use of cotton import sliding standard tax quota, and provide timely and truthful information and data required for inspection.

(4) for those who fill in the application form falsely, falsify relevant materials to defraud cotton import sliding standard tax quota, and fail to carry out cotton import business in accordance with relevant provisions and the relevant requirements of the national development and Reform Commission and its entrusted institutions, the quota certificate will be collected, and the application for cotton import tariff quota and sliding standard tax quota will be restricted.

(5) to investigate the criminal responsibility of the enterprises who forge, alter or buy or sell the certificate of cotton import quota with preferential tariff rate beyond the tariff quota in accordance with the relevant laws and regulations.

National Development and Reform Commission

March 9, 2022

(source: National Development and Reform Commission)