The Impact of RCEP on Foreign Trade Enterprises

Starting from January 1, 2022, six ASEAN member countries including Brunei, Cambodia, Laos, Singapore, Thailand, Vietnam, and four non ASEAN member countries including China, Japan, New Zealand, and Australia officially began implementing the agreement (South Korea followed up on February 1, and Indonesia, Malaysia, Myanmar, and the Philippines are also on their way).

This is China's largest favorable foreign trade policy in the past two decades, and it is also a critical period for foreign trade enterprises to achieve a comeback in performance! What can foreign trade enterprises do at this golden juncture? What is the market outlook for RCEP? The content of this issue is easy to interpret with you.

RCEPWhat is it?

RCEPThe full name is the Regional Comprehensive Economic Partnership Agreement, which is the world's most populous, largest economic and trade agreement with the greatest potential for development. It aims to establish a unified market free trade agreement by reducing tariffs and non-tariff barriers. Simply put, by joining a group, we can buy things from each other and get them at a more favorable price.

RCEPWhat is the real value of exporting to foreign trade?

oneExporting will be simpler. According to customs statistics, in the first 11 months of 2021, China's total import and export value to the other 14 member countries of RCEP was 10.96 trillion yuan, accounting for 31% of China's total foreign trade value. After the RCEP is fully implemented, the zero tariff product trade within the region will reach around 90%. The immediate zero tariff ratio between China and ASEAN, Australia, and New Zealand will exceed 65%. So the business of customers in the region will be better, Southeast Asian tariffs will be reduced, and foreign trade enterprises' sales and profits will increase! This brings great benefits to China's foreign trade exports in the post pandemic era.

twoThe cost has become cheaper. You should know that China produces many raw materials and core components that need to be imported. For example, raw materials for wool need to be imported from Vietnam, camera parts, car parts and machines need to be imported from Japan, and imported components need to pay import taxes. After the finished product is produced, it is sold to Vietnam or Japan, and other expenses need to be paid. In this way, the cost of the enterprise will greatly increase, However, for the "principle of accumulation of origin" in the policy dividend of RCEP, there is no need to pay so much "toll", and the cost of raw materials in the region will be greatly reduced, which will also greatly increase the competitiveness of Chinese suppliers.

threeEnhance product competitiveness globally. For example, denim, smart instruments, mobile phones, camera parts, etc., the import cost of raw materials has been greatly reduced, so that our production costs have been reduced, and ultimately our products' competitiveness in the world has been greatly improved, expanding the export of foreign trade!

fourCustoms procedures will be improvedsimplify。 RCEPAdopting efficient management methods such as pre ruling, pre arrival processing, and information technology application to promote customs procedures and simplify customs clearance procedures. This involves multiple aspects of cross-border logistics, including reducing or even eliminating the risk of tariffs on postal parcels, reducing the cost of overseas logistics warehousing construction, etc. Enterprises such as port shipping and cross-border e-commerce will directly benefit.

For example, when the importing contracting party obtains the necessary information for customs clearance, the goods should be released within 48 hours; For perishable goods, such as fresh seafood, fruits, and vegetables, the importing contracting party shall release them within 6 hours after receiving customs clearance information; Allow air freight to expedite customs clearance, etc.

RCEPThe regulations on cross-border logistics are expected to help improve the efficiency of customs clearance for Chinese exported goods in the destination country, thereby significantly improving cross-border logistics efficiency, shortening logistics time, and improving consumer shopping experience.

fiveCross border transaction costs will be lower.According to the agreement, the contracting parties of RCEP make arrangements for the liberalization of goods trade through bilateral pairwise bidding. After the agreement takes effect, more than 90% of goods trade in the region will ultimately achieve zero tariffs, and each country promises to immediately reduce tariffs to zero or reduce taxes to zero during the transition period (the transition period mainly lasts for 10, 15, and 20 years) according to its own national conditions, The free trade zone is expected to fulfill the promise of liberalization of all goods trade in a relatively short period of time, thereby enabling consumers in contracting countries to enjoy high-quality and affordable overseas goods.

sixforeign trade marketIt will further expand.The foreign trade market has further expanded, especially in the ASEAN market. ASEAN is the abbreviation for Southeast Asian countries, with a total population of approximately 660 million. According to Chinese customs data, in the first three quarters of 2021, China's imports and exports to ASEAN reached 4.08 trillion yuan, an increase of 21.1%. ASEAN continues to maintain its position as China's largest trading partner, accounting for 14.4% of China's total foreign trade value.

According to a report released by PwC in October 2020, most ASEAN countries are still in the early stages of economic development and have relatively weak economic foundations. With the rapid development in recent years, the living standards of local people have significantly improved, and the demand and consumption for various products are constantly increasing. This is a good time for China's foreign trade enterprises to "go to Nanyang" and open up new markets.

sevenCan better promoteSmall and medium-sized enterprises' going global '。RCEPThe effective implementation of the policy will bring more development opportunities to domestic small and medium-sized enterprises. Many foreign trade enterprises in China will benefit from this agreement, which officially takes effect on January 1, 2022. RCEP can not only bring direct "dividends" such as tariff reduction and investment and trade facilitation, but also help restructure the industrial value chain in East Asia and accelerate the economic recovery process of countries in the "post pandemic era".

RCEP After 8 years of hard work and finally being implemented, it is both an opportunity and a challenge for the vast number of Chinese foreign trade enterprises. Enterprises should fully familiarize themselves with and make good use of relevant rules, especially preferential rules of origin. At the same time, it is also necessary to always pay attention to strictly adhering to the bottom line of compliance and law, to avoid significant risks of violations in the import and export field.