After RCEP Comes Into Effect, Textile Enterprises Should Pay Attention To Those Aspects In Operation

　　 On November 2, the ASEAN Secretariat, the custodian of the regional comprehensive economic partnership agreement (RCEP), issued a notice announcing that six ASEAN Member States, including Brunei, Cambodia, Laos, Singapore, Thailand and Vietnam, and four non ASEAN member states including China, Japan, New Zealand and Australia, have formally submitted their approval documents to the Secretary General of ASEAN, reaching the threshold for the agreement to enter into force. According to the agreement, RCEP will enter into force for the above ten countries on January 1, 2022.

　　 In fact, as early as March 22 this year, China has completed the approval of the RCEP agreement, becoming the first country to ratify the agreement.

　　 It is reported that after RCEP comes into effect, tariffs on 91% of goods trade between member countries will be cancelled, and trade activities such as investment standards, intellectual property protection and e-commerce will be standardized, and the supply chain in the free trade zone will be optimized. At a critical moment when the world is facing the rise of unilateralism and protectionism, the signing and entry into force of RCEP agreement has injected new vitality into free trade and multilateralism.

　　 01、 RCEP helps

　　 Deepen the cooperation of regional textile and garment industry chain and supply chain

　　 For China's textile industry, RCEP will have a far-reaching positive impact on expanding the scale of foreign trade and deepening the supply chain cooperation in the regional industrial chain.

　　 RCEP members are important economic and trade partners of China. According to the data of the Ministry of Commerce, the total trade volume between China and other RCEP members will reach 1055 billion US dollars from January to September 2020, accounting for about one third of China's total foreign trade.

　　 In terms of export, ASEAN and Japan are the third and fourth largest export markets of China's industry after the European Union and the United States, accounting for about 20% of China's annual textile and garment exports; South Korea and Australia, as the world's important textile and clothing consumer markets, have sufficient purchasing power, and are also important export destinations for end products. In terms of import, China's annual import of textiles and clothing from ASEAN exceeds 7 billion US dollars, accounting for about 30% of the annual import volume of the industry. ASEAN has become the largest source of China's import of textiles and clothing. For example, China imported a large number of cotton yarn and clothing from Vietnam, and cotton knitted clothing from Cambodia. At the same time, Japan and South Korea are also important import sources of functional fabrics, chemical fiber textiles and clothing, textile dyes, etc. In addition, Australia and New Zealand also provide China with a large number of high-quality wool and other textile materials.

　　 In addition, through the connection of this agreement, the economic and trade relations between China and Japan, which had no bilateral trade mechanism before, will further develop. The original import tax rate of 5% - 8% for major categories of products imported from Japan will basically be reduced to zero in stages within 11, 16 or 21 years. For example, for China's textile machinery products such as shuttleless air-jet looms and flat weft knitting machines imported from Japan, the original 8% tax rate will be reduced to zero within 11 or 16 years after RCEP takes effect, which is conducive to accelerating industrial innovation and upgrading and improving production efficiency.

　　 South Korea is an important trade partner of China's textile industry in East Asia, and is also one of the important export markets of China's textile and clothing. In 2019, China's textile and garment exports to South Korea reached 8.99 billion US dollars, accounting for 3.2% of the total export volume of the whole industry in that year. In the same year, China imported 1.502 billion US dollars of textiles and clothing from South Korea, accounting for 5.9% of the total annual import volume of the industry. For South Korea, China is also the largest source of textile and clothing imports, accounting for more than 1 / 3 of South Korea's total annual imports of textiles and clothing.

　　 The bilateral free trade agreement between China and South Korea came into effect on December 20, 2015. All the reduction rules have been implemented for six years, and most textile and clothing products have enjoyed preferential tariff reduction and exemption. The signing of RCEP has little impact on the existing textile and clothing trade tariffs of the two countries, but some export products still have the best tariff under the RCEP rules. For example, after the implementation of RCEP, China's chemical fiber knitwear, men's and women's down jackets, women's jeans, men's cotton shirts and other products will be reduced by half to 6.5% of the basic tax rate. After RCEP comes into effect, it will also reduce the cost of China's import of iron ore, rubber, PX and other commodities, which will help to improve the competitiveness of the relevant industrial chain in the long run.

　　 It can be said that the conclusion of RCEP will help to expand China's export market space, meet the needs of domestic import consumption, strengthen the supply chain of regional industrial chain, help stabilize foreign trade and foreign investment, and provide effective support for the formation of a new development pattern with domestic big cycle as the main body and domestic and international dual circulation promoting each other.

　　 02 　 Under RCEP 　 Opportunities and challenges coexist in China's textile industry

　　 Of course, RCEP is not only good for China's textile and garment exports, but also good for Vietnam and other ASEAN countries. For example, Vietnam's clothing export to China needs to pay tariffs. If Vietnam joins the FTA, the regional value chain will play a role. In fact, all enterprises in the region can participate in the value accumulation of the origin, which is of great benefit to the promotion of mutual trade and investment in the region.

　　 RCEP rules of origin accumulation are more beneficial to enterprises. The greatest achievement of RCEP in the field of goods trade is to stipulate the rules of origin accumulation within the region. Under the rules of origin of most bilateral free trade agreements in the world, goods from country a to country B, another free trade partner, need to meet the value-added standards or production requirements in country a, and be identified as the original goods of country a before they can enjoy the preferential tariff of country B. The regional accumulation rule of RCEP means that when goods enter from country a to another free trade partner country B, intermediate products of several contracting parties in the agreement can be used to meet the required value-added standards or production requirements, so that the threshold for a country to enjoy zero tariff of country B can be significantly reduced. The regional origin accumulation system such as RCEP will make it easier for enterprises to obtain preferential tariff. At the same time, it will have an impact on the purchase of raw materials and spare parts, the layout of industrial chain and the decision of foreign investment. After RCEP comes into effect in the future, when enterprises import and export products listed in the tariff reduction list and meet the standards of origin, they should actively apply for and issue certificates of origin, so as to enjoy tariff preferences and customs clearance convenience in time, and enhance the competitiveness of products in the international market.

　　 Undoubtedly, RCEP will promote the transformation and upgrading of domestic textile enterprises and industries. However, it should be noted that after RCEP is signed, it means that China's textile and garment industry will be more closely linked with East Asia and Southeast Asia, domestic enterprises will be integrated into a larger market, and the flow of resources, technology and talents in the region will be accelerated. These countries will increase their share in the RCEP regional internal market by virtue of their resource and price advantages. If China's textile and garment industry has not yet shifted to the direction of high-end and high added value, the effect will be more harmful than beneficial. At the same time, with the reduction of tariffs on some imported products, the domestic market will face more fierce competition, which will force domestic enterprises to speed up the transformation and upgrading in the competition and improve the quality and added value of products.

　　 There is no doubt that through RCEP, market access in goods, services, investment and other fields among Member States will be further relaxed, and customs procedures and technical standards will be gradually unified. Through the adoption of regional cumulative rules of origin, it will promote the free flow of economic factors in the region, strengthen the Division of production and cooperation among members, promote the expansion and upgrading of the regional consumer market, and promote the regional industrial chain Supply chain and value chain are further developed.