A few days ago, the Ministry of Commerce announced that China has applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
China’s Minister of Commerce Wang Wentao submitted China’s formal application to join the CPTPP to New Zealand’s Minister of Trade and Export Growth O’Connor, the depositary of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Written correspondence. The ministers of the two countries also held a telephone conference to communicate on the follow-up work regarding China’s formal application to join.
What is CPTPP?
CPTPP is a free trade agreement (FTA) derived from the remaining 11 signatories of the Trans-Pacific Partnership (TPP). The CPTPP contains most of the original TPP agreement but without U.S. participation and suspended some provisions.
In addition to reducing tariffs by 95%, the CPTPP has also established high standards of non-tariff measures, including sanitary and phytosanitary measures, and a dispute settlement mechanism. The agreement suspended 20 provisions of the original TPP, 11 of which were related to intellectual property rights and were promoted by the United States.
On December 30, 2018, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) officially came into effect. This is an improved version of the TPP after the United States withdrew from the TPP. Many people believe that after Trump tore up the TPP agreement, without the United States as the leader, the TPP will come to an end. However, the remaining 11 countries continued to advance and eventually formed the world’s third largest free trade area.
The 11 countries are: Australia, New Zealand, Canada, Japan, Mexico, Singapore, Vietnam, Brunei, Chile, Malaysia, and Peru.
In fact, tariff reduction and exemption are only one aspect of the CPTPP content. According to the media, its more strategic intention is to remove barriers to investment, services and data in the Pacific Rim region, bringing opportunities for retail, banking and e-commerce.
What does joining CPTPP bring?
Professor Hong Junjie, Vice President of the University of International Business and Economics, said in an interview with “China Interview”: CPTPP has established the future development direction of new international economic and trade rules to a certain extent. This development direction is an important reference for future free trade agreements and national economic and trade rules.
Why did China apply to join the CPTPP at this time? Hong Junjie said: From the perspective of the country’s own development needs, joining the CPTPP is conducive to promoting the formation of a new dual-circulation development pattern in our country. The important development tasks facing the country now are the “three news”: based on the new development stage, implementing new development concepts, and building a new development pattern. Applying to join the CPTPP will help form a dual circulation pattern, with the domestic circulation as the main body and the domestic and international dual circulations reinforcing each other.
On the other hand, in terms of investment relations, nearly 70% of my country’s foreign investment last year was made to trading partner countries, that is, the trading partners of the free trade agreement, attracting 40% of foreign investment comes from partner countries of these free trade agreements. Therefore, it can be seen that the signing of this free trade agreement will play a very important role in trade and investment relations.
From a framework perspective, the CPTPP is still the highest level economic and trade liberalization mechanism to date, reflecting a “comprehensive, broad and deep system” of open rules: First, “trade in services and trade in goods” “Double opening simultaneously. Covering finance, digital trade, telecommunications, modern logistics, culture and education, medical care, movement of natural persons, etc. There are not only market, trade and other issues, but also investment content. The second is the deep opening of “border opening and intra-border opening”. Reducing market access aspects such as tariffs and non-tariff barriers, i.e. “border opening”. At the same time, it moves from “border” to “within the border”, involving technical standards, environmental protection, intellectual property rights, labor, safety and health, competitive neutrality, state-owned enterprises, dispute settlement mechanisms, etc.
What are the opportunities and challenges for textile companies?
Faced with the great changes we are currently experiencing that have not been seen in a century, and new changes in the international and domestic situation and environment, our country has proposed to build a domestic macrocycle as the main body and a domestic and international dual cycle. A new development pattern of mutual promotion. China has joined the Regional Comprehensive Economic Partnership (RCEP) and applied to join the CPTPP. This means that the dual cycle is not a turning back from openness to closure, but relies on the scale effect and multiplier effect of the big country’s economy. Open up to the outside world and form a more benign domestic and international dual cycle.
At the same time, if it can participate in these two large-scale free trade agreements at the same time, China will play a more important role in the development of the Asia-Pacific economy and even the global economy. In the entire Asia-Pacific production network and global value chain, the hub status may be further enhanced. This will definitely promote the trade development and industrial chain upgrading of my country’s textile industry.
First, it will help deepen cooperation in the regional textile and apparel industry chain and supply chain.
Through the CPTPP, market access for goods, services, investment and other fields among member countries will be further relaxed, customs procedures, technical standards, etc. will be gradually unified, and through the use of regionally accumulated origins The rules will promote the free flow of economic factors within the region, strengthen production division of labor and cooperation among members, promote the expansion and upgrading of the regional consumer market, and promote the further development of the regional industrial chain, supply chain and value chain.
And compared with RCEP, CPTPPMost of the member countries are developed economies. China’s participation in this agreement can help our industrial chain move to the mid-to-high end and further open up the blockages and breakpoints in some important industrial and value chains.
Second, the cumulative rules of origin are more conducive to enterprises benefiting.
The large-scale regional origin accumulation system will make it easier for companies to obtain preferential tariffs. At the same time, it will have an impact on the company’s procurement of raw materials and parts, industrial chain layout, and foreign investment decisions. After the CPTPP comes into effect in the future, when companies import and export products that are included in the tariff concession schedule and meet the origin standards, they should actively apply for and issue a certificate of origin in order to enjoy tariff preferences and customs clearance convenience in a timely manner and enhance the competitiveness of their products in the international market. .
Of course, on the one hand, we see the opportunities that joining CPTPP will bring, on the other hand, we also need to take action in the following aspects: First, in terms of commodity trade, Further reduce import tariffs and emphasize China’s implementation of regional cumulative origin standards in negotiations as much as possible. At the same time, we should do a good job in trade facilitation and investment facilitation, optimize the business environment, and reduce the cost of import customs clearance. The second is to comprehensively promote the negative list model in services trade to promote the opening up of China’s services trade. Third, in terms of investment, we should learn from the pre-establishment national treatment plus negative list model adopted by China in the free trade pilot zones and promote it nationwide in an orderly manner. The fourth is to effectively protect intellectual property rights, encourage enterprise innovation, and narrow the gap with developed countries in core key areas, which will help China further join the CPTPP.
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