The world's largest free trade zone is about to emerge, 10 questions 10 answers to take you to understand RCEP!
At a regular policy briefing of the State Council on November 6, Wang Yuwen, vice minister of commerce and deputy representative of the international trade negotiations, briefed him on the (RCEP) negotiations of the Regional Comprehensive Economic Partnership Agreement and answered questions from reporters. How did the RCEP negotiations last for seven years? What role has China played in the negotiations? What are the benefits of RCEP?. China Government Network and the State Council client "10 questions and 10 answers" bring you the most complete combing--
01 Origin of RCEP negotiations?
The RCEP negotiations were launched by 10 ASEAN countries in 2012, inviting Australia, China, India, Japan, South Korea and New Zealand to participate in the negotiations, with the goal of further improving on the basis of the "10 / 1" free trade agreements signed with these countries. Reach a modern, comprehensive, high-quality, mutually beneficial new large-scale free trade agreement.
What is the negotiation process of 02 RCEP?
The negotiations began officially in 2013 and have gone through seven years this year. During these seven years, three leaders' meetings, 19 ministerial meetings and 28 rounds of formal negotiations have been held. In the course of these seven years of negotiations, all parties have made great efforts and overcome many difficulties, especially in the past year, all parties have shown strong political will to speed up the process. The results of the negotiations reached so far fully take into account the interests and concerns of all parties and reflect the maximum common divisor of the development aspirations of the participants.
This time, Prime Minister Li Keqiang attended the third RCEP leaders' meeting in Bangkok, Thailand. The meeting officially announced the conclusion of negotiations among the 15 member states as a whole. This marks a major breakthrough in the construction of the free trade zone, which has the largest population, the most diversified membership structure and the greatest development potential in the world.
When will RCEP be officially signed?
Free trade agreement negotiations are divided into text negotiations and market access negotiations, RCEP text negotiations have been completed, market access negotiations have been substantially concluded, leaving only a few remaining issues. In the statement, the leaders instructed the negotiating team to immediately initiate the review of the text, with the goal of signing the agreement by 2020. India still has some important issues that have not yet been resolved, and other countries will work with India to continue to solve these problems. India will decide whether to join after these issues have been satisfactorily resolved. We very much welcome India's accession to this agreement as soon as possible.
Why is it that when RCEP15 is completed, it will be the largest free trade zone in the world?
According to 2018 data, the population of the RCEP15 member countries that have concluded negotiations as a whole has reached 2.2 billion, GDP has reached US $29 trillion, exports have reached US $5.6 trillion, and the flow of foreign investment has attracted US $370 billion. These indicators account for about 30 per cent of the global total, some slightly less than 30 per cent and some slightly more than 30 per cent. So when RCEP15 is completed, it will be the largest free trade zone in the world. If India joins in resolving the problem in the future, its scale will be further expanded.
What are the benefits of RCEP for countries in the region?
First, RCEP15 is a collective upgrade of the existing "10 / 1" free trade agreements, which will form a unified system of rules in the region. There is a word called "spaghetti effect". Ten ASEAN countries and five other countries have signed agreements respectively. So many agreements, rules of origin, rules on opening up investment, rules on trade in services are all different. Wrapped together like "spaghetti". Now RCEP has a collective upgrade to form a unified rule, which is very convenient for the business community and import and export enterprises in the region, which helps to reduce operating costs and reduce the uncertain risk of operation.
Second, it is helpful to build the supply chain and value chain in the region. In this region, it used to be one-to-one, but now we have become a collective region, forming a unified free trade zone, which helps to form a supply chain and value chain according to comparative advantages in the region. There will be great benefits to commodity flows, technology flows, service flows and capital flows within the region, including the cross-border movement of people, resulting in a "trade creation" effect. In the region, enterprises can participate in the value accumulation of the country of origin, which is of great benefit to the promotion of mutual trade and investment in the region.
Third, if enterprises from outside the region want to invest here, they have to face different rules. Now that the rules within the region are unified, for investors outside the region, entering a country means entering the country as a whole. The market and space for development will be greatly increased, so it will help the region to attract investment from outside the region.
What are the benefits of 06 RCEP for China?
Last year, our exports to these 14 countries reached 620 billion US dollars and our imports reached 760 billion US dollars. Last year, our total trade volume was US $4.6 trillion, and the total trade volume with these 14 countries exceeded US $1.3 trillion, accounting for a very high proportion, which will be of great benefit to the expansion of imports and exports to countries in the region.
Last year, China's investment in these 14 countries reached 16 billion US dollars, and the amount of foreign investment in the region reached 14 billion US dollars. Therefore, this scale is also very large, which is conducive to our stable foreign trade and foreign investment. The development of healthy, sustainable and stable foreign trade and investment relations is also of great significance.
Specifically, for our consumers and for enterprises that need to rely on imports of raw materials and components from these regions, costs will be greatly reduced and will benefit from the removal of tariff and non-tariff barriers. Therefore, it will be of great benefit to our enterprises, to our workers and to our consumers.
What are the benefits of 07 RCEP to the world?
At present, global unilateralism and protectionism are on the rise, the global economy is under great downward pressure, and the growth rate of trade has dropped significantly. Under such circumstances, RCEP, as an important achievement of regional integration and the largest free trade agreement in the world, will have great benefits in boosting the confidence of the world economy and the confidence of investors.
In terms of rules, RCEP15 now has the most developed countries, the least developed countries, the level of economic development is very different, the cultural background and political system are different, so different diverse countries can walk together. The conclusion of such an agreement is also of great and far-reaching significance to the formulation of global economic and trade rules in the future.
What do you think of India's concerns?
First, these problems in India are not just with China, but with all the other 15 parties. Second, there are concerns in India that RCEP could increase India's trade deficit.
India does have some deficits in trade in goods, but it has a surplus in trade in services. Overall, India has a deficit under the current account, but the deficit is only 1.7% of GDP. The internationally recognized safe area is that the current account deficit is less than 4% of GDP. India now has a deficit of 1.7%. It should be said that its balance of payments is healthy, and India's rapid economic development in recent years, it should be said that it is also worth celebrating.
In the free trade agreement, it has some concerns, after the signing of the free trade agreement, because of tax cuts, imports from other countries will be more, whether India's deficit will increase, whether it will have an impact on its industry. With regard to this matter, there are some special regional safeguard measures in the FTA. This safeguard measure stipulates that if the import increases a lot after the tariff is reduced by the importing country, it will do some harm to the domestic industry. Tariffs can be restored to the original level of MFN status. Therefore, regional safeguard measures are actually a kind of safety valve, which can solve the concern about the impact of domestic industry.
After signing the FTA, it will be of great benefit to a country's exports, especially a regional free trade agreement such as RCEP, in which 15 or 16 countries participate, which will form a regional value chain, which will bring great benefits to exports. For example, suppose a garment, if India now produces clothing exported to China, will have to pay tariffs, if joined the FTA, the regional value chain plays a role. China imports wool from Australia and New Zealand, because we have a free trade agreement, it is RCEP, so we may import wool duty-free in the future and weave it into fabric in China, which may be exported to India. India weaves clothing out of this fabric. This is Australia and New Zealand. The wool of New Zealand is very good. The fabric of China is very good. When it comes to India, it weaves into clothing. The Indian labor force has a competitive advantage. After becoming clothing and then exporting to South Korea, Japan, China and other countries, it may be duty-free, which will promote the development of India's textile and clothing industry, solve its employment, and it is also very beneficial to its export.
China has signed free trade agreements with a number of countries whose exports to China have grown rapidly after signing free trade agreements with China. For example, Chile, Peru, Australia and New Zealand in South America, including ASEAN, have become the largest export markets for these countries, thanks to the signing of free trade agreements. So we understand that some industries in India will have some concerns, but RCEP will also bring huge export opportunities to the Indian industry.
09 RCEP what is the quality of this free trade agreement?
It will be a comprehensive, modern, high-quality and mutually beneficial free trade agreement.
First, it is a comprehensive free trade agreement. It has 20 chapters, including the basic features of FTA, trade in goods, trade in services, investment access and corresponding rules.
Second, it is a modern free trade agreement. As we all know, for example, e-commerce is not clearly reflected in the WTO agreement, because e-commerce did not have much development at that time, and today e-commerce is already an important form of international trade. Our agreements include e-commerce, intellectual property rights, competition policy, government procurement, small and medium-sized enterprises, and so on.
Third, the agreement is a high-quality free trade agreement. In terms of trade in goods, its overall level of openness has reached more than 90 per cent. Generally speaking, the high level of FTA is more than 95%, and the level of slightly lower is more than 80%. RCEP trade in goods has reached more than 90 per cent, much higher than the open level of WTO countries. In the area of investment, investment access negotiations are conducted in the form of negative lists.
Finally, it is a mutually beneficial free trade agreement. This is mainly reflected in the balance of interests in the areas of trade in goods, trade in services, investment and rules. In particular, the agreement also includes provisions on economic and technological cooperation and gives some transitional arrangements to least developed countries such as Laos, Myanmar and Cambodia, including the provision of more favourable conditions for these members, So that they can be better integrated into regional economic integration.
10 what role has China played in the RCEP negotiations?
The Chinese side has always attached great importance to the RCEP negotiations. President Xi Jinping repeatedly called on all parties to reach an RCEP agreement as soon as possible at the opening ceremony of the first China International Import Expo, the G20 leaders summit, the CICA summit, and other important occasions. President Xi Jinping had many in-depth exchanges of views with the leaders of relevant countries on the RCEP issue. Premier Li Keqiang attended the RCEP leaders' meeting for three consecutive years to elaborate on China's propositions and views on promoting the early conclusion of the RCEP agreement. At the second RCEP leaders' meeting last year, Premier Li Keqiang made an appeal to "kick the door well", which strengthened confidence and motivation for the negotiations.
In the past few years, China has participated in all the ministerial negotiations, 28 rounds of technical negotiations, the Chinese side has not been absent, and has actively made our contribution. Three of the 28 rounds were held in China, and three meetings were held in Nanning, Tianjin and Zhengzhou. The ministerial meeting played a very important role in promoting the RCEP negotiations. Vice Premier Hu Chunhua specially attended the opening ceremony of the RCEP ministerial meeting in Beijing in August this year and made a very important speech. The meeting played a role in speeding up the conclusion of the negotiations this year, and the parties also fully affirmed them. As the negotiating team of the Chinese side, we have actively participated in the negotiations with a constructive attitude and promoted the settlement of difficult issues in the negotiations in the spirit of "promoting talks, promoting cooperation and facilitating".
China has always played a positive and constructive role in the RCEP negotiations. In addition, ASEAN plays a central role in the RCEP negotiations. This is a negotiation initiated by ASEAN, which invited six countries to participate in 2012. Therefore, it is very important that ASEAN plays a central role in such complex negotiations. China has always supported the central role played by ASEAN in the RCEP negotiations. It is the central role of ASEAN that has enabled us to overcome the political, economic, development level, historical and traditional cultural diversity of so many countries in the region and finally reach a consensus. We will also continue to support ASEAN in playing a central role in resolving the few remaining issues, completing the review of the text at an early date, so that the agreement can be signed as scheduled in 2020, so that it can play a role. To contribute to the improvement of the trade and investment environment in the region and in the world.