On November 15th, RCEP, the world's largest trade agreement economic circle, was finally officially signed after eight years of negotiations! The free trade zone with the largest population, the most diverse membership structure, and the greatest development potential in the world was born. This is a major milestone in the process of East Asian regional economic integration, and it has injected new impetus into the recovery of the regional and even the world economy.

More than 90% of products are gradually zero tariffs

RCEP negotiations are based on the previous "10+3" cooperation and further expand the scope to "10+5". Prior to this, China has established a free trade area with the ten ASEAN countries, and the zero tariff of the China-ASEAN Free Trade Area has covered more than 90% of the tax items of both parties.

According to the China Times, Zhu Yin, associate professor of the Department of Public Administration of the School of International Relations, said, “RCEP negotiations will undoubtedly take greater steps in reducing tariff barriers. In the future, 95% or more of the tax items will not be excluded from being included in the scope of zero tariffs. The market space is also It will be even bigger, which is a major policy benefit for foreign trade companies."

According to statistics in 2018, the 15 member states of the agreement will cover approximately 2.3 billion people worldwide, accounting for 30% of the global population; the total GDP will exceed US$25 trillion, and the region covered will become the world's largest free trade zone.

In the first three quarters of this year, the trade volume between China and ASEAN reached US$481.81 billion, an increase of 5% year-on-year. ASEAN has historically become China's largest trading partner, and China's investment in ASEAN increased by 76.6% year-on-year.

In addition, the conclusion of the agreement will also help build the supply chain and value chain in the region. Wang Shouwen, Deputy Minister of Commerce and Deputy Representative of International Trade Negotiations, once pointed out that the formation of a unified free trade zone in the region will help the local region to form a supply chain and value chain based on its comparative advantages, and it will affect the flow of goods and technology in the region. , Service flows, capital flows, including cross-border movement of people will have great benefits, forming a "trade creation" effect.

Take the clothing industry as an example. If Vietnam’s garments are now exported to China, it will have to pay tariffs. If it joins the free trade agreement, the regional value chain will come into play. China imports wool from Australia and New Zealand. Because it has signed free trade agreements, it may import wool duty-free in the future. After importing, it will be woven into fabrics in China. This fabric may be exported to Vietnam. Vietnam uses this fabric to make garments before exporting to South Korea, Japan, China and other countries, these may be tax-free, which will promote the development of the local textile and garment industry, solve employment, and is also very good for exports.

Therefore, after the RCEP is signed, if more than 90% of the products gradually zero tariffs, it will greatly promote the economic vitality of more than a dozen members, including China.

At the same time, in the context of the transformation of the domestic economic structure and the decline in overseas exports, RCEP will bring new opportunities for China's textile and apparel exports.

What is the impact on the textile industry?

Rules of Origin Facilitate the Circulation of Textile Raw Materials

This year the RCEP Negotiation Committee will focus on the discussion and planning of the rules of origin in the public clauses. Unlike CPTPP, which has strict rules of origin requirements for products that enjoy zero tariffs in member countries, such as the textile and apparel industry Adopting the Yarn Forward rule, that is, starting from the yarn, it must be purchased from member states to enjoy zero tariff preferences. One of the key points of the RCEP negotiation efforts is to realize that 16 countries share a common certificate of origin, and Asia will be integrated into the same comprehensive origin. There is no doubt that this will give the textile and garment enterprises of these 16 countries the supplier , Logistics and customs clearance bring huge convenience.

Will solve the raw material concerns of Vietnam's textile industry

The director of the Department of Origin of the Import and Export Bureau of the Ministry of Industry and Trade, Zheng Thi Chuxian, said that the biggest highlight of the RCEP will bring benefits to the Vietnamese export industry is its rules of origin, that is, the use of raw materials from other member countries in one country. The product is still regarded as the country of origin.

For example, many products produced by Vietnam using raw materials from China cannot enjoy preferential tax rates when exported to Japan, South Korea, and India. According to RCEP, products produced by Vietnam using raw materials from other member states are still considered to be of origin in Vietnam. Preferential tax rates are available for export. In 2018, Vietnam's textile industry exported 36.2 billion U.S. dollars, but imported raw materials (such as cotton, fibers, and accessories) reached 23 billion U.S. dollars, most of which were imported from China, South Korea, and India. If the RCEP is signed, it will resolve the concerns of the Vietnamese textile industry about raw materials.

The global textile supply chain is expected to form a leading pattern of China + neighboring countries

With the continuous improvement of China's textile and clothing related R&D, design and production technology of raw and auxiliary materials, some low-end manufacturing links have been transferred to Southeast Asia. While China's trade in finished textile and clothing products in Southeast Asia has declined, the export of raw and auxiliary materials will increase significantly. .

Although the textile industry of Southeast Asian countries represented by Vietnam is on the rise, Chinese textile companies are not completely in a position of being replaced.

The RCEP jointly promoted by China and Southeast Asia is also for the purpose of achieving such a win-win cooperation. Through regional economic cooperation, China and Southeast Asian countries can achieve common development.

In the future, in the global textile supply chain, a dominant pattern of China + neighboring countries is expected to form.