China and Japan reach first tariff reduction arrangement through RCEP

China and Japan reach first tariff reduction arrangement through RCEP

According to the website of the Ministry of Commerce, on January 1, the Regional Comprehensive Economic Partnership (RCEP) came into effect, and six ASEAN member states including Brunei, Cambodia, Laos, Singapore, Thailand, Vietnam and China, Japan, New Zealand and Australia Wait for 4 non-ASEAN member states to officially start implementing the agreement.

It is worth noting that China and Japan reached a bilateral tariff reduction arrangement for the first time through RCEP, achieving a historic breakthrough.

Ministry of Commerce spokesman Gao Feng said at a regular press conference on December 30, 2021 that the entry into force of RCEP will bring tangible benefits to enterprises and consumers in the region, including China. China and Japan have newly established free trade relations, and the immediate zero-tariff ratio of each other will reach 25% and 57% respectively. Ultimately, 86% of Japan’s products exported to China will achieve zero tariffs, while 88% of China’s products exported to Japan will enjoy zero-tariff treatment.

Chen Zilei, vice president of the National Japan Economic Association and director of the Japan Economic Center of Shanghai University of International Business and Economics, told Yicai.com that for China and Japan, the entry into force of RCEP is a mutually beneficial and win-win trade system arrangement, which can make all parties clearly understand Regional economic integration is conducive to the deepening of bilateral trade and investment, and is of immediate interest to the improvement of people’s welfare, the improvement of industrial competitiveness and the expansion of employment.

Immediately zero tariffs on 57% of China’s exports to Japan

Vice Minister of Commerce Ren Hongbin said at the previous briefing of the State Council Information Office that China and Japan have reached a free trade arrangement for the first time, and the two sides have greatly reduced tariffs in many fields such as machinery and equipment, electronic information, chemicals, light industry and textiles, especially in 2022. In 2019, 57% of the products exported by my country to Japan under the tariff line will immediately achieve zero tariffs, which will have a significant effect on trade promotion.

According to the website of the Ministry of Commerce, in trade with Japan, the tariffs on chemicals such as silica gel and polyurethane raw materials were immediately reduced to zero when the RCEP took effect, and the tariffs on the above-mentioned products were 5.5% and 6.5% during the negotiation.

According to Japanese media reports, in terms of categories, Japan’s industrial products and spare parts exported to China enjoy the largest tariff reduction, and the overall tariff cancellation rate is about 86%. Among them, 90% of auto parts and components will enjoy zero-tariff treatment immediately after the agreement takes effect; tariffs on gasoline engine parts and some steel products will also be eliminated in stages.

In terms of agricultural products, Japan’s tariff revocation rate on imports from China will reach 56%, higher than South Korea’s level of 49%. Among them, the tariffs on Japanese scallops, sake, and shochu entering China will be gradually reduced to zero. Japan will also gradually withdraw tariffs on Chinese Shaoxing rice wine entering the Japanese market. At present, China’s tariff on Japanese sake is 40%. According to the concession arrangement, it will be lowered in stages after the agreement comes into force until it is completely cancelled in the 21st year. Tariffs on soju will also be completely reduced to zero in the 21st year from the current 10%. The Chinese Shaoxing rice wine, which is more popular with Japanese consumers, currently faces a tariff of about 2.7 yuan per liter when entering the Japanese market, which will gradually drop to zero 21 years after the agreement takes effect.

In addition to the above products, the impact of RCEP on China-Japan textile and apparel trade is also significant. The information obtained by the first financial reporter from the China Council for the Promotion of International Trade shows that after the RCEP came into effect, most of the products originally exported to Japan by the Chinese textile industry generally faced a Japanese import tariff of about 4% to 11%, except for a small number of products, such as masks, In addition to the tax reduction for bedding filled with textile materials, the tariffs on products mainly exported to Japan, such as knitted sweaters, men’s and women’s tops, pants, suits, T-shirts, socks, dresses and other products, will be reduced to zero within 16 years.

At the same time, China’s major textile products imported from Japan were originally subject to an import tax rate of 5% to 8%. According to the concession arrangement, it will basically be reduced to zero in stages within 11, 16 or 21 years. For example, for 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.

In addition, with regard to Japanese home appliances that Chinese consumers are more concerned about, the tariffs on Japanese microwave ovens and other products will be reduced to zero in the 11th year on the basis of the current 15% tariff. However, cosmetic products (under heading 3304) and hair care products (under heading 3305) are not included in the exemption and are marked as U, ie, excepted products.