Trade bloc boosts regional integration and heralds business expansion. Zhong Nan reports
EMPLOYEES of Heze Sanqing Food Co Ltd, a food processor in Heze, Shandong province, have been busy unloading and loading unusually large amounts of goods. The company produces 100,000 metric tonnes of canned fruits and vegetables a year, averaging about 274 tonnes a day.
One day recently a huge consignment of canned pineapples arrived from the Philippines, the last signatory member to ratify the Regional Comprehensive Economic Partnership agreement on June 2. After quick processing at Sanqing Food, the fruits were exported to Australia.
This was unthinkable until recently. In pre-RCEP days the benefits of the China-Australia Free Trade Agreement were not applicable to raw materials that China imported from the Philippines.
Sanqing Food's products are mainly for export. The Australian market accounts for about 40 per cent of its overseas sales. Canned pineapples, papayas and other products, imported in large quantities as raw materials from the Philippines, could not enjoy the preferential tariffs of the China-Australia Free Trade Agreement signed in 2015.
However, thanks to the Philippines' ratification on June 2, firms such as Sanqing Food are reaping huge benefits such as tariff cuts and speedy Customs clearance, said Tang Linglin, the company's general manager.
The RCEP agreement, signed by 15 countries — China, Japan, South Korea, Australia, New Zealand and the 10 member countries of the Association of Southeast Asian Nations — took effect on January 1 last year. It aims to gradually eliminate tariffs on more than 90 per cent of the goods traded among the 15 member countries.
Under the RCEP rules, when determining the origin of goods, the free trade area can be regarded as a whole. Sanqing Food can apply the RCEP's cumulative rules of origin and treat the fruits imported from ASEAN as of Chinese origin. So when exporting to Australia, the tariff can be cut from 5 per cent to zero.
Given softening global goods demand, geopolitical and geo-economic challenges, and a decline in cross-border investment, the fully implemented RCEP pact will thus significantly enhance economic integration in the Asia-Pacific region and sustain the long-term and stable growth of the global economy, business leaders and government officials said.
With the gradual reduction of tariffs, the RCEP will offer consumers a wider range of market options, meeting the demand for cross-border consumption and helping increase overall consumption, said Eddy Chan, senior vice-president of FedEx Express of the United States.
Echoing that view, Liu Qing, vice-president of the China Institute of International Studies in Beijing, said the RCEP framework has enriched the comparative advantages of each of the 15 countries, making each of them more attractive to others for trade and investment.
"The agreement brings together finances, resources, technologies and services, establishing a comprehensive cycle of regional economic collaboration," said Liu, adding that many signatory countries, such as China and Japan, have already expedited the distribution of market components to drive forward institutional openness.
China's trade with the 14 other RCEP economies grew 7.5 per cent to 12.95 trillion yuan (US$1.76 trillion) in 2022 compared with 2021, accounting for nearly 31 per cent of the country's total trade last year, the General Administration of Customs said.
Despite a complex and difficult external environment, the value of China's trade with RCEP partners totalled 6.1 trillion yuan in the first half of this year, 1.5 per cent more than in the previous corresponding period, contributing more than 20 per cent to its foreign trade growth.
During a ministerial meeting in Indonesia in late August senior government officials from RCEP member countries said they will accelerate the completion of the conversion of tariff regulations to ensure that the implementation of tariff reduction runs smoothly.
Li Fei, China's vice-minister of commerce, described the RCEP as a comprehensive, advanced and mutually beneficial economic partnership, and said effective implementation of the RCEP is of great significance to all members in promoting trade and investment, and maintaining the security and stability of regional industrial and supply chains.
Addressing the meeting, Li said China hopes all member countries will speed up discussions on procedures for new members to join the bloc and reach an agreement as soon as possible.
The meeting approved the responsibilities of the RCEP secretariat and will thus help promote the organisation's being made operational before January 1. The meeting also instructed the RCEP joint committee and its subsidiary bodies to ensure transparency in smooth and effective implementation of the agreement.