The FTA Strategy in China’s Opening-up


Wang Jianqing
Disclaimer

•  Personal observation
 In 2021, China has become the largest trading
partner of more than 120 countries and regions.
China joined the World Trade Organization in 2001.
Rapid Growth of China’s Foreign Trade
China’s Merchandise Trade, 2001-2021 (in billion USD)
7000 4000

6000 3500

3000
5000
2500
4000
2000
3000
1500
2000
1000

1000 500

0 0

Merchandise total Merchandise export Merchandise import Source: WTO

Three Pillars of the WTO

•  Trade negotiations
•  Dispute settlement
•  Trade policy review
Trade Negotiations

•  Doha Round in
stagnation
•  Trade Facilitation
Agreement (2013)
•  MC12
Dispute Settlement
•  Dispute Settlement Body
(DSB)
•  Appellate Body (7 members)
•  Temporary mechanism
established in Jan.2020
among China, the EU and 15
other countries
Free Trade Agreements (FTAs)
•  By 2022, China has signed 18 FTAs covering 25 countries
and regions.
•  China has also launched 11 FTA negotiations with 16
countries, the most recent of which started on February 8,
2022, with Ecuador.
•  Moreover, China has initiated feasibility studies for reaching
new FTAs with seven countries and regions, including
Colombia, Fiji, Nepal, Papua New Guinea, Canada,
Bangladesh, and Mongolia
 RCEP entered into force on January 1, 2022

•  ASEAN: Brunei, Cambodia,

Laos, Singapore, Thailand
and Vietnam，Malaysia，
Indonesia

•  Non-ASEAN: Australia,
New Zealand, Japan and
China, South Korea
Asian Financial Crisis (1997)
•  Started in Thailand
•  Indonesia and South Korea were also hit
hard
•  China less affected
 China-ASEAN FTA was established in
January 2010.
East Asia Free Trade Area (EAFTA)
•  10+3: ASEAN + China, Japan, South Korea
Comprehensive Economic Partnership in East Asia (CEPEA)
•  10+6: ASEAN + China, Japan, South Korea,
Australia, New Zealand, India
The Road to RCEP
•  EAFTA + CEPEA = RCEP (with ASEAN centrality)
The Road to RCEP
•  EAFTA + CEPEA = RCEP (with ASEAN centrality)
The Journey of RCEP Negotiations
First Stage (November 2012 - October 2015)
•  Exploration: model of request and offer
Second Stage (October 2015 - November 2017)

•  TPP was signed by 12 nations on February 2016.

•  Delays, higher expectations, divergent positions within

ASEAN
Third Stage (November 2017 - November 2019)

•  The first leaders’ summit in

November 2017

•  The third leaders’ summit in November

2019 announced conclusion on all text
negotiations and substantial conclusion
on market access negotiations.
Fourth Stage (November 2019 - November 2020)
•  India’s withdrawal
 RCEP Contents
Preamble
Chapter 1 Initial Provisions and General
Definitions
Chapter 2 Trade in Goods
Chapter 3 Rules of Origin
Chapter 4 Customs Procedures and Trade
Facilitation
Chapter 5 Sanitary and Phytosanitary
Measures
Chapter 6 Standards, Technical Regulations,
and Conformity Assessment Procedures
Chapter 7 Trade Remedies
Chapter 8 Trade in Services
Chapter 9 Temporary Movement of Natural
Persons
Chapter 10 Investment
Chapter 11 Intellectual Property
Chapter 12 Electronic Commerce
Chapter 13 Competition
Chapter 14 Small and Medium Enterprises
Chapter 15 Economic and Technical Cooperation
Chapter 16 Government Procurement
Chapter 17 General Provisions and Exceptions
Chapter 18 Institutional Provisions
Chapter 19 Dispute Settlement
Chapter 20 Final Provisions
Annex I Schedules of Tariff Commitments
Annex II Schedules of Specific Commitments for
Services
Annex III Schedules of Reservations and Non-
Conforming Measures for Services and Investment
Annex IV Schedules of Specific Commitments on
Temporary Movement of Natural Persons
•  Zero tariffs for +90% trade in goods (immediately or in 10 years)

•  China’s zero-tariff commitment by tariff lines

n ASEAN: 90.5%
n Australia: 90%
n New Zealand: 90%
n Japan: 86%
n South Korea: 86%

•  China-Japan free trade relationship with Japan committed to

zero tariffs for 88% of goods from China.
Cumulative Rules of Origin (ROO)

•  Most FTAs: bilateral

•  RCEP: cumulative
Trade in services

•  Significantly higher opening-up than 10+1 FTAs

•  Negative list approach: Japan, South Korea, Singapore,

Brunei, Malaysia and Malaysia

•  Positive list approach (converted to negative list approach in 6

years after entry into force): China and other 7 countries.

•  China: more opening-up than ever

n WTO accession: 100 service sectors
n RCEP: 22 additional service sectors + further liberalization
in 37 sectors
 Service Sector
Manufacturing-related services
Elderly service
Hospitals and clinics
Banking
Insurance
Securities
International shipping
Archetectural design and
engineering services
Environmental services
China’s Commitments
Wholly foreign-owned
Wholly foreign-owned and profitable service providers
Joint-venture hospitals or clinics with foreign majority stakes
Foreign equity cap removed and no requirement on total
assets for establishment of subsidiaries and branches
Foreign equity cap on life insurance removed etc.
Foreign equity cap removed on securities firms, fund
management companies and futures
No joint venture requirement; no nationality requirement on
board directors and senior executives
Wholly foreign-owned
Wholly foreign-owned
•  China’s commitment by negative list approach in
investment: manufacturing, agriculture, forestry, fishery
and mining.

•  Rules: investment liberalization, protection, promotion and

facilitation

•  Investor-state dispute settlement: further discussion in the

next two years.
Customs

•  48 hours: arrival of goods

•  6 hours: express assignment and perishable
goods
IPR
•  83 articles and 2 annexes (longest chapter)
•  Copyright, trademark, geographical indication,
patent, appearance design, genetic resources,
traditional knowledge and folklore.
•  Protection beyond the level of the WTO TRIPS
Agreement
E-commerce
•  Paperless trading, electronic authentication
and electronic signature, online consumer
protection, unsolicited commercial electronic
messages.
•  Location of computing facilities and cross-
border transfer of information by electronic
means.
•  Mutual trust, mutual certification,
connectivity.
SMEs & Economic and Technical Cooperation
•  Information sharing and cooperation.
Government Procurement
•  Five 10+1 FTAs: no government procurement
•  Transparency and cooperation
•  China: first plurilateral agreement to include
RCEP vs. CPTPP
RCEP
•  Development-oriented rules
•  Standards-oriented rules
•  Thai Ambassador to China: You now get the
best of both worlds. Before you talk about
Asian tigers. Now you have both dragons,
tigers.
Next Steps in Regional Economic Integration
•  China-Japan-Korea (CJK) Trade Agreement Negotiations
Next Steps in Regional Economic Integration
•  During its Economic Leaders’ Meeting in November 2014
in Beijing, APEC announced the launching of the Free
Trade Area of Asia-Pacific (FTAAP) process.
Next Steps in Regional Economic Integration
“We will.....expand the globally-oriented network of high-
standard free trade areas.”
--Report to the 20th CPC National Congress, October 2022
Next Steps in Regional Economic Integration
•  September 16, 2021, Chinese Minister of Commerce Wang
Wentao submitted China’s formal application for CPTPP
accession to New Zealand ,the official depository for the
CPTPP parties.
•  November 1, 2021, Chinese Minister of Commerce Wang
Wentao submitted China’s formal application for DEPA
(Digital Economy Partnership Agreement) accession to New
Zealand, the depository for the DEPA parties.
DEPA
•  All aspects of the digital economy that might support trade in the digital era
•  Chile, New Zealand and Singapore
•  Aug 18, 2022: Accession Working Group for China established
CPTPP
•  Nov 20, 2020: “China will favorably consider joining the CPTPP,” said President Xi
jinping at the 27th APEC Economic Leaders’ Meeting.
•  Sept 16, 2021: China submitted its accession application to New Zealand.
•  Mar 1, 2022: “China has made full, comprehensive and in-depth analysis, research
and evaluation of the terms of the CPTPP,” said Wang Shouwen, Vice Minister of
Commerce and China International Trade Representative at a State Council
Information Office press briefing.
Thank You.