32 countries canceled the treatment of China’s Generalized System of Preferences, and only 3 countries remain!

32 countries canceled the treatment of China’s Generalized System of Preferences, and only 3 countries remain! As early as the end of October this year, the General Administration of Customs issued a “Notice on No longer Issuing GSP Certificates of Origin for Goods Exported to EU Member States, Britain, Canada, Turkey, Ukraine, and Liechtenstein” (No. 84 in 2021) Announcement No.) mentioned that starting from December 1, 2021, the customs will no longer issue GSP certificates of origin for goods from the 32 countries that no longer grant China’s GSP tariff preferential treatment.
It is worth noting that with the continuous improvement of my country’s economic development and people’s living standards, my country has successively “graduated” from the generalized system of preferences in advanced economies. From 2012 to 2019, Ukraine, Canada, Switzerland, Liechtenstein, the European Union, Turkey, Japan, etc. have successively cancelled the preferential treatment of the GSP for my country’s export goods. In 2021, the Eurasian Economic Union announced the abolition of preferential tariff treatment for my country’s Generalized System of Preferences. At present, Norway, New Zealand, and Australia are still granted my country’s GSP treatment.

So, what exactly is GSP? What impact will the cancellation of the 32 countries’ GSP treatment have on my country? How do companies respond?

Let’s dive right in now, and you can click on the question that interest you, 

1 What is the Generalized System of Preferences?

The Generalized System of Preferences (Generalized System of Preferences) is abbreviated as the Generalized System of Preferences (GSP). It is a general, non-standard, non-standard way of exporting manufactured and semi-manufactured products from developed countries (beneficiary countries) to developing countries and regions (beneficiary countries). Discriminatory and non-reciprocal tariff preference system. For related products imported from beneficiary countries, tariff concessions based on the most-favored-nation tax rate, or even zero-tariff access treatment, will be granted. Since the implementation of the Generalized System of Preferences in 1978, 40 countries have given my country’s GSP tariff preferences, most of which are my country’s important trading partners, such as EU member states and the United Kingdom, Russia, Canada, and Japan.

However, with the rapid development of my country’s economy and the continuous improvement of people’s living standards, my country is no longer a low-income or low-middle-income economy according to the World Bank standards. For this reason, many GSP countries have successively announced the cancellation of the GSP treatment granted to my country in recent years. After the preferential countries notified the cancellation of the GSP treatment, my country’s export commodities can no longer enjoy tariff preferences by virtue of the GSP certificate of origin. Correspondingly, the relevant visa measures of the customs will also be adjusted accordingly. Previously, after the Japanese Embassy and the Eurasian Economic Commission notified the cancellation of the GSP treatment granted to China, the Customs had no longer issued the GSP to Japan and the Eurasian Economic Union from April 1, 2019 and October 12, 2021, respectively. Preferential certificate of origin.

However, it needs to be emphasized that the GSP is different from the most-favored-nation treatment that we often hear.

The Generalized System of Preferences is a one-way system of preferential tariffs granted by developed countries to exports of manufactured and semi-manufactured products from developing countries and regions. According to the World Bank standards, it is no longer a low-income or low-middle-income economy, and developed countries can cancel the GSP treatment (commonly known as “national graduation”).

Most-favored-nation treatment is one of the basic principles of the World Trade Organization (WTO). It requires WTO members to give each other equal tariff treatment, also known as “non-discriminatory treatment.” After my country’s accession to the WTO, it will automatically receive the most-favored-nation status of the WTO, and the most-favored-nation tax rate will be applied when the goods are exported to other member states.

Expert: This change is impossible

2 How big is the impact of my country’s foreign trade exports?

So, what impact will the cancellation of the 32 countries’ GSP treatment have on my country?

According to the Beijing Youth Daily, a foreign trade professional told reporters that the cancellation of the GSP treatment granted to my country by 32 countries will temporarily make some export companies lose tariff preferences and bring certain pressure. But generally speaking, this impact is limited: as the competitiveness of Chinese-made products is getting stronger and stronger, it is difficult for a simple tariff policy to affect the overall situation of international trade of Chinese products, so it will not affect the long-term future of Chinese export enterprises. Fight for greater market opportunities.

The Economic Daily article pointed out that the cancellation of the GSP benefit would have an adverse impact on the exports of some companies, but the overall impact is relatively limited. One of the most convincing examples is the Sino-US trade friction. Although the trade friction has lasted for many years, it has not affected the rapid growth of trade volume between China and the United States.

According to the Global Times, Huo Jianguo, vice chairman of the China WTO Research Association, believes that the normal tariffs of European and American countries remain between 2-3%, even if the GSP is cancelled and the normal tariff level of these countries is restored, the impact on Chinese products will be Not big.

 Generalized System of PreferencesMei Xinyu, a researcher at the Institute of International Trade and Economic Cooperation of the Ministry of Commerce, said that in fact, the EU has gradually reduced its preferential trade arrangements with China since the 1990s. As early as 1996, the EU abolished China’s GSP treatment for all chemical products, clothing and accessories, glass, and ceramics except fertilizers. In 1998, it once again abolished the GSP treatment for seven major categories of commodities in China. Under the new GSP arrangements implemented in advance on April 1, 2005, 16 categories of products with 50 chapters in China were excluded from the product categories of the GSP implemented by the EU, and only 11 categories of products with 44 chapters were left to continue to enjoy the general system. Preferential treatment. By the second decade of this century, the types of exports that China enjoys the EU’s Generalized System of Preferences treatment are no longer many, but the scale of China’s exports to the EU has expanded exponentially.

Mei Xinyu said that for more than 20 years, many products in China have “graduated” one after another, which shows that China has achieved considerable economic development. Now, the European Union and some other countries will abolish the Generalized System of Preferences treatment for China. Some of the original beneficiary countries have completely lagged behind China in terms of manufacturing. We should treat it with peace of mind. This change cannot be exported to my country. What an impact.

Mei Xinyu further stated that, realistically speaking, the EU’s Generalized System of Preferences reforms since this century have been advertised for the purpose of simplification, transparency and pertinence. It has the advantages of simplified procedures and increased transparency, which is beneficial to all beneficiary countries and the EU itself. . China has already provided preferential trade treatment to a group of underdeveloped countries. In the future, China may also provide GSP treatment to some countries. my country also needs to establish a “graduation” system for implementing preferential trade treatment. For this reason, it needs to learn from Western countries in Europe and the United States in this regard. Lessons learned.

3 As a China sourcing agent, some suggestions!

Faced with the cancellation of the GSP treatment by 32 countries and the adjustment of relevant customs visa measures, how should export companies respond?

The General Administration of Customs of China recommends that for goods exported to advanced economies that no longer grant China inclusive treatment, companies can apply for non-preferential certificates of origin to apply the most-favored-nation tax rate.

In addition, the General Administration of Customs has two suggestions:

One is to communicate and explain to foreign customers as soon as possible to avoid inconvenience caused by different types of certificates of origin.

The second is to make full use of the achievements of my country’s free trade zone construction. Exploit emerging markets, optimize the structure of export markets, increase the utilization rate of free trade agreements, and create new competitive advantages. Export products to countries and regions that have signed and implement free trade agreements with China, and enjoy tariff reduction or exemption, and even zero-tariff market access treatment.