Does The Abolition Of The Generalized System Of Preferences Affect My Country's Exports?

There is a fundamental difference between GSP and MFN treatment. The cancellation of the GSP treatment by the countries concerned shows that China's economy has achieved a historic rise. However, judging from certain specific indicators, China is still the world's largest developing country. Export companies should take this opportunity to accelerate the pace of transformation and upgrading, develop towards innovation and efficiency, and fundamentally enhance their ability to participate in international market competition.

The 4th CIIE ended perfectly, making China's pace of opening up more confident and determined. However, a piece of news in the circle of friends recently surprised many people.

According to the news, from December 1st, 32 countries including EU member states, Canada, and the United Kingdom will cancel the "Generalized System of Trade Preferences" for China. In this regard, some people say that the abolition of the Generalized System of Preferences means tariff hikes, and a new round of trade friction is about to come. Others believe that this is equivalent to pulling China back to the WTO overnight.

The author checked the Bulletin of the General Administration of Customs and found that there is indeed a statement that "the GSP certificate of origin will no longer be issued for exports to the EU, the UK and other places from December", which confirms the authenticity of the above news from the side. . However, because of their unfamiliarity with international economic and trade rules, many people confuse the concepts of "Generalized System of Preferences" and "Most-Favoured-Nation Treatment" when forwarding the news, causing unnecessary speculation.

In fact, there is a fundamental difference between GSP and MFN treatment. The Generalized System of Preferences, as its name implies, is a system of general preferences, a non-discriminatory and non-reciprocal tariff system given to developing countries or regions by developed countries. Because it is a unilateral preference given by developed countries to developing countries or regions, developed countries can unilaterally cancel them; most-favored-nation treatment is a legal treatment clause in trade treaties and agreements between countries, which are mutually granted to each other. Unilateral cancellation is a breach of contract. In addition, the GSP is mainly aimed at import and export trade, and the most-favored-nation treatment includes the preferential treatment, privileges or immunities of the contracting states in terms of trade, navigation, tariffs, and legal status. It has a broader scope of application than the GSP.

In reality, the main reason why developed countries set GSP treatment for developing countries is to expand the export of products from developing countries to developed countries. And by expanding exports, developing countries can obtain foreign exchange income, improve the level of industrialization, and then promote their own economic development. This "looks beautiful" thing, in fact, still can't get rid of the keyword profit fundamentally. It is precisely because of low or zero tariffs that developed countries can buy the bulk commodities they need from developing countries at low prices. In the final analysis, what the GSP wants to achieve is "developing countries want development, and developed countries want profits." If the profits desired by developed countries are reduced to a certain level or even disappeared, they will naturally cancel the GSP treatment.

It is not difficult to understand why the above-mentioned countries have to cancel the GSP treatment for China. This year marks the 20th anniversary of China’s accession to the World Trade Organization. In the past 20 years since China’s accession to the WTO, China’s foreign trade has become one of the most important forces driving the growth of world trade. “Made in China” has received more and more attention and recognition in the international market. Chinese products Compared with 20 years ago, the competitiveness of the company has been greatly improved. As experts have said, the abolition of the Generalized System of Preferences marks that China has "graduated" in the world trade rush exam.

At present, although China's economy has achieved a historic rise, under the dazzling label of the world's second largest economy and the largest trader in goods, we must still clearly realize that China is still a developing country. Judging from specific indicators such as per capita GDP, industrial structure, employment structure, innovation capability, and balance and adequacy of development, China is still the world's largest developing country.

It should be pointed out that the cancellation of the GSP benefit will have an adverse impact on the exports of some enterprises, 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. However, for relevant foreign trade companies, in the short term, they must make full use of the achievements of my country's free trade zone construction to transfer orders to countries and regions that have signed bilateral and multilateral free trade agreements with my country to deal with export shocks; in the long run, exports Enterprises should take this opportunity to accelerate the pace of transformation and upgrading, develop towards innovation and efficiency, and fundamentally enhance their ability to participate in international market competition.

The good news is that as the world’s most populous, largest, and most potential free trade agreement, the Regional Comprehensive Economic Partnership (RCEP) will come into effect early next year. While the majority of foreign trade companies are actively responding to the cancellation of the Generalized System of Preferences, they may wish to pay more attention to how to identify RCEP market opportunities in order to better take the RCEP express train.

[Source: Economic Daily]