Analysis: The impact of the cancellation of trade preferences in 32 countries on China | Generalized System of Preferences | Most Favored Nation Treatment | Chinese Economy

[Epoch Times November 04, 2021](Interviews and reports by Epoch Times reporters Luo Ya and Long Tengyun) Starting from December 1, 32 countries including the European Union, Britain, and Canada have formally cancelled their GSP treatment for China. Some experts believe that this is because the West is countering the CCP’s unfair trade, and at the same time, it will also make China’s economy undergo inward transformation and greater pressure from the epidemic.

The General Administration of Customs of the Communist Party of China issued a notice on October 28 stating that since December 1, 2021, 32 countries including the European Union, Britain, and Canada will no longer grant China’s GSP tariff preferences, and the customs will no longer issue GSP certificates of origin. (Form A). The Chinese Communist Party officially declared that the “graduation” from the multi-country GSP proves that Chinese products have a certain degree of competitiveness.

The Generalized System of Preferences (Generalized System of Preferences, abbreviated GSP) is a more favorable tariff reduction based on the most-favored-nation tax rate granted to developing countries (beneficiary countries) by developed countries (beneficial countries) in international trade.

Inclusiveness is different from most-favored-nation treatment (MFN), which is an international trade in which the contracting states promise to give each other no less than the current or future preference given to any third country. The principle of most-favoured-nation treatment is the cornerstone of the General Agreement on Tariffs and Trade and the WTO.

Experts in 32 countries canceling China’s inclusive treatment: a matter of course

Lin Xiangkai, a professor in the Department of Economics at National Taiwan University, took this for granted, “First of all, the CCP has been boasting the rise of a great power over the years. Therefore, China’s industrial and economic strength makes the West no longer need to give MFN status. Moreover, Chinese products are already sufficiently competitive. , It’s not like it needs protection at the beginning.”

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“The second is that the CCP has not contributed to human rights and freedom. The CCP has been destroying labor and human rights, including human rights in Xinjiang.” He believes that the CCP strictly controls Chinese society, and China does not have human rights and freedoms; and international trade agreements have all. For the protection of human rights, labor and the environment, these standards implemented by various countries directly affect the cost of producing goods.

Lin Xiangkai added, “The CCP does not contribute to the environment either, because protecting the environment will increase production costs, so China’s low cost comes at the expense of human rights and the environment.”

He believes that Western countries are warning the CCP by abolishing inclusive treatment, “This is a means to tell the CCP that what you have done has undermined the fairness of world trade.”

Hua Jiazheng, deputy director of the Second Research Institute of the Taiwan Economic Research Institute, said, “The policies adopted by these countries are based on the principle of fair trade.”

He said that at first, the West gave China preferential treatment in order to expect the CCP to abide by fair competition in international trade after economic development. Now it is discovered that the CCP is still engaged in unfair trade such as subsidies; coupled with the epidemic, the world has increased its opposition to the CCP. Trust, “So each country has begun to pay more attention to mutual trust, trustworthy trading partners, and trustworthy supply chains. That’s why there is such a policy promotion.”

Taiwan’s general economist Wu Jialong said bluntly, “It is to contain the CCP.” He said that it has now been proved that the CCP has no way to resolve issues such as trade negotiations, trade imbalances, and climate. “There is no way to talk, and no war, then surround you.”

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The United States renamed the most-favored-nation treatment permanent normal trade relations in 1998 and applied it to all countries, unless the law provides otherwise. In 2018, the U.S. government accused the CCP of long-term unfair trade practices and theft of intellectual property rights, and imposed tariffs on imported Chinese goods. The CCP subsequently retaliated against the United States. The most-favored-nation treatment of both parties was broken.

According to the customs data of the Communist Party of China, since the implementation of the Generalized System of Preferences in 1978, 40 countries have given China’s GSP tariff preferences; currently, the only countries that grant China’s Generalized System of Preferences are Norway, New Zealand, and Australia.

Analysis: the impact of the cancellation of the Generalized System of Preferences on the Chinese economy

Regarding the impact of the abolition of the Generalized System of Preferences on the Chinese economy, Lin Xiangkai does not think it will suffer a big impact. “In fact, it will not have much impact, just make less money.”

He believes that the future of China’s economy may depend on the results of the transformation. “In the past, the CCP also always talked about the development of domestic demand, not exports, because China’s economy is large and has a large population.” “China’s economy has shifted from being export-oriented to domestic demand-oriented. If the speed of the transformation is not fast enough, then of course it will be affected; if the transformation is successful, then the Chinese economy may pass this barrier.”

Hua Jiazheng also believes that “China’s economy is unlikely to collapse in the short term.” He said that the CCP hopes to make the economy a soft landing, so it has been expanding domestic demand and internal circulation. Over the past few years, exports have contributed to China’s economic growth. The contribution of China is getting lower and lower; now, dual-cycle and domestic demand markets are proposed to support economic growth.

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And Wu Jialong believes that the key lies in the epidemic. “China’s economy will not be affected in the short term. Because of the transfer order effect caused by the epidemic, foreign production activities are transferred to China, so China’s exports are performing well, and the transfer order effect will not fade so quickly.”

He analyzed, “However, the normalization of the epidemic to support China’s economy and exports is actually a very strange phenomenon. Therefore, the CCP may continue to release the virus, causing the epidemic to continue wave after wave, so that European and American countries cannot resume normal production. .”

Is the global industrial chain “de-sinicized” in the post-epidemic era

The Sino-US trade war has set off a wave of restructuring of the global industrial chain. Hua Jiazheng also analyzed the layout of the global industrial chain in China. He believes that “the industrial chain does not mean that it can be withdrawn when it is withdrawn. The situation of enterprises in different countries is also different.”

Hua Jiazheng said that Taiwanese businessmen who have been based in the mainland for a long time may transfer some new investments back to Taiwan or put them in other countries, but they will not uproot China.

He observed that the same is true for Japanese companies. “The Japanese government has taken some preferential measures to encourage companies to return, but not many have withdrawn from mainland China.” Hua Jiazheng explained, “because the supply chain involves upstream and downstream manufacturers, Local personnel, structural coordination, etc. do not mean that you can find a replacement right away.” “The more you invest and the longer it takes, the harder it will be for you to leave.”

Editor in charge: Ye Ziming#

Post time: Dec-02-2021