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Analysis on the influence of TPP on China's textile industry

2018/06/07 17:21
Recently, negotiations on the TPP agreement have been completed, and the final TPP agreement still needs approval from the national parliaments of all participating countries before it can be formally
Recently, negotiations on the TPP agreement have been completed, and the final TPP agreement still needs approval from the national parliaments of all participating countries before it can be formally signed. Although TPP is still a long way from the end of negotiations to its formal implementation, we should take precautions, study carefully and respond positively.
First, the "zero tariff" and "rules of origin" in the TPP rules have the biggest impact on the export of the industry
TPP rules has not been announced, according to the ministry of commerce provided "across the Pacific (601099, shares) partnership agreement", according to the content in this paper, the agreement of three chapters, including "the third chapter textiles and clothing" "zero tariff" and "to" from yarn the rules of origin of a greater influence on the export of our country textile industry.
The third chapter mainly includes: TPP parties agree to eliminate tariffs on textiles and clothing, an industry that is an important contributor to the economic growth of TPP parties. Most product tariffs will be lifted immediately, and some sensitive product tariff cuts will go through a longer transition period. This chapter also establishes rules of origin requiring the use of yarns and fiber fabrics as raw materials in the contracting parties' regions, which will facilitate the integration of supply chains and investment within the region. The use of specific yarns and fabrics supplied by non-parties as raw materials is permitted only for products in the "shortlist".
Also stipulated in chapter 4 of the TPP rules of origin: in order to ensure the rules of origin of simplicity, promoting regional supply chain, to ensure that the TPP without dispute parties become agreement of the parties of the main beneficiaries, the TPP parties to develop a set of unified rules of origin, to determine whether a product is eligible for the TPP preferential tariffs. The TPP sets out a "accumulation rule" that, in general, the raw materials provided by any TPP party when a product is produced will be treated as those from other TPP parties.
Ii. Existing free trade agreements between China and TPP countries
TPP members currently include the United States, Japan, Canada, Chile, Mexico, Peru, Australia, New Zealand, Malaysia, Singapore, Vietnam and brunei. Among the countries that have signed fta with China are Australia, New Zealand, Peru, Chile, Singapore, Malaysia, Vietnam and brunei. Most of China's textile and apparel tariffs with these countries have been reduced to zero and a few have been gradually reduced to zero (see annex). Therefore, in terms of tariff treatment, the TPP mainly involves the us, Japan, Canada and Mexico forming barriers to China's textile and clothing exports.
Iii. China's textile and apparel exports to TPP countries in 2014
In 2014, China exported a total of us $114.371 billion of textile and apparel to TPP12 countries, including us $37.764 billion of textiles and us $76.61 billion of clothing. It accounts for 37.26 percent of China's textile and apparel exports, 31.70 percent of China's textile and apparel exports and 40.79 percent of China's garment exports.
Iv. The short-term impact of the implementation of TPP on China's textile and apparel exports
1. Zero tariff effect
In the TPP members, and our country has not establish a free trade agreement with the United States, Japan, Canada and Mexico, in 2014, our country textile clothing export of 4 countries totaled $80.268 billion, accounted for 26.15% of the total amount of Chinese textile clothing export at the same period. Due to the parallel between TPP and WTO, under WTO rules, developed countries such as the United States and Japan now have import tariffs of about 10% on China's textile and clothing. That is to say, once the zero tariff is implemented in TPP, China's textile industry will still export in accordance with WTO rules, which will be about 10% higher than the internal trade of TPP.
Among the TPP countries, Mexico and Vietnam are similar to China's textile and apparel products and have similar competitiveness. Since Mexico has signed free trade agreements with the United States, Japan and Canada, 80% of its exports are in the TPP area, and there is little room for release after the TPP is implemented. Vietnam has also signed free trade agreements with asean, Japan, Australia, New Zealand and Chile, but its exports to the United States and Canada are expected to grow rapidly with zero tariffs.
According to statistics, the total value of Vietnam's textile and apparel exports to the world in 2014 was 20.95 billion us dollars, including 9.82 billion us dollars to the us and 493 million us dollars to Canada. China's textile and clothing exports, to the United States and Canada, were 6.83 percent, 20.87 percent and 11.34 percent respectively. In order to investigate the impact of Vietnam's export to the us and Canada on China under the background of zero tariff after the implementation of TPP, we should first look at the situation after Japan and Vietnam signed the free trade agreement and implemented zero tariff.
Japan and Vietnam signed a free trade agreement at the end of 2008, which came into effect in July 2009. Since 2011, Vietnam's textile and clothing exports to Japan have increased significantly. In 2014, the amount reached 3401 billion yen, an increase of 1.98 times over 2009. Zero-tariff incentives are obvious.
Japan to China imports about 10% of the tariff for textile clothing, under the background of 10% tariff difference, Vietnam textile clothing export Japan about 2014 more than $30, for the same period the Chinese textile clothing export Japan ($25.6 billion) to 12% of the total. This is mainly determined by the comprehensive competitiveness of the textile industry in China and Vietnam in terms of production capacity, product structure and class. By the same token, the future of the TPP zero tariff can stimulate the rapid growth of exports to the United States Canada, Vietnam, but less in terms of comprehensive competitiveness of China's textile industry, only on mid-range clothing products similar products have a certain substitution effect to our country.
According to media reports, fan chunhong, deputy director general of the Vietnam textile and garment association, said Vietnam's textile and garment industry will grow by more than 20 percent after the TPP tariff is effective. It is assumed that Vietnam's textile and clothing exports will double in the next 3-5 years, accounting for 13.65% of China's total textile and clothing exports in 2014. The overall impact on China's textile industry is not significant.
2. Influence of rules of origin
According to the origin principle of TPP, production must be carried out in TPP area "starting from yarn". At present, Vietnam's advantages mainly lie in the garment manufacturing link of the industrial chain, and its overall industrial supporting capacity is very poor. Most of the flour accessories need to be imported from China. In 2014, Vietnam imported 15.834 billion us dollars of textile and clothing from China, of which 9,478 million us dollars of textile imports. So the short term, the TPP rules of origin is a double-edged sword, on the one hand will curb China's exports of textiles face to Vietnam, on the other hand also dampened Vietnam garment production capacity in the U.S. and Canadian alternative to our country.
TPP members of the United States and Mexico, all is the producer of textile raw materials and fabrics, the purpose of the rules of origin, is to promote reduce garment fabrics and accessories imported from China, Vietnam, in turn, increase the imports of similar products from the United States and Mexico. According to statistics, Mexico's textile and clothing exports totaled us $7.167 billion in 2014 (no export data to Vietnam). U.S. textile and apparel exports totaled $24.419 billion, of which only $101 million was exported to Vietnam. China's textile exports to Vietnam alone reached us $9.478 billion. In addition, due to the differences in transportation costs caused by geographical factors, it is impossible for the us and Mexico to meet the soaring demand for noodles and accessories in Vietnam's garment industry in a short period of time. Vietnam textile and garment association, vice director of Fan Chungong said: "now the local supply of clothing production raw material only can satisfy the demand of about 20%, and so far the Vietnam textile and garment 80-90% of raw materials from China. The price of raw materials produced in the United States is very high. If Vietnam imports materials from that country, the cost of finished products will increase.
In short, the supporting capacity of the textile and garment industry in TPP is very poor, and regional balance cannot be achieved in a short time. According to WTO statistics, in 2014, TPP12 countries exported us $74.745 billion of textile and apparel, imported us $222.422 billion, and the gap (import-export) was us $147.677 billion. Such a large gap must be balanced in the short term by off-site imports.
Therefore, in the short term, once the TPP is implemented, China's textile and apparel exports to the United States and Canada will be squeezed by Vietnam's zero-tariff advantage. About $9 billion of textile exports to Vietnam are subject to rules of origin. But due to the TPP in the short term is difficult to form internal textile clothing industry chain upstream and downstream of the trade balance, combined with Vietnam and China's textile industry in production capacity, product structure, the differences between the product added value, our country textile clothing export of TPP will remain a larger proportion.
V. the long-term impact of TPP cannot be ignored
Although the TPP in the short term, the export of textile industry in China will not form a significant impact, but the long term, due to its member state of the developed countries and developing countries to participate, from raw materials to finished products and has a textile clothing production capacity, estimated that 10 years or so, the recombination of them will lead to the change of the global textile and garment industry chain inside the TPP tariff declines, members and their companies would be put outside the free trade area of the original production, trade and investment gradually transferred to the free trade area. At the same time, the high tariffs and rules of origin imposed by the fta on countries outside the region will lead countries and enterprises outside the region to gradually transfer their superior production capacity to countries with comparative advantages within the region. After a period of adjustment, the production and trade within the fta will be gradually balanced, the industrial chain will be gradually matched, and external dependence will be gradually reduced. At that time, the negative impact on China's textile export will gradually appear.
In view of the decline in labor cost advantage, in recent years, some textile enterprises in our country has set up a garment factory in Vietnam, with their own fabric accessories in Vietnam after production clothing exports to the United States and other developed countries. After the implementation of TPP, it will become impossible because of the rules of origin, which will lead many Chinese enterprises to transfer the entire industrial chain of textile and clothing to Vietnam. This will lead to the decline of the investment growth rate of China's textile industry, but will also promote the pace of textile enterprises "going out". At present, there have been some companies, such as the listed company BaiLong Oriental (601339, shares), waffer color spinning (002042, shares), lutai A, ShenZhou international, texhong company, has moved to Vietnam and other southeast Asia section capacity. In addition, in recent years our country textile clothing enterprise with foreign investment has been affected by the pressure of the domestic economy transformation, the cause of the future together with the TPP, they can accelerate the pace of overseas production capacity (2014 foreign investment and Hong Kong, Macao and Taiwan textile gauge on the main business income accounted for industry rules on main business income of 16.85%).
Therefore, in the future, some of the domestic textile industry's production capacity will be gradually transferred overseas, and new domestic and foreign investment will also be greatly reduced. Investment in China's textile industry has been in double digits in recent years (except during the 2008 global economic crisis) and is expected to drop to single digits in the next few years. However, the decline in investment does not mean the decline of the industry. By investing overseas, advantageous enterprises can realize global resource sharing, which will promote the transformation and upgrading of the industry and improve the quality of industry growth.
Therefore, we should not be overly pessimistic about the impact of TPP on the textile industry. Even if China cannot join the TPP in the short term, the bilateral free trade arrangement between China and its member countries will help resolve its negative impact. Future with the strengthening of China's trade negotiating position, China and the RCEP agreements (including 10 asean countries and China, Japan and South Korea, India, Australia, new), and bilateral investment treaties between the United States, Europe and so on negotiations, will promote the depth of the Chinese economy. The amplification of trade brought by these trade activities will offset to some extent the negative impact of TPP on China.
Attachment: the existing free trade agreement between TPP member states and China
China - asean: effective from 2010. Most goods, including Malaysia, Vietnam, Singapore and brunei, fell to zero tariffs.
China - Chile: effective from October 2006. For China's textile and apparel exports, 22 percent of the tax code immediately achieved zero tariff, 45 percent of the tax code gradually reduced to zero tariff in 5 years, 27.5 percent of the tax code reduced to zero tariff in 10 years, 5.5 percent of the tax code did not reduce tariff.
China - New Zealand: effective from April 2008. China's export of knitwear to New Zealand will have zero tariffs after 2016, while other textile clothing will have no tariffs after 2014.
China - Australia: signed in June 2015. The tariff number of 68% is zero tariff, the tax number of 19% is reduced to zero tariff gradually in 3 years (clothing), and the tax number of 13% is reduced to zero tariff gradually in 5 years (floor fabric).
China - Peru: implemented in March 2010. Textile clothing imported from China, 8% of ein immediately realize zero tariff, 9% duty number 5 years gradually to zero tariff, the customs code of 21% 10 years gradually to zero tariff, the customs code of 6% gradually to zero tariff in 16 years, the remaining 55% duty number does not reduce tariffs.