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Recently, the General Administration announced that from April 1, the customs will no longer issue GSP certificates of origin and related Japanese import processing certificates for goods exported to Japan.Can't you apply for a certificate of origin from April 1?GSP certificate of origin cannot be applied for, but non-preferential certificate of origin can be applied.

The specific announcement is as follows:

About no longer transporting goods from Japan

Announcement on the Issuance of GSP Certificate of Origin

General Administration of Customs Announcement No. 48 of 2019

According to a report from the Japanese Embassy in China, the Ministry of Finance of Japan has decided not to grant preferential tariffs on goods exported to Japan from China from April 1, 2019. The relevant matters are hereby announced as follows:

I,From April 1, 2019, the Customs will no longer issue GSP certificates of origin and related Japanese import processing certificates for goods exported to Japan.

2. If the shipper of the goods exported to Japan needs a certificate of origin, he may apply for the issuance of a non-preferential certificate of origin.

It is hereby announced.

General Administration of Customs

22 March 2019

Small make up warm tips

1. For enterprises that export goods to Japan, in order to enjoy the preferential tariff of GSP certificate of origin, they must notify the export consignor to handle the GSP certificate of origin and ship the goods before April 1, 2019 (excluding the same day).

2. At present, China is actively promoting the negotiations on the free trade area between China, Japan and South Korea, and hopes that in the near future, products exported to Japan can also enjoy the preferential tariff treatment of the free trade area agreement.

Why did Japan suddenly announce the end of China's GSP preferences?

In November 2016, Japan's Ministry of Finance officially announced the readjustment of the target country of the "preferential tariff" system. The new standard removes China, Mexico, Brazil, Thailand and Malaysia from the list of tariff reductions and exemptions for developing countries, which means that Japan will fully end its GSP policy for my country from 2019. This is undoubtedly bad news for China's export enterprises.

Policy interpretation: tariff preferences are gone.

Preferential tariffs, also known as GSP preferential tariffs, are universal, non-discriminatory, non-reciprocal preferential tariffs granted by industrialized developed countries to semi-manufactured goods exported from developing countries or regions, and are further reduced or even exempted from taxes on the basis of most-favored-nation tariffs. This policy is conducive to helping beneficiary countries increase exports and promote industrialization and economic development.

According to Japan's latest GSP policy, from 2019, more than 35%-90% of China's traditional superior products such as organic chemicals and plastic products will no longer enjoy Japan's GSP treatment. Since the average tariff preference granted by Japan was about 3%, this means that the average tariff rate of goods exported to Japan of about US $12 billion per year has risen by about 3 percentage points as a whole, and some products have even risen by more than 10 percentage points. It is estimated that the increase in the import tariff rate of Japan will increase the tariff cost of China's goods exported to Japan by nearly 0.3 billion US dollars, which will weaken the competitiveness of China's export products in the Japanese market to a certain extent. For example, the only Japanese customer of a silicone company in Jiangsu has been forced to switch to suppliers in other countries due to GSP graduation, which increases the tariff cost by $3.8 million per year.

Direct consequences-textile industry, mechanical and electrical industry affected

It is worth noting that labor-intensive Chinese products such as textiles account for more than 60% of the Japanese import market, and the cancellation of Japan's GSP has a particularly serious impact on the textile industry. Vietnam, Indonesia, Bangladesh and Cambodia are my country's main competitors in the Japanese textile and raw material market. While Japan cancels my country's GSP treatment, it retains the GSP treatment of these countries.

In recent years, due to the rising labor cost and price level in China, the labor cost of textile and other industries is 1-3 times higher than that of Southeast Asian countries. After the implementation of the new GSP policy in Japan, the import tariff rate of my country's textiles and raw materials in Japan will be 1.06-14.2 percentage points higher than that of Vietnam, Indonesia, Bangladesh and Cambodia, resulting in a more unfavorable competitive situation for my country's related products in Japan. At the same time, China's mechanical and electrical products, as another major export product to Japan, are still dominated by Japanese-funded enterprises in China. Many Japanese companies import raw materials from China, or use China as a production base to produce products and then sell them back to Japan. The inability to enjoy the GSP treatment will affect the layout of these Japanese companies' production bases and product prices.

Chain reaction-Japanese capital in China or transfer

Under the global value chain and the current tariff system, many Japanese enterprises have set up production bases in China and have established a global production and circulation system. According to a survey conducted by the Japan External Trade Organization, as labor costs and price levels continue to rise, the negative effects of the imminent graduation of Japan's GSP are accelerating, and the trend of Japanese-funded enterprises withdrawing is becoming more and more obvious. The proportion of Japanese-funded enterprises planning to reduce the scale of investment, withdraw or transfer to third countries has exceeded 10%.

As China's chemical products exported to Japan can be exempted from import duties of 3.1-6.5 per cent on the basis of the GSP certificate of origin, the chemical industry has become one of the key industries for Japanese investment in China. Take a chemical company in Qingdao, Shandong as an example. The company is a wholly-owned Japanese enterprise wholly-owned by its Japanese parent company. The company stated that after the cancellation of Japan's GSP concessions to China, the company's annual customs clearance costs will increase by nearly 0.14 billion yen, and affect The company's next investment layout.

Advice: Seek diversification strategies

In order to minimize this impact, the inspection and quarantine department recommends: to open up other markets that give my country GSP treatment, such as exporting products to Russia, Belarus, Ukraine, Kazakhstan and other countries to continue to enjoy GSP preferences. It is necessary to give preferential policies in terms of industrial guidance, independent brand building, and financial support, accelerate the transformation and upgrading of enterprises, cultivate competitiveness with brand, quality, and service as the core, and gradually get rid of dependence on price advantages. It is necessary to encourage qualified enterprises to invest and build factories in free trade partners in Southeast Asia and other regions, reduce labor costs, and make use of the GSP or FTA tariff concessions granted to third countries by traditional trading partners such as Japan and the European Union to expand exports and improve efficiency. We should make full use of the free trade agreements signed between China and ASEAN, Australia and other countries and regions, and make use of the preferential tariff policies given by these countries and regions to gradually optimize the structure of the export market and create new competitive advantages.

As early as August 2017, the General Administration of Quality Supervision, Inspection and Quarantine issued an article: Japan's GSP for China is about to "graduate" and will fully end its GSP policy for my country in 2019.

GSP Certificate of Origin abbreviated as FORM A Certificate

The GSP is a universal, non-discriminatory, non-reciprocal tariff preference granted by developed countries to developing countries for exports of manufactured and semi-manufactured goods (including certain primary products).

Usually issued in accordance with the rules of origin and related requirements of the GSP, it is the official document for the preferential treatment of the goods of the beneficiary country when exported to the preferential country.

Since the European Union announced the graduation of China's GSP in 2015, Russia, Belarus, Ukraine, Kazakhstan and other countries have given preferential treatment to China's GSP.

But the GSP is not eternal. When the products of developing countries or regions are exported more and more under preferential policies, and the economic growth rate accelerates accordingly and reaches a certain level, the developed countries think that these countries or regions can graduate and will cancel such preferences.

For example, on March 4, 2019, the Office of the United States Trade Representative announced that, in accordance with President Trump's instructions, the U.S. government plans to cancel the GSP treatment granted to India and Turkey.

The graduation system includes the national graduation system and the product graduation system. The former means to cancel the qualification of the state benefit, and the latter means to cancel the qualification of a product benefit.

Note: Similar to China's poverty-stricken counties, the same is true for international cross-border trade. When the economic level and growth rate of developing countries reach a certain level, they must also consider graduating from the GSP. Since the EU announced the graduation of China's GSP in 2015, this time Japan's cancellation of GSP tariff preferences for China is based on this reason.

According to Japanese customs statistics, the import and export volume of bilateral goods between Japan and China in 2018 was 317.53 billion billion US dollars, an increase of 6.8 percent. Among them, Japan's exports to China were 143.99 billion US dollars, up 8.4 percent, and imports from China were 173.54 billion US dollars, up 5.5 percent. Japan's trade deficit with China is $29.55 billion.

Japan's main imports from China were mechanical and electrical products, textiles and raw materials and furniture toys, with imports of US $78.9 billion, US $21.88 billion and US $10.75 billion in 2018, up 4.7 per cent, 2.0 per cent and 1.3 per cent respectively, accounting for 45.5 per cent, 12.6 per cent and 6.2 per cent of Japan's total imports from China.