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Chinese Commerce Ministry Holds Press Briefing on China-ROK FTA Negotiations

The Information Office of the Chinese Ministry of Commerce held a press briefing on China-ROK FTA negotiations on November 17. Assistant Minister Wang Shouwen and Deputy Director of the Department of International Trade and Economic Affairs Sun Yuanjiang attended the press briefing and answered questions from the media. Deputy Director of the General Office and the Information Office Hu Suojin presided over the press briefing. The records are as follows.

Hu Suojin: Friends from the media, good afternoon. Chinese President Xi Jinping and President of the ROK Park Geun-hye met in Beijing on November 10 and co-announced the conclusion of the substantial negotiations on the China-ROK FTA. Witnessed by the two leaders, Chinese Minister of Commerce Gao Hucheng and ROK Minister of Trade, Industry & Energy Yoon Sang jick, on behalf of the governments of the two countries, signed the minutes of the meeting on the conclusion of the substantial negotiations on the China-ROK FTA. Related information and the minutes of the meeting have been released to the media. Today, the Ministry of Commerce is having the press briefing, inviting Assistant Minister Wang Shouwen and Deputy Director of the Department of International Trade and Economic Affairs Sun Yuanjiang to give you a detailed introduction and interpretation on the situations and important achievements of the China-ROK FTA negotiations, and answer your questions. The press briefing will last for 30 minutes. At first, let’s welcome Assistant Minister Wang Shouwen to introduce us related situations.

Wang Shouwen: President Xi Jinping and President of the ROK Park Geun-hye met in Beijing on November 10 and co-announced the conclusion of the substantial negotiations on the China-ROK FTA, and Chinese Minister of Commerce Gao Hucheng and ROK Minister of Trade, Industry & Energy Yoon Sang jick, on behalf of the governments of the two countries, signed the minutes of the meeting on the conclusion of the substantial negotiations on the China-ROK FTA witnessed by the two leaders. Today, on behalf of the Ministry of Commerce, I would like to take the opportunity to extend cordial thanks to the friends who always care for and support China-ROK FTA negotiations, especially the friends in the media. The establishment of the China-ROK FTA is not only a key step to implement the spirits of the Third Plenary Session of the Eighteenth Central Committee of the CPC and speed up the implementation of the FTA strategy taking the surroundings as the foundation, but also an important link in China’s economic field on comprehensively deepening reform and expanding opening up. Although the agreement has not been signed officially, the substantial negotiations have been over. All circles have paid high attention to the agreement. Next, I will give you an introduction to the main situation of the China-ROK FTA negotiations.

First of all, the China-ROK FTA negotiations witnessed a long process. In 2004, that is 10 years ago, China and the ROK announced the launch of the non-governmental feasibility research. In November 2006, the joint research by the government, industries and institutions led by the government was started. The negotiations were officially launched in May 2012, and the substantial negotiations were over in November this year. It is especially worth mentioning that the goal of “striving to complete the negotiations by the end of the year” put forward by President Xi Jinping and President Park Geun-hye in July this year during Xi’s visit to the ROK has played an important driving role in the negotiations. Under the attention and guidance of the leaders of the two countries, the negotiation groups of the two parties sped up their work, and at the final sprint stage, the two trade ministers directly took part in the work, serving as the heads of the delegations. Through negotiations for several days and nights, the two parties finally reached consensus on all substantial contents.

We could say that the China-ROK FTA negotiations are “ten years for a sword”, and looking from the results, the negotiations have realized the high-level, comprehensive and benefit balance goal put forward by the two leaders. Why?

Firstly, the China-ROK FTA is one with the largest trade value and highest comprehensive level in China up to now. China is the second largest economy in the world, and the ROK is the fourteenth. Last year, China-ROK bilateral trade amounted to US$ 274 billion. In terms of trade, China is the largest goods trader in the world, and the ROK is the ninth, and as the top four goods traders, China, the U.S., the EU and Japan have no FTA agreements among them. Therefore, the FTA agreement between the largest goods trader and the ninth largest goods trader could be regarded as an FTA with the highest trade value and comprehensive level. According to the consensus reached during the negotiations, 90% of the products tariff and 85% of the trade value should be liberalized. That is to say, no matter how high the tariff is now, after the transitional period, 90% of the tariff and 85% of the trade value would be reduced to zero. During China-ROK FTA negotiations, China made the commitment for the first time to carry out trade in service and investment negotiations through Pre-Establishment National Treatment and Negative List. The two parties also included e-commerce and regional cooperation into the FTA negotiations for the first time, and formed individual chapters for financial services and telecommunication services for the first time. We could say that this is a high-level FTA agreement.

Secondly, the China-ROK FTA covers a wide range. Common FTA agreements mainly concern trade in goods, and agreements at a higher level also include investment and trade in service. The China-ROK FTA not only includes trade in goods, trade in service and investment, but also covers 11 fields including rule of origin, customs procedures and trade facilitation, trade remedies, plants and plant health inspection and quarantine, technical trade barriers, intellectual property, competition policies, e-commerce, environment, economic cooperation and general conditions, especially those economic and trade issues of the 21st century like e-commerce, competition policies and environment. The negotiations cover 17 fields and 22 chapters in total. We could say that the China-ROK FTA agreement is an attracting and wide-range agreement.

Thirdly, I want to stress that the China-ROK FTA has balanced the benefits of the two parties. The agreement is balanced and will befit China and the ROK largely. For example, in terms of trade in goods, after 20 years (longest) of transition, 91% of China’s tariff products and 85% of the import value will enjoy zero tariffs. Due to the current most favored nation tariffs, the number of the tax-free products of the ROK will be more than China, and 92% of the tariffs and 91% of the import value of the ROK will be zero. At present, the ROK’s exports to China account for 26% of its total exports, and it is a great benefit in the future that 91% of tariff products would be free to China. The ROK is the third largest export market of China, therefore it is also an important driving force for China’ s export in the future that 92% of the tariff and 91% of the import value would be free. In terms of trade in service, China settled the ROK’s concern on cooperation in audio and visual, outbound tourism and environment, and the ROK satisfied China’s key requirements on express delivery, building and medical care. The two parties also made the commitments to provide investors and internal personnel of transnational corporations with a two-year permission for employment and residence, and business visitors with the one-year multiple entry visa. At the same time, the two parties promised to launch the negative list and carry out negotiation on trade in service in two years after the entering into force of the agreement. In terms of investment, China is the largest overseas investment destination of the ROK. At present, investment of ROK enterprises in China has reached US$ 60 billion, being an important foreign investment source of China. The two parties were committed to launching negotiations on Pre-Establishment National Treatment and the negative list mode. In terms of rules, the two parties reached consensus on the institutional arrangement for further strengthening cooperation and regulation integration on the basis of the general balance of the benefits.

In conclusion, we could say that the China-ROK FTA is an agreement that is high-level, comprehensive with the benefits of the two parties generally balanced.

There is something I want to say in particular to friends from China’s business circle. The China-ROK FTA is a bilateral institutional arrangement to further deepen economic and trade cooperation. The enterprises’ level of participation and application are keys to the effect of the institution. At present, the substantive negotiations have been over. Next, the consultation at the work level on technical problems will be carried out and is scheduled for completion before the end of the year. We hope that the agreement will be officially signed in the first half of next year. All going well, the China-ROK FTA would officially enter into force in the second half of next year. After the implementation, we will see if our enterprises could make full use of the agreement, and we hope that the enterprises would make plans and arrangements ahead of time. After the signing of the China-ROK FTA, we will release all the contents, in order to help the enterprises make studies and preparations. We hope that the enterprises will make full use of the agreement, making our import and export more efficient and driving trade in service, investment and long-term cooperation of the two parties to a higher level.

Hu Suojin: Thanks to Assistant Minister Wang Shouwen. Moving forward, we’ll take your questions. Each of you may ask one question concerning the China-ROK FTA and please address your media name before posing a question.

Phoenix TV: Assistant Minister Wang, we can see that Taiwan has some worries about the conclusion of the substantive negotiations on the China-ROK FTA since Taiwan and the ROK are similar to each other in either the economic volume or economic structure. So how will you respond to such worries? Do you have any follow-up plan on ECFA?

Wang Shouwen: We have noticed that the industrial circle in Taiwan has expressed their worries in this regard. I’d like to say that firstly, the cross-straits trade in goods negotiations started earlier than the China-ROK FTA negotiations. Now, the substantive negotiations on the China-ROK FTA have completed, but the negotiations on cross-straits trade in goods have not yet. We could say we have an early start but late arrival. Secondly, many phrasal achievements have been made in the cross-straits trade in goods negotiations, which are the results from our work done and are really great and need to be cherished. Thirdly, we need to step up the follow-up negotiations, strive for the same goal in particular, display more flexibility and creativity and make joint efforts to agree on the mechanism for cross-straits trade in goods.

CCTV News Center: Just now, Assistant Minister Wang introduced us the China-ROK FTA negotiations, now how about the China-Australia FTA? Is there any experience we could learn from the China-ROK FTA negotiations? How does the China-Australia FTA progress on? What kind of influence will the China-Australia FTA have on our daily life?

Wang Shouwen: If you pay attention to the website of the Ministry of Commerce, you will find that a short flash was released after the meeting between Chinese President Xi Jinping and Australian Prime Minister Tony Abbott this morning that the substantive negotiations on the China-Australia FTA had also ended. It’s a negotiation of great significance and will create a series of conditions for deepening China-Australia trade and economic relations. For example, China and Australia are highly complementary to each other in economy. We have a relatively large amount of manufactured goods exported to Australia while Australia has more exports of fundamental raw materials to China. With the China-Australia FTA being reached, it means that five years later, all China’s exports to Australia will enjoy a zero-tariff, which creates favorable conditions for China to expand the Australian market.

China’s investment in Australia at present comes close to US$60 billion, which makes China a very important source of investment for Australia. Arrangements have also been made in investment and it is conducive to bilateral investment development. China has also decided to give Australia the most-favored nation treatment in key areas that concern Australia. The Australian side has also made some arrangements for China. For example, arrangements have been made for China’s special labor force to enter into the Australian market and for promoting investment facilitation under the investment item. All those arrangements will play a great role in boosting bilateral economic, trade and investment cooperation.

Similarly, and very importantly, most of the Australian exports will also enjoy a zero-tariff when entering into the Chinese market. That will help Chinese manufacturers reduce cost and consumers buy reliable products at a competitive price. Thank you.

China Radio International: Speaking of the China-ROK FTA, I’d like to know how the China-Japan-ROK FTA negotiations progress? How do the China-ROK FTA negotiations contribute to the China-Japan-ROK FTA negotiations and what influence it will have on the East Asian regional economic integration?

Wang Shouwen: China is the largest trading partner of Japan and the ROK, Japan is China’s second largest trading partner and the ROK is China’s third largest trading partner in terms of countries. The three countries are all in East Asia, so if the FTA is done, it will play a very important role in the East Asian regional economic integration as well as the trade, investment and economic exchanges among the three important countries. At present, five rounds of China-Japan-ROK FTA negotiations have been held, with much progress made. The conclusion of the substantive negotiations on the China-ROK FTA is conducive to the China-Japan-ROK negotiations. We believe that the China-Japan-ROK FTA negotiations are bound to achieve greater and faster results as long as the three countries reflect greater political intention and display more flexibility on concrete issues. We also expect more progress from the China-Japan-ROK negotiations to be held next year.

CCTV-4: Director Sun, what influence and impact do you think it may bring to China’s industries if ROK goods enter into China’s market with a preferential price?

Sun Yuanjiang: One of the main contents of the FTA is to open the market, and that kind of opening will affect some enterprises and industries to different extents. The China-ROK FTA has made most goods tax reduced while protecting some sensitive products. Seeing from the present negotiation results, the two sides have found a proper balance point between opening markets and protecting sensitive industries. Assistant Minister Wang just mentioned that more than 90% of the goods of both countries have realized liberalization, which means we still have 10% as an exception exempting from tax reduction or getting partial tax reduction which have been protected well actually. Even for those 90% that will enjoy a zero-tariff finally, there are a transitional period of five years, 10 years, or 15 years and 20 years, which provides enough adjusting time and space for those industries and enterprises to avoid overlarge and drastic influence and impact.

National Business Daily: Assistant Minister Wang, what industries in China will benefit from the China-ROK FTA when it comes into force officially ? Thank you!

Wang Shouwen: China and the ROK are two economies that boast great similarities in many industries. The China-ROK FTA is a high-level free trade agreement, of which over 90% of tax items will be reduced to zero after a transitional period of 20 years. Therefore, many industries in China will benefit from this agreement especially mechanical and electrical products and metal products, as well as agricultural products. Similarly, among the ROK’s advantageous industries, since 90% of China’s tax items and 85% of its trading value also enjoy a zero-tariff after the transitional period, most of the ROK’s industries willbenefit from the agreement. The best thing for the agreement is that the two countries reduce their tariff and integrate two markets into a greater one, which is conducive to making the industries from both sides divide the work in a greater market, form a value chain and create effective competition, and also contribute to helping industries of both sides win market shares from each other’s market winning both scale economy from the two markets and benefits outside the markets. At present, a foundation for a greater market and better competition system has been laid and what left is let the business circle make full use of this agreement with their innovative spirits and spirits of seeking excellence.
Hu Suojin: That closes today’s news conference. Thanks to Assistant Minister Wang and Vice Director Sun Yuanjiang! Thank you all!

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