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The Head of the Department of International Trade and Economic Affairs of the Ministry of Commerce Interprets the Outcomes Reached at the Conference of the Fourth Session of the Ministerial Council of the Asia-Pacific Trade Agreement

On January 13th, the conference of the Fourth Session of the Ministerial Council of the Asia-Pacific Trade Agreement (‘APTA’) was held in Bangkok, Thailand. APTA members China, India, South Korea, Sri Lanka, Bangladesh and Laos, and Mongolia which is ready to join APTA, sent high-level delegations to said conference. At the conference, representatives of the six member states of APTA jointly signed the Second Amendment to the Asia-Pacific Trade Agreement (the ‘Amendment’), a document on the fourth round of tariff concession after negotiations. The Ministerial Declaration was issued at the conference, announcing the launch of substantive negotiations in the fields of trade facilitation, investment and service trade under APTA, and planning to make efforts to start the fifth round of tariff concession negotiations within the year. It was also decided at the meeting to establish a business association under APTA to further promote the liberalization and facilitation level of trade and investment within the relevant areas. A few days ago, the Head of the Department of International Trade and Economic Affairs of the Ministry of Commerce accepted a press interview, and interpreted the outcomes of this conference of the Ministerial Council.

Q: Please describe the general situation of the Asia-Pacific Trade Agreement.

A: Formerly known as the Bangkok Agreement which was signed in 1975, the Asia-Pacific Trade Agreement is a preferential trade arrangement reached among developing countries to promote South-South cooperation as directed by the United Nations Economic and Social Commission for Asia and the Pacific (‘ESCAP’), and one of the earliest preferential agreements in the Asia-Pacific region. APTA is open to all developing member states of ESCAP, and its secretariat is ESCAP in Bangkok, Thailand. Since its establishment, a total of four rounds of tariff concession negotiations have been held concerning APTA, giving a strong impetus to the long-term, stable and healthy development of economic and trade relations among members, and creating a paradigm of mutual benefit and win-win cooperation among developing countries.

At present, APTA members include China, India, South Korea, Sri Lanka, Bangladesh and Laos; Mongolia is ready to join, and is currently performing internal procedures for examination and approval. APTA is a preferential trade arrangement in the Asia-Pacific region with unique advantages; its members span two major economic growth poles in East Asia and South Asia, and constitute a huge market of 2.8 billion people.

Q: Please describe our involvement in the Asia-Pacific Trade Agreement.

A: In 1994, China formally announced its application for accession to the Bangkok Agreement; from 1997, China conducted bilateral negotiations with respect to access to the agreement with all member states respectively, and formally joined the Bangkok Agreement in May 2001. APTA is the first preferential trade arrangement in which China has participated, and it is also the only preferential trade agreement in progress in China that covers East Asia and South Asia.
Since the implementation of the outcomes reached after the third round of tariff reduction in 2006, the scope of the covered goods has been greatly expanded, which has had a positive impact on the expansion of trade between China and its fellow APTA members. In 2001-2015, bilateral trade between China and the other APTA members expanded from USD 41 billion to USD 369.6 billion, an increase of nearly nine times. Among other trends, China's export to other APTA members expanded from USD 15.9 billion to USD 179.3 billion, an increase of about 11 times, and its imports expanded from USD 25.1 billion to USD 190.3 billion, an increase of about 8 times. At the same time, the number of preferential certificates of origin signed in 2015 under APTA ranked second among regional trade agreements signed by China, the value of imported commodities covered by APTA ranked third, and enterprises benefited significantly.

Q: What are the main contents of the Ministerial Declaration issued by the Ministerial Council of APTA?

A: At the Ministerial Council, the representatives of the participating countries to APTA jointly issued the Ministerial Declaration, which includes the following contents: first, announce the end of the fourth round of tariff concession negotiations; second, announce the launch of substantive negotiations in the fields of trade facilitation, investment and service trade; third, announce plans to make efforts to start the fifth round of tariff concession negotiations within 2017 and explore the possibility of cooperation in new areas; fourth, welcome Mongolia's accession to APTA as soon as possible and promote the continued expansion of members to APTA; and lastly, agree on the establishment of the business association of APTA. In addition, the Ministerial Declaration also refers to the promotion of preferential trade data exchange, encourages the issuance of electronic certificates of origin and promotes green trade, investment and so on; it reflects the efforts that have been made by various member states in recent years to promote the development of APTA, and points the direction for the future work and development thereof.
  
Q: Please introduce the background, main contents and significance of the fourth round of tariff concession negotiations under APTA.

A: In order to further improve the level of trade liberalization in the region, in October 2007 the APTA member states started the fourth round of tariff concession negotiations, which ultimately ended in August 2016 after nine years of arduous negotiations. Representatives of the member states signed the Second Amendment to the Asia-Pacific Trade Agreement at the fourth Ministerial Council on the fourth round of tariff concessions after negotiations.

Over nearly 400 pages, the Amendment reflects the outcomes of the fourth round of negotiations of APTA, mainly including the tariff reduction commitments of various member states, the optimization of rules of origin and other contents. As an important achievement of the members of APTA after 9 years, the Agreement and the perfection, supplementation and upgrading thereof reflects the common desire and practical need of APTA members to deepen and expand economic and trade cooperation relations. The conclusion and execution of the Amendment will provide a new impetus for the economic development of APTA member states, and will promote the economic integration of Asia and the construction of ‘One Belt and One Road’.

Q: What improvements are made to tariff concessions in the Amendment?

A: According to the outcomes of the fourth round of tariff concession negotiations, 6 APTA member states agreed to cut tariffs for 10,312 tariff items in total, which applies to all members; as such, it calls general concessions; the total items subject to tax reduction increase by 2.5 times compared with the third round of negotiations, with the average ratio of items subject to tax reduction and the average range of tax reduction being more than 28% and 33% respectively. In this way the least developed countries - Bangladesh, Laos and the small economy of Sri Lanka - can enjoy a certain flexibility. In addition, the member states unilaterally and on a voluntary basis give preferential tariff rate arrangements to the least developed countries in APTA (1,259 for Bangladesh and 1,251 for Laos), which are known as special concessions, with the average tax reduction rates standing at 86.4% and 86.2% respectively.

Specifically, China's general concessions list includes 2,191 taxable items (calculated according to the 2012 edition of the tax regulations; the same below), mainly including fish, vegetables, tea, chemical products, textiles and clothing, footwear, iron and steel products, motor vehicle parts, machinery, electronics and instruments and meters, as well as other products. The special concessions list includes 181 preferential tax rate products for Bangladesh and Laos.

South Korea's general concessions list includes 2,797 taxable items, mainly including fish, flowers, minerals, chemical products, leather products, textiles, iron and steel products, mechanical products and others. The special concessions list includes 951 and 943 preferential tax rate products for Bangladesh and Laos respectively.

India's general concessions list includes 3,142 taxable items, mainly including animal products, oilseeds, minerals, chemical products, rubber products, textiles, base metals, mechanical products and others. The special concessions list includes 48 preferential tax rate products for Bangladesh and Laos.

The general concessions lists of Sri Lanka, Bangladesh and Laos include 585, 598 and 999 taxable items respectively, mainly including aquatic products, fruit, spices, food, minerals, chemical products, plastics and products thereof, leather products, paper products, textiles, iron and steel products, mechanical products and others. Sri Lanka's special concessions list includes 75 preferential tax rate products for Bangladesh and Laos. Bangladesh's special concessions list includes 4 preferential tax rate products for Laos. Laos did not submit a special reduction list.

Q: When can the tariff concession outcomes of the parties to the Amendment be carried out?

A: In order for enterprises to receive benefits as early as possible, the member states of APTA agree to pay close attention to the implementation of domestic procedures and conduct effective technical preparation. Efforts will be made to implement the tariff concession outcomes of the parties to the Amendment by July 1st, 2017.

Q: Did Mongolia make any related undertakings in the fourth round of tariff concession negotiations?

A: At the conference of the second Ministerial Council held in Beijing in October 2007, the ministers of all member states agreed to the proposal of the Secretariat to assist interested countries in their accession to APTA. With the invitation and support of the Chinese side, Mongolia submitted an offer list for the fourth round of negotiations as an observer, and reached an agreement with all parties. In October 2013, the member states agreed in principle to Mongolia's accession to APTA at the 42nd Standing Committee. At the present Ministerial Council, Mongolia also dispatched representatives to attend. It is understood that Mongolia is currently working to fulfill the domestic approval procedures; when completed, it will officially join APTA and carry out the outcomes of the fourth round of tariff reduction as soon as possible.

According to the consensus reached by Mongolia and other APTA members, Mongolia will enjoy certain flexibility in the fourth round of negotiations on tariff concessions. According to the results of the negotiations, Mongolia's general concessions list includes 366 taxable items, mainly including aquatic products, vegetables and fruit, animal and vegetable oil, mineral products, chemical products, wood, cotton yarn, chemical fiber, mechanical products, transportation equipment and others, with an average tax reduction rate of 24.2%. Mongolia did not submit a special reduction list.

Q: What improvements have been made to the rules of origin in the Amendment?

A: In order to further enhance the implementation effect of the tariff reduction undertaken in APTA, the member states have optimized the rules of origin as follows: first, the two terms ‘cumulative component’ and ‘direct transport’ are respectively explained through the addition of two notes so as to further clarify the definition of ‘cumulative components’ and transfer via third party under the term of ‘direct transport’, enabling enterprises to better enjoy the corresponding privileges by using the rules of origin; and second, the list of rules of origin for specific products is added in APTA for the first time which covers 155 4-digit taxable items on the basis of single regional appreciation standards, the ‘4-digit change of taxable items’ standard can apply and it involves beverages, mineral fuels, organic chemicals, plastics and plastic products, synthetic rubber, steel and other products, making the application of the rules of origin in APTA more scientific and flexible.

Q: Will the Ministerial Council launch a new round of tariff concession negotiations?

A: After the fourth round of tariff concession negotiations, APTA’s level of trade liberalization is further improved, with the average ratio of items subject to tax reduction and the average range of tax reduction being more than 28% and 33% respectively; however, there is still much room for improvement compared with other free trade agreements. Prior to the present Ministerial Council, all member states have taken a positive attitude with respect to the start of the fifth round of tariff reduction negotiations as soon as possible, but they have not yet agreed on the specific starting time. At the Ministerial Council, the ministers of various member states discussed the future direction of APTA, and exchanged their opinions on the start of the fifth round of tariff concession negotiations. All parties agreed to obtain their domestic authorizations as soon as possible so as to strive to start the fifth round of tariff concession negotiations within 2017, thereby further enhancing APTA’s level of liberalization.

Q: Aside from access to the goods trade market, does APTA involve negotiations in any other areas?

A: Conforming to the new trend of the rapid development of the free trade agreement in the Asia-Pacific region, APTA is working to expand its negotiation scope and fields of cooperation. In December 2009, the ministers of various APTA member states signed the Framework Agreement on Trade Facilitation, Framework Agreement on Investment Protection, Promotion and Liberalization and Framework Agreement on Promoting the Development of Service Trade and Liberalization. In accordance with the foregoing framework agreements, the member states can start substantive negotiations on trade facilitation, investment and trade in services upon negotiations. In October 2013, the member states agreed at the meeting of the 42nd Standing Committee to announce the launch of said negotiations at the meeting of the fourth session of the Ministerial Council.

At the present Ministerial Council, various representatives of the APTA member states announced the launch substantive negotiations in the fields of trade facilitation, investment and service trade under the aforementioned framework agreements, and directed the APTA Standing Committee to establish corresponding working teams and promote related negotiations. With the increasingly close economic and trade relations among APTA members, we believe that APTA will cover more areas and gradually form more comprehensive regional trade arrangements at higher levels.

Q: The Ministerial Council also agreed to establish an APTA business association. Please introduce the related particulars.

A: The proposal to explore the establishment of an APTA business association was put forward by Sri Lanka at the meeting of the 48th Standing Committee. It is recommended that the various member states form the same in concert with the association so as to promote the implementation of APTA and economic and trade cooperation among its members. After an in-depth discussion, the member states reached the opinion that the establishment of an APTA business association would help their enterprises make better use of the preferential policies under APTA, enhance the effect thereof, promote personnel exchange and raise economic and trade cooperation to a new level. On this basis, the Ministerial Council agreed to establish an APTA business association, and instructed each member state to conduct in-depth consultation with association experts on the functions, composition operation and other specific details of the APTA business association so as to reach an agreement as soon as possible.

Q: Are there any ways we can learn more about the Asia-Pacific Trade Agreement and the Second Amendment to the Asia-Pacific Trade Agreement?

A: We regularly update related information about APTA and the Amendment thereto on the China FTA Network (fta.mofcom.gov.cn) in order to promote enterprises to use the preferential measures stipulated by APTA. For more information, please refer to the China FTA Network.

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