Entering RCEP member states: what is the prospect of China Vietnam agricultural trade?

The regional comprehensive economic partnership agreement (RCEP) has officially entered into force on January 1, 2022. China and Vietnam are both members of RCEP and important trading partners of agricultural products. How will the Chinese and Vietnamese agricultural products market be opened under RCEP? With the effective implementation of RCEP, what is the prospect of agricultural trade and investment between China and Vietnam? How to deepen China Vietnam agricultural cooperation?

Overview of agricultural products trade between China and Vietnam

Agriculture is the pillar industry of Vietnam's national economy. In 2020, the added value of agriculture will account for about 15% of GDP. The main food crops are rice, corn, potato, cassava, etc. the economic crops are coffee, rubber, cashew nuts, tea, etc. China and Vietnam are connected by mountains and rivers, one belt and one road to another, and they have strong complementarity in agricultural resources, market and technology. With the improvement of competitiveness of agricultural products, the establishment of China ASEAN Free Trade Area and the promotion of the "one belt and one road" initiative, bilateral agricultural trade has increased rapidly in recent years. From 2010 to 2020, the trade volume of agricultural products between China and Vietnam increased from US $2.12 billion to US $9.48 billion, an increase of 3.5 times; China's agricultural imports from Vietnam increased from US $770 million to US $3.99 billion; Exports to Vietnam increased from US $1.35 billion to US $5.49 billion. At present, China has become the second largest exporter and the first largest importer of agricultural products in Vietnam. The proportion of bilateral agricultural trade volume in Vietnam's total agricultural trade increased from 9% in 2010 to 18% in 2019.

Market opening of agricultural products between China and Vietnam under RCEP

Before the signing of RCEP, China and Vietnam had opened their agricultural products markets to each other under the framework of China ASEAN Free Trade Area, and China abolished tariffs on 93% of Vietnam's agricultural products and 91.7% of Vietnam's agricultural products to China. Under RCEP, the two sides have generally maintained the level of openness under the China ASEAN Free Trade Area, and expanded the opening to a small number of agricultural products. With the entry into force and implementation of RCEP, enterprises carrying out China Vietnam agricultural trade can choose between the preferential tariffs under China ASEAN Free Trade Area and RCEP. As long as they meet the rules of origin of a free trade area, their preferential tariffs can be applied accordingly. In view of the relatively loose rules of origin of RCEP, which allows the value components of 15 members to be accumulated, under the condition that its regional value component standard is the same as that of China ASEAN Free Trade Area, since RCEP has more members and is easier to meet the standard, its benefit threshold is greatly reduced, and the tariff reduction under RCEP is still of positive significance.

Under RCEP, Vietnam promised to eventually abolish tariffs on 91.3% of China's agricultural products, including maintaining zero tariffs on 840 agricultural products or reducing taxes to zero immediately upon the entry into force of the agreement, accounting for 50.1% of all agricultural products, mainly fresh and cold fish, shelled poultry eggs, natural honey, etc; 692 tax items have been reduced to zero after 10-20 years, accounting for 41.2% of all agricultural products, mainly including milk and cream, potatoes, coffee, nuts, pineapple, etc; 143 tax items are subject to partial tax reduction, exception handling and maintenance of tariff quota management, accounting for 8.4% of all agricultural products, mainly including black tea, coffee, rice, sugar and tobacco. Correspondingly, China promises to eventually implement zero tariff on 92.6% of Vietnam's agricultural products, including maintaining zero tariff or immediately reducing zero tariff on 960 agricultural products, accounting for 65.3% of all agricultural products, mainly including fish, fruits and nuts, beverages, condiments, cakes and snacks; 404 tax items have been reduced to zero in 10-20 years, accounting for 27.4% of all agricultural products, mainly including almonds, essential oils, tea, fruit juice, etc; In consideration of food security and farmers' livelihood, 106 tax items were subject to exceptional treatment or partial tax reduction, mainly including wheat, corn, rice, sugar and palm oil, accounting for 7.3% of all agricultural products.

Vietnam adopts the positive list method to open its service trade, which is higher than its commitment under the China ASEAN Free Trade Area, and will turn into a negative list within six years from the entry into force of the agreement. For example, Vietnam does not open the packaging service of the food industry under the China ASEAN Free Trade Area. In RCEP, joint ventures are allowed to carry out this service in the Industrial Park (Economic Development Zone), provided that the proportion of foreign capital in the joint venture does not exceed 49%. For the investment field, the negative list is adopted to promise to "enter without prohibition" and significantly reduce the restrictive measures in the field of agricultural investment. For example, under RCEP, Vietnam has abolished the restrictions on the use of domestic raw materials for foreign investment in aquatic products processing, vegetable oil processing and dairy processing; We will open wider to farming, animal husbandry and catering supply. In addition, the agreement also made high-level commitments in terms of customs clearance facilitation, e-commerce and other modernization issues. For example, the agreement requires to strive for 6-hour customs clearance for express goods and perishable goods, which will further optimize the agricultural trade and investment environment between China and Vietnam.

Taking advantage of RCEP to deepen the main direction of China Vietnam agricultural cooperation

Tariff reduction and exemption, looser rules of origin and high-level trade facilitation arrangements in the field of agricultural products between China and Vietnam under RCEP are conducive to the flexible allocation of resources and industrial chain cooperation between China and Vietnam in the region. We can seize the opportunity of the effective implementation of RCEP to expand and deepen China Vietnam agricultural cooperation. First, promote the high-quality development of bilateral agricultural trade. Actively promote the export of independent brands and enhance export added value by holding a docking meeting for agricultural trade enterprises, building an agricultural products exhibition center and overseas warehouse in Vietnam, and encouraging enterprises to carry out international trademark registration of agricultural products. Second, develop agricultural service trade with Vietnam. With the opportunity of Vietnam's service trade opening up under RCEP, promote the "going out" of agricultural machinery and agricultural technology services. Third, increase agricultural investment in Vietnam and improve the supply chain of cross-border agricultural industry chain. Make full use of China's agricultural product processing technology advantages and Vietnam's labor cost advantages, carry out agricultural industrial chain cooperation with Vietnam, and build a safe, stable, collaborative, efficient, mutually beneficial and win-win regional agricultural industrial chain.