Will Korean makgeolli be cheaper?

The birth of a huge trade zone and what is behind it January 19, 19:45

A huge free trade zone was born in Asia.


RCEP = Regional Comprehensive Economic Partnership.


From February 1, this framework will come into effect in South Korea, and the first economic partnership agreement between Japan and South Korea will start.

When will tariffs be eliminated and cheaper for Korean traditional sake makgeolli, kimchi, and colorful paprika?


As I proceeded with the interview, I could see what was behind me.


(Koji Yamamoto, Reporter, Ministry of Economic Affairs, Yuka Nonaka)

Japan-Korea's first trade agreement

Busan Port boasts the largest cargo handling volume in South Korea.



At this port, which does not sleep 24 hours a day, import and export cargo with and from Japan is constantly coming and going.

South Korea is Japan's third largest trading partner in the world.



The RCEP will come into effect on February 1, and tariffs will be immediately eliminated for more than 3,000 items exported from Japan to South Korea, and more than 25% of the total.



Beverage vending machines, fire alarms, and some ironware are included.



On the other hand, what about imports?



What about the makgeolli and kimchi mentioned at the beginning, and the paprika that is often imported into Japan?



The answer is that Makgeolli has abolished tariffs in the 21st year.



However, kimchi and paprika were excluded from tariff elimination and reduction at the time of negotiations, and the situation seems to be a little overwhelming.



Nevertheless, most tariffs on yarns, textiles and other textiles except clothing will be eliminated immediately.



In terms of exports, the percentage of industrial products that are tax-free in South Korea is currently 19%, but will eventually reach 92%.



It seems that the effect of future tariff elimination in fields where Japanese companies have strengths, such as automobile parts and chemical products, is not small.

Will clothing be cheaper?

!!

RCEP came into effect on January 1st in 10 countries including Japan, China, Singapore and Australia.

The introduction of new rules could reduce the price of clothing in Japan.



This clothing.

It was produced at a factory in Vietnam by the sewing maker "Matsuoka Corporation" in Fukuyama City, Hiroshima Prefecture.



The process is a bit complicated.



The fabric was made in China, which was made into clothing in Vietnam and imported to Japan.



Although there was already an economic partnership agreement between Japan and the Association of Southeast Asian Nations, which is a member of Vietnam, the tariff on this garment was not zero, and a tariff of 9.1% was applied.

This is because of the rule of origin.



Unless the two work processes of thread to fabric and fabric to clothing are completed within the area where the agreement is signed, tariffs will not be applied.



The fabric made in China was the neck.



That is, RCEP has introduced a new rule that tariffs will be zero if one process of making clothing from fabrics is done within the RCEP area.

As a result, the import tariffs on the clothing from Vietnam became zero on January 1st.

President Matsuoka


"It is a great advantage for companies expanding into RCEP member countries.


I think that we can develop more advantageously because all member countries have the potential to become markets."

Expectations for exports to huge markets and China

The effect of the RCEP coming into effect is also manifested in terms of exports to China, Japan's largest trading partner.

Elevator parts are one of the immediate elimination of tariffs on exports to China.



Hitachi has factories not only in Japan but also in China, and many parts are procured locally, but important parts that require high performance are manufactured in Japan and sent locally.



As a company, we expect that the cost will be reduced and the local "price competitiveness" will be enhanced, leading to an increase in sales.

Something that will be taken care of when you have cavities

Tariffs have disappeared for surprising things.



A drill used by dentists to sharpen cavities.

The 4% tariff imposed in China was reduced to zero on January 1.



At Nakanishi, a precision equipment manufacturer in Tochigi Prefecture, which boasts the world's top market share, sales in China have increased by about 30% every year over the past few years.



The company believes that tariff elimination will help expand sales channels in China.

President Nakanishi


"The Chinese market is fiercely competitive, and Chinese products are catching up with our products.


The elimination of tariffs of 4% means that our competitiveness will become stronger and more sustainable. I think it will be a big plus in terms of points. "

Is it a strong Chinese strategy?

On the other hand, China's strong strategy can be seen and hidden.



One of them is the automobile field.



The tariffs imposed on Japanese automobile parts by the Chinese side will eventually be eliminated for 87% of the items (export value of 5 trillion yen), but most of them are only phased out.



Tariffs on water pumps for automobile engines have been reduced to zero since January.

However, most of the camshafts (6%) and some gearboxes (8%) that Chinese manufacturers also produce have been tariff-free in the 16th year.

EV = some of the lithium-ion batteries used in electric vehicles, whose demand is expected to grow in the future, are in the 16th year (6%), and some of the motors are in the 16th and 21st years (10%, 12%). It has become.



China is the world's largest EV market.



Given that many Chinese companies are finding opportunities to expand this market, it is clear that they want to slow down tariff elimination as much as possible.

Data collection is also free ...

Furthermore, RCEP includes a provision that, in principle, computer-related data transfer such as servers in the region should not be restricted and should be freed.



It has been pointed out that Chinese IT companies may expand into Southeast Asia, make good use of this rule, and actively collect and analyze data to develop their business in an advantageous manner.



If a Japanese company wants to do business in Southeast Asia, it may be possible that a Chinese company has already solidified its customer information network.

It is a problem if it is operated without permission

According to Junichi Sugawara, a senior researcher at Mizuho Research & Research Institute, a think tank familiar with trade issues, RCEP points out that there is a large discretion in the participating countries in the regulations and the effect may change depending on the operation. increase.

Senior Researcher Sugawara


"China is seriously thinking about creating desirable rules for China in the Indo-Pacific region.


How will China, which boasts an overwhelming presence in the RCEP, operate this agreement? I think that it will have a great impact on Japan's business and economy.


It is important for Japan to take the lead in changing to better ones, and Japan will cooperate with each country. I think it is important to monitor each other and ensure that each country keeps its promises. "

Looking at the world

Looking around the world, I feel that the framework of free trade is now at a difficult stage.



After the war, the United States, which has consistently promoted free trade and drove global economic growth, has been nation-first since the days of former President Trump, and has strengthened its stance of giving top priority to the country.

Even after withdrawing from the TPP = Trans-Pacific Partnership Agreement and becoming the Biden administration, he still maintains that stance.



Meanwhile, the battle for hegemony over advanced technology has intensified in the United States and China.



There is a growing tendency for the free trade framework to become inseparable from security and geopolitical implications, rather than simply enjoying economic benefits.

RCEP may have the advantage of becoming more economically close, especially with China, and the disadvantage of being divided due to the relationship with the United States, which requires difficult decisions to develop business. You may fall into.



A huge trading area = RCEP, which accounts for about 30% of the world's population and GDP.



The key to the future is how each country manages its operations while keeping its security strategy secret.



Buttons have been handed over to international politics to make our lives richer and more convenient.


Koji Yamamoto ,

Reporter of the Ministry of Economic Affairs Joined

the Ministry of Economy, Trade and Industry in


2009.


After working at the Nagasaki Bureau, International Affairs Department, Singapore Branch, etc.



Yuka Nonaka ,

Reporter , Ministry of Economy, Trade and Industry


Joined in 2010


After working at Matsue Bureau, Hiroshima Bureau, and Metropolitan Area Bureau, he is currently


in charge of the Ministry of Economy, Trade and Industry.

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