SMM News: the temperature in May is rising, but the Sino-US trade negotiations have reversed the previous positive trend. With the US raising tax rates and starting the tax increase procedure for surplus products, Sino-US economic and trade negotiations have changed, and Sino-US trade frictions have once again come to the front desk.
It is worth noting that among the counter-measures taken by the Chinese side, the exclusion of goods subject to tariffs on the United States has been launched for the first time.
On May 13, 2019, the Office of the United States Trade Representative (USTR) issued an announcement that it intends to start the process of imposing tariffs on about $300 billion worth of Chinese products exported to the United States. The move comes just days after the United States announced an increase in tariffs on $200 billion worth of products from China.
A number of experts interviewed said that the US tariff escalation measures will have an impact on China and the United States, as well as the world economy and trade, and bring uncertainty to global trade growth and future economic growth prospects. The fundamentals of China's economy, due to the large size of its own economy and the implementation of a series of tax cuts, fees and charges, decentralization and other active market measures, the long-term good situation has remained stable.
Sino-US friction escalates again
, (USTR) announced on May 13, 2019, that it would impose tariffs of up to 25 per cent on Chinese exports of about $300 billion to the US. The USTR intends to impose tariffs to solicit public opinion and will hold public hearings.
In this regard, Gao Feng, spokesman for China's Ministry of Commerce, said that the US practice of hegemonism and extreme pressure violates multilateral trade rules, and China firmly opposes this. If the US side insists on going its own way, China will have to make the necessary response. The Chinese side has always believed that the continuous collection of tariffs is not conducive to the settlement of economic and trade problems. China has never been afraid of any pressure and has the confidence, determination and ability to deal with any risks and challenges.
A few days ago, the USTR announced that tariffs on $200 billion of Chinese imports to the United States had been raised from 10 per cent to 25 per cent. Earlier, the United States imposed tariffs of 25 percent on $34 billion and $16 billion of Chinese exports to the United States on July 6 and August 23, 2018, respectively.
The products that the United States intends to impose tariffs on China involve about $300 billion in Chinese exports, including 3805 tax lines, covering almost all products except the first three rounds of products that have been subject to tariffs of $34 billion, $16 billion and $200 billion.
"if tariffs are imposed on $300 billion of products, it means that almost all Chinese exports to the United States in the future could be subject to high tariffs." Tu Xinquan, director of the China WTO Research Institute at the Capital University of Economics and Economics, said.
Ren Qing, a Beijing-based partner of Global Law firm who has attended four USTR hearings in the United States, said: "drugs, API, some medical supplies, rare earths and key mineral products are not on this list. Products that have previously been excluded by USTR in the US $34 billion list exclusion procedure (i.e. exemption from additional duties) will not be affected. "
It is worth noting that the US announcement on raising tariffs on 200 billion Chinese exports to the United States shows that for exports before May 10, Chinese goods entering the United States before June 1 are still subject to a 10 per cent tariff, and a 25 per cent tariff is not applicable.
As to whether this move means that things will take a turn for the better within this time, Gao Feng said on May 16 that this will not change the fact that the new tariff measures imposed by the United States on Chinese exports to the United States have been implemented on May 10. China has always opposed unilateral tariff measures. The increase in tariffs by the US side will only bring greater difficulties to the negotiations. We urge the US side to abolish its erroneous practices as soon as possible, avoid causing greater losses to Chinese and US businesses and consumers, and have a declining impact on the world economy.
China starts exclusion procedure for the first time
In response to the US move to upgrade its tariff measures, the Chinese side has had to take counter-measures to increase the tariff rate on some imports originated in the United States, and for the first time to launch a tariff exclusion process.
On May 13, the tariff Commission of the State Council of China decided to increase the tariff rate on some imports originating in the United States from 00:00 on June 1, 2019. The Chinese tax list is divided into four categories, with tariffs of 25%, 20%, 10% and 5% respectively for goods under different tax categories.
At the same time, the tariff Commission of the State Council of China issued the notice on the trial implementation of the exclusion of tariff goods from the United States (hereinafter referred to as the "notice"), according to the application of Chinese stakeholders, Some eligible commodities shall be excluded from the scope of levying tariffs on the United States, and exclusion measures shall be taken, such as not levying tariffs for the time being, refund of additional customs duties that meet the conditions for refund of taxes, and so on.
A person involved in the work told China Business Daily: "when we chose the counterlist before, it was impossible for us to take into account the situation of every product and enterprise. Later, we learned that the cases of some enterprises were very unique." As a result, there is this exemption mechanism. "
The announcement shows that enterprises should use facts and data to explain the following three reasons for applying for goods in order to find alternative sources of goods, and that the levying of tariffs will cause serious economic damage to the subject of the application. The introduction of tariffs has a significant negative structural impact on relevant industries (including on industry development, technological progress, employment, environmental protection, etc.) or has serious social consequences.
"our exemption mechanism does not need to hold hearings, as long as we submit materials explaining the requirements of the application." Gao Lingyun, a researcher at the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, said in an interview with the China Business Daily, "this time it is also specifically mentioned that the tariffs previously levied can also be returned to enterprises."
The "announcement" pointed out that for the goods on the exclusion list, the tariffs imposed by me for measures against the United States 301 will no longer be levied within one year from the date of implementation of the exclusion list; if the conditions for tax refund are met, the additional duties and taxes already levied shall be refunded.
Tu Xinquan believes that this is an opportunity for enterprises and a backup mechanism to minimize the impact on China and avoid dealing a heavy blow to Chinese enterprises.
"the reason for the introduction of this exemption mechanism now is that in the past we sought to crack down on the strength of the attack, but now we are pursuing accuracy. Instead of pursuing equality, we are fighting a protracted war for the sake of domestic producers and consumers. " Gao Lingyun said.
About 20% of the products imported by the United States from China are 50% dependent.
On the question of how to assess the impact of the US tariff escalation measures, the peak said that the escalation of Sino-US trade frictions will have an impact on the economies of China and the United States and the world economy, and as far as the Chinese economy is concerned, the impact is completely controllable.
Liang Ming, director of the Institute of Foreign Trade of the Research Institute of the Ministry of Commerce, told China Business Daily: "the list of US $200 billion products contains 6031 commodities, of which 100 per cent need to import a total of 67 items from China. 90% to 100% need to import 127 items from China, 80% to 90% need to import 193 items from China, 70% to 80% need to import 207items from China, and more than 50% need to import a total of 1150 items from China. "
"for products that are highly dependent on China, the United States needs to import even if tariffs are imposed. For example, 96 per cent of cooking pots need to be imported from China, with an import value of US $1 billion. 70 per cent of furniture needs to be imported from China and the value of goods is about $3.5 billion. These goods are difficult or unable to import from other substitute countries, and the price increases caused by the tariffs have to be borne by American consumers. " Liang Ming said.
Gao Lingyun believes that after China and the United States impose tariffs on each other, it means that prices will rise and mutual demand will decline. In the first four months of this year, Sino-US trade volume has fallen by more than 11 per cent from a year earlier. The volume of trade between China and the United States ranks first in the world, the volume of trade between the two countries has declined, and global trade will also be affected. In addition, global value chain production, Sino-US trade problems, other countries and regions will also spread, IMF lower the world growth rate this year, the uncertainty of future economic growth prospects has increased.
Analysts believe that the amount of tax increases is not the current key point, the focus of our work has shifted to deal with, in reducing the burden on enterprises, reducing industrial transfer and other aspects to make more preparations.
"in the second half of last year, we issued six measures to stabilize employment, finance, foreign trade, foreign investment, investment and expectations." We will further implement these six measures and solve the difficulties faced by enterprises. " Peak said.
Gao said that there is still plenty of room for China's macro policy and there are many policy tools, and we are confident and capable of dealing with any difficulties and challenges. China's economic and industrial system is complete, the market scale is huge, the toughness is strong, the swing space is big, the prospect is very bright.
As to whether the US tariff escalation measures will lead to an increase in the prices of domestic consumer goods, the peak said: "at present, the prices of domestic consumer goods are stable, we will pay close attention to the trend changes and take the necessary measures in a timely manner."
Trial measures for the exclusion of goods subject to tariffs on the United States (part)
1. Subject of application
The applicant shall be the interested party applying for the exclusion of the goods, including the enterprises in China or their trade associations (associations) engaged in the import, production or use of the relevant commodities. Trade associations are encouraged to apply on behalf of their members.
2. Scope of exclusion that may be applied for
The scope of exclusion that may be applied for is goods that have been announced to be implemented in our country and have not stopped or have not been suspended from levying tariffs.
The first batch includes "single goods with tariffs on the United States" attached to the notice of the Customs tariff Commission of the State Council on imposing tariffs on US $50 billion imported goods originating in the United States (notice of the Taxation Committee (2018) No. 5). And the notice of the tariff Commission of the State Council on imposing tariffs on imports originating in the United States of about US $16 billion (notice of the Taxation Committee (2018) No. 7), attached to the "list of goods subject to tariffs on the United States." goods.
The second batch includes Annex 1 to 4 goods attached to the notice of the tariff Commission of the State Council on imposing tariffs on some imported goods (second batch) originating in the United States (Inland Revenue Committee notice (2018) No. 6).
The above two batches do not include goods such as motor vehicles and spare parts that have ceased or have been suspended from duty.
3. Manner and time of application
The applicant shall fill in and submit the exclusion application as required through the website of the tariff Policy Research Center of the Ministry of Finance.
The first batch of goods that can be excluded will be open for application from June 3, 2019, with a deadline of July 5, 2019.
The second batch of eligible items will be open for application from September 2, 2019, with a deadline of October 18, 2019.
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