The latest monthly round-up of updates to key free trade agreements and trade preference programmes involving the EU, US and Japan covers developments in November 2019.
US Section 301 Actions against China updates
- The Office of the US Trade Representative (USTR) is accepting exclusion requests for Tranche 4A products until 31 January 2020. This list includes most apparel items (HS chapters 61 and 62) imported into the US from China.
- On 7 November and 27 November 2019, USTR announced additional product exclusions for the Section 301 tariff action against imports from China (Tranche 3). The exclusions will apply retroactively to 24 September 2018, and will remain in effect until 7 August 2020. Two textile products feature: 5007.20.0065 (silk fabric) and 5402.20.3030 (High tenacity single yarn of polyester multifilament).
EU-Singapore Free Trade Agreement
The European Council approved the EU-Singapore Free Trade Agreement on 8 November 2019, which will officially take effect on 21 November 2019. The FTA will further cut import tariffs on both sides, including removing tariffs on nearly 80% of Singapore exports to the EU.
Through a 5-year staging period, the agreement will eventually offer duty-free market access for all apparel exports from Singapore to the EU as long as the rules of origin requirements are met. In general, this agreement adopts the “fabric-forward” rules of origin, which means that fibres and yarns may be produced anywhere, but each component starting with the fabric used to make the apparel garments must be formed within the free trade area.
Singapore is a minor apparel supplier for the EU. In 2018, the EU imported US$16.1m apparel (HS Chapters 61 and 62) from Singapore – less than 1% of EU’s total apparel imports that year.
Cambodia’s Everything But Arms (EBA) status
On 12 November 2019, the European Union (EU) sent the government of Cambodia a preliminary report outlining the findings of its investigation into Cambodia’s human rights record. The investigation was triggered in February 2019 under the procedure for a possible temporary withdrawal of Everything But Arms (EBA) trade preferences.
The details of the preliminary report are not disclosed to the public. However, Cambodia now has one month to react to this preliminary report. The Commission will then finalise the report and take a decision in February 2020 on whether or not to temporarily withdraw Cambodia’s tariff preferences. Any withdrawal would come into effect after a further six-month period.
Cambodia is the second-largest beneficiary of EBA trade preferences, accounting for over 18% of all imports coming into the EU market under the EBA scheme in 2018. Textiles and apparel accounted for around three-quarters of EU imports from Cambodia, almost all of which entered under the EBA scheme in 2018.
Regional Comprehensive Economic Partnership (RCEP)
The 3rd Regional Comprehensive Economic Partnership (RCEP) Summit was held in Bangkok on 4 November 2019, attended by leaders from 16 member countries of the agreement. Several developments were announced after the summit:
- India announced it would withdraw from the negotiations due to concerns about the potential flood of imports from China as a result of the RCEP. However, India also indicated it might consider rejoining.
- The 15 RCEP members announced the conclusion of all 20 chapters of the Agreement, and essentially all market access commitments on goods, services and investment. However, details of the draft text are not yet available to the public.
- The 15 RCEP members aim to sign the agreement in 2020.
Japan-China-Republic of Korea Free Trade Agreement
The sixteenth round of negotiations on a Free Trade Agreement (FTA) between Japan, China and the Republic of Korea (ROK) was held in Seoul from 27-29 November 2019. At this round, the three parties held concrete discussions on market access and rules (such as electronic commerce and intellectual property). The three countries also confirmed they will continue negotiations toward the conclusion of the Regional Comprehensive and Economic Partnership (RCEP) in 2020, another mega-free trade agreement under negotiation in the Asian region. Japan, China, and South Korea are all members of RCEP too.