In just six months since the implementation of the Regional Comprehensive Economic Partnership (RCEP), China's foreign trade has been flourishing, with ceramic enterprises reaping the benefits. The Guangzhou Customs issued 1,557 preferential certificates of origin under the RCEP, amounting to a total value of 220 million yuan for ceramic exports from January to May. This places Guangzhou as the top district in terms of RCEP certifications and trade value for various ceramic commodities.

Out of the 15 signatory countries of RCEP, which include China, Japan, South Korea, Australia, New Zealand, and the ten ASEAN nations (Vietnam, Malaysia, Thailand, Cambodia, Myanmar, Laos, Brunei, etc.), 13 member countries have officially ratified the agreement. Only Indonesia and the Philippines are yet to implement it.

It is safe to say that the RCEP free trade zone is significantly impacting one-third of the global economy and nearly 70% of the ceramic tile market worldwide. In 2019, the total population of the RCEP member countries reached 2.27 billion, with a combined GDP of 26 trillion US dollars and an export value of 5.2 trillion US dollars, accounting for approximately 30% of the global total. According to the "World Ceramic Tile Production and Consumption Report," Asia produced 11.905 billion square meters of ceramic tiles in 2020, representing 74% of global production. Moreover, Asia consumed 7.995 billion square meters of ceramic tiles in 2019, accounting for 64.6% of global consumption.

Photo source: People's Vision 

Tariff Advantages and Market Expansion

Under the RCEP agreement, one of the key highlights is the achievement of zero tariffs for over 90% of intra-regional trade in goods. Tariff reductions will take place immediately or within 10, 20, or 25 years to eventually reach zero.

Ceramic tile imports from China will experience significant tariff reductions, especially from Japan and South Korea.

Japan, establishing a free trade agreement with China for the first time, has committed to gradually lower tariffs on ceramic tile imports. Under RCEP implementation, tariffs for HS codes 690710.000 and 690790.000 will decrease from the original 1.7% to 1.5% in the first year and continue to decrease annually until reaching zero tariffs by the eleventh year. For HS codes 690810.000 and 690890.000, tariffs will decrease from 2.1% in the first year to 1.9% and eventually reach zero tariffs by the eleventh year.

This development has led to a notable increase in ceramic tile exports from China to Japan.

With the tariff advantages provided by RCEP, the ceramic industry's transfer may potentially accelerate as manufacturers seek to capitalize on the new trade opportunities.

Challenges and Considerations in the RCEP Ceramic Trade

However, challenges may arise due to varying tax rates for certain ceramic products. While South Korea reduced tariffs for HS code 6908.90.10.00 from 8.0% to 4.0%, Vietnam maintains a 20% tariff for HS code 6907.90.20.00 for the first 19 years, which will decrease to 10% from the 20th to 25th year. Australia and New Zealand apply the same tariff rates for all RCEP signatories. Australia imposes zero tariffs on HS codes 6907.10.00, 6907.90.00, 6908.10.00, and 6908.90.00. New Zealand applies zero tariffs on ceramic mosaics (HS codes 6907.10.01 and 6908.10.01) and gradually reduces tariffs for HS codes 6907.90.00, 6908.90.00, and 6908.10.09 from 5.0% in the first year to 4.5% and 4.7%, eventually reaching zero tariffs by the tenth and fifteenth years.

While the "China-ASEAN Comprehensive Economic Cooperation Framework Agreement" already achieved zero tariffs for most ceramic tile products between China and six ASEAN countries (Thailand, Malaysia, Myanmar, Cambodia, Brunei, and Laos), under the RCEP agreement, certain ceramic tile products still face higher tariff levels due to the uniform tax rates adopted by these six ASEAN countries for all RCEP signatories.

According to data from the China Building Sanitary Ceramics Association, in 2021, China's ceramic tile exports reached 595 million square meters. Among the top 10 export destinations, eight are RCEP member countries, including the Philippines, Indonesia, South Korea, Thailand, Cambodia, Australia, Malaysia, and Vietnam. RCEP adopts efficient management methods such as pre-determination, pre-arrival processing, and information technology applications to simplify customs clearance procedures and strive to release goods within 48 hours after their arrival.