The State Council issued t the Opinions on Speeding up Implementation of Free Trade Zone Strategy (hereinafter referred to as the Opinions) on December 17. To help the public better understand the Opinions, the official of the Department of International Trade and Economic Affairs of the Ministry of Commerce interpreted the Opinions in terms of its background and main contents a few days ago.

1. What are the background and significance of the Opinions?

Speeding up the implementation of FTZ strategy is an important content of China’s new round of opening up. The 18th Party Congress proposed to accelerate the implementation of the FTZ strategy. The 3rdand the 5th Plenary Session of the 18th Central Committee of the CPC further required that we accelerate the implementation of the FTZ strategy on the basis of the surrounding countries and build a high-level FTZ network facing the whole world. At present, the international FTZs are increasing, with the covered issues broadening rapidly and liberalization level improving obviously. Chinese economy has entered into a new normal. The development of foreign trade witnessed both opportunities and challenges. “Introducing in” and “going out” are facing new development trends. Speeding up the implementation of the FTZ strategy adapts to the objective requirements of the new trends of economic globalization. It is also the inevitable choice of comprehensively deepening reform and building the new mechanism of open economy. Against the above background, the State Council issued the Opinions, which is the first strategic and comprehensive document since China launched the construction of FTZs. The Opinions made the “top-level design” and put forward specific requirements for China’s construction of FTZs.

2. How is China’s construction of FTZs going now?

Up to now, China has signed 14 Free Trade Agreements, 12 of which have been implemented, covering 22 countries and regions. China’s FTA partners spread over Asia, Latin America, Oceania and Europe. These Free Trade Agreements include the FTAs with ASEAN, Singapore, Pakistan, New Zealand, Chile, Peru, Costa Rica, Iceland, Switzerland, ROK, Australia, the Closer Economic Partnership Arrangement (CEPA) with Hong Kong and Macao, and the Economic Cooperation Framework Agreement (ECFA) with Taiwan.

Besides, China is promoting several FTA negotiations, including the Regional Comprehensive Economic Partnership (RCEP), China- Gulf Cooperation Council FTA, China-Norway FTA, China-Japan-ROK FTA, China-Sri Lanka FTA and China-Maldives FTA. In addition, China is also bolstering the upgrading negotiation of China-Singapore FTA, the second stage negotiation of China-Pakistan FTA and the follow-up negotiation of ECFA.

3. What are the guiding thoughts of accelerating the implementation of the FTA strategy?

The Opinions put forward the guiding thoughts of speeding up the implementation of the FTA strategy. We should comprehensively implement the spirits of the 18th Party Congress, and the Third, Fourth and Fifth Plenary Session of the 18th Central Committee of the CPC. We should sincerely implement the arrangement of the Central Party Committee and the State Council. We should also stick to the decisive role of the market in resource allocation according to the requirements of the “Four Comprehensives”, and give better play to the role of the government. We should take both domestic and overseas market into consideration, and comprehensively use the two resources. We should promote the combination of the construction of “Belt and Road” and the national foreign strategies. We should grasp the initiative of opening up and safeguard our national security, and gradually construct a high standard Free Trade Zone network which is based on the surrounding countries, influences the “Belt and Road” countries and faces the world.

4. What principles we should adhere to when speeding up the implementation of the FTZ strategy?

The Opinions proposed four principles for accelerating the implementation of the FTZ strategy. Firstly, expand the opening up and deepen the reform. Enhance the level and quality of opening up through FTZs, deeply participate in international rule-making, broaden new space for open economy, promote the comprehensive deepening of reform and better serve the domestic development. Secondly, take part in comprehensively and break -through in key issues. We should comprehensively participate in various regional trade arrangements and cooperation including FTA, and accelerate the construction of Free Trade Zones with surrounding countries, countries along “Belt and Road”, key countries and regions of capacity cooperation and regional economic groups. Thirdly, seek mutual benefit and win-win result, and make efforts for common development. Guide the implementation of the FTZ strategy with the correct idea of moral and profit, seek the integrating points of interests and the common points of cooperation, and promote the common development between China and other countries and regions. Fourthly, make scientific evaluation to control risks. We should make efforts to eliminate the risks in the construction of FTZs. At the same time, we should also enhance the government’s supervision ability in opening up, establish and optimize laws and regulations on safety review, anti-monopoly, simultaneous and afterwards supervision to ensure the national security.

V. What’s the goal of accelerating the implementation of free trade zone strategy?

The Opinion has made clear the short-term, medium-term, and long-term goals of accelerating the implementation of free trade zone strategy. The short-term goal is to step up the present FTA negotiations so as to gradually improve the liberalization level of the present free trade zones when conditions are mature. In addition, this goal is to make active efforts to establish free trade zones with most neighboring countries and regions and to make China’s trade value with FTA partners reach or even exceed that of most developed countries and emerging economies. The medium-term and long-term goal is to establish global free trade zones networks, including the neighboring countries and regions, covering the countries along the “belt and road” and reaching the important countries in five continents, and realizing the liberalization and facilitation for most of China’s foreign trade and two-way investment.

VI. What kind of layout the free trade zone construction will come into being in the future?

The Opinion offers plans on China’s FTA layout construction on three levels: the neighboring countries, the countries along belt and road, and the globe. Firstly, accelerate the free trade zones with neighboring countries. Efforts will be made to establish free trade zones with all neighboring countries and regions, deepen trade and economic relations constantly and build a great neighboring market with win-win cooperation. Secondly, step up free trade zones with countries along the “belt and road”. Efforts will be made to combine the neighboring FTA construction with international capacity cooperation promotion, negotiate on establishing free trade zones with the countries along the belt and road, form a great market of “belt and road”, make it a road of smooth traffic, a road for trade and commerce, and a open road. Thirdly, gradually form a global network of free trade zones. Efforts will be made to establish the free trade zones with most of the emerging economies, developing countries, main regional economic blocs and some developed countries, and build a great market of BRICS, emerging economies and developing countries, etc.

VII. What specific measures China will take to accelerate free trade zones of higher levels?

Measures in eight aspects will be taken to accelerate the construction of high level free trade zones.

1.Improve the opening level of trade in goods. We’ll jointly cut tariff and non-tariff barriers with our free trade partners, open markets for trade in goods, and realize mutually beneficial results.

2. Expand the opening-up of service sector. Efforts will be made to promote the opening in finance, education, culture, and medical care areas. Restrictions on foreign investment in nursery and elderly service sector, architecture design, accountant and audit, commercial logistics and e-commerce areas will be lifted. And a negotiation model with a negative list will be promoted gradually on the basis of the consensus reached by all of our free trading partners.

3. Relax investment access. Great efforts will be made to promote investment market opening and foreign capital management system reform, further optimize foreign investment environment, and genuinely improve the two-way investment access. Pilots of the capital account convertibility of renminbi will be steadily promoted to strengthen the currency cooperation with our free trade partners and enhance trade and investment facilitation.

4.Step up negotiations on rules. We will actively engage in topics of rules which meet the Chinese needs for development during the FTA negotiations. Negotiations on topics concerning IPR protection, environmental protection, e-commerce, competition policy and governmental procurement will be made referring to international rules and development tendency, in line with China’s development level and management ability.

5. Upgrade trade facilitation level. The implementation management of place of origin will be strengthened and efforts will be made to carry out the exporters’ self-declaration system of origin country with approval in wider range. Reforms on Customs supervision, inspection and quarantine management will be made and cooperation in customs and inspection areas will be strengthened to realize the “single window” gradually in international trade.

6.Enhance mechanism cooperation. Efforts will be made to strengthen the information exchanges with our free trade partners on their own supervision system, promote suitable integration in supervision system, procedure, method and standard, reduce trade cost and improve trade efficiency.

7. To facilitate the movement of natural persons. More favorable conditions will be applied to the border exit and entry of the Chinese personnel of overseas investment.

8.Strengthen economic and technological cooperation. Topics for economic and technological cooperation concerning industrial cooperation, development cooperation, and global value chain will be incorporated to enhance China’s pragmatic cooperation with free trade partners.

VIII What kinds of safeguard system and mechanism will China implement to accelerate free trade zone strategy?

The Opinion has put forth specific requirements for perfecting the safeguard system of free trade zone strategies and improving relevant supportive mechanism.

On perfecting safeguard system. Firstly, continue to strengthen the pilot free trade zones. Free Trade Zones like China (Shanghai) Pilot Free Trade Zone will have an early and pilot implementation, explore the best opening model and provide the practical basis for international negotiations. Secondly, perfect laws and regulations concerning foreign investment. Pre-access national treatment with a negative list will be carried out to maintain the steady, transparent and predictable foreign investment policies. Thirdly, improve basis system of regulation in process and afterwards and strengthen the process supervision and follow-up management after “easing” the major market players. Fourthly, continue to do trade remedy work well, conduct trade remedy investigation according to laws and safeguard the legitimate rights of domestic industries and enterprises. Fifthly, study trade adjustment and assistance mechanism to provide assistance for industries, enterprises and people who suffer from tariff reduction on the basis of reducing policy distortion, regulating industrial support policies, improve its competitiveness and promote industrial adjustment.

On improving supportive mechanism. Firstly, perfect the third party evaluation system of free trade zone, and make analysis of advantages and disadvantages of the Free Trade Zone Negotiations. Have risk assessment through the third party institutions. Secondly, strengthen the implementation of free trade agreements that have come into force, improve the use ratio of agreements and make full use of preferential measures. Thirdly, increase talents support to the free trade zones construction, and gradually build a talent team with good quality, great vision, and familiar knowledge of business and foreign trade rules, good language skill and excellent negotiation ability.