China on Tuesday announced a long list of tariff cuts on imports from South Korea, India, Bangladesh, Laos and Sri Lanka that will take effect on July 1, amid an ongoing trade skirmish with the United States.
The cuts are part of China’s commitments under the Asia-Pacific Trade Agreement signed by the members of a small regional trade bloc that China joined in 2001, before its entry to the World Trade Organisation. The six members agreed to the reduced tariffs in 2016 after a decade of negotiations.
Beijing’s decision to put the agreement into effect next week – five days before US President Donald Trump will impose 25 per cent tariffs on US$34 billion worth of imports from China – comes as the Chinese government tries to rally support to fight “trade protectionism”.
Under the Asia-Pacific deal, member countries including China agreed to slash import duties on more than 10,000 items by a third on average, according to official documents.
China’s cabinet decided to remove tariffs on soybeans from India, South Korea, Bangladesh, Laos and Sri Lanka that were previously 3 per cent, according to a list published by the finance ministry and customs. Soybean meal, which had been subject to 5 per cent tariffs, will also be exempted.
Tariff cuts also apply to chemicals, agricultural products, medical supplies, clothing, steel, non-ferrous metals and liquefied petroleum gas – duties on LPG, for example, will be cut from 3 to 2.1 per cent.
The move is a sharp contrast to Beijing’s tit-for-tat retaliation against Washington’s punitive duties – it will slap 25 per cent tariffs on US$34 billion of American goods, from soybeans to gas, that will kick in on the same day, July 6.
But the move will have little real impact in terms of helping China’s negotiations with the United States. China is the world’s biggest soybean importer, so diversifying its sources would reduce its reliance on America for the grain. But removing tariffs on soybeans from the five Asian countries may not make much difference – none of them have exported the grain to China in the past year.
India, a net exporter of soybeans, exported only 269,275 tonnes of soybeans last year, according to the data of US Department of Agriculture. That is equivalent to less than 1 per cent of China’s soybean imports from the US last year.
Other products on the list include live eels, which will be subject to 6.7 per cent tariffs instead of 10 per cent, textile raw materials, down to 6.5 per cent from 10 per cent, and hot-rolled stainless steel plates, cut to 9.3 per cent from 10 per cent.
The pact was the first agreement to reduce tariffs that Beijing signed, but its significance for the country has weakened over the years as its members are not major trading partners with China.
Free-trade deals that overlap with the Asia-Pacific agreement also make it less important for China, for example with South Korea, as well as with Laos under the China-Asean free-trade pact.