If you’ve got business in China, there’s far more to follow than tariffs.
In the ongoing trade war between the United States and China, tariffs make headlines for good reason: Their impacts tend to be both public and immediate. For importers and exporters operating on razor-thin margins, lucrative markets can be lost overnight.
What those stories don’t often cover, however, concerns developments taking place in China of equal importance — and more lasting significance.
China’s government is engaged in a sweeping reform of the nation’s trade regulations and procedures. Importers and exporters must become aware of the changes, if they are to ensure an uninterrupted flow of goods to and from this crucial market.
The latest set of reforms stems from recommendations by the State Council, adopted by the National People’s Congress of China in March of 2018. They call for extensive reorganization of multiple government agencies, with a special emphasis on those overseeing trade. The intention is to streamline regulatory procedures and boost the Chinese economy, which has recently seen signs of a slowdown.
Among the most dramatic actions taken by the government is the integration of two major agencies: China Customs and China and Inspection Quarantine (CIQ). With the merger, Customs becomes responsible for measures controlling the admittance of foreign goods, as well as the taxation of imports and exports. In the U.S., that would be akin to combining Customs and Border Protection with the Food and Drug Administration and agencies overseeing consumer product safety.
In all, the China General Administration of Customs (GAC) announced the revision of 71 regulations, and abolition of two more, concerning customs activities. Here are a few of the additional changes enacted in the wake of that action:
- A new “Single Window” for the submission of declarations and documents for the physical inspection of goods. Similar to reforms adopted by customs agencies in the U.S. and Europe, the provision eliminates the need for redundant filings with multiple regulatory agencies.
- A 13-digit Commodity Code, replacing the 10-digit version, in conformance with the global Harmonized System (HS) for product classification. The first eight digits are keyed to China’s import and export tariff system; digits 9 and 10 are Customs supervisory additional numbers, and 11 through 13 relate to inspection and quarantine requirements.
- More than 20 additional parameters for clarification and standardization of customs and quarantine declaration requirements.
- Revamped supervision of processing trade down to part number level, with expanded Handbook reconciliation options. The action stems from new rules for trade processing under the system known as Golden Gate II, which incorporates much more rigorous compliance requirements for companies processing goods in and outside of bonded zones.
- Changes in China’s Advanced Certification Enterprises program. ACE is similar to the Authorized Economic Operator (AEO) programs in place in other countries. It speeds up the shipment of goods through ports by certified companies, which can take advantage of up to 49 facilitation measures provided by China Customs and other government departments. ACE-approved enterprises experience a 50-percent reduction in average inspection rates over other shippers.
Many of these government actions are expected to cut down on red tape and lighten the procedural burden on companies shipping goods into China. At the same time, they require traders to enact major changes in their documentation and submission practices. Even with the reforms in place, China trade will continue to be more complex than that of most countries. The price for ignorance of the rules is steep.
It’s crucial, therefore, that traders acquire the expertise needed to comply with the new procedures. With the help of a skilled third party, they can implement a China trade-management technology solution that effectively creates “a window through the wall.”
The benefits of a comprehensive Global Trade Management (GTM) platform are extensive: lower costs, reduced risk, improved supply-chain efficiencies, and access to timely regulatory updates. China will continue to make changes that impact its foreign trade regime, and traders must stay on top of developments.
Gary Barraco is director of global product marketing for Amber Road.