November 15,2020 -- the largest regional free trade agreement ever signed, the regional comprehensive economic partnership (RCEP) . The RCEP agreement will bring opportunities and challenges to China's import and export of copper products, promote high-quality development of the copper industry in an all-round way, accelerate the upgrading of the quality of foreign trade, and create an innovative development pattern for foreign trade, the construction of Industrial Development Community has put forward new requirements. The author combs the current situation and trade characteristics of copper industry in the member countries of RCEP, and analyzes the opportunities and challenges brought by the agreement of RCEP to the development of copper industry in China.

1.Introduction of the RCEP agreement

Overall, RCEP is a modern, comprehensive, high-quality, mutually beneficial large-scale regional free trade agreement. RCEP is by far the largest free trade zone in the world in terms of size. In 2019, RCEP's 15 member countries had a total population of 2.27 billion, GDP of US $26 trillion and total exports of US $5.2 trillion, each accounting for about 30 percent of the global total. The creation of the RCEP zone means that about one-third of the world's economies will be integrated into a large market. RCEP, which encompasses the major countries in East Asia, will inject strong impetus into regional and global economic growth.

In terms of tariff reduction, the number of zero tariff products under RCEP is over 90% , and most goods are immediately reduced to zero and reduced to zero within 10 years. This ensures that the effect of tariff reduction under RCEP will be significant within a certain period, the liberalization of trade in goods could be achieved more quickly. The overall level of liberalization of trade and investment in services is also significantly higher than the original "10 + 1" free trade agreement, including intellectual property rights, E-commerce, competition policy, government procurement and other modernization issues.

In addition, Japan, as the third largest economy in the world, is also a member of the CPTPP. The RCEP agreement is the first FTA between China and Japan, and the first FTA between Japan and South Korea. "This is the first time that China, Japan and South Korea have agreed on a mutually open market.

2.The basic situation of copper industry and trade in the member countries of the RCEP Agreement 

(1)Basis of copper industry in the member countries of the RCEP agreement

From the perspective of copper resources reserves, according to relevant statistics, the total copper resources reserves of the member countries of the RCEP agreement currently amount to 150 million tons, accounting for about 18% of the total global reserves, australia is the most rich country in the RCEP agreement, with 88.7 million tons of copper-based reserves, accounting for about 10% of the global total, followed by Indonesia, with 28 million tons of copper-based reserves, accounting for about 3% of the global total China's copper-based reserves are 26m tonnes, or about 2.9 per cent of the global total, ranking third in the RCEP agreement. In terms of mine production, in 2019, the member countries of the RCEP agreement produced 3.32 million tons of copper ore, accounting for 16.3 percent of the world's total output, of which 1.65 million tons were produced by Chinese copper mines, accounting for 8 percent of the world's total output Australia and Indonesia are also important producers of copper, accounting for 4.5 per cent and 1.7 per cent of global production, respectively.

In terms of smelting production, eight of the member countries of the RCEP agreement have refined copper production, with a total output of 13.089 million tons, accounting for 75 percent of the total global output, making it the most important production area in the world. China produced 9.784 million tons, about 47 percent of the world's total, followed by Japan, which produced 1.5 million tons, or 7.3 percent of the world's total.

From the processing of copper, RCEP free trade zone is also the world's most important copper processing areas, copper processing output accounted for about 60% of the global total output. China accounts for 46 per cent of global copper production, ASEAN for 5 per cent, Japan for 4.5 per cent and South Korea for 3.2 per cent. It is noteworthy that Japan has a dominant position in the world in the field of high-end copper processing and copper alloy materials, and Sumitomo Electric, Sumitomo Metal, Mitsubishi Composite Materials, Furukawa Electric, Hitachi metal, Mitsui Metal and other world-renowned Non-ferrous metal processing enterprises.

From the aspect of consumption, RCEP free trade zone is the largest, fastest growing and most potential free trade zone in the world. In 2019, the RCEP countries together consumed 15.142 million tons of refined copper, accounting for 63.4 percent of global copper consumption, up nearly 30 percentage points from 2001. China's consumption of refined copper in 2019 was 12.3 million tons, a compound growth rate of 9.6 percent over the past 20 years, and the ASEAN countries, despite their low consumption base of 1.23 million tons, are the fastest growing regions outside China, in the past 20 years, the compound growth rate has reached 5.1% .

Overall, RCEP FTZ brings together the world's important copper smelting, processing and high-end materials manufacturing countries, but also the world's important copper consumer market. It is of great significance for China's copper industry to construct a new development pattern of domestic and international double-circulation mutual promotion.

(2) According to the import and export statistics in 2020, the copper products trade between RCEP countries and China constitutes a very close and interdependent trade relationship. In terms of trade volume, from January to December 2020, China's imports and exports of "copper and its products" totaled us $17.186 billion, accounting for 31.4 percent of China's total trade in "copper and its products" . The ASEAN countries' import and export trade volume reached 8.11 billion US dollars, accounting for 14.8 percent of the total trade volume of China's "copper and its products" , and the import and export trade volume between China and Japan reached 4.46 billion US dollars, it accounts for 8 per cent of China's total trade in "copper and its products" ;

From the trade variety, the trade of copper products between China and other members of RCEP is mainly concentrated in the downstream copper processing products. According to customs data, from January to November, China's import and export trade in copper processed products amounted to us $10.195 billion, of which us $5.008 billion was exported and imported from the countries of the RCEP agreement, it accounted for 49.1 percent of the total trade volume of copper processed products. In terms of exports, China's total exports of copper-processed products amounted to us $4.392 billion from January to November, of which us $1.985 billion was exported to the member countries of the RCEP agreement, accounting for 45.19 percent of the total trade in copper-processed products.

3.Opportunities and challenges

Under the impact of the new coronavirus epidemic, the global economic development and trade have been greatly impacted. The signing of the RCEP agreement will help promote economic and trade exchanges among countries in the asia-pacific region, it will open up a new pattern for China to promote free trade and build regional economic integration. The signing and implementation of "RCEP agreement" will bring greater development opportunities for Chinese copper enterprises, and at the same time, they will face many challenges.

(1) development opportunities

1. 1Bring more market space to Chinese copper industry

The signing of the RCEP agreement is reflected not only in the greater reduction of tariff levels, but also in the reduction of Non-tariff barriers to trade, especially the substantial increase in trade liberalization. From the perspective of promoting the development of the copper market, the signing of RCEP has an obvious positive impact on the power equipment, computer and electronic products and even automobile industries in ASEAN countries, for China, it will promote the export growth of copper processed products and related products. More importantly, the signing of the RCEP agreement marks the establishment of free trade relations between China and Japan. This is not only the first time that China has signed a free trade agreement with the top 10 economies in the world, it is also the only free trade agreement that includes China, Japan and South Korea under the same framework. After the entry into force of the RCEP agreement, China's exports of copper or related products to Japan may increase substantially with the reduction of export tax rates. This will help Chinese copper enterprises to explore new markets, which is undoubtedly a rare opportunity.

2.2 It will help to move the industrial chain to the middle and upper end

China's copper processing industry as a whole is still in the middle and low end of the industrial chain. Due to the cost, access threshold and other reasons, the market share of high-end processing industry has not been very high. RCEP members include both developing countries and advanced economies such as Japan, Australia and New Zealand, which will make it easier for companies to participate in the International Division of Labor at lower cost, it is helpful to push the industrial chain to the middle and high end, further open the choke point and break point of the industrial chain, and promote the high-quality development of China's copper processing industry.

3. 3Significantly enhance the level of copper industry integration in East Asia.

The completion of the RCEP FTA is a new milestone in East Asia's regional economic integration. It will significantly improve the overall business environment in the region and further enhance the trade creation effect brought about by the FTA. RCEP will facilitate the integration of regional industrial chains, supply chains and value chains. RCEP will promote the free flow of regional economic factors, strengthen the division of labor among members, promote the expansion and upgrading of regional consumer markets, and promote the further development of regional industrial chain supply chain. In addition, the greatest achievement in the area of trade in goods under RCEP is the establishment of rules of accumulation of origin in the region. Most of the world's free trade agreements are bilateral rules of origin, in which the entry of goods from country a into another free trade partner country B requires meeting the value added or production requirements in country a, which is identified as goods of origin in Country A, to receive preferential tariffs from country B. Unlike RCEP, where goods move from country A to another free-trade partner country B, the required value-added standard or production requirements can be met with the intermediate products of several parties to the agreement, so that the threshold for country a to enjoy zero tariffs in country B can be significantly lowered. This will not only lower the threshold of origin, while greatly facilitating the flow of processed products within the free trade zone, promoting the integration of the copper industry in the region.

(2) challenges

The related tariff reduction and Non-tariff barriers to trade measures proposed in the RCEP agreement not only help Chinese enterprises to open up the international market, but also open the door for enterprises from member countries to enter the Chinese market. Although in fact, apart from Japan, China has signed regional or bilateral free trade agreements with the relevant countries under the RCEP, some tariff reduction agreements have been reached (such as the china-asean Free Trade Area, the china-south Korea Free Trade Area, the china-new Zealand free trade area, and the china-australia Free Trade Area) , but compared with previous free trade agreements, "RCEP agreement" covers more areas of economic and trade arrangements, for the signatory countries means greater opportunities and challenges. As mentioned earlier, the RCEP agreement between the member countries and China's copper products is very close in import and export trade, and there is competition in some processing areas. Therefore, China's copper processing enterprises will also face import products, or with the region's fierce competition for the same products, especially the RCEP agreement among the member countries like Japan, such as traditional copper processing power. Therefore, while seeing the opportunity, Chinese copper enterprises should make up the shortage as soon as possible, improve the market competitiveness, analyze the import trend and change of various products in advance, control the quality strictly and reduce the cost. In addition, the Non-tariff barriers to trade may become an important means for countries to protect their domestic industries. After the entry into force of the RCEP agreement, with the substantial tariff reduction of member countries, countries may increase anti-dumping, anti-subsidy or safeguard-based trade relief measures for the purpose of protecting domestic industries. The high starting point and long time span of Taxation under such Non-tariff barriers to trade will also bring market challenges to enterprises.

4.Conclusion

There is competition in cooperation and challenge in opportunity. As we all know, China's copper industry chain is relatively complete, high, medium and low-end products relatively complete, with the region between other countries both complementary, but also a certain degree of competition. Therefore, the copper industry must adhere to the implementation of the new concept of development, closely around the construction of a new development pattern, take supply-side structural reform as the main line, and deepen scientific and technological innovation, institutional innovation, business form and model innovation, we will accelerate the improvement of the quality of foreign trade. For the enterprise, to do the following aspects of work. Firstly, copper enterprises should study the relevant tariff concession arrangement in the light of their own import and export products, and secondly, they should plan the optimization of supply chain in advance Third, it is suggested that enterprises should carry out innovation-driven development strategy, strengthen weak points, make up weak points, activate energy and enhance competitiveness. 

Source: Non-ferrous metal