On October 20, 2004, EU Trade Commissioner Lamy announced its proposed preferential tax system, which is expected to take effect on January 1, 2006. Although Lamy said that the range of products covered by the new plan will be expanded compared with the current one, the new revision will have a negative impact on certain products of Chinese traders.
Overall, the new system will be simplified, providing a 3.5% reduction in tariffs for sensitive products compared to normal tariffs and reducing tariffs on non-sensitive products to zero. The least developed countries will receive the benefits of the “all products except weapons†provisions; and the additional provisions of the universal preferential tax system allow countries that have signed major world conventions to receive preferential treatment. In order to comply with the WTO's "tariff reduction" principle, the EU will provide preferential tax benefits for nearly 300 new products, including fishery and agricultural products. In addition, the merger source rules will be more flexible to facilitate regional integration in beneficiary countries.
On October 14, Lamy expressed his views on which countries should enjoy preferential treatment in the European Parliament, saying that the new system will focus on countries with the weakest strengths than those that have exerted influence in the international market. For example, China has already had a major impact on the textile industry. Therefore, it is less valued. However, he did not clearly state whether textiles are the only ones that would be excluded from the popular preferential tax system.
Although the new system has not been officially announced, it is understood that when the new system comes into effect on January 1, 2006, textiles and clothing exported from the Mainland to the EU will lose relevant trade preferences. According to Lamy, Chinese traders will pay a 12% tariff on shirts exported to the EU, instead of 9% under the universal preferential tax system. Under the universal preferential tax system, China's exports to the EU account for nearly 30% of the market share, far exceeding the standards under the new system.
Now, the popular preferential tax system will eliminate many types of Chinese-originated products that have enjoyed preferential treatment in the past. Lamy suggested that the new system should be based on the competitiveness of the products of the exporting countries and take the share of the products in the EU market as an important criterion.
According to the new system, when a country's products exported to the EU account for more than 15% of the EU's total imports, such products will be eliminated from the popular preferential tax concessions, while textiles and clothing standards are lower, set at 12.5%. The European Commission will study whether other products exceed the standard, and if so, will be canceled.
A series of Chinese-origin products that have enjoyed preferential tax benefits in the past will now be cancelled, as the standards adopted by the European Commission in the new and old systems show that these products are highly competitive. Details are as follows:
China Source Products List Consolidated under the current Generalized Preferential Tax System Consolidated No. Item Product Chapter 4 Animal-derived Foods Chapters 39 and 40 Plastics and Rubber Chapters 47 to 49 Papers Chapters 84 and 85 Electric Products and Consumer Electronics Chapters 90 to 92, glasses and clocks have been cancelled before the current universal ex-gratia tax system continues to be excluded from the list of Chinese source products, the name of the products, Chapter 5, Chapter 4, Animal Products, Chapter 12, Seeds, fruits and plants Chapters 28-38 (except Chapter 31) Chemicals (except fertilizers)
Chapters 42 and 43 Leather and fur products Chapters 61 and 63 Clothing Chapters 64 to 67 Footwear Chapters 68 to 70 Glass and ceramics Chapters 72 to 73 (only some products) Iron or steel and its products No. 74 to 83 Chapters of metal and its products Chapter 94 Furniture, bedding, mattresses, mattresses, upholstery and similar packing arrangements, lamps and lighting fixtures, illuminated signs, illuminated brand names, pre-assembled equipment Chapter 95 Toys, games and sports Supplies and their components and accessories Chapter 96 Other products The products that will be cancelled according to the current universal preferential tax system will come into effect on January 1, 2005. The new system will take effect on January 1, 2006, and the EU Council will The implementation of the implementation before the start of the next year will allow traders to have about 10 months to familiarize themselves with the new regulations.
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