Research On The Influence Of China FTA Rules Of Origin On China's Status In Global Value Chains

With the development of the regional economic integration,China has signed 19 Free Trade Agreements(FTAs)with 26 countries and regions,and has made great achievements in bilateral and plurilateral trade liberalization and investment liberalization.Since the signing of the “Regional Comprehensive Economic Partnership”(RCEP)which is the world's largest free trade Area,China's FTAs strategy has entered in a new stage of development.As an important tool for the realization of preferential functions in FTAs,the functions of the rules of origin(Rules of Origin,Ro O)have gradually evolved from a neutral customs technician to a discriminatory trade strategy tools,which have a significant impact on trade flows and investment flows in FTAs.With the refinement of the international division of labor to the division of processes,multinational companies(MNEs)continue to closely link their subsidiaries and nonintegrated suppliers that are scattered around the world through horizontal(vertical)investment flows and trade flows of inter-enterprises(intra-enterprises),which formed the Global value chains(GVCs)division.The free trade area rules of origin(FTA Ro O)not only prevent the “free-ride” phenomenon of non-member countries,but also affects the trade flow and investment flow within(outside)the region through the MNEs crossborder production strategies such as purchasing intermediates,FDI inflow,and offshore outsourcing,and thus affect the status of a country in the GVCs.Therefore,studying on the influence of the FTA Ro O on the GVC status has great theoretical value and practical significance.This dissertation uses several theories such as the economic effects of FTAs Ro O,the MNEs cross-border production and GVCs theory to analyse the mechanism of FTA Ro O on China's GVC status.And then give an empirical testing with the amendatory FTAs Ro O restrictiveness index measurement system and the trade in value-added accounting system.The basic content and main conclusions of this dissertation are summarised as follows:First,this dissertation explains the development process and structural distribution of China's FTAs Ro Os,and further comparatively analyses the development characteristics of the China's FTAs Ro O with Pan-European Ro O and the NAFTA Ro O.It is then concluded that China's FTAs Ro O have the following development characteristics:(1)the main criterion changed from the regional value content(RVC)to the change of tax classification(CT).(2)the formulation of the origin criterion shift from the Harmonised System(HS)2-digit level to the HS 6-digit level.(3)The Ro O have been continuously improved during the process of FTA upgrading.(4)Gradually applying selective standards in a larger range of products to increase the utilisation rate of preferential tariffs of free trade areas.Second,on the basis of the Estevaderordal Ro O restrictiveness index and the PC Ro O restrictiveness index,and based on the distribution of China's FTA Ro O criterion,this dissertation proposes a measurement system suitable for measuring the China's FTAs Ro Os restrictiveness index through the introduction of regime-wide Ro O such accumulation,minimal operations.The measurement results show that the restrictiveness of China's FTAs Ro O is basically reasonable but without uniformity,flexibility and precision.Third,with the use of the trade in value-added(Ti VA)method and the Global Value Chain Database constructed by the University of International Business and Economics(UIBE-GVC Index),this dissertation calculate and analyse the global value chain participation(GVC participation)as well as the global value chain position(GVCs position)of major economies in the world including China and China's FTAs partners.The results show that China's GVC forward participation is generally on the rise,but the increment is moderate is not large.While the GVC backward participation of China is generally with a large decline.Compared with other major economies in the world,China's GVCs participation is at a lower level,and participated in global value chain through backward method.Compared with China's FTAs partners,China's GVCs participation is at the medium level.China's GVCs position index is far below the level of developed economies such as Japan and the United States,while resource-based economies such as Chile,Peru,and Australia,are located in the upper link of the global value chain.However,among the such economies,the growth trend of China's GVC position index is the most obvious.Fourth,taking the GVCs division as the result and performance of the MNEs cross-border production sharing or cross-border production activity as a pointcuts,and based on the economic effect theory of Ro O,this dissertation incorporate the FTAs Ro O and the GVCs division of labor into a unified analysis framework.The analysis shows that the FTAs Ro O affect country's GVC participation as well as the GVC status through the MNEs cross-border production strategy.More details,MNEs organise all suppliers and affiliated companies scattered around the world through inter-enterprise(intraenterprises)trade flows and investment flows,and thus forming the global value chain.The restriction on the origin of the final product by the FTAs Ro O forces companies to engage more production activities such as procurement,investment and outsourcing in the FTAs region,which affects the trade flow and investment flow of intra-enterprises and inter-enterprises,and thus affects countries GVCs participation.Based on such theoretical analysis above,and the introduction of the important significance of intermediate goods exports(imports)and the FDI inflow on GVC status,this article further analyses the influence paths of Ro O on GVCs status.It is concluded that the FTAs Ro O improve the manufacturing capacity of a country's industry through the technology spillover effect,thereby enhancing a country's GVCs status.Fifth,on the basis of the theoretical analysis of the influence mechanism of the FTAs Ro O on GVC status,this dissertation further uses econometric methods and the two-way fixed effects model to empirically test the correlation between the FTAs Ro O and China's GVC status.The results show that the impact of the FTAs Ro O on China's GVC status depends on the provisions contained in the FTAs Ro O:(1)without the institutional provisions,the Ro O have no significant impact on China's GVC status.More details,the FTAs Ro O have no significant impact on the GVC backward participation of China and China's FTAs partners as well as on China's position in the value chain between China and China's FTAs partners.(2)the composite FTAs Ro O that contains institutional provisions have significantly affected China's GVC status.This is reflected in the fact that,on the one hand,the composite rules of origin have a significant impact on the GVC backward participation of China and China's FTAs partners.There has an inverted “U” relationship between FTAs Ro O and GVC participation.On the other hand,the composite rules of origin have a significant impact on the GVC position between China and China's FTAs,and there has a “U” relationship between FTAs Ro O and GVCs status.The innovations of this dissertation mainly include:(1)Using the analytical framework of the economic effects of the FTAs Ro O,and taking the MNEs cross-border production as the pointcuts,to explore the logical relationship between the FTAs Ro O and the GVC status.It is concluded that the Ro Os affect the trade flows and investment flows of inter-enterprises and intra-enterprises through FDI,intermediate product procurement and compliance costs,which in turn affect a country's participation in GVCs as well as its status in GVCs.(2)On the basis of the existing method of Ro O restrictive index,and combined with the characteristics of the China's FTAs Ro O,this dissertation developed a new measurement system suitable for measuring the China's FTAs Ro O restrictiveness through the introduction of Regime-wide Ro O such as accumulation,minimal operations.(3)Abandoning the traditional analysis at the aggregate level such as traditional trade data and trade in value-added data,this article uses trade in value-added methods to analyse global value chain indicators such as the GVC participation as well as the GVC position of China and China's FTAs partners,and thus concluded that China is in the middle and lower position of the bilateral value chain division.