From September 30 to October 1, the G20 Trade Ministers 'Meeting was held in Milwaukee, Wisconsin, USA. On October 4, the Ministry of Commerce answered reporters 'questions about the meeting and stated the results very bluntly: a joint statement was reached on the food issue, and no outcome documents were formed on the three issues of overcapacity, forced labor, and most-favored-nation treatment adjustment. The four topics in a meeting only become one, and this incident itself is a microcosm of the current game of global trade rules. For exporting factories, there is a signal more important than any single tariff: the most-favored-nation principle is being put on the negotiating table.
I. Quick overview of the results of the Conference
| issues | results | key differences |
|---|---|---|
| Oppose the weaponization of food | Reach a joint statement | Developing countries advocate that importing and exporting countries jointly maintain supply chain stability, and that all parties have the right to take measures based on public policy goals, which was adopted by the chair. |
| Addressing overcapacity | Unconcluded outcome document | Most members are being imposed on forced labor 301 tariffs and are the subjects of the Overcapacity 301 investigation. They disagree with the motive for setting the topic. |
| elimination of forced labour | Unconcluded outcome document | After the meeting, the US and two G20 members issued a statement outside the framework |
| Adjusting the principle of most-favored-nation treatment | Unconcluded outcome document | The vast majority of members emphasized that this principle is the cornerstone of the multilateral system, and the presidency did not make recommendations on the outcome document. |
Based on the spokesperson's answers to reporters 'questions and leaders' activities on the official website of the Ministry of Commerce on October 4, it can be found atofficial website of the Ministry of CommerceVerification; the international edition of China Daily also published an English review on October 4.
2. Why is MFN treatment worthy of special attention from factories
Most-favored-nation treatment is the cornerstone of the WTO: tariff preferences granted to one member must be granted unconditionally to all members, which ensures the predictability of global trade. In the past few decades, factories only needed a tax schedule to calculate exports, because tariffs between most trading partners were anchored to the most-favored-nation rate. This time, the United States made it a topic and discussed "adjustments." Although it was not written because of the opposition of the vast majority of members, the signal has been released: If the MFN status is gradually lifted, country-to-country tariff differences will become the norm-the same batch of goods are sent to the United States, the European Union, and Southeast Asia, the applicable tariff logic may be completely different and change several times a year.
There are three levels of transmission to factories: the validity period of quotations must be shortened, and tariff adjustment clauses must be included in annual lock-in contracts; market combinations cannot bet on a single tax system, and cross-market capacity elasticity is more valuable than a single point cost reduction; origin management has changed from "optional" to "mandatory". Tools such as free trade agreement certificates of origin and cumulative rules are tickets to make good use of differentiated tariffs among countries.
3. The food statement hides opportunities for agricultural products to go to sea
The joint statement on food issues deserves close reading by factories exporting agricultural products and agricultural materials: the statement absorbs the opinions of China and other developing members-importing and exporting countries jointly maintain the stability of the food supply chain, and all parties have the right to take measures based on domestic public policy goals and food security. When it comes to business: The "stability and smoothness" of the global grain production and supply chain has been written into the G20 document, and the overseas demand for chemical fertilizers, agricultural machinery, agricultural product processing equipment, and warehousing and logistics equipment has added a layer of legitimacy to the narrative; at the same time,"all parties have the right to take measures for food security" also reminds exporters that export controls and import restrictions on grain and related products will be more frequent, and the parties responsible for licensing and quarantine risks must be clearly stated in the contract.
4. China's role and follow-up rhythm
Li Chenggang, China's International Trade Negotiator and Vice Minister of Commerce, attended the meeting and delivered a speech, calling on G20 members to practice multilateralism and support the multilateral trading system with the WTO as its core. During the meeting, he held bilateral meetings or brief talks with the United States, the European Union, Saudi Arabia, Russia, Brazil, Canada, Mexico, Argentina, Australia, South Korea, Poland and other heads of delegations. The Ministry of Commerce also announced that China is willing to work with all parties to contribute economic and trade results to the upcoming G20 Miami Summit. The observation and suggestions for factories are simple: focus on two lines-whether the issue of most-favored-nation treatment within the G20 framework will be promoted again, and the pace of filing cases against specific industries by the United States with "301" tools (two names of forced labor and overcapacity). These two lines will determine the tightness of the tariff environment in the coming year.
Three things you can do in the fifth and fourth quarters
- Make a "tariff scenario table" for the main market:The existing tariffs, the possible additional 301 tariffs, and the most-favored-nation tax rate are listed side by side, and the landing costs under the third-gear scenarios are calculated. Quotations and production capacity planning are prepared according to the middle gear.
- Inventory certificate of origin toolbox:The qualifications of origin under RCEP, China-ASEAN, China-South Korea and other agreements are checked on a per SKU basis. After tariff differences are normalized, this is real price competitiveness.
- Contract plus tariff adjustment clauses:The annual framework agreement states that "if cost changes exceed the agreed range due to changes in tariff policies of the importing country, both parties will negotiate price adjustments" and stop using fixed prices to offset policy fluctuations.
6. Common questions
1. Will most-favored-nation status really be cancelled? How big is the impact on small factories?
The probability of being completely overthrown in the short term is not high-the vast majority of G20 members oppose it, and this time, even the outcome document has not been released. But marginalization will occur gradually: more country tariffs, more 301 tools. The impact on small factories is not that the weather changes overnight, but that the quotation life becomes shorter and customers compare prices more frequently. The response is to the above three things: scenario table, certificate of origin, and price adjustment clauses, all of which are not costly.
2. What does the food issue have to do with our manufacturing of electromechanical and daily necessities?
It has little direct relationship, but there is a transmission path worth remembering: the G20 has written "supply chain stability" into the track of the document, and subsequent supporting infrastructure, equipment, and logistics needs will be given priority. Agricultural machinery, food processing equipment, and cold chain storage equipment go out to sea, and you can use this narrative to endorse the market; for other categories, pay attention to when the same logic falls on the issue of manufacturing products.
3. Will the United States '"Forced Labor 301" be traced to small factories like ours?
The 301 tariff is country-level. Let's first see whether your product is on the list, and then talk about supply chain review. At present, the more common verification comes from the correct adjustment of the supply chain of American buyers: employment records, attendance, and salary records must be consistent. This set of documents should have been there. Instead of waiting for customers to ask for it, it is better to conduct a quarterly self-inspection.
