SCIO briefing on master plan for Hainan Free Trade Port

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Hainan Television:

The master plan for the Hainan Free Trade Port has decided to establish a system of policies and institutions that will build Hainan FTP with a focus on trade liberalization and facilitation. Could you shed some light on consideration taken when designing policies and institutions related to trade liberalization and facilitation throughout the course of building Hainan FTP? What features will there be? Thanks.

Wang Shouwen:

Thanks for your question. Trade liberalization and facilitation is a basic and common feature of all advanced free trade ports in the world. Today, a lot of regional and bilateral free trade agreements have stressed trade liberalization and facilitation. Of course, trade liberalization and facilitation will be a very important element in the institutional design for Hainan FTP. Actually, it is a focus.

When it comes to institutional design, we attach high importance to innovation. We will not only draw on experience of other countries, but also make it embody Chinese characteristics and suit Hainan's positioning. Trade liberalization and facilitation should align with China's broader efforts to comprehensively deepen reform and expand opening-up. Trade liberalization and facilitation has two aspects: First is goods trade liberalization and facilitation, and second is service trade liberalization and facilitation. The goods trade liberalization and facilitation has several features. First, we will work toward "zero tariffs." That means that we will establish a list of goods to be tariffed in Hainan FTP. All imported items excluded from the list will enjoy "zero tariff" status. Second, we will work toward "zero barriers." In terms of non-tariff measures, such as license and quotas, we will establish a list of exported and imported goods and items to be restricted or forbidden in Hainan FTP. All goods and items excluded from the list will be free to come and go. Third, we will promote facilitation. All imported goods will be handled through a single window of international trade, which will be very convenient. We will put in place effective and convenient customs supervision to facilitate the flow of goods. Fourth, under the circumstances of trade liberalization and facilitation, we will ensure that risks can be prevented and controlled. We will build high-standard port infrastructure and regulate it in a smart and targeted way.

Service trade has four modes. Cross-border supply, overseas consumption and the movement of natural persons constitute cross-border service trade. With regard to the three forms, we will establish a negative list for cross-border service trade. Entry of all service trades of these three forms outside the negative list will be allowed. The fourth mode is called commercial presence, which means providing services locally. Once entry is allowed, persons will have to meet proper standards and qualifications to receive operation permits. Some technologies will have to meet certain criteria for transparency and supervision. We will update regulations to liberalize and facilitate a commercial presence. In terms of service trade, we will make sure entry and operation are both allowed.

According to the master plan for the Hainan Free Trade Port, development will proceed in two phases. The first phase is expected to be completed by 2025. Three aspects of work will be done. First, we will pilot the policy of "opening up at the first line and strengthening regulation at the second line" in the Yangpu Bonded Port Area. Second, we will establish the "One Negative and Three Positives" list. As Secretary Liu and Governor Shen mentioned just now, the "One Negative and Three Positives" list will be put in place before the free trade port system. It focuses on trade and investment liberalization and facilitation to be basically established in Hainan by 2025. The "Negative" list refers to administrative measures for the import of equipment used by enterprises themselves. Goods not on the list will be exempt from tariffs. The "Three Positives" will be established to regulate the import of transportation tools, raw materials to be processed for export goods and everyday use items for the people of the island. Goods on the three lists will be exempt from tariffs. Third, within this year we will put in place a negative list for cross-border service trade, which I just mentioned. Any restrictions concerning the three forms of service trade will be included in the negative list. Those not on the list will be free from restrictions. This institutional innovation is a highlight for Hainan FTP. It will become China's first negative list for cross-border service trade. It's worth looking forward to. Thanks.

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