11.28.2023
In the expansive market of global trade, the Lampung pineapples of Indonesia have carved out a notable presence, reaching an array of destinations including but not limited to the United States, Argentina, Peru, France, Hong Kong, Japan, Qatar, and the United Arab Emirates. The export demand for these pineapples has seen a remarkable upswing, with figures reported by the Indonesia Quarantine Full Automation System (IQFAST) showcasing a growth from 38.84 million tons in 2020 to 45.3 million tons in 2021, before slightly declining to 1.913 million tons in 2022.
A significant deviation from this trend, however, is the stance taken by China, where, as per reports from the Indonesian Embassy in Beijing, there was a refusal to accept 150 shipments of Indonesian products at a total of 18 different ports in March of 2022. The root cause of this refusal is linked to the failure of numerous Indonesian exporting companies to adhere to the business registration mandate set forth by China’s customs authority, or the GACC.
The GACC plays an instrumental role in not only safeguarding national security and interests but also in facilitating the smooth operation of international trade. The issuance of Decree 248 by the GACC has been a critical step in this process, with the decree making it mandatory for all food producers and processing plants located outside of China to undergo a registration process. This process entails the submission of company information through an online portal to the GACC Import and Export Food Safety Bureau, a step that is essential for the continuation of trade relations. These registration requirements, which came into effect at the start of January 2022, are subject to annual review within GACC to ensure the ongoing validity of the registration numbers granted.
Under the stipulations of this decree, it is incumbent upon every manufacturer or processing factory that aims to export food products to China to initiate an application process with the GACC. This involves the completion of a Food Export form via a registration file management system, which requires the provision of detailed information including but not limited to the name, location, address, and contact information of the manufacturer or processing factory, alongside other pertinent details like the category of food being produced. Upon successful application, a registration number is assigned by China’s customs authority, which in turn facilitates the declaration of goods at the customs checkpoints within China.
The spectrum of food categories that fall under the registration mandate is extensive, encompassing a variety of products from soft drinks, drinking water, and refined processed foods, to canned goods, alcoholic beverages, preserved sweets, plant-derived flavored foods, biscuits, dry cake crackers, cigarettes, cigars, tea, sugar, eggs, bee products, bird nest products, vegetable oils and fats, oilseeds, filled wheat products, edible grains, fresh vegetables, fruits, spices, nuts, dietary foods, and health foods — with the notable exception of drugs. A significant benefit of securing a registration number under Decree 248 is that, upon approval, the manufacturer’s products are not only granted entry but are also accorded preferential treatment and are prominently featured on the importers’ purchase list within the Chinese market.
In further development, China’s customs authority has also promulgated Decree 249, which offers an expanded elucidation on the registration responsibilities incumbent upon food exporters. This decree supplements the categories previously listed in Decree 248 by including additional food items such as meats, dairy products, aquatic products, and seafood. For the successful registration under this decree, food exporters are required to furnish a variety of documents, including photographs of product packaging, official business registration certificates issued by the government of the country of origin, statements of compliance by the applicant, and the completed registration forms themselves.
A key recommendation from the customs authority is that applicants should manage the registration process independently, eschewing reliance on importers or distributors. This recommendation is of particular importance as the registration number of the exporter is a prerequisite for the clearance of goods through Chinese customs. In scenarios where an exporter undergoes changes in distributors or engages with multiple distributors, the management of the registration number and the associated authorization password can become complex. The authorization password serves as the definitive credential when exports are processed through the GACC system for customs procedures within China. Hence, it is advisable for exporting companies to undertake their registration with China’s customs authority independently.
The journey to acquire a GACC certificate is accompanied by considerable financial implications for exporting and producing companies. As delineated within the GACC application process, foreign exporting companies, which take the form of either manufacturers or producers, are mandated to make a financial investment amounting to $4,485 to secure a validity period of five years for their registration. This significant outlay presents a formidable challenge for entities that aspire to engage in the exportation of their goods to the Chinese market. As a consequence of this financial burden, many foreign exporters elect not to pursue exporting opportunities to China, resulting in a pronounced imbalance in China’s international trade equation, with a tilt towards a predominance of exports over imports.
The role of international trade as a vital component of China’s economy, as well as a key mechanism for its economic modernization, cannot be overstated. Data released by the World Trade Organization reflects that China’s goods exports amounted to a staggering $3,363.8 billion, while imports stood at $2,688.6 billion for the year 2021. Within this same timeframe, China experienced a robust 40% augmentation in its overall exports and witnessed a decline of 16% in its imports, a dynamic largely influenced by the GACC registration policy, which serves the purpose of preserving the country’s trade balance.
As 2023 comes to a close, China continues to assert its dominance as the preeminent goods trading nation globally, achieving stable growth in its foreign trade endeavors. Data procured from the General Administration of Customs attests to a consistent escalation in China’s import and export activities in the initial half of the current year, culminating in a total trade volume of $2.8 trillion. This milestone is emblematic of a significant juncture in the nation’s trade history, with the combined value of imports and exports surpassing the $56 billion mark, a figure that equates to the total export value of in excess of 3 million automobiles in 2022. The WTO anticipates a modest growth rate of 1.7 percent in the global merchandise trade for 2023, a figure that is somewhat below the 12-year average of 2.6 percent. Although the pace of global trade expansion may have moderated, China’s foreign trade has exhibited remarkable tenacity and has bolstered its competitive edge when juxtaposed with its regional competitors.
The policy enacted by the Chinese government, which necessitates the registration of all foreign exporting manufacturers through the GACC, functions as a strategic bulwark designed to reinforce China’s trade surplus. The imposition of the registration requirement, coupled with the significant fees imposed over a quinquennial period, compels exporters across the globe to reevaluate their commercial interactions with the Chinese marketplace. In the event that foreign exporters curtail their involvement with China, an automatic contraction in the volume of imports ensues, leading to a surge in China’s export quantities. This scenario engenders a sizeable trade surplus for China, which serves to fortify its standing as the second-largest economy in the world in the face of the economic adversities faced in the year 2023.
Fatimah Az Zahra Andryani is majoring in International Relations at Diponegoro University. Her interests are international business, international political economy, human rights, and history.
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