In another month, the entire island of Hainan Free Trade Port will be officially closed for operation. On November 18th, 10 "second tier ports" of Hainan Free Trade Port simultaneously conducted a composite exercise. How to seal the 'blockade'? What impact will it have on Hainan Island and beyond? How are the preparations for the 30 day countdown to the lockdown progressing? Firstly, sealing off is not about sealing off the island. It is a policy system of liberalization and facilitation, aimed at establishing a special customs supervision area for the entire island of Hainan, with the basic characteristics of "opening up the first line", "controlling the second line", and allowing freedom within the island. Opening up the "front line" means treating Hainan Free Trade Port as a "front line" with other countries and regions outside China's customs territory, and implementing a series of free and convenient entry and exit measures; Controlling the 'second line' means treating the relationship between Hainan Free Trade Port and the mainland as a 'second line', and implementing precise management for the content that has been opened up in the 'first line'; Freedom within the island refers to the relatively free circulation of various factors within the Hainan Free Trade Port. Simply put, the 'front line' connects other countries and regions outside of China's borders with Hainan. The 'second line' connects Hainan with the mainland. The front line should be free and convenient. The 'second tier' needs precise control. The two lines work together to ensure that they can be both 'released' and 'managed'. On the 18th, 10 "second tier ports" of Hainan Free Trade Port simultaneously conducted composite exercises. The preparations for the operation of the customs clearance have been basically completed. The General Administration of Customs held a press conference on the 18th, and the relevant person in charge introduced that the preparations for the operation of the Hainan Free Trade Port have been basically completed. Starting from the 18th, the "second tier port" of Hainan Free Trade Port has launched a 7x24 hour hot operation. Haikou Customs Chief Gao Ruifeng: The software and hardware conditions required for the operation of the customs closure are ready. The four customs protection projects, including the International Tourism Health Center and the Technical Center Laboratory, have all been put into use. Ten 'second tier ports' have passed national acceptance and regulatory facilities and equipment are ready for use. The customs intelligent supervision platform has been launched and is running smoothly, with complete functions, fully meeting the needs of customs supervision for customs clearance operations. How to place the "first line" and manage the "second line"? Regarding the closure of Hainan Free Trade Port, a very concerned question is how to place and manage the "first line". At the press conference, the head of the Free Trade Department of the General Administration of Customs gave an answer. Pan Cheng, Director of the Development Department of Free Trade Zones and Special Regions of the General Administration of Customs: After the closure of Hainan Free Trade Port, the customs will regulate what, how, and where. Our overall regulatory system is called "opening up the first line" and "controlling the second line", which is precise and efficient. That is to say, whatever the "first line" opens up, the "second line" controls, for example, where to manage the "second line" outbound goods and how to manage them. We are separated here, with one part called the customs supervision channel and the other part being the non customs supervision channel. The current implementation of zero tariffs, value-added processing, duty-free, and relaxed trade policies is the opening up of the front line. So when the "second tier" goods leave the island, we need to implement corresponding customs supervision. Other goods will be handled according to normal domestic circulation, and customs will not be involved. Hainan Province will manage them according to the current normal domestic circulation process, in order to facilitate the flow of goods between the mainland and the island to the greatest extent possible. How to achieve 'zero tariffs'? Let's take a closer look at the core keyword of Hainan Free Trade Port: "zero import tariffs". To figure out how to achieve zero tariffs, we need to return to these 12 words: "opening up the first line, controlling the second line, and promoting freedom within the island". First, let's talk about the opening up of the front line. Under what circumstances can goods enter Hainan through the front line with zero tariffs? Firstly, the types of products must comply with regulations. After the lockdown, imported zero tariff goods will be subject to negative list management. Any goods that are not on the list and are not within the scope of trade remedy measures can enjoy "zero tariff". In this way, the number of goods eligible for "zero tariffs" has greatly increased, expanding from the current 1900+tax items to over 6600 tax items. This is the first condition for "zero tariffs" to pass through the "front line". Another condition is that the entity importing goods must be a unit that meets the policy conditions. Not all units are eligible, and of course, individuals also do not meet the eligibility requirements for "zero tariff" benefits. Some of the goods imported with "zero tariffs" are used within Hainan Island, while others may need to enter the mainland through "second tier" ports. Second tier ports require precise control over them. In addition, goods containing imported materials produced by encouraged industrial enterprises in Hainan Free Trade Port and processed at Hainan Free Trade Port with a value-added of 30% or more are exempt from import tariffs and subject to import value-added tax and consumption tax in accordance with regulations when entering the mainland from Hainan Free Trade Port. Freedom within the island refers to the relatively free circulation of various factors within the Hainan Free Trade Port. For example, if a company with eligibility for preferential treatment imports a batch of raw materials that meet the "zero tariff" conditions, but the quantity is too large to use up, it can sell the excess products to other companies with the same eligibility for preferential treatment, making the company's production and operation more flexible and efficient. (New Society)