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During a duty visit to Beijing in December 2001, the Chief Executive obtained the agreement in principle of the Central Government to his proposal of establishing some form of free trade area between the Mainland and the Hong Kong Special Administrative Region (HKSAR). The Financial Secretary, Mr Antony Leung, led the HKSAR delegation to Beijing on January 25 to start formally the discussions with the Vice Minister of Ministry of Foreign Trade and Economic Cooperation(MOFTEC), Mr AN Min, as well as officials from the MOFTEC and the Hong Kong and Macao Affairs Office on the proposal.

During the meeting, they exchanged views on the preliminary concept of the proposal, and established the principles, the mode of operation and channel for discussions. The proposal is now named "Mainland/Hong Kong Closer Economic Partnership Arrangement (CEPA)".

Principles for Consultation

Both sides agreed to comply with the following principles for discussion:

(1) The relevant rules of the World Trade Organisation and the "One country, Two systems" principle should be observed;

(2) The CEPA should be mutually beneficial, and take into account the trends of economic developments in the two places;

(3) The consultations should be progressive, starting with the less difficult areas;

(4) The political, business and academic communities of the two places would be widely consulted in the process; and

(5) Both sides will work actively together to take forward the proposal with a view to achieving continuous progress.

Scope of the CEPA

The proposed arrangement will cover the following:

(1) Trade in Goods

(2) Trade in Services

(3) Trade and Investment Facilitation

Consultation Mechanism

Both sides have designated their respective agencies for the consultations, and they will be conducted at two levels:

(1) High Level Consultation Mechanism: decisions will be taken at this level. On the Mainland side, the delegation will be headed by MOFTEC Vice Minister Mr An Min. The Financial Secretary, assisted by Secretary for Commerce and Industry, will head HKSAR's delegation.

(2) Senior Officials Consultation Mechanism: this will be the working level. The delegation of the two sides will be headed by the Director of the Department of Taiwan, Hong Kong and Macao Affairs, MOFTEC and the Director-General of Trade and Industry of HKSAR respectively. HKSAR's delegation will also include Commerce and Industry Bureau, Trade and Industry Department, and other relevant bureaux and departments.

Consultation with the Business Sector

The Government will now commence consultations on the coverage of the proposed arrangement. The Commerce and Industry Bureau, Trade and Industry Department and relevant bureaux will seek the views of their respective business sectors, commerce and industrial organisations as well as professional bodies on the proposal.

Individuals and organisations are welcome to put forward their comments on the proposal by March 15, 2002 to Trade and Industry Department (Special Duties Division) at 17/F, Trade and Industry Department Tower, Nathan Road, Kowloon. Fax: (852) 2787 7799. E-mail address: cepa@tid.gcn.gov.hk. For enquiry, please call (852)3403 6357.

End/Monday, February 4, 2002

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