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Following is a question by the Hon Sin Chung-kai and a reply by the Financial Secretary, Mr Antony Leung, at the Legislative Council today (October 23):

Question:

Regarding the establishment of the Mainland/Hong Kong Closer Economic Partnership Arrangement being discussed by the Hong Kong Special Administrative Region Government and the Central Government, will the Government inform this Council:

(a) of the result of the public consultation on the Arrangement conducted in February this year and the timetable for the announcement of the result; whether it will issue a more detailed consultation paper to the public so as to explain its policies in this aspect and enhance public involvement in the discussion;

(b) of the progress of the discussion on establishing the Arrangement; in the process of the discussion, whether it will strive for the relaxation of restrictions on the importation of Hong Kong films into the Mainland and on the investments in telecommunications services by Hong Kong businessmen in the Mainland; and

(c) whether it has plans to form a Greater China Free Trade Area with Macau and Taiwan at the same time, or discuss with other Asian countries or regional trade organizations such as Association of South-East Asian Nations, for drawing up similar free trade agreements; if so, of the details; if not, the reasons for that?

Reply:

Madam President,

Late last year, the Central People's Government agreed in principle on the proposal of the HKSAR Government as to the establishment of some form of a free trade area. Soon afterwards, the Mainland/Hong Kong Closer Economic Partnership Arrangement (CEPA) consultations were launched. The two sides agreed that the CEPA consultations should comply with relevant World Trade Organisation (WTO) rules and the "One country, Two systems" principle, and that it should be mutually beneficial, taking into account the trends of economic developments in the two places. My replies to the three points of the questions are as follows -

(a) The Government has always placed importance on the views of the public and the business sector on its major trade policies and measures. During February to March 2002, the Government conducted a comprehensive public consultation on the coverage of the proposed CEPA. The Commerce and Industry Bureau (i.e. the present Commerce, Industry and Technology Bureau), Trade and Industry Department and relevant bureaux sought the views of respective business sectors, commerce and industrial organisations as well as professional bodies on the proposal. Individuals and organisations were also invited to put forward their views and comments.

During the consultation period, the Government received over 100 written submissions from the public, commerce and industrial organisations, professional bodies as well as the academia. All submissions supported the early establishment of the CEPA as well as the proposed coverage of the arrangement and the principles of consultations. Some commerce and industrial organisations and professional bodies also put forward sector-specific proposals. The Government will fully consider all the views and proposals collected, and reflect them as appropriate in the various proposals to be made in our consultations with the Mainland.

To avoid any adverse effect on the on-going consultations, the Government will not publicise the results of the consultations in detail. Views of the relevant sectors will be further solicited as and when appropriate.

(b) The CEPA consultations are progressing steadily. The proposed arrangement will cover three areas - trade in goods, trade in services, and trade and investment facilitation. On trade in goods, both sides agreed to aim to reduce or eliminate tariffs and non-tariff measures, and to work out an appropriate set of origin rules. On trade in services, direct sectoral experts exchanges and consultations have progressively been launched. As regards trade and investment facilitation, work mainly focused on defining the scope of cooperation.

Through the proposed CEPA, the Government aims to seek for Hong Kong more market access into the Mainland, while ensuring that the arrangement is complementary to the economic endowments of the two places and mutually beneficial, and consistent with rules of the WTO. Since the consultations are now underway, it is not appropriate for the Government to disclose the details of the consultations.

(c) The Government has in principle an open mind on Hong Kong establishing free trade agreements (FTAs) or similar cooperation arrangements with our trading partners. We now focus ourselves on the on-going consultations with the Mainland and New Zealand on respectively the CEPA and the Hong Kong/New Zealand Closer Economic Partnership Agreement, as well as the new round of WTO multilateral trade negotiations. As such, the Government has no plan at present to engage in FTA talks with other Asian economies, countries or regional trade organisations.

End/Wednesday, October 23, 2002

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