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Following is the transcript of the press conference on the Closer Economic Partnership Arrangement (CEPA) chaired by the Secretary for Commerce, Industry and Technology (SCIT), Mr John Tsang; Acting Permanent Secretary for Commerce, Industry and Technology (PSCI), Mr Raymond Young, and Director- General of Trade and Industry, Mr Kevin Ho, today (September 29):

Reporter: The previous Financial Secretary saw a 25 per cent value-added figure. Why are you satisfied with a 30 per cent Hong Kong-made product? The second question regards the telecom industry. I understand that Hong Kong firms will not be allowed to take majority shares. How much of a competitive edge will Hong Kong firms get when compared with foreign rivals who will get that opportunity next year?

SCIT: The tariff for non-preferential imports into the Mainland is set at 30 per cent, that is the minimum. Even though our requirement is 25, we have been discussing this with our Mainland counterparts and we have come to agree that it should be set at their minimum, which is 30. We think that 30 per cent is the proper balance and it serves the interests of the people of Hong Kong.

On the one hand, with the inclusion of the development process in the 30 per cent, the manufacturers in Hong Kong will be able to make use of that to have much better accessibility and competitiveness in the Mainland. At the same time, with the 30 per cent, they will be able to make use of their own process. Originally, for things such as watches and clocks, the determination of the origin is based on what they call the movement. Now we are able to make use of the entire manufacturing process that the people in Hong Kong employ. I think that provides the proper balance for the manufacturers in Hong Kong. We are quite satisfied with that level. On the issue of telecommunications, I'll leave it to Raymond.

PSCI: As I said just now, market access preferences are given to five sectors of telecommunications, namely, Internet data centre services, store and forward services, call centre services, Internet access services, as well as content services. The markets for these sub-sectors are completely closed at the moment and no licences actually are issued to operators for any of these value-added services.

Under CEPA, starting from October 1, the Hong Kong service suppliers can now apply to form joint venture companies with Mainland operators and they can actually obtain a licence to provide these services in the Mainland. There will be no geographic restrictions for the provision of these services. And as I said in my response to a previous question, this preference is actually better than China's WTO commitments because the commitments won't kick in until 1 January next year, but these preferences will be implemented starting October 1. So hopefully Hong Kong service providers will be able to have an early foothold in the Mainland telecom services.

(Please also refer to the Chinese portion of the transcript.)

End/Monday, September 29, 2003

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