CEPA II provides further trade liberalisation

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The Hong Kong Special Administrative Region Government (HKSARG) and the Central People's Government (CPG) today (August 27) reached an agreement to provide further liberalisation measures on trade in goods and services under the second phase of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA II).

The Vice Minister of Commerce, Mr An Min, and the Financial Secretary, Mr Henry Tang, signed the arrangement at a ceremony held in Beijing this morning.

Under CEPA II, the Mainland will apply zero tariffs to products under 713 Mainland 2004 tariff codes, which are on top of the 374 products that have been enjoying zero import tariff status since January 1, 2004.

For trade in services, the Mainland has agreed to grant preferential treatment in eight new areas, and to broaden the liberalisation to 11 of the 18 services sectors to which preferential treatment has already been provided under CEPA.

Speaking at the signing ceremony, Mr Tang said that CEPA adopted a building block approach and provided a mechanism for further liberalisation measures. Hong Kong and the Mainland have agreed that the content of CEPA will be broadened and enriched through continuous discussion.

"Since the implementation of CEPA on January 1, 2004, the CPG and the HKSAR have held a series of high level and senior official meetings with a view to broadening the scope of CEPA, I am glad that the two sides have reached an agreement on CEPA II today."

"The HKSAR shall spare no effort in encouraging the local business sector to make full use of the preference under CEPA. We will also underline the many business opportunities offered by CEPA in our promotion work to attract more foreign investment to Hong Kong.

"The CPG and the HKSARG will continue to pursue further liberalisation on goods and services trade in the latter phases under CEPA through the established liaison mechanisms," Mr Tang said.

The 713 Mainland 2004 tariff codes covering both existing production (529 tariff codes) and planned production (184 tariff codes).

Products under the 529 tariff codes currently produced by Hong Kong manufacturers will enjoy zero tariff status starting from January 1, 2005. For the remaining 184 products, the Mainland will apply zero tariffs from January 1 of the following year upon confirmation by both sides that the products have come into production in Hong Kong.

On trade in services, the Mainland has agreed to grant preferential treatment in eight new areas, namely the airport services; information technology services; patent agency services; trademark agency services; job referral agencies; cultural and entertainment services; job intermediaries; and professional and technical qualification examinations.

The Mainland has also agreed to broaden the liberalisation for 11 out of the 18 service sectors enjoying preferential treatment under CEPA. The 11 sectors are: legal services; construction services; distribution services; transport services (including road passengers transportation and maritime transport); freight forwarding agency services; medical services; audio-visual services; accounting services; banking services; securities and futures services; and individually owned stores.

In particular, the Mainland has agreed to lift the geographical restriction and expand the business scope for the individually owned stores set up by Hong Kong permanent residents with Chinese nationality.

The new liberalisation measures will take effect from January 1, 2005, unless otherwise specified. Taking the two phases of CEPA together, Hong Kong services and services suppliers are now eligible for preferential treatment in a total of 26 services.

Mr Tang said, "The liberalisation permits earlier access for Hong Kong services suppliers to the Mainland market, ahead of China's WTO timetable. In some sectors, like audio-visual services, transport and related services and medical services, the concessions go beyond China's WTO commitments."

As part of the services trade under CEPA, Hong Kong and the Mainland have also committed to encouraging mutual recognition of professional qualifications and promoting the exchange of professional talent.

Witnessed by the Financial Secretary and the Vice Minister, a mutual recognition agreement for structural engineers and an agreement for the exemption of professional examination papers in the accounting sector were signed at the ceremony this morning.

Since the signing of the six Annexes of CEPA in September 2003, the two sides have already reached agreements or arrangements for professionals including estate surveyors; qualified personnel of the securities and futures industry; architects; insurance practitioners and patent agents.

"We will continue to consult the business and professional communities to understand their needs and discuss with the concerned business sectors appropriate policy measures that may be required to enable them to gain the greatest benefits from CEPA," Mr Tang added.

Today's signing ceremony was held after a meeting between the Financial Secretary and the Vice Minister this morning for the High Level Consultations of the Joint Steering Committee under CEPA in Beijing.

The main text of CEPA was signed on June 2003. Premier Wen Jiabao and the Chief Executive, Mr Tung Chee Hwa, presided over the signing ceremony. Six Annexes to the main text, which set out the implementation details of CEPA, were subsequently signed by Mr An and Mr Tang on September 29, 2003.

A note on the further trade liberalisation measures and a summary of zero tariff products under CEPA II are available at the website of the Trade and Industry Department at www.tid.gov.hk.

Ends/Friday, August 27, 2004

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