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LCQ13: Implementation of Mainland and Hong Kong Closer Economic Partnership Arrangement in Guangdong-Hong Kong-Macao Bay Area
     Following is a question by the Hon Jeffrey Lam and a written reply by the Secretary for Commerce and Economic Development, Mr Edward Yau, in the Legislative Council today (November 8):


     The governments of the three places, namely the Hong Kong Special Administrative Region (HKSAR), the Macao Special Administrative Region and the Guangdong Province are working on the Development Plan for a City Cluster in the Guangdong-Hong Kong-Macao Bay Area (the Plan). On the other hand, the HKSAR Government and the State Ministry of Commerce signed on June 28 this year the Investment Agreement and the Agreement on Economic and Technical Cooperation under the framework of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) to further promote economic and trade co-operation between the Mainland and Hong Kong. Some members of the industrial, commercial and professional sectors have expressed concern about how CEPA will be implemented in the Guangdong-Hong Kong-Macao Bay Area (the Bay Area) in the future. In this connection, will the Government inform this Council:

(1) of the details of the CEPA-related work (such as entering into new agreements with the Mainland, monitoring the implementation of market liberalisation measures and providing support to the industrial, commercial and professional sectors) carried out by the Government in each of the past five years, and the manpower and public expenditure involved;

(2) whether the Government will, in the coming three years, provide additional manpower and financial resources to take forward the two aforesaid Agreements and support the work related to the Plan; if so, of the details; if not, the reasons for that;

(3) as quite a number of local enterprises have relayed that when doing businesses on the Mainland, they often encounter the difficulties that "big doors are open, but small doors are not yet open", of the respective numbers of enquiries, complaints and requests for assistance relating to CEPA received by the Trade and Industry Department in each of the past five years, with a tabulated breakdown by nature of the cases and the trade involved; the follow-up actions taken by the Government in respect of such cases; and

(4) as the Chief Executive has indicated in the Policy Address recently delivered by her that the Government will set up a Guangdong-Hong Kong-Macao Bay Area Development Office to co-ordinate efforts related to the implementation of the Plan and undertake research and publicity work in relation to the Bay Area development, of the relevant details; whether the Office will explore ways to assist Hong Kong people and enterprises in discovering more new opportunities in the Bay Area through CEPA?



     Our country will soon promulgate the Development Plan for a City Cluster in the Guangdong-Hong Kong-Macao Bay Area (the Development Plan). The Hong Kong Special Administrative Region (HKSAR) Government will actively participate in taking forward the development of the Guangdong-Hong Kong-Macao Bay Area (the Bay Area), grasp the historic opportunities to be brought about by this important national development strategy, so as to open up potential new areas of economic growth for Hong Kong. The signing of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) in 2003 provides for progressive liberalisation of the Mainland market through a building block approach, allowing Hong Kong traders to enjoy the most preferential treatment in accessing the Mainland market.  The Investment Agreement and Agreement on Economic and Technical Cooperation (Ecotech Agreement) signed under the framework of CEPA in June this year further expanded the coverage of CEPA and added new co-operation initiatives. Provisions on investment protection and investment facilitation were added. The Mainland also committed to according national treatment to investments and investors of Hong Kong in all non-services sectors (covering manufacturing sectors, mining sectors and investment in assets)(Note 1) (except for the 26 measures on the Mainland's negative list). At the same time, both sides are committed to enhancing economic and technical co-operation in 22 areas, including major sectors such as financial services, innovation and technology, etc., to better cater for the development needs of the two places. The Ecotech Agreement was implemented on the date of signing, whereas the Investment Agreement shall be implemented as from January 1, 2018. The HKSAR Government will ensure effective implementation of CEPA through the established mechanisms with the Ministry of Commerce.

     Having consulted the Constitutional and Mainland Affairs Bureau (CMAB), our reply to different parts of the question is as follows:

(1) The work on CEPA involves various bureaux and departments in the HKSAR Government: the Commerce and Economic Development Bureau (CEDB) (Commerce, Industry and Tourism Branch) is responsible for the overall policy on CEPA; the Trade and Industry Department (TID) oversees discussions on further new measures and implementation of liberalisation measures under CEPA with the Ministry of Commerce; individual bureaux and departments deal with new measures and specific implementation issues in the relevant trade sectors; and offices of the Government in the Mainland and in other economies assist in promoting CEPA and handling implementation problems encountered by Hong Kong traders in the Mainland. The expenditure of the above work has been subsumed under the overall estimated expenditure of the bureaux and departments concerned respectively. It is difficult to quantify separately. The work is being taken up by the existing manpower of relevant bureaux and departments. That said, as the above mentioned work continues, and as we further our work related to the Belt and Road Initiative (B&RI) at the same time, the overall workload of various departments under CEDB would increase. We are currently examining the manpower and resources situation. In particular, consideration will be given to improving the arrangement so as to address those needs arising from new areas of work related to the B&RI and external trade and economic relations. Agreement on provision of additional manpower and resources will be appropriately sought from the Legislative Council for meeting work requirements.

(2) On the Development Plan, CMAB is responsible for co-ordinating efforts of the HKSAR Government in taking forward the development of the Bay Area. In this regard, CMAB will set up a Guangdong-Hong Kong-Macao Bay Area Development Office (the Office), which will operate for five years to cope with the substantial workload arising from implementing the Development Plan during the initial stage. The Office will be led by a Director, who will be an officer at point three of the Directorate Pay Scale. The Director will be underpinned by several staff at non-directorate level. Apart from the increase in manpower, the Office will also have an average annual budget of about $3 million for conducting relevant research studies, organising seminars and conferences, as well as publicity and promotion events, etc..

     On CEPA, as mentioned in part (1) above, the CEPA implementation work, including the implementation of the Investment Agreement and the Ecotech Agreement, will be undertaken by the existing manpower and resources of the relevant bureaux and departments.

(3) In the past five years, TID received around 10 000 enquiries per annum relating to CEPA (see table 1). Most of them were enquiries about application for Hong Kong Service Supplier Certificate and application for Certificate of Hong Kong Origin. With regard to problems encountered by the trade in utilising CEPA in the Mainland, the relevant bureaux and departments of the respective sectors and Hong Kong Economic and Trade Offices in the Mainland would report and follow up on the cases with the relevant Mainland authorities. TID would follow up on unresolved issues with the Ministry of Commerce at Joint Working Group meetings through the established mechanisms. Relevant bureaux and departments and Mainland authorities would be invited to the meetings on a need basis for detailed discussion. The last two meetings were held in December last year and September this year. Cases handled included confirming that Hong Kong airlines are allowed to sell air tickets and hotel packages in their offices in the Mainland or through their official websites without the need to apply for a change in their scope of business, and assisting a Hong Kong organisation interested in establishing non-academic tertiary vocational training institutions on a wholly-owned basis in Qianhai in lining up with the relevant Mainland authority to follow up on its application.

     The Joint Working Group followed up on 24 cases involving CEPA implementation in the past five years. The service sectors covered included securities, insurance, accounting, construction, medical, banking, air transport, property management, education, film, cultural and entertainment, printing and trademark agencies. The relevant bureaux and departments explained the implementation measures in the Mainland to the trade in detail after each meeting.  

     To facilitate the trade to familiarise themselves with and utilise the CEPA measures, the HKSAR Government jointly organise CEPA forums with Mainland authorities at central and provincial levels from time to time to brief the trade about the latest CEPA implementation issues and details. The HKSAR Government co-organised the 2017 CEPA Business Forum with the Ministry of Commerce on September 27 this year to introduce the Investment Agreement and the Ecotech Agreement to the trade. The Forum also included breakout sessions dedicated to individual sectors (Note 2). About 30 representatives from various Central ministries and the HKSAR Government were present to introduce CEPA measures and implementation arrangements of individual sectors to the Hong Kong trade and answered questions from them. On June 28 this year, the date of signing of the Investment Agreement and the Ecotech Agreement, TID also co-chaired a CEPA briefing session with the Ministry of Commerce to introduce the two new agreements to the trade, and brief them on the latest CEPA development and gauge the trade's views.

     The HKSAR Government will continue to work closely with the Mainland authorities at central, provincial and municipal levels in promoting the effective implementation of CEPA.

Table 1: Enquiries relating to CEPA in the past five years (by subject of enquires)
Year 2017
2016 2015 2014 2013
Hong Kong Service Supplier Certificate 6 415 9 711 7 536 7 332 7 446
Rules of origin, Certificate of Hong Kong Origin, factory registration 1 973 2 654 2 543 3 125 3 202
Market access commitments of individual sectors 147 226 275 298 453
Individually owned stores 72 14 18 17 30
List of products enjoying zero tariffs 5 4 47 79 137
Investment Agreement and Ecotech Agreement 12 N.A. N.A. N.A. N.A.
Other enquiries 108 168 183 178 243
Total 8 732 12 777 10 602 11 029 11 511
(4) The Office will be tasked to co-ordinate efforts to implement the Development Plan by liaising with the National Development and Reform Commission, relevant central ministries/departments, the Guangdong Provincial Government and the Macao SAR Government, as well as the relevant bureaux and departments of the HKSAR Government. The Office will also proactively approach trade associations, professional bodies and relevant stakeholders, publicise and promote the opportunities for Hong Kong enterprises and talents to be brought about by the development of the Bay Area and gauge their views on implementation of the Development Plan, so that the relevant measures can better meet the needs of the industries. As regards research studies, the Office will engage academic and research institutions, etc. to conduct theme-based researches and analyses on various key co-operation areas under the Bay Area development, so that Hong Kong people and enterprises can grasp relevant information and latest development, thereby facilitating them to explore more development opportunities in the Bay Area.

Note 1: The Agreement on Trade in Services which was implemented since June 2016 already covered the admission of investments in services sectors.

Note 2: Including financial services, accounting, innovation and technology, technical testing, analysis and product testing services, tourism, manufacturing, audiovisual, cultural and entertainment, legal and dispute resolution services, construction and engineering, medical, intellectual properties and trade mark, and convention and exhibitions.
Ends/Wednesday, November 8, 2017
Issued at HKT 17:15
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