CEPA Offers Myriad Opportunities for HK

The signing of the Closer Economic Partnership Arrangement (CEPA) between Hong Kong and the Mainland brings new opportunities for Hong Kong’s manufacturing and services sector, Financial Secretary of the Hong Kong Special Administrative Region Government, Mr Antony Leung, said at a press conference following the signing ceremony. The signing of CEPA was witnessed by Premier Wen Jiabao and the Chief Executive, Mr Tung Chee Hwa.

Mr Leung said the agreement would greatly enhance economic co-operation and integration between the Mainland and Hong Kong. It would also open preferential and World Trade Organization plus access opportunities for Hong Kong products and services in the Mainland.

The CEPA covers three broad areas: trade in goods, trade in services and trade and investment facilitation.

In the first area, the Mainland has agreed to apply zero import tariff from January 1, 2004 for exports form Hong Kong meeting the CEPA rules of origin requirement in some 270 Mainland product codes.

On trade in services, some 16 sectors including management consultant services, exhibitions and conventions, advertising, legal services, accounting services, medical and dental services, real estate and construction services, transport and tourism services are among those which will benefit from additional market access or removal of specific restrictions in the Mainland.

For trade in services, to be eligible for enjoying the benefits offered by the Mainland under the CEPA, a company must have “substantive business operations" in the HKSAR as assessed on the basis of the following criteria:
(a) the company must be incorporated under the laws of the HKSAR;
(b) the company must pay profits tax in the HKSAR (or be exempted by law from paying such tax);
(c) the length of the company’s substantive business operations in the HKSAR;
(d) the size and nature of business activity of the company’s office in the HKSAR; and
(e) the proportion of the company’s staff force employed in the HKSAR.
The nationality of owners or sources of capital are not a consideration in determining whether a company can benefit from CEPA. Therefore, Canadian services providers meeting the above criteria can also enjoy greater access to the Chinese Mainland market through Hong Kong.

Besides, both sides have agreed to promote co-operation in trade and investment facilitation in the areas of:

-customs clearance
-quarantine and inspection of commodities, quality assurance and food safety
-small and medium-sized enterprises
-Chinese medicine and medical products
-electronic commerce
-trade and investment promotion
-transparency in law and regulations

A series of CEPA promotional activities will be launched soon both in Hong Kong and overseas. The full text of the CEPA can be viewed at “www.tid.gov.hk/english/cepa/.

 

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