Signing of the CEPA Annexes Helps Attract Overseas Investors

The Hong Kong Special Administrative Region Government (HKSARG) and the Central People's Government (CPG) signed the six Annexes to the main text of the Closer Economic Partnership Arrangement (CEPA) on September 29. 

This followed the signing in Hong Kong of the main parts of CEPA on June 29, witnessed by Premier Wen Jiabao and the Hong Kong Chief Executive, Mr Tung Chee Hwa.

Signing the six CEPA Annexes were the Vice Minister of Commerce, Mr An Min, representing the CPG, and the Financial Secretary, Mr Henry Tang, representing the HKSARG. Speaking at a press conference held after the signing ceremony, the Hong Kong Secretary for Commerce, Industry and Technology, Mr John Tsang, said that CEPA had good potential to open up many more new business opportunities in the Mainland for Hong Kong, as well as enhance the attractiveness of Hong Kong to overseas investors. 

"We believe that the zero import tariff preference will make it more attractive to undertake in Hong Kong manufacturing of brand name products, or manufacturing processes with high-value added content or substantial intellectual property input. 

"The WTO-plus market liberalization measures for trade in services would also give enterprises in Hong Kong a 'first mover' advantage," Mr Tsang said. 

Echoing Mr. Tang’s remarks, the Director of the Hong Kong Economic and Trade Office (Canada), Mr Bassanio So, said that CEPA would make Hong Kong more attractive to foreign companies and investors, including those in Canada, as a unique and the best gateway to doing business with China, particularly in the Pearl River Delta Region.

The Annexes cover the following areas: arrangements for implementation of zero tariff for trade in goods; rules of origin for trade in goods; procedures for the issuing and verification of certificates of origin; specific commitments on liberalization of trade in services; the detailed definition of "Service Supplier" and related requirements; and trade and investment facilitation. 

On trade in goods, the Mainland has agreed to eliminate tariffs on imported goods of Hong Kong origin by stages. A total of 273 Mainland product codes meeting CEPA rules of origin will enjoy zero tariff starting from January 1, 2004. For other products, the Mainland will apply zero tariff at the latest by January 1, 2006 upon applications by local manufacturers and upon CEPA rules of origin being agreed and met. 

For 70% of the 273 Mainland product codes covered in the initial phase, Hong Kong's existing process-based origin rules will be adopted as the CEPA origin rules. For the rest, either the "Change in Tariff Heading" approach or the "30% value-added" requirement will be used. 

On trade in services, the two sides have agreed on some further clarifications and refinements regarding the liberalization of the 17 sectors of services agreed and announced. 

Moreover, the Mainland has agreed to grant preferential treatment in one additional sector, telecommunications services, taking the total number of sectors covered under CEPA to 18. Also, rules on equity participation in Mainland Insurance companies will be relaxed. 

Further details of CEPA are available from the Hong Kong Trade and Industry Department website at www.tid.gov.hk/english/cepa/index.html.

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