CEPA “only the beginning"  says SCIT

The Secretary for Commerce, Industry and Technology, Mr Henry Tang, spoke about the Mainland/Hong Kong Closer Economic Partnership Arrangement (CEPA), at the Hong Kong Foreign Correspondents' Club on July 10.

Mr Tang shared some of the basic principles which guided the 18-month-long consultation process. Free trade was foremost among these and the SCIT assured his audience that “Hong Kong’s trade and economic autonomy will not be affected in any way by the conclusion of CEPA."

According to Mr Tang, the question of defining Hong Kong companies was one of the most difficult issues, because of the disparity in the respective level of economic openness of the two economies. Under CEPA, said Mr Tang, objective and transparent criteria specify what constitutes a Hong Kong company. Ownership, shareholding structure, ethnicity or nationality considerations do not feature in the definition. In brief, a Hong Kong company must be incorporated and must engage in substantive business operations in Hong Kong. Thus, Hong Kong continues to offer a level playing field for all.

Companies are required to have been locally incorporated for 3 years before enjoying the benefits of CEPA. This stipulation, said Mr Tang, is similar to China’s WTO commitment, where “many of the liberalization measures only kick in within 3 to 5 years after China’s WTO accession."

In addition, some aspects of CEPA compare very favourably to what China has committed to the WTO. Mr Tang pointed to the entry asset threshold for banks incorporated in Hong Kong, which will be lowered from US$20 billion to US$6 billion. As well, Hong Kong firms may enter the Mainland market completely quota-free and Hong Kong law firms with representative offices in 
the Mainland will be permitted to run business jointly with their Mainland counterparts.

“All in all, we are very happy with and proud of this agreement," said Mr Tang. “CEPA provides a new platform for businesses in Hong Kong, whether locally- or foreign-owned, to tap the vast opportunities that exist in the Mainland market."

Mr Tang went on to stress that “CEPA is only the beginning of a continuous process of liberalization. This landmark agreement is going to usher in a new economic order for the long-term development of both Hong Kong and the Mainland."
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