Chinese Mainland, HK Vows to Forge Closer Economic Ties

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Last updated at: (Beijing Time) Monday, June 30, 2003

Chinese Mainland, HK Vows to Forge Closer Economic Ties

The Chinese mainland and the Hong Kong Special Administrative Region (SAR) signed an agreement in Hong Kong Sunday to forge closer economic ties aimed at promoting bilateral trade and economic relations. The CEPA is a special arrangement under the "one country, two systems" principle and the World Trade Organization (WTO) framework, said Chinese Premier Wen Jiabao.

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The Mainland-HK CEPA Signed

The Chinese mainland and the Hong Kong Special Administrative Region (SAR) signed an agreement in Hong Kong Sunday to forge closer economic ties aimed at promoting bilateral trade and economic relations.

The Closer Economic Partnership Arrangement (CEPA) also aims at enhancing trade and economic cooperation between China's mainland, Hong Kong and other countries and regions around the world.

The CEPA covers three areas, namely commodities trade, services trade and trade and investment facilitation.

Its basic objectives are to phase out tariffs and non-tariff barriers on trade in commodities, phase in the liberalization of trade in services and reduce and eliminate all discriminatory measures in an effort to boost trade and investment facilitation.

The implementation and revision of the CEPA will be carried out in accordance with the principle of "One country, Two systems", inline with the rules of the World Trade Organization (WTO), conforming to the needs of the two sides in readjusting and upgrading industrial structure, and on the basis of mutual benefit, making optimal use of each other's advantages and contributing to the ideal of common prosperity.

Beginning January 1, 2004, the two sides will implement their concrete commitments on the liberalization of trade in commodities and trade in services. The two sides will enrich the content of the arrangement, or CEPA, through opening further to each other.

The two sides initiated discussions on the pact on January 25, 2002.

According to the arrangement, Hong Kong will continue to give all goods of mainland origin zero-tariff treatment.

Beginning January 1, 2004, goods of Hong Kong origin which fall into the mainland's 273 tariff categories will enjoy zero tariff treatment when entering the Chinese mainland. The treatment will be extended to all goods of Hong Kong origin no later than January1, 2006.

According to the arrangement, China's mainland will not impose any tariff quotas on goods of Hong Kong origin, and the two sides will take no anti-dumping or anti-subsidy measures against each other's goods.

By January 1, 2004, the mainland will have opened more of its service sectors to Hong Kong.

The areas that will be opened to Hong Kong cover management and consultation, exhibitions, accounting, architecture and real estate, medical services, distribution, which includes wholesale, retail sales and franchise businesses, shipping agent service, storage, transportation, audio-visual services, banking, securities and insurance.

According to the arrangement, firms with 100 percent Hong Kong financing are allowed to operate in the areas of management and consultancy, with the exception of the legal, accounting, auditing and authentication, exhibition services and advertisement sectors.

Hong Kong investors are also permitted to establish firms with 100 percent Hong Kong financing in the areas of foreign trade, retail sales (excluding tobacco) and franchises, according to the arrangement.

The arrangement also contains arrangements for bilateral cooperation in the financial sector and in the development of the tourism industry.

The Chinese mainland encourages its financial institutions to develop their businesses in Hong Kong.

To further boost the development of Hong Kong's tourism industry, the Chinese mainland will allow residents of Guangdong Province to visit Hong Kong. This measure will initially be implemented in Dongguan, Zhongshan and Jiangmen cities, and will be extended to the whole of Guangdong Province no later than July 1, 2004.

The two sides will cooperate in the promotion of tourism resources. The arrangement also contains specific arrangements for personnel exchanges between the two sides.

In the area of trade and investment facilitation, the Chinese mainland and Hong Kong will strengthen cooperation in seven areas, namely, trade and investment promotion, customs clearance, commodities quarantine, inspection and quality certification, e-commerce, the transparency of laws and regulations, cooperation among small and medium-sized enterprises and the development of traditional Chinese medicine.

The arrangement has six appendices, including the arrangements of China's mainland regarding zero tariff treatment for goods of Hong Kong origin, rules governing the origin of goods that apply to the CEPA, a supervisory mechanism for the procedures of signing and issuing commodities' place of origin certificates and cooperation in this field, concrete commitments the two sides have made in opening areas of the service sector, the definition of "service provider", and relevant stipulations and measures for trade and investment facilitation.

Special Arrangement under "One Country, Two Systems" Principle

The Mainland/Hong Kong Closer Economic Partnership Arrangement (CEPA) is a special arrangement under the "one country, two systems" principle and the World Trade Organization (WTO) framework, said Chinese Premier Wen Jiabao Sunday.

Delivering a speech when meeting with people from various communities in Hong Kong after the signing ceremony of CEPA Sunday afternoon, the premier said the arrangement embodies a closer economic relationship between China as a sovereign state and Hong Kong as a separate customs territory, and demonstrates the care and support for Hong Kong from the Central Government and the fellow folks of the motherland.

"I hope that this arrangement will bring more opportunities to Hong Kong's business communities and provide some practical help to Hong Kong's economic recovery and growth," he said.

Wen also said CEPA represents only the first step towards a closer economic partnership between the Mainland and Hong Kong, adding that "In future, we should not only implement this arrangement in earnest but keep up our study in light of the new developments and update our policies and measures."

"In the meantime, we should step up efforts to promote economic cooperation between Hong Kong and the Pearl River Delta in particular," Wen added.

The premier reiterated that the Central Government will unswervingly commit itself to the policies of "one country, two systems," "Hong Kong people administering Hong Kong" and a high degree of autonomy and the Basic Law of Hong Kong.

"This is the message I have come to convey," he said, adding that "these set policies of the Central Government towards Hong Kong will not change."

The conclusion of the Mainland/Hong Kong Closer Economic Partnership Arrangement would greatly enhance economic cooperation and integration between the Mainland and Hong Kong, said Financial Secretary of Hong Kong SAR Antony Leung.

Speaking at a press conference held after the CEPA signing ceremony, Leung said the arrangement would also open preferential and World Trade Organization plus access opportunities for Hong Kong products and services in the Mainland.

"Trade and investment between the two places would also be facilitated as a result of the cooperative measures agreed under CEPA," the financial secretary said.

Leung, representing the Hong Kong Special Administrative Region (HKSAR) government, and the Vice Minister of the Ministry of Commerce An Min, representing the Central People's government, signed the CEPA at a ceremony held at Government House Sunday.

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