By Karen E. Thuermer, AJOT Hong Kong continues to enter a new phase of economic cooperation with Mainland China. With the conclusion and implementation of the Closer Economic Partnership Arrangement (CEPA) by Hong Kong and Mainland China, the first free trade agreement signed between Mainland China and Hong Kong, opportunities are widening for Hong Kong goods and Hong Kong service providers. CEBA is important to businesses in and with Hong Kong connections. Authorities saw the scheme as a critical means for easing the incorporation of Hong Kong into Mainland China after Hong Kong was handed over to the Chinese by the British in 1997. Since CEPA’s first implementation in 2003, the two sides have been working closely to introduce continual further liberalization. “The CEPA between Hong Kong and Mainland China provides Hong Kong service providers (HKSS) with preferential access to the Mainland market,” reports Ruby Ng, senior information officer, Secretariat Press Office (Transport and Housing Bureau), Hong Kong. It allows Hong Kong companies providing logistics, freight forwarding, storage, air transport sales agency, and maritime and road freight transport services to set up wholly-owned enterprises in Mainland China.
Effective, January 1, 2011, CEBA will include:
  • 27 liberalization measures spanning 14 service sectors
  • 2 new business sectors, with four new service areas opened under the individually-owned stores scheme
  • Guangdong pilot measures under CEPA service sectors
  • Products with CEPA origin rules expanded by 7 to 1,592
“Also, Mainland China has offered HKSS better market access than that available to other foreign investors under Mainland China’s World Trade Organization (WTO) commitments,” Ng adds.  “Nevertheless, as CEPA is neutral on nationality, a foreign firm incorporated in Hong Kong or partnering with Hong Kong companies can also benefit as long as it satisfies the CEPA criteria.” Since CEPA was originally signed in June 2003, seven additional supplements have been added. Supplement VII, signed on May 27, 2010, will take effect on Jan. 1, 2011. “The main text and its six annexes of the Mainland and Hong Kong CEPA were signed in June and September 2003, and came into full implementation on 1 January 2004,” Ng adds.  “The Trade and Industry Department of the HKSAR Government has been providing certification services of HKSS for various service sectors under CEPA, including transport and logistics services, since November 2003.  With the signing of a series of supplements to CEPA, the number of service sectors covered by the HKSS certification system has increased over the years.” Goods, Services, Investment Essentially, CEPA covers three broad areas: trade in goods, trade in services; and trade and investment facilitation. In the trade of goods category, all goods of Hong Kong origin imported into the Mainland enjoy tariff free treatment if they meet CEPA rules of origin (CEPA ROO). Thus far, CEPA ROO have been agreed for more than 1,590 products, including pharmaceutical products, plastics and plastic articles, textiles and clothing, food and beverages, etc. Up to July 2010, the total export value of goods that enjoyed zero tariff treatment under CEPA amounted to over $3.23 1 billion, and the tariff savings amounted to about the equivalent of $267 million, according to the Mainland authorities. Where trade in services is concerned, Hong Kong service suppliers enjoy preferential treatment in entering into the Mainland market in various service areas. Professional bod