D. Introduction to the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA)
The objectives of the CEPA are to strengthen trade and investment cooperation between Mainland China and Hong Kong and to promote the joint development of both places through the implementation of measures to:
- reduce or eliminate tariff and non-tariff barriers to trade in goods;
- liberalise the trade in services through the reduction or elimination of discriminatory measures;
- promote and facilitate trade and investment.
The current measures of the CEPA are implemented in four phrases in January 2004, January 2005, January 2006 and January 2007. Discussions between Mainland China and Hong Kong will continue to aim for further liberalisation and greater market access for Hong Kong companies and workers to the Mainland market. It is anticipated that further measures will be implemented in the future.
Trade in goods (export of Hong Kong products to Mainland China)
Products with a Hong Kong origin enjoy zero tariffs on importation to Mainland China . It is important to note that under the rules of the CEPA, all Hong Kong products must first obtain a Certificate of Hong Kong Origin (which can be issued by the Trade and Industry Department (TID) of the HKSAR Government or other authorised organisation) before they are eligible for tariff free status. More details on the criteria for product origin and the procedure for obtaining a Certificate of Hong Kong Origin are available from the website of the Trade and Industry Department.
Trade in services (export of Hong Kong service suppliers to Mainland China)
Mainland China will progressively reduce or eliminate the restrictive measures that currently apply to services and service suppliers from Hong Kong (who have engaged in substantive business operations in Hong Kong for 3-5 years), and will implement new measures to liberalise the trade in services. Currently, 27 service areas have benefited under this arrangement. These service areas include accountancy, advertising, medicine and dentistry, law, management consultancy, real estate and tourism (the full list is available from the TID website).
Hong Kong organisations (including limited companies, partnerships and sole partnerships) must first obtain a Hong Kong Service Supplier Certificate from the TID before they can seek permission from the Mainland authorities to provide services in Mainland China with reduced restrictions. More information can be obtained from the TID website (note: individual persons are not required to apply for this certificate).
As part of the CEPA, Mainland China and Hong Kong also encourage the mutual recognition of professional qualifications and promote the exchange of professional talent.
Trade and investment facilitation
Mainland China is committed to the promotion and facilitation of trade and investment through greater transparency, the conformity of standards and enhanced information exchange. Areas of cooperation include customs clearance, commodity inspection and quarantine, food safety, and standardisation management.
The liberalisation measures of the CEPA permit wider accessibility to the Mainland market for Hong Kong investors. Mainland China has also expanded the business scope for individually owned stores that are set up by Hong Kong permanent residents who have Chinese citizenship. The CEPA expedites the flow of talent and capital, and opens up opportunities for Hong Kong professionals to establish and develop their careers in Mainland China .
A summary of the trade and investment facilitation measures can be found on the website of the TID.