HK products to enter mainland market tariff free
By Dai Yan (China Daily)
Updated: 2005-10-19 08:47

By All Hong Kong origin products will be allowed to enter the Chinese mainland with a zero tariff from January 1 next year.

It is one of the most significant achievements recorded in the third-phase agreement of the Closer Economic Partnership Arrangement (CEPA) signed yesterday, which will also give the city's companies greater access to markets on the Chinese mainland.

China's Vice-Minister of Commerce Liao Xiaoqi and Financial Secretary Henry Tang signed the agreement after a high-level meeting at the CEPA's joint steering committee in Hong Kong.

Also under the trade pact, the mainland will waive the 30 per cent value-adding requirement for Hong Kong brand named watches.

Trade in services in 10 sectors, including legal, accounting, audiovisual, construction, distribution, banking, securities and tourism will also be liberalized under the third-phase pact.

For example, the mainland has agreed to allow Hong Kong's legal representative offices to enter into association with mainland law firms in different cities of the same province.

Within the audiovisual sector each company set up in the mainland by Hong Kong service suppliers on a wholly owned basis is allowed to build and operate more than one cinema at different locations. The turnover thresholds for setting up travel agencies on the mainland will also be lowered.

Liao said the central government attaches great importance to Hong Kong's economic development, adding that all measures able to help the city maintain its prosperity and stability will be carefully considered

The Hong Kong government said the third-phase of CEPA with the Chinese mainland will bolster the territory's economic recovery and create new jobs.

"These additional measures will offer new business opportunities on the mainland for Hong Kong enterprises and professionals and enhance Hong Kong's attractiveness to overseas investors. They will also help sustain Hong Kong's broad-based economic recovery and facilitate the creation of new jobs in the private sector," Tang said.

The first CEPA deal, signed in 2003, gave zero-tariff status to products in 374 tariff codes. A follow-up agreement in August 2004 expanded that to goods in another 713 tariff codes.

Noting that 29,000 new jobs have been created since implementing phase-one CEPA, Tang said the scheme is an open and developing platform, and he is anticipating its continued development.

The first two CEPA pacts helped Hong Kong's exports to the Chinese mainland rebound 3.1 per cent last year, to HK$37.9 billion (US$4.9 billion), ending a three-year decline. And a government report showed that the agreement saved Hong Kong exporters 66 million yuan (US$8.2 million) in tariffs last year.

All Hong Kong origin products will be given the tariff-free status upon applications by local manufacturers and upon the CEPA rules-of-origin, according to the third-phase agreements.

Hong Kong and the Chinese mainland have reached agreement on the CEPA rules-of-origin for 1,369 products. Products with no current rule restrictions will be considered twice a year after 2005, on application by the manufacturer. This will provide further flexibility for interested manufacturers.

(China Daily 10/19/2005 page10)