1 Economic and Trade Relations between the Mainland and Hong Kong And The Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) Ms. Joyce

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Economic and Trade Relations between the Mainland and Hong Kong

AndThe Mainland and Hong Kong Closer Economic Partnership Arrangement

(CEPA)

Ms. Joyce Tam, Acting Deputy Director-General of

Trade and Industry

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Close Economic Tie between Close Economic Tie between Mainland and HKMainland and HK

Trade Trade The Mainland is HK's largest trading partner, accounting for

47.5% of HK's total trade value in 2008. Hong Kong is the Mainland's third largest trading partner,

accounting for 8% of the Mainland's total external trade in 2008.

InvestmentInvestment HK is the Mainland's largest source of realised direct foreign

investment, accounting for about 40% of the national total as at June 2009.

The Mainland is HK's most important external investor. At end-2007, the stock of inward direct investment from the Mainland accounted for 40.7% of HK' s total.

Establishments in the Guangdong ProvinceEstablishments in the Guangdong Province More than 99,000 HK-invested enterprises have been approved

by the Guangdong Province at end‑2007. HK-related enterprises in the nine cities of the Pearl River Delta

of the Guangdong Province hired around 9.6 million employees.

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CEPACEPA CEPACEPA

Main Text signed on 29 Jun 2003Main Text signed on 29 Jun 2003 Six Annexes signed on 29 Sept 2003Six Annexes signed on 29 Sept 2003 Implementation since 1 Jan 2004Implementation since 1 Jan 2004

Supplement to CEPASupplement to CEPA Supplement to CEPA signed on 27 Oct 2004Supplement to CEPA signed on 27 Oct 2004 Implementation since 1 Jan 2005Implementation since 1 Jan 2005

Supplement II to CEPA Supplement II to CEPA Supplement II to CEPA signed on 18 Oct 2005Supplement II to CEPA signed on 18 Oct 2005 Implementation since 1 Jan 2006Implementation since 1 Jan 2006

Supplement III to CEPA Supplement III to CEPA Supplement III to CEPA signed on 27 Jun 2006Supplement III to CEPA signed on 27 Jun 2006 Implementation since 1 Jan 2007 Implementation since 1 Jan 2007

Supplement IV to CEPA Supplement IV to CEPA Supplement IV to CEPA signed on 29 Jun 2007Supplement IV to CEPA signed on 29 Jun 2007 Effective from 1 Jan 2008 Effective from 1 Jan 2008

Supplement V to CEPA Supplement V to CEPA Supplement V to CEPA signed on 29 Jul 2008Supplement V to CEPA signed on 29 Jul 2008 Effective from 1 Jan 2009Effective from 1 Jan 2009

Supplement VI to CEPA Supplement VI to CEPA Supplement VI to CEPA signed on 9 May 2009Supplement VI to CEPA signed on 9 May 2009 Effective from 1 Oct 2009Effective from 1 Oct 2009

Mainland and HKMainland and HK1st free trade 1st free trade

agreement agreement

Building Block Approach

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CEPA CEPA CoverageCoverage

CEPA

Trade in Services

Trade in Goods

Trade & Investment Facilitation

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Trade in Goods (1) – Zero Tariff Benefits Trade in Goods (1) – Zero Tariff Benefits

Zero Tariff Benefits: ALL products of Hong Kong origin (except for prohibited articles) to the Mainland since 1 January 2006

Criterion: Products to meet CEPA rules of origin (ROOs)

Products with no agreed ROOs: consultations held twice a year

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Cumulative CO(CEPA) Statistics (as at end Sept 2009)

Trade in Goods (2) - ImplementationTrade in Goods (2) - Implementation

Top Product CategoriesNo. of

Applications Approved)

Export Value

1. Pharmaceutical Products 6,018 HK$7.21 billion

2. Plastics and Plastic Articles 7,409 HK$4.67 billion

3. Textiles and Clothing 12,527 HK$2.45 billion

4. Food and Beveragess 12,739 HK$1.82 billion

5. Chemical Products2,739 HK$0.73 billion

: : :

Total 48,351 HK$19.9 billion

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Trade in Services (1) – 42 Service AreasTrade in Services (1) – 42 Service Areas Preferential Treatment in 42 Service Areas of the Mainland Market :

storage and warehousing medical and dental environmental

services related to management consulting

market research distribution

services incidental to mining

management consulting

cultural

securities and futures logistics convention and exhibition

transport (including road freight/passenger and

maritime transport)

related scientific and technical consulting services

legal computer and related services

translation and interpretation

real estate and construction

job referral agency building cleaning

trade mark agency public utility job intermediary banking

tourism professional qualification examinations

insurance audiovisual

telecommunications printing information technology

air transport

sporting photographic individually owned stores

advertising

social services patent agency freight forwarding agency

accounting

research and development

rail transport

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Trade in Services (2) – Better Market Access Trade in Services (2) – Better Market Access

Forms of Preferential Treatment: relaxing the equity share restrictions reducing the requirements of registered capital reducing the requirements of business

turnover relaxing the restrictions over geographical

location and business scope allowing cross border supply of services delegating approval authority

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Trade in Services (3) - HKSSTrade in Services (3) - HKSS

Beneficiaries: Hong Kong Service Suppliers (HKSS)

Juridical persons (e.g. companies, partnerships, sole proprietorships)

- incorporated in HK and engaged in substantive business operations for 3 or 5 years

- To obtain an HKSS Certificate from TID before applying directly to Mainland authorities for provision of services in the Mainland

Natural persons (HK permanent residents, professionals, individually owned stores)

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Trade in Services (4) - Implementation Trade in Services (4) - Implementation

Cumulative Statistics of HKSS Certificates (As of end Sept 2009)

Individually Owned Stores (as at end 2008)3,203 (of which

2,589 in Guangdong)

Top Service SectorsApplication Approved

1. Transport and Logistics 558

2. Distribution 257

3. Advertising 100

4. Air Transport 75

: :

: :

Total 1,342

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Mutual Recognition of Mutual Recognition of Professional QualificationsProfessional Qualifications

Agreements or arrangements on mutual recognition of professional qualifications concluded so far:

Construction estate surveyors; architects; structural engineers; planners; quantity surveyors; and building surveyors Finance accounting; and qualified personnel and expertise in respect of the

securities and futures industry

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Trade and Investment FacilitationTrade and Investment Facilitation

Trade and investment promotion Trade and investment promotion Customs clearance facilitationCustoms clearance facilitation Commodity inspection and quarantine, food Commodity inspection and quarantine, food

safety and quality and standardizationsafety and quality and standardization Electronic businessElectronic business Transparency in laws and regulationsTransparency in laws and regulations Cooperation of small and medium Cooperation of small and medium

enterprises (SMEs)enterprises (SMEs) Cooperation in Chinese traditional medicine Cooperation in Chinese traditional medicine

and medical products sectorand medical products sector Protection of intellectual property (IP)Protection of intellectual property (IP) Cooperation on BrandingCooperation on Branding

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CEPA Supplement VICEPA Supplement VI

Signing of CEPA Supplement VI on 9 May 2009, with implementation from 1 Oct 2009, ahead of usual schedule

Contains a total of 29 liberalization measures, covering 20 services sectors (including two new sectors)

Total no. of service sectors covered by CEPA expands from 40 to 42

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Highlights of CEPA Supplement VI (1)Highlights of CEPA Supplement VI (1)

Major characteristics of liberalization measures under CEPA Supplement VI : :

relaxation in equity share restrictions(e.g. audio visual, public utility, and rail transport services)

lowering of entry threshold(e.g. distribution services, banking services)

elimination of geographical limitation (e.g. convention and exhibition services)

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Expansion of allowable business scope (e.g. securities services, telecommunications, tourism)

Inclusion of liberalization commitments made by the Mainland under other free trade agreements (medical and dental services, research and development services, and real estate services)

Encourage mutual recognition of professional qualifications (e.g. accounting, construction, real estate, printing, pharmacy)

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Guangdong pilot measures (e.g. legal, public utility, banking, transport, telecommunications)

Enhance financial cooperation(e.g. ETF)

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Benefits of CEPA Supplement VI (1)Benefits of CEPA Supplement VI (1)

Liberalization of key service sectors which Hong Kong has competitive advantages : :

Financial services Tourism Creative industry Transport services

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Benefits of CEPA Supplement VI (2)Benefits of CEPA Supplement VI (2)

Signing of CEPA Supplement VI :– reflects Central Peoplereflects Central People’’s Governments Government’’s support for s support for

Hong Kong Hong Kong – complements the policy direction, as advocated in the complements the policy direction, as advocated in the

““Outline of the Plan for the Reform and Development of Outline of the Plan for the Reform and Development of the Pearl River Deltathe Pearl River Delta””

– consolidates Hong Kongconsolidates Hong Kong’’s status as an international s status as an international financial, trade, shipping, logistics and high value-financial, trade, shipping, logistics and high value-added service centreadded service centre

– promotes the long term economic development of both promotes the long term economic development of both

sidessides and upgrades the professional standards of the and upgrades the professional standards of the two places two places

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Benefits of CEPABenefits of CEPA

HKSARG’s preliminary assessment of the economic impact of CEPA to HK

Created 43,200 new jobs in 2004 to 2008; Generated an additional spending of

HK$58.4 billion in 2004 to 2008. Generated HK$45.9 billion worth of services

receipts from the Mainland for HKSS holders in 2004 to 2008;

HKSARG’s latest assessment of the economic impact of CEPA to the Mainland

Created 49,500 new jobs in 2004 to 2008;

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Opportunities to Overseas Investors Opportunities to Overseas Investors

A new platform to tap the vast opportunities of the Mainland market:

For trade in goods, to set up manufacturing operations in Hong Kong to produce goods meeting CEPA origin rules to enjoy the zero tariff benefits.

For trade in services, to make full use of CEPA benefits in entering the Mainland market by:- establishing their businesses in Hong Kong- acquiring or joining forces with enterprises in Hong Kong

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Support & Promotion of CEPASupport & Promotion of CEPA

TID’s CEPA Website (http://www.tid.gov.hk/english/cepa/)

- Information Database on CEPA Service Sectors

Free Enquiry Services

Hotline: (852) 2398 5667 E-mail: [email protected]

Organizing and participating in seminars or briefings

Co-operation with HKSARG Offices in the Mainland (Beijing, Guangdong, Shanghai and Chengdu) for assistance cases

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Thank you

Documents

1 Economic and Trade Relations between the Mainland and Hong Kong And The Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) Ms. Joyce