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2 October, 2003 CEPA -- Opportunities Beyond WTO |
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Hong Kong joined many other members of the WTO in welcoming China's accession to the international trade body in December 2001. For China, WTO membership marks a watershed in its ongoing reform and modernisation programme, as the country adapts its legal and regulatory framework of foreign trade and investment consistent with its WTO commitments. For Hong Kong, China's WTO accession would denote another defining moment in the structural transformation of the Hong Kong economy. Reminiscent of Hong Kong's gradual shift of its production facilities to the mainland hinterland over the last quarter century, taking advantage of the its opening up, Hong Kong companies can spearhead the development of the mainland as their domestic market in light of the WTO-promoted liberalisation.
Even with the WTO-enhanced market access conditions, however, China's average tariff rate of industrial products will be maintained at about 9% after phasing in all the committed cuts by 2005. Besides, the entry requirements for many of the mainland's services sectors remain prohibitive to Hong Kong's small-and-medium sized enterprises (SMEs), thereby preventing them from effectively developing their businesses on the mainland. Given the free trade status of Hong Kong and its unique relations with the mainland, some special economic arrangements would be deemed as necessary and appropriate.
Against such a background, Hong Kong and the mainland commenced the consultations on a Closer Economic Partnership Arrangement (CEPA) in January 2002. Agreement on the main parts of CEPA was reached and signed on 29 June 2003, after 17 months of consultations. The two sides are continuing discussion with a view to finalizing and announcing the details of implementation that is scheduled for 1 January 2004, including matters like country of origin.
Under CEPA, Hong Kong can further leverage its first mover advantage in exploring business opportunities on the mainland. CEPA is not simply another landmark for Hong Kong's continuing trade and economic development, it ensures Hong Kong will be "economically interlocked" with the mainland. Hong Kong companies, the majority of which are SMEs, will firmly benefit from the opening up and liberalisation beyond the mainland's commitments in its WTO accession protocol.
This report assesses the opportunities for companies making use of the Hong Kong platform under CEPA, and highlights the extent to which qualified Hong Kong products and companies may benefit from implementation of the CEPA agreement above and beyond the mainland's WTO commitments.
This new report is available at TDC's Retail Outlets. It can also be purchased through the TDC Bookshop section in the TDC's trade portal: info.hktdc.com
