CEPA is truly a landmark agreement for Hong Kong. As I told Mr Tung, we truly believe it will be beneficial to many Hong Kong businesses and thus to the overall Hong Kong economy.

Many of you are aware that it was the Chamber which first proposed the concept of a free trade agreement between the Mainland and Hong Kong in early 2000. The idea came up as we were conducting an assessment of the impact of China's anticipated entry to the WTO. Then, in November 2001, China signed itself into the WTO, and we took the opportunity to reiterate the idea to Mr Tung. When it was known one month later that Mr Tung had formally proposed to the Central Government to begin discussion on the free trade agreement, the Chamber went into high gear.

Within eighteen months, we conducted in-depth studies on our own, as well as going out to our members for consultation. Hundreds of pages of information, ideas and suggestions were written, and we presented no fewer than thirteen sets of papers to the government on various aspects of CEPA. It was thus with a strong sense of satisfaction that we witnessed the signing of the agreement a few weeks ago. The then Financial Secretary, Antony Leung, and the HKSAR negotiating team deserve much credit for their dedication, as do Vice Minister An Min and his staff for their far-sightedness and sincerity.

I should add that it was not just the signing which we were happy with, but the fact that a substantive agreement with genuine benefits has been delivered. Already the Chamber secretariat has lined up a range of programmes on CEPA, which you will find in this Bulletin. You will see that besides obvious immediate benefits like tariff saving, there are important longer-term benefits which CEPA can bring to Hong Kong.

Take Hong Kong's manufacturers. Many of them are currently producing in the Mainland for export to third countries. Increasingly, they are interested in China's domestic market. CEPA will open up an opportunity for them to move some of their specialised manufacturing processes back to Hong Kong, upgrade their production, build a Hong Kong brand name, and then distribute the finished product in the Mainland. CEPA's commitment on liberalising trade in services will also enable them to expand their logistics, distribution and retail networks in China more easily.

CEPA's benefit to Hong Kong industry thus goes far beyond the amount of tax saved. It will reinforce our industrial re-structuring.

The service sectors will benefit no less. Through CEPA, China has made many concessions in market access, over and above what it has committed to other WTO members. It allows our exhibition organisers and film producers access to the Mainland market, a privilege which it has not offered to other WTO members. Business people in sectors like real estate services, maritime transport and legal services will find that a substantially wider scope of business is now permitted.

Many sectors will benefit from CEPA to varying degrees. Given the closely intertwined nature of our service industries, the multiplier effect will be substantial. Maybe CEPA will not work miracles for any single service sector, but if we add everything up, CEPA offers a much expanded business horizon for Hong Kong in the world's fastest growing large economy. It will reinforce the comparative advantage of our pillar industries, i.e. the financial, logistics, professional, and tourism sectors.

Not to be overlooked, besides trade liberalisation, are the measures to facilitate trade and investment. It is interesting to observe that besides general commitments like greater transparency and more co-operation in trade promotion, there are specific references to e-commerce, SME collaboration and Chinese medicine. Their inclusion in CEPA indicates that both sides are aiming for genuine actionable progress in specific areas.

Indeed, genuine progress is within sight for many businesses, especially those working in the Pearl River Delta area. CEPA's aim, by definition, is to bring Hong Kong and the Mainland's economies closer to each other. The Pearl River Delta, as our closest economic partner, cannot help but to benefit from more businesses with Hong Kong -- and this is not counting the explicit provisions within CEPA to integrate Hong Kong and Guangdong more closely in the retail, travel and professional sectors.

Likewise, the provision in CEPA for ongoing negotiations to expand its content is welcome. As the Chamber has long argued, there should be a second phase of further liberalisation, once we begin implementing the initial agreement. We are all pleased that such a mechanism is now available, through the high-level Steering Committee to be established by the two governments. There may be a number of working groups under this Steering Committee to handle different aspects of CEPA's implementation. I hope that when these are set up, a way will be open for the Chamber and the business sector to provide input into the future development of CEPA.

Of course ultimately the usefulness of CEPA will depend importantly on how Hong Kong companies use the new opportunities provided by the agreement.