Policy Statement & Submission

Closer Economic Partnership Agreement
between Hong Kong and New Zealand
Comments by the Hong Kong General Chamber of Commerce
June 2001

Introduction
1. The Chamber supports the multilateral trading system represented by the World Trade Organisation. The Chamber considers that regional trade arrangements should be consistent with WTO principles and should advance, and not undermine, multilateral trade.

2. New Zealand is not a major market for Hong Kong. However, since Hong Kong and New Zealand both have a free and open trade regime, a free trade agreement between the two will not only advance their trade interests, but contribute to the multilateral system through exemplifying "open regionalism". We therefore support the negotiation of a "Closer Economic Partnership Agreement" with New Zealand.
　
Tariffs and rules of origin

3. We support the elimination of all tariffs through a comprehensive zero-tariff policy. We believe this could be achieved without much painstaking negotiation. On the part of Hong Kong, we believe a binding of our existing zero-tariff regime could be offered quite comfortably.

4. As to requests for tariff concessions from New Zealand, our priority should be for products which have high price elasticity, namely, the textile, clothing and footwear, electronics, plastics, toys and processed food. Even if the volume of export from Hong Kong is not substantial, tariff reduction or elimination will hopefully stimulate bigger demand and hence trigger more production and export, due to their price sensitivity.

5. On rules of origin, the close interaction between Hong Kong and Mainland China exports and re-exports inevitably leads to concerns about enforcement of origin rules. From our 70 years' experience as inspector and certifying agent of certificates of origin, the Chamber has every confidence that Hong Kong's enforcement regime –which we take pride in being part of - is of the highest international standard, and we do not believe any additional enforcement measure is needed.
　
Trade in services

6. Even though there is little trade in services between the two economies, we believe Hong Kong and New Zealand can jointly create an exemplary effect on the GATS negotiations by agreeing on a GATS-plus package in the Closer Economic Partnership Agreement. A starting point is to commit to a binding of existing practices and seek to rollback on the trade restrictions of some sectors.

7. We have an open attitude towards New Zealand's indicated areas of interest (education, tourism, environmental services, professional services). Service providers from these sectors should be welcomed.

8. As to Hong Kong's own interest, we believe there will be opportunities for our service providers in the offshore trade, financial and business services, and professional services sectors. In particular, we are interested in more liberal application of mode four, i.e. movement of personnel, especially for the professional services sectors. For the professions, the question of qualifications appears to be a common interest between New Zealand and Hong Kong and we would encourage substantive results to be achieved in this regard.

9. A particular area of great interest to us is that of information services and e-commerce. Here we see an opportunity for Hong Kong and New Zealand to make a substantial contribution to the WTO, by showing the way forward in the multilateral negotiations on e-commerce regulation. In accordance with the principles developed by the Hong Kong Coalition of Service Industries in its Services 2000 study, we would advocate minimum regulation for e-commerce, promote common standard for regulation, clarify coverage of Internet services, and support application of current WTO obligations. We could also place certain basic principles such as consumer protection, technological neutrality, and protection of intellectual property rights into the Hong Kong-New Zealand Agreement, so as to form the basis of a possible reference paper for the WTO.

10. The subject of e-commerce brings into focus the question of the distinction between goods and services. This is an issue which has been troubling the WTO, yet a free trade agreement negotiation between two of the freest economies may provide just the right context to tackle this in a meaningful way without the WTO "baggage" of split regimes on goods and services. That is why the Hong Kong-New Zealand talks could well produce a "GATS-plus" agreement.

Trade, investment and competition

11. In the same vein, the negotiation between the two freest economies should provide an opportunity to tackle some of the more difficult subjects for the WTO. For investment, for instance, without the "trade" baggage, the principles of transparency, national treatment and MFN could be comfortably applied to foreign direct investment for both Hong Kong and New Zealand – and in that regard the agreement is very aptly named "Closer Economic Partnership" rather than "Free Trade Agreement".

12. On competition, instead of domestic competition policy, we believe the focus should be on tackling trade-related anti-competitive measures such as anti-dumping and administrative barriers to trade. The principle should be that unrestricted market access is the best means of ensuring competition.