The Hong Kong General Chamber of Commerce warmly welcomes the signing of the Closer Economic Partnership Arrangement (CEPA) between Hong Kong SAR and the Central Government today.
“CEPA will usher in a new era in economic integration between Hong Kong and the Mainland. Hong Kong should truly be thankful to the central government and the SAR government for working so hard to come up with such a meaningful agreement.” said Chamber CEO Dr Eden Woon.
The Chamber observed that many of CEPA’s provisions will bring substantial benefits to Hong Kong. “The Chamber had a long wish list of what the business sector wants from CEPA, which we had submitted continuously to the government in the past 18 months. It seems many of our calls have been answered,” said Dr Woon. He used banking as an example, where CEPA would allow for bank asset requirement to be lowered to US$6 billion for banks wanting to establish branches in the Mainland – substantially below that of China’s requirement for other WTO members, which is at US$20 billion.
A major part of CEPA is to abolish tariffs for made-in-Hong-Kong goods. “It is great news for Hong Kong industry that zero-tariff will apply to most industrial products, including many high-tariff sectors such as jewelry, which can enjoy zero-tariff, starting January next year. This will attract investment back into Hong Kong—even in some new areas—and will no doubt benefit our employment,” said Dr Woon.
One of the important effects of CEPA will be to drive our industrial restructuring further towards more innovation. Zero tariffs will encourage more manufacturing in brand-name goods as well as products with a high intellectual property content, thus further enhancing the competitiveness of our manufacturing industries. Innovative service industries like design and audio-visual production will also benefit.
Although CEPA does not cover all service industries, the 17 sectors included represent a wide spectrum of services in which Hong Kong excels. Many businesses in the exhibition, advertising and management consultancy services will soon be able to establish wholly-owned subsidiaries in the Mainland, while other doors will be open for professionals to practice. A bigger market will be open to retailers and travel agents, well ahead of competitors from other economies.
On the important issue of Hong Kong companies, the Chamber observed that the CEPA has taken a broad and inclusive definition, supplemented by specific requirements for some sectors, in keeping with Hong Kong’s international character. This is very much in line with the recommendations by the Chamber.
“CEPA would mean a lot to many small and medium enterprises,” commented Dr Woon, “Many Hong Kong manufacturers are SMEs and the zero-tariff regime will make them much more competitive than before.” For service industries, among other things, CEPA enables Hong Kong professionals to have an edge, while opening up the Guangdong market for small retail businesses. Dr Woon emphasized that the implications of CEPA on every-day operations of small businesses should not be overlooked, “For many SMEs, what matters is the actual procedures like customs clearance, inspection and e-commerce.” These are now addressed by CEPA under trade and investment facilitation. In addition, there is an explicit commitment to help promote SMEs under this part of the CEPA agreement.
“Furthermore, CEPA is not a one-way arrangement that benefits Hong Kong only,” explained Dr Woon. It will help strengthen economic integration between the country and the outside world, and prepare both Hong Kong and the Mainland for the Doha Round of the WTO negotiations.
This first ever free trade agreement for both Mainland and Hong Kong reflects the forward–thinking attitude of the central and the SAR governments and has captured the whole world’s interest; and the Chamber feels that this agreement has met with the highest standards of regional trade agreements of the WTO. The CEPA, which the Chamber has been championing for over three years, is a confidence booster to the Hong Kong economy and can bring tangible benefits, but much hard work still lies ahead of us in rejuvenating our economy. And CEPA itself will be improved upon in the months and years ahead.
Dr Woon concluded, “The Chamber believes, as Premier Wen Jiabao said today, that a bright future lies ahead of Hong Kong, as we continue to ‘use our edge, maintain our character’.”
The Chamber will conduct workshops on July 7 and 8 to analyze CEPA in more detail.
For inquiries, please contact Dr Eden Woon, CEO, HKGCC at 2823-1211