For Immediate Release
Under the shadow of the China-U.S. trade war, the business community in Hong Kong is generally downbeat about the economic outlook for the coming year. However, the signing of a new agreement on trade in goods under the framework of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) offers relief for local companies.
HKGCC Chairman Aron Harilela described it as a “Christmas gift” for businesses, which will help to open up more economic and trade opportunities.
According to the new agreement, starting from January 1, 2019, goods of Hong Kong origin imported into the Mainland will fully enjoy zero tariff.
In addition, further plans to promote CEPA, and policies and measures on further service liberalisation in sectors such as finance, education, tourism and culture, will be launched in the Greater Bay Area (GBA) on a pilot implementation basis. This will help achieve full liberalisation of trade in services in the GBA.
The Chamber is pleased to see that the new agreement enhances the level of liberalisation for trade and investment between the Mainland and Hong Kong.
“Under the new agreement, we appreciate the zero tariff arrangement for goods imported and originated from Hong Kong,” Harilela said. “This arrangement will save manufacturers time in awaiting consultation on product-specific rules of origin. It will also encourage them to develop new products in Hong Kong and export them to the Mainland market.”
The Chamber Chairman however pointed out that there are still areas not covered by the agreement.
“The new agreement does not cover the mutual recognition of examination and quarantine results of animals and plants and related products, as well as food and pharmaceutical products. We hope the Government will further enhance CEPA to include these areas.”
Harilela added that the agreement was very welcome development under the current climate of uncertainty.
“The new agreement is a Christmas gift to the business community, which helps to alleviate the adverse consequences of the trade war and carve a way out for the trade and services sectors,” he said.
“In particular, trade facilitation measures between cities in the Greater Bay Area and Hong Kong will help boost investor confidence and speed up the pace of expansion of SMEs in the Mainland market.”
Hong Kong and the Mainland have also announced the incorporation of two new liberalisation measures on trade in services into the Services Agreement for implementation as from March 1, 2019.
Under this new agreement, the geographical scope for the setting up of Mainland and Hong Kong law firms in the form of partnership association will be expanded from the municipalities of Guangzhou, Shenzhen and Zhuhai to the entire Mainland. In addition, accredited testing organizations in Hong Kong will be allowed to undertake testing of products for the China Compulsory Certification (CCC) System on all products processed or manufactured in the Mainland requiring CCC.
“The Chamber is pleased to see the new measures in legal services and testing and certification, which gradually address the issue of ‘big doors are open but small doors are not.’ We hope other ‘small doors’ will open one by one soon,” Chamber CEO Shirley Yuen said.
CEPA now covers 1,900 product-specific rules of origin (PSROOs). Under these rules, around HK$97.1 billion worth of goods imported by the Mainland from Hong Kong enjoyed zero tariff between 2004 up until October this year. This represents an estimated RMB6.81 billion in tariff savings.
Under the new agreement, a general ROO based on the calculation of the value added to the products in Hong Kong will cover another 6,000 goods, including machines, equipment and parts, plastic products, textiles, and proprietary Chinese medicines.
The agreement also establishes principles of trade facilitation, including stipulation of commitment of the two sides in facilitating trade between the two places, simplifying customs procedures, enhancing transparency of related measures and strengthening cooperation in the relevant areas.
In particular, the new agreement sets out measures to expedite customs clearance of goods with a view to facilitating movement of goods in the Guangdong-Hong Kong-Macao Greater Bay Area, thereby enhancing the customs clearance capacity and efficiency of the control points in Guangdong and Hong Kong.
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