Starting from 1 January 2006, not only will 1,369 types of products exported from Hong Kong to the Mainland will enjoy zero-tariff, but the measures also apply to the service industries which are the concerns of both Hong Kong and the Mainland. This will involve 23 new measures applying to 10 industries including legal, accounting, sales, finance, etc. in order to further open up the market.

In October this year, Mr. Liao Xiao-qui, Vice Minister of Commerce of the People’s Republic of China, and Mr. Henry Tang, Financial Secretary of the Hong Kong SAR, met in the "CEPA (Closer Economic Partnership Arrangement) Joint Steering Committee Senior Management Meeting". After the meeting, the two officials signed the legal documents of CEPA III. Tang said he was delighted to see that both parties agree to launch even more new measures on top of those covered by CEPA I and CEPA II.

Further open-up of markets for service industries

Under CEPA III, the types of products entitled to zero-tariff will be extended greatly - close to a total open-up of markets. Mr. Dong Shi-zhong, Professor of the Faculty of Laws in Shanghai Fudan University cum Deputy Director of the WTO Shanghai Research Centre, pointed out that opening up the markets further for service industries such as legal, accounting and tourism is a necessary step.

According to the legal documents of CEPA III, there are 23 measures regarding the service industries, covering a total of 10 aspects, namely, legal, accounting, audio-visuals, construction, sales, banking, securities, tourism, transport and individual traders. The Mainland has agreed to further open up the market in these 10 areas, making it easier for these businesses to enter the Mainland.

Under the regulations of the agreement, the Mainland will allow those Hong Kong legal firms which have already established their representative organisations in the Mainland to operate jointly with Mainland legal firms in the same provinces but different cities. It will also allow Hong Kong residents who are providing professional services in the Mainland to be employed by other legal firms in places other than the Mainland.

Dong said, “In the past, both parties have to send their own solicitors as representatives to exchange ideas and co-operate in the name of observations or practice. This can be regarded as a prelude to the intention of both parties to establish a joint legal firm.” Dong believes that Hong Kong’s excellent service industries will become a blueprint after the signing of the agreement and will have a significant impact on how the service industries (including legal, accounting, finance, etc.) in the Mainland connect to the outside world.

Under the newly signed legal documents, service providers in Hong Kong are allowed to establish a sole proprietorship in the Mainland; they are also allowed to set up and operate cinemas in various venues; the minimum turnover for running a travel agency in the Mainland is lowered; specified securities and futures agencies in the Mainland are allowed to set up branches in Hong Kong; and so on. The Trade and Industry Department said that both parties agree that the measures will be effective from 1 January 2006. The Mainland authorities will also work out and announce the specific rules and regulations in due course.

Facilitation of trade encourages investments

Under the signed agreement, another focus for both parties is the facilitation of trade. Both parties understand that this is a key factor of the successful implementation of CEPA. Many measures under CEPA III are aimed to enhance the trade and investments between Hong Kong and the Mainland.

Meanwhile, facilitation of trade under CEPA has covered seven main areas, i.e. promotion of trading investments, convenience of cross-border customs, inspection and quarantine of commodities, food safety and quality standards, electronic commerce, transparency of laws, co-operation among SMEs and Chinese medicine industries.

Henry Tang said that the further opening-up of markets under CEPA III will bring more business opportunities to Hong Kong enterprises and professionals. This will in turn help them expand the Mainland markets and attract more foreign investments. These measures can also help Hong Kong maintain its steady progress in economic revival as well as encourage private sectors to create more job opportunities.

CEPA was first signed on 29 June 2003 in Hong Kong and the supplementary agreement signed on 27 October, 2004. CEPA has created business opportunities for Hong Kong’s trading industries and service providers as well as enhanced its attractiveness to overseas investors.