Hong Kong Financial Secretary Henry Tang and Chinese Vice Minister for Commerce An Min Monday signed six annexes to the closer economic partnership arrangement between Hong Kong and the Chinese mainland.

Below are highlights from a handout provided by the Trade & Industry Department on the six annexes:

Trade in goods

Annex 1, Arrangements for Implementation of Zero Tariff for Trade in Goods;

Annex 2, Rule of Origin for Trade in Goods;

Annex 3, Procedures for the Issuing and Verification of Certificates of Origin;

Trade in services

Annex 4, Specific Commitments on Liberalization of Trade in Services;

Annex 5, Definition of "Service Supplier" and Related Requirements;

Trade and investment facilitation

Annex 6, Trade and Investment Facilitation.

Trade in goods  

1) IMPORT TARIFFS

A total of 273 Hong Kong goods as defined by mainland product codes meeting CEPA rules of origin will enjoy zero tariff starting from Jan. 1, 2004. For other products, the zero tariff will apply at the latest by Jan. 1, 2006.

2) CEPA RULES OF ORIGIN

For the 273 product codes covered in the initial phase of zero tariff, the following rules are adopted:

*Hong Kong's existing origin rules for 187 product codes such as textiles and clothing, jewelry, cosmetics, pharmaceutical products and plastic and paper articles;

*Change in tariff heading for 46 product codes, such as chemical products, metal products, and some electronic products and electronic components;

*30% value-added requirement for 40 product codes such as some electronic and optical components, watches and clocks, and watch movements. Product development costs incurred in Hong Kong shall be considered when calculating the value-added percentage.

3) PROCEDURES FOR CLAIMING ZERO TARIFFS

To enjoy zero tariffs, products imported into the mainland must be accompanied by a Certificate of Hong Kong Origin-CEPA issued by the Trade & Industry Department or one of the government Approved Certification Organizations (the Hong Kong General Chamber of Commerce (news - web sites); the Federation of Hong Kong Industries; the Indian Chamber of Commerce, Hong Kong; the Chinese Manufacturers' Association of Hong Kong; and the Chinese General Chamber of Commerce).

4) NEXT PHASES

For products not covered in the initial phase (of tariff-free status), the two sides will continue to discuss the applicable origin rules. Details of application procedures for including products in subsequent phases of tariff reduction will be announced in November.

TRADE IN SERVICES

1) The two sides have agreed on clarifications and refinements regarding the liberalization of the 17 sectors of services agreed and announced on June 29. The mainland has agreed to grant preferential treatment for one additional sector, telecommunications services, taking the total number of sectors covered under CEPA to 18:

a) Management consulting services;

b) Convention and exhibition services;

c) Advertising services;

d) Accounting services;

e) Real estate and construction services;

f) Medical and dental services;

g) Distribution services;

h) Logistics services;

i) Freight forwarding agency services;

j) storage and warehousing services;

k) Transport services;

l) Tourism services;

m) Audiovisual services;

n) Legal services;

o) Banking services;

p) Securities services;

q) Insurance services; and

r) Telecommunications services.

2) Definition of Hong Kong Service Suppliers includes "juridical persons" including companies, partnerships, sole proprietorships as well as natural persons of Hong Kong.

3) Service suppliers should apply to the Trade & Industry Department for a Certificate of Hong Kong Service Supplier to obtain preferential treatment under CEPA. They will need to demonstrate that they have engaged in substantive business operations in Hong Kong.

TRADE AND INVESTMENT FACILITATION

Both sides have reached agreement on enhancing cooperation in the following seven areas:

i) trade and investment promotion;

ii) customs clearance facilitation;

iii) commodity inspection and quarantine, food safety, quality and standardization;

iv) electronic business;

v) transparency in laws and regulations;

vi) cooperation of small and medium enterprises; and

vii) cooperation in the Chinese medicine industry.

New areas of trade and investment facilitation may be added later, with the Joint Steering Committee of CEPA responsible for overall coordination.

FURTHER LIBERALIZATION

With a view to broadening CEPA's scope and coverage, the two sides agree to pursue further liberalization on goods and services trade in the latter phases.

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