The mainland and Hong Kong yesterday agreed that the Closer Economic Partnership Arrangement (CEPA) between them is a continuous and open agreement and that both sides will make ongoing efforts to enhance and broaden the content of the free-trade deal.

Vice-Minister of Commerce An Min and Financial Secretary Henry Tang reached the consensus yesterday after they signed six annexes to the arrangement at a ceremony held in Hong Kong.

An said the pact is set to "bring new dynamics and opportunities to Hong Kong as well as the mainland."

The documents detail how the pact is to be implemented, covering areas such as zero tariffs for trade in goods, commitments on the liberalization of trade in services and a definition of "Hong Kong service suppliers."

Tang said: "It is now up to our private sector to realize the potential benefits of the arrangement."

Chief Secretary Donald Tsang said the most important challenge and the future focus of the territory's government will be to attract more foreign investors to take advantage of the pact and to create job opportunities in Hong Kong.

According to the annexes signed yesterday, the mainland's insurance and telecommunications sectors will open up further to Hong Kong firms.

Hong Kong insurance companies will be allowed to hold a stake of up to 24.9 per cent in a mainland insurance firm, up from the 15 per cent announced in late June.

Five categories of value-added telecom services on the mainland will open up to Hong Kong investors starting tomorrow, with the equity share of the Hong Kong side in a joint venture limited to no more than 50 per cent.

The five categories involved are storage and forward services, Internet access, Internet data centres, call centres and content supplies.

Hong Kong will thus get a three-month head start over other overseas investors, which will be allowed access to those sectors only in January next year under Beijing's commitments to the World Trade Organization, said Raymond Young, acting permanent secretary for commerce, industry and technology.

Under the free-trade pact, which will be implemented in January next year, 273 Hong Kong products will be exempt from tariffs when exported to the mainland.

All Hong Kong products will be subject to zero tariffs by January 2006 upon application by Hong Kong manufacturers.

The pact also further opens up 18 areas of the service sector - including banking, legal services and film production - to Hong Kong firms and individuals.

Although the territory's government said it is hard to quantify the overall economic benefit to Hong Kong from the pact, Hong Kong firms are expected to consequently save HK$750 million (US$97 million) in tariffs a year based on 2001 export figures.

On the rules of origin under the pact, an annex clarifies that 187 of 273 types of products - including garments, jewellery, cosmetics, pharmaceuticals, and plastic and paper products - will be subject to Hong Kong's existing rules.

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