China, Hong Kong Sign CEPA Supplement VIII

by Mary Swire, Tax-News.com, Hong Kong

16 December 2011

The Hong Kong and Chinese governments have agreed to boost their economic and trade co-operation by signing the eighth Supplement under their bilateral Closer Economic Partnership Arrangement (CEPA).

The CEPA gives preferential treatment to Hong Kong enterprises to enter Mainland markets, and, currently, covers more than 1,600 products and 40 services sectors. It adopts a building block approach, and the two sides have been working closely to introduce further liberalization measures continually.

Witnessed by Hong Kong’s Chief Executive Donald Tsang, its Financial Secretary John Tsang and China’s Vice-Minister of Commerce Jiang Yaoping signed Supplement VIII to the CEPA on December 13. The new Supplement further opens the Mainland's service-sector market to Hong Kong and enhances bilateral trade.

Supplement VIII provides for a total of 32 services liberalisation and trade and investment facilitation measures, including 23 liberalisation measures in 16 service sectors, while it also strengthens co-operation in areas such as finance, tourism, innovation and technology.

Both sides also agreed to enhance origin criteria in trade in goods. The new Supplement allows Hong Kong's traders to include the value of raw materials and component parts originated from the Mainland when calculating ‘value-added content’, such that they will be able to utilize the zero tariff preferential treatment offered to Hong Kong goods under the CEPA.

In addition, the new Supplement allows Mainland banks to make use of Hong Kong's international financial platform to develop their international businesses, and supports Hong Kong insurance companies entering the market through the setting up establishments or taking capital participations, to participate and share in the development of the Mainland insurance market.

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