Hong Kong And China Set To Announce Origin Rules Under CEPA II

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

20 October 2004

The Chinese and Hong Kong authorities have been working closely to reach arrangements for the rules of origin for the products which will enjoy zero tariff status under the second phase of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA II), Hong Kong’s Secretary for Commerce, Industry and Technology, Mr John Tsang, explained yesterday.

"In the course of discussions with the Mainland, we have been in close touch with our business sector to seek their views on the way forward with an aim to securing a reasonable and flexible arrangement,” announced Mr Tsang.

He added: “I believe that most of our businessmen and manufacturers will welcome the outcome of the consultations."

With regard to zero tariff products under CEPA II, Mr Tsang said that it was expected that around 60% to 70% of the Mainland's product codes would adopt the process-based origin rules.

For the rest, while most of the products would adopt the ‘Change in Tariff Heading’ approach, only 7% to 8% would use the ‘30% value-added’ requirement.

The Mainland and Hong Kong reached an agreement on further liberalisation under CEPA II on 27th August, 2004, removing tariffs on products under 713 Mainland tariff codes, as well as facilitating further liberalisation of 44 measures under 19 services sectors and eight new service areas, which are due to take effect from January 1, 2005.

The SAR Government has stated that it aims to commence consultations on the next phase of CEPA as early as possible, although no timeframe for the negotiations has yet been set.

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