Hong Kong Wants Tax Free Exports To Mainland China

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

14 March 2002

The Hong Kong General Chamber of Commerce has called for exports from the SAR to the Chinese mainland to be tariff free under the proposed Closer Economic Partnership Arrangement (CEPA).

The Government requested input from the jurisdiction's business community prior to the second high-level CEPA meeting at the end of March, and the Chamber presented its suggestions to Financial Secretary Antony Leung Kam-chung on Tuesday. In addition to the proposed zero tariff on SAR exports, the Chamber of Commerce also suggested that Hong Kong based companies be given greater access to mainland services over the next three years, over and above the access which was promised by China to all countries under the terms of its WTO accession.

Previously, the Chamber of Commerce had merely been pushing for earlier access to mainland markets, and for Hong Kong goods to enjoy earlier tariff reductions than those from other countries. However, in view of the state of the SAR's economy, it now wants Beijing and the HK authorities to take more radical steps.

Speaking to the South China Morning Post, the Chamber's Director, Eden Woon Yi-teng explained the reasoning behind the decision to ask for more: 'We felt OK, why not push for [tariffs] to go down to zero...it should not be a problem because we are not a very big manufacturing base,' he observed.

The Hong Kong General Chamber of Commerce also announced that it is considering asking the Government to include proposals to reduce the asset requirements for Hong Kong banks entering the mainland from HK$20 billion to HK$7.5 billion, in the first phase of CEPA negotiations. It revealed that it thinks talks between the two governments over the first phase proposals, which include the zero tariffs suggestion, could be over by Christmas.

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