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Hong Kong, Macao To Begin FTA Negotiations

by Mary Swire,, Hong Kong

12 October 2015

Hong Kong has begun a consultation on the areas to be covered in a proposed Closer Economic Partnership Arrangement (CEPA) trade treaty with Macao, negotiations for which are expected to commence shortly.

"Establishing the Hong Kong-Macao CEPA would further enhance economic co-operation and development of the two places," a Hong Kong Government spokesperson said. "At present, Hong Kong and Macao have each entered into a separate CEPA with Mainland China. After the establishment of the HK-Macao CEPA, the three places may build upon those CEPAs to establish a new, common platform to advance the further liberalization and facilitation of trade and investment in the 'Greater China' region."

Both Hong Kong and Macao do not apply any tariffs on imports. Under the new CEPA negotiations, Hong Kong and Macao will seek to bind the existing tariff-free regimes, providing legal certainty on the tariff-free movement of goods between the two places.

It has also been pointed out that, as both Hong Kong and Macao are free ports and impose no tariffs, their CEPA need not cover preferential rules of origin, as in the case of Hong Kong's other trade agreements. Both sides will also seek to minimize non-tariff barriers and avoid imposing trade remedy measures, including anti-dumping, safeguards, and countervailing measures, in order to further reduce obstacles to trade between the two places.

In addition, negotiations on the CEPA will aim to seek better market access or more predictability for services and service suppliers; and boost the liberalization, protection, promotion, and facilitation of investments. Other items covered will include customs facilitation procedures; cooperation in the areas of intellectual property, legal, and institutional matters; and a mechanism for the settlement of disputes.

While Macao was only the 19th largest trading partner with Hong Kong in terms of goods in 2014, bilateral trade in goods between the two economies grew by an average of 22 percent annually between 2010 and 2014. Macao is also the 11th largest source of foreign direct investment (FDI) into Hong Kong and the 11th largest recipient of FDI from Hong Kong.

Interested parties in Hong Kong are invited to put forward their views and suggestions on the areas to be covered in the Hong Kong-Macao CEPA on or before November 9, 2015.

TAGS: tax | investment | foreign direct investment (FDI) | tariffs | anti-dumping | trade treaty | China | Macau | agreements | Hong Kong | trade

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