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Closer Economic Partnership Arrangement (CEPA) |
| Author | Topic: "Briefing on CEPA" FAQ |
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Q&A from the floor |
posted 30 July 2003 09:33 AM
Q What does CEPA refer to and when will it be implemented? A The CEPA refers to Mainland/Hong Kong Closer Economic Partnership Arrangement signed on 29 June 2003 to strengthen trade and investment cooperation between the Mainland and Hong Kong, and promote joint economic development of the two sides. From 1 January 2004 the two sides will implement the specific commitments in liberalization of trade in goods and services under CEPA. |
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Q&A from the floor |
posted 06 August 2003 02:46 PM
Q Is this partnership arrangement abiding by the requirements of the WTO. A The CEPA abides fully by the WTO's requirements on a free trade agreement, as it does not raise any obstacles and discriminations to other economies' access to the two markets. |
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Q&A from the floor |
posted 06 August 2003 02:48 PM
Q What are the benefits for Hong Kong in trade in goods? A Starting from 1 January 2004, the Mainland will apply zero tariff to imports from Hong Kong of 273 products of China's Harmonized System (HS) Code 8 digit items, including some electrical and electronic products, plastic articles, paper articles, textiles and clothing, chemical products, pharmaceutical products, clocks and watches, jewellery, cosmetics and metal products. |
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Q&A from the floor |
posted 06 August 2003 02:49 PM
Q Where I can get a detail list of the 273 product categories that are subject to zero tariff treatment? A The detail list of 273 product categories can be found in the Trade and Industry Department web, whose URL is: http://www.tid.gov.hk/english/cepa/ . Just open Schedule 1 under Annex1. |
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Q&A from the floor |
posted 06 August 2003 02:49 PM
Q Are the HS codes used by the Mainland customs the same as those used in Hong Kong? A The HS codes used by the Mainland and Hong Kong are the same at least at the first four digit levels, while the other digits are slightly different. It is not difficult to reconcile the codes with one another. |
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Q&A from the floor |
posted 06 August 2003 02:51 PM
Q If I have certain ingredients imported from overseas for packaging beverages in Hong Kong, would this product be eligible for zero tariff treatment? A Beverages are not included in the list of product categories subject to concession. |
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Q&A from the floor |
posted 06 August 2003 02:52 PM
Q Is there any further elimination of tariff for other goods of Hong Kong imported to the Mainland? A From January 2004, Hong Kong manufacturers may submit applications to the government for preferential tariff treatment, providing information on the description of their products, production capacity, export capacity, etc. After assessment and verification, Hong Kong government will submit a consolidated product list to the Mainland authorities for consultation. Both sides will then complete the ratification and consultations on the origin rules and tariff reduction programme for the products that are intended be benefit from tariff elimination. |
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Q&A from the floor |
posted 06 August 2003 02:52 PM
Q China has already committed to reduce the external tariffs for some plastic goods in 2003 and in 2004 to some 6.5 – 10%. Is this true that under CEPA Hong Kong exports of these goods to the Mainland are subject to zero tariff treatment in 2004? A The tariffs of these plastic goods of Hong Kong for exports to the Mainland will be eliminated provided that they comply with rules of origin. |
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Q&A from the floor |
posted 06 August 2003 02:53 PM
Q My company is manufacturing garments under foreign license and using brand labels. Are they qualified for this tariff preference? A If the garments are included in the list of product categories designated for zero tariff treatment in the first phase, they will be accorded this concession if the products comply with the rules of origin. |
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Q&A from the floor |
posted 06 August 2003 02:53 PM
Q If the product is made in Hong Kong using imported materials do we need to pay the VAT on the imported materials before we can claim tariff preference? A The VAT is levied on the finished product in the Mainland. |
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Q&A from the floor |
posted 06 August 2003 02:55 PM
Q My factory is registered with the department in Hong Kong for certificate of origin. If the products are exported to China through some trading companies, are they eligible for zero tariff treatment? A The products for exports to China are eligible for tariff preference if they are in the list of product categories under CEPA, and comply with the rules of origin. |
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Q&A from the floor |
posted 06 August 2003 02:55 PM
Q What are the rules of origin under CEPA? A The Mainland and Hong Kong are working on the origin rules on the list of products to be covered in the initial phase and hope to reach an agreement before end 2003. The Mainland and Hong Kong have agreed that Hong Kong's origin rules would provide the basis for discussion, subject to necessary adjustment. |
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Q&A from the floor |
posted 06 August 2003 02:56 PM
Q If we employ foreign artist to design and make a mould in Hong Kong, would the product coming out from this mould be eligible for tariff preference? A To be eligible for tariff preference in the Mainland, the products must fully comply with rules of origin, the details for which are to be announced soon. |
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Q&A from the floor |
posted 06 August 2003 02:56 PM
Q What are the requirements of a Hong Kong company in order to be eligible for applying the certificate of origin? A There are no special requirements for a Hong Kong company or factory applying tariff concession for their products, apart from the usual company registration requirements. |
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Moderator |
posted 12 September 2003 11:07 AM
Moderator: The following is the last batch of questions raised by participants in the captioned briefing. Users of this Forum are welcome to forward their questions and/or views of the CEPA to separately listed topics. Q Is there any restriction on the shareholders of Hong Kong Company? Can some of the shareholders be foreigners? And any indication on the minimum numbers workers? A There are no restrictions on the nationalities of the shareholders of Hong Kong Company. Though there is no indication on the size of workers in the company the enterprise must employ in Hong Kong 50% or more of its staff in Hong Kong. Q In the CEPA Hong Kong enterprises to fulfill t he qualification of ‘Hong Kong Company, they must have 3 years or more substantive operations in Hong Kong. Can you indicate what is meant by ‘substantive operation’? A The CEPA has not specified the criteria of ‘substantive operation’ as of present. China and Hong Kong will further consult on the specific methodology with respect to the qualifying criteria for ‘Hong Kong Company’. Q Is it correct to say that the Hong Kong Company cannot change its nature and scope of business once it qualifies to invest in the Mainland? A The business in the Mainland that the enterprise intends to operate must be of the same nature and scope as that the enterprise operates in Hong Kong. Q Is there any restriction on the areas or regions that the Hong Kong based companies can register their retailing enterprises? What about Hong Kong individuals with Chinese citizenships? A Hong Kong companies are permitted to set up retailing enterprises in all cities at the prefectural level, and cites at the county level in Guangdong province. Hong Kong permanent residents with Chinese citizenships are permitted to set up individually owned retail stores in Guangdong to provide retail services excluding franchising operation without the prior approval applicable to foreign investments. The sales area of such stores shall not exceed 300 square metres. Q What are the types of management consulting services not approved under CEPA? A Hong Kong companies are permitted to establish in the Mainland wholly owned enterprises to provide management consulting services other than those relating to legal. accounting and certification, etc. Q In the CEPA is it true that only joint venture travel agencies are allowed in the Mainland to operate travel agency business? A In the CEPA it is indicated that there will be no geographical restriction for joint venture travel agencies by Hong Kong travel agencies in the Mainland. However China has just announced that a newly promulgated provisional regulation on the establishment of travel agencies controlled or wholly owned by foreign investors. Under the regulations, starting from 12 July, qualified foreign investors can set up travel agencies in the State-Council-designated tourist resort in the cities of Beijing, Shanghai, Shenzhen, Guangzhou and Xian. Details can be found at: http://www.tdctrade.com/alert/cba-e0308d.htm Q Macao is also a Special Administration Region of the Mainland China. Will there be any schedule for a CEPA for the Region similar to that of the Hong Kong SAR? A Yes. According to the Director of Department of Hong Kong, Macao and Taiwan Affairs of the Ministry of Commerce, the consultation over the Mainland and Macao CEPA is scheduled for completion at the end of October, and that it will be activated simultaneously with the Mainland and Hong Kong CEPA on January 1, 2004. Q We know that in the CEPA there is little concession on the operational requirements for joint venture accounting companies. What about for local accountants to gain access to the Mainland accounting profession? A Hong Kong accountants who have already qualified as Chinese Certified Public Accountants (CPAs) and practiced on the Mainland are treated on par with Chinese CPAs for the requirement for annual working hours on the Mainland. Also the validity of the ‘Temporary Audit Business Permit’ is lengthened from 6 months to 1 year.
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