A Bilateral Trade Agreement Between Hong Kong and China: CEPA

Abstract

On June 29th 2003 the Special Administrative Region (SAR) of Hong Kong and mainland China signed a bilateral trade agreement, known by its English acronym as CEPA (Closer Economic Partnership Arrangement) 1. This agreement is made up of three sections: tariff reductions on 273 categories of goods that Hong Kong exports to the People's Republic of China (PRC); a preferential opening of the Chinese market to Hong Kong service providers in 17 sectors (increased to 18 in September 2003); and a series of measures aimed at facilitating bilateral exchanges of goods, capital and people. On September 29th 2003, Hong Kong and the PRC signed six annexes to the main agreement. The aim of these annexes was to clarify and complete the original provisions of the CEPA. Annexes 1 to 3 deal with trade in goods and define, in particular, related rules, the origin of the goods and the procedures for registration and verification of certificates of origin. Annexes 4 and 5 deal with the second section of the agreement, with the addition of the telecommunications sector, and the definition of the term "Hong Kong service provider". Annex 6 defines six fields for special cooperation between Hong Kong and China. 2 With the exception of a certain number of these measures (opening up in the telecommunications sector, the provision of individual visas for tourists from certain regions of mainland China visiting Hong Kong…), which were implemented in the autumn of 2003, the agreement came into effect on January 1st 2004. Both parties have committed themselves to continue negotiations to extend this agreement at a later

The evolution of China’s regional trade agreements: power dynamics and the future of the Asia-Pacific

“…As a result, it has been said that China gained little economic advantage from the deal as prior to the agreement only around 20% of goods trade from Hong Kong was tariff free but after implementation this figure stood at 90% (Hufbauer & Wong, 2005, p. 6). Partially as a result of the agreement, the two economies are increasingly interdependent and, Hong Kong's dependence on the PRC had increased substantially following the deal (Cabrillac, 2004). As of 2018, China is responsible for over 50% of Hong Kong's total trade, compared with 25% in 1997.…”

Coevolution of Culture and Technology: The Business Success of Lee Kum Kee

“…In the 1980s, the fourth generation of the Lees joined Lee Kum Kee after graduating from the universities in the United States. 7 Taking the benefit of Closer Economic Partnership Arrangement (CEPA) 8 signed between Mainland China and Hong Kong in 2003, Lee Kum Kee expanded into Mainland China’s traditional health service and herbal markets because these areas obtain a lot of benefit from the Agreement (Cabrillac, 2004, p. 6). Specifically, the company collaborates with Southern Medical University in China to develop Chinese natural and herbal foods (Wu and Du, 2004).…”

“…Furthermore, all goods have to meet CEPA rules of origin. To acquire Hong Kong origin, a good must have 30 per cent value added in Hong Kong (Antkiewicz and Whalley, 2005; Cabrillac, 2004).…”

FinTech innovation and knowledge flows in Hong Kong’s financial sector: a social network analysis approach

“…It was the foreign and domestic banks, financial regulators and professionals in Hong Kong, for instance, who connected the People's Bank of China with global financiers like the Bank of England (Li, 2018;People's Bank of China, 2006). It was also Hong Kong's banks that played leading roles in developing economic integration projects over the years, such as Closer Economic Participation Agreement, to invigorate flows of capital between China, Hong Kong and the offshore community (Cabrillac, 2004;Chiu, 2006;Liu and Au, 2020). Thus, Hong Kong's banks and financial markets possess a significant amount of leverage that has been key to liberalizing the domestic capital market and generating international financial power.…”