With the approval of the State Council, Vice Minister of Commerce Wang Shouwen and Director of the Department of Finance of Hong Kong Special Administration Region Government John Tsang Chun-wah signed Mainland and Hong Kong Closer Economic Partnership Arrangement Agreement on Trade in Services (hereinafter referred to as “the agreement”) in Hong Kong on November 27, 2015. The agreement will be officially implemented on June 1, 2016. Attending the signing ceremony were Chief Executive of the Hong Kong Special Administration Region Leung Chun Ying and Deputy Director of Central Government’s Liaison Office in Hong Kong SAR Qiu Hong.
The agreement is the first free trade agreement which allows the whole mainland to fully open the trade in services areas through pre-access national treatment with a negative list, meaning that the whole mainland and Hong Kong basically realize the liberalization of trade in services. The agreement made principle provisions on its relation with CEPA, application range, obligation, national treatment, the most preferential treatment, finance prudence principle, safeguard measures, exception clause, preserved restrictive measures, cross-border service, telecommunication and culture chapter, special procedures, information requirement and investment facilitation. Annex of the agreement include Restrictive measures the mainland preserves for Hong Kong with a negative list under commercial presence model and the mainland’s new open measures to Hong Kong regarding cross-border services, telecommunications and culture areas by means of positive list and restatement of the contents of former CEPA.
Based on the the pilot experience of implementing the Mainland and Hong Kong CEPA Agreement on the Basic Realization of Liberalization of Trade in Services between Guangdong Province and Hong Kong SAR (hereinafter referred to as the “Guangdong agreement”), the agreement aims to further expand the mainland’s service industry to Hong Kong. The highlights of the agreement are listed as follows: firstly, it’s more open at higher levels. The number of areas that the mainland opens to Hong Kong in service sector will reach 153, involving 95.6% of the WTO’s 160 service areas, 62 of which realize the national treatment, with 4 new departments compared with Guangdong Agreement. In areas with a negative list, only 120 items of restrictive measures were made, 12 fewer than Guangdong Agreement’s 132 items. Among these, market access of 28 items of restrictive measures will be further loosened. In areas with a positive list such as cross-border service, culture and telecommunications, the new added open measures reach 28 items. Secondly, it is clearly stated that Hong Kong will enjoy the most preferential treatment in the whole mainland. It means that all free trade agreements that China signs with other countries and regions also apply to Hong Kong once they have measures better than the CEPA. Thirdly, it will further establish and perfect the support management system which adapts to the negative list model. Except restrictive measures preserved in the agreement, and the establishment of enterprises in telecommunications and cultural areas and financial institutions, the Hong Kong service providers invested in the mainland’s service trade domain which is open to them. Their company establishment companies, contract changes and the corporate constitution approval are changed as filing management, making it easier for Hong Kong business to enter the mainland market.
The mainland and Hong Kong’s basic realization of liberalization of trade in services helps to consolidate Hong Kong’s position as international financial, trade and voyage center. It is also conducive to developing emerging modern services, injecting new vigor into the mainland’s service industry. It enhances the comprehensive and deep Mainland-Hong Kong economic integration and common economic development.
