9 Dec 2015
CEPA Trade in Services Agreement Signed
China's Vice Minister of Commerce Wang Shouwen and Hong Kong's Financial Secretary John Tsang Chun-wah signed the Agreement on Trade in Services under the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) in Hong Kong on 27 November 2015. The agreement will be implemented from 1 June 2016.
As the first free trade agreement for the full liberalisation of trade in services drawn up by the mainland on the basis of pre-establishment national treatment and negative list, this document marks the basic liberalisation of trade in services between the whole mainland area and Hong Kong. The main text of the Agreement outlined the principled regulations regarding the scope of application, bilateral obligations, national treatment, most-favoured treatment, financial prudence principles, safeguard measures, exception clauses, reserved restrictive measures, cross-border services, telecommunications and cultural services, special procedures and information requirements, and investment facilitation.
The annexes of the Agreement mainly cover the following aspects:
1. The mainland's reserved restrictive measures for Hong Kong's commercial presence in the form of negative listing.
2. The mainland's newly added liberalisation measures in the fields of cross-border services, telecommunications and culture in the form of positive listing as well as a recap of the earlier provisions under CEPA.
On the basis of summing up the experience of the early and pilot implementation of the Agreement between the Mainland and Hong Kong on Achieving Basic Liberalisation of Trade in Services in Guangdong (hereinafter referred to as the Guangdong Agreement), the Agreement further extends the liberalisation measures for Hong Kong services to the whole mainland. The following are some of its highlights:
1. Liberalisation in depth and breadth. The mainland will open up 153 service sectors to Hong Kong, 95.6% of the 160 service sectors under the World Trade Organisation classification. National treatment will be applied to Hong Kong in 62 sectors, four more than in the Guangdong Agreement. In the negative list, there are only 120 reserved restrictive measures, 12 less than the 132 reserved restrictive measures in the Guangdong Agreement. Entry thresholds are relaxed for 28 of these restrictive measures. In the positive list for cross-border services as well as cultural and telecommunications services, 28 liberalisation measures are added.
2. Clearly stating that Hong Kong is given the most-favoured treatment across the mainland, which means that any trade agreement the mainland signs with other countries or regions in future will also apply to Hong Kong as long as it is more favourable than the CEPA.
3. Further establish a sound supporting management system that is consistent with the negative list model. Apart from the reserved restrictive measures in the Agreement and the measures for the establishment and change of financial institutions and companies in the fields of telecommunications and culture, record-filing management is adopted in lieu of prior approval of contracts and articles of association. This applies to the establishment and change of companies set up by Hong Kong service suppliers on the mainland in service trades liberalised under the Agreement to facilitate the entry of Hong Kong service suppliers into the mainland.