Supplement X to CEPA marks further step towards liberalisation of trade in services between Mainland and Hong Kong
Thursday, August 29, 2013
The Hong Kong Special Administrative Region (HKSAR) Government and the Central People's Government today (August 29) reached agreement on the enhancement of economic and trade co-operation of the two places under the framework of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA).
Supplement X to CEPA was signed today by the Financial Secretary, Mr John C Tsang, and the Vice Minister of Commerce, Ms Gao Yan.
Supplement X to CEPA provides for a total of 73 services liberalisation and trade and investment facilitation measures, which include 65 liberalisation measures for trade in services and eight measures to strengthen co-operation in areas of finance and facilitate trade and investment of the two places. Inclusive of measures in Supplement X, there are 403 liberalisation measures for trade in services under CEPA.
Liberalisation Measures for Trade in Services
Under CEPA and previous Supplements, 28 sectors have already been partly liberalised for Hong Kong. These sectors are legal, construction, computer and related services, real estate, market research, technical testing and analysis services, placement and supply services of personnel, building cleaning, photographic, printing, convention and exhibition, translation and interpretation, telecommunications, audiovisual, distribution, environment, banking, securities, hospital services, social services, tourism, cultural, sporting, maritime transport, air transport, road transport, freight forwarding agency, and trade mark agency. Supplement X to CEPA will further relax the market access conditions for these sectors. Furthermore, there are additional liberalisation measures on duplicating and after-death facilities services. Key measures are summarised as follows:
On legal, Hong Kong law firms and Guangdong law firms will be allowed to enter into agreement under which Guangdong law firms may second Mainland lawyers to work as consultants on Mainland law in representative offices set up by Hong Kong law firms in Guangdong Province.
On banking, a Hong Kong bank's operating institution in the Mainland, after obtaining approval to conduct Renminbi business for serving Hong Kong enterprises, may provide service to enterprises in the Mainland that are recognised as owned by Hong Kong investors in accordance with relevant rules and regulations, despite investors of those enterprises being based in a place other than Hong Kong.
On securities, Hong Kong-funded securities companies will be allowed to make reference to the securities assets being managed by the respective group when applying for Qualified Foreign Institutional Investors status. Qualified Hong Kong-funded financial institutions will be allowed to set up joint venture fund management companies in the Mainland in accordance with relevant Mainland requirements. The shareholding percentage of these Hong Kong-funded institutions could exceed 50 per cent. Hong Kong-funded financial institutions which satisfy the requirements for establishing foreign-invested securities companies will be allowed to set up one full-licensed joint venture securities company each in Shanghai, Guangdong Province and Shenzhen in accordance with relevant Mainland requirements. The maximum percentage of aggregate shareholding of the Hong Kong-funded institutions is 51 per cent.
On technical testing and analysis services, the scope of testing services for the purpose of certification that can be undertaken by Hong Kong testing organisations will be expanded from food to other areas of voluntary product certification on a pilot basis in Guangdong Province. Certification bodies, inspection bodies and laboratories jointly or solely set up in the Mainland by Hong Kong service suppliers, when participating in testing and certification activities, will be accorded the same treatment as is accorded to Mainland certification bodies, inspection bodies and laboratories. Testing and certification organisations in Hong Kong will be allowed to co-operate with the Mainland testing and certification organisations in respect of acceptance of testing data (results).
On audiovisual, the dialect version of motion pictures produced by Hong Kong and co-produced by Hong Kong and the Mainland will be allowed to be distributed and screened in the Mainland, after being examined by and obtaining the approval of the relevant authorities in the Mainland, on the condition that standard Chinese subtitles are provided on screen.
On telecommunications, Hong Kong service suppliers will be allowed to set up joint venture enterprises in Guangdong Province to provide online data processing and transaction processing services. Hong Kong service suppliers' shareholding should not exceed 55 per cent.
On transport, for Hong Kong service suppliers investing in the construction of port facilities and operating port cargo handling, yards and warehousing, the requested capital amounts and the criteria for establishing branches will be the same as those for Mainland enterprises. The registration of Hong Kong service suppliers for the establishment of foreign-invested enterprises engaging in international maritime container station, container yard services and international cargo warehousing services in Guangdong Province is delegated to the transport authorities of prefecture-level or above in Guangdong Province.
On placement and supply services of personnel, the restriction on the year of experience required for Hong Kong service suppliers to set up job intermediaries in Guangdong Province will be removed.
On social services, Hong Kong service suppliers will be allowed to operate elderly service agencies in the mode of wholly owned private non-enterprise units to provide home care services for the elderly in Guangdong Province.
On after-death facilities services, Hong Kong service suppliers will be allowed to invest in and operate funeral facilities (excluding crematorium) and human ashes storage facilities in the Mainland on a wholly owned or equity joint venture basis.
In addition, for a number of sectors, contractual service providers employed by Hong Kong service suppliers are allowed, in the mode of movement of natural persons, to provide temporary service in the Mainland for the performance of the service contract(s) secured in the Mainland by his or her employer. The contractual service provider should hold an HKSAR identity document and his or her employer should be a Hong Kong service supplier without commercial presence in the Mainland.
Under Supplement X to CEPA, all measures relating to the liberalisation of trade in services will take effect from January 1, 2014.
In accordance with Article 5 of Annex 4 of CEPA, Hong Kong will not impose any new discriminatory measures on the Mainland's services and service suppliers in the service sectors covered by CEPA. This commitment will also apply to sectors covered by the liberalisation of trade in services measures under Supplement X to CEPA.
On financial co-operation, the Mainland agreed to actively study mutual recognition of fund products between the Mainland and Hong Kong, and to actively support qualified Hong Kong insurers to take part in compulsory traffic accident liability insurance business in the Mainland. Applications made by Hong Kong insurers will be actively considered and facilitation will be provided in accordance with relevant rules and regulations.
Trade and Investment Facilitation
The Mainland agreed to further strengthen co-operation in the areas of commodity inspection and quarantine, food safety, quality and standardisation, and also in the area of intellectual property protection.
CEPA is the most liberalised free trade agreement signed by the Mainland. Supplement X to CEPA has included various CEPA-plus liberalisation measures covered in the services agreement signed by the Mainland and Taiwan in late June this year under the Economic Cooperation Framework Agreement (ECFA). The various new measures will enable Hong Kong services industries to develop the Mainland market, and are conducive to the continued economic co-operation and development of the two places. The Central Government has pledged to basically achieve, through CEPA, liberalisation of trade in services between the Mainland and Hong Kong before the end of the National 12th Five-Year Plan period. The signing of Supplement X to CEPA marks a further step towards this goal.
The public can visit the Trade and Industry Department's CEPA website at www.tid.gov.hk/english/cepa/index.html for details on CEPA.