The bilateral trade accord signed between Chinese mainland and Hong Kong Special Administrative Region, called the Closer Economic Partnership Arrangement or CEPA, aims to intensify already-rapid integration of the bilateral trade. The CEPA covers trade in goods and services, investment facilitation and also tourism. Its basic objectives are to phase out tariffs and non-tariff barriers on trade in commodities, phase in the liberalization of trade in services and reduce and eliminate all discriminatory measures in an effort to boost trade and investment facilitation.

According to CEPA, the Chinese mainland will remove tariffs to zero on 273 Hong Kong products from January 1, 2004, accounting for 67 percent of manufactured goods exported to the mainland. Hong Kong's Financial Secretary, Antony Leung, estimates that Hong Kong exporters would save 750 million US dollars a year through the removal of tariffs.

On trade in services, a number of sectors including exhibitions and conventions, advertising, banking, securities and insurance in the mainland will be open to Hong Kong investors earlier than to foreign investors.

Through CEPA, Hong Kong-based service providers and qualified professionals are better placed to expand their business and to assist their mainland customers. The arrangement also aims to attract new investment into the production of high value-added goods in Hong Kong, notably those with valuable intellectual property, for distribution and sale in the mainland.

If any company who like to enter China's market through Hong Kong, that's benefiting Hong Kong. They set up manufacture base, operations and headquarters in Hong Kong, then they begin operations in Chinese mainland. We have seen a lot of companies already. The government should increase employment. A certain firms they haven't come to depart the world yet. For fancy goods, you talk about watch, not Hong Kong-made watch, but international brand? said Roger Chu, director of Chinese Mainland, Hong Kong Trade Development Council.

Official statistics show that trade volume between Hong Kong and the mainland stood at 2.2 billion US dollars or 10 percent of HK's trade in 1979, but leapt to about 166 billion US dollars in 2002. The figure represents 42 percent of Hong Kong's total trade.

By the end of 2002, Hong Kong's direct investment in the mainland had reached over 200 billion US dollars, which is close to half of the total direct overseas investment in the mainland.

Editor: Liao Ming