The Mainland and Hong Kong have agreed on to expand the scope of the Closer Economic Partnership Arrangement, or CEPA, including the introduction of new renminbi business in Hong Kong. The new measures cover goods and services, and enhanced cooperation in intellectual property protection.

The State Council is studying the scope for further expansion of renminbi business in Hong Kong. This includes allowing Hong Kong importers to settle direct import trade from the Mainland in renminbi, and allowing financial institutions in the Mainland to issue renminbi financial bonds in Hong Kong on a pilot basis.

At the opening of the "Mainland, Hong Kong & Macau Trade & Economic Co-operation Forum" this morning, to mark the third anniversary of CEPA's signing, Chief Executive Donald Tsang stressed this was a complex exercise. He also noted that the policy was designed to consolidate and develop Hong Kong's status as an international financial centre.

"The Hong Kong Government will maintain close liaison with the Mainland authorities to expedite the preparatory work for an early launch of these two types of new business," Mr Tsang said.

In the services sector, 10 areas will see new liberalisation measures. They are legal services, construction, information technology, convention and exhibition, audiovisual, distribution, tourism, air transport, road transport, and individually owned stores.

Some of the moves targetting legal services include:

* waiving the requirement regarding the number of full-time lawyers employed by Mainland law firms that operate in association with Hong Kong law firms;

* waiving the residency requirement for representatives stationed in representative offices of Hong Kong law firms in the Mainland;

* allowing Hong Kong residents qualified for practice in the Mainland to act as agents in matrimonial and succession cases relating to Hong Kong;

* allowing Hong Kong barristers to act as agents in civil-litigation cases in the Mainland in the capacity of citizens; and

* allowing Hong Kong residents who have acquired Mainland lawyer qualifications or legal professional qualifications to undergo internships in a branch office of a Mainland law firm set up in Hong Kong.

In construction, Hong Kong service suppliers will be allowed to set up wholly-owned construction-engineering cost-consulting enterprises in the Mainland. The enterprise's  performance in both Hong Kong and the Mainland will be taken into account in assessing their qualification in the Mainland.

Both sides are committed to encouraging mutual recognition of professional qualifications as part of the services trade under CEPA.  In this connection, a mutual recognition agreement between Mainland construction supervising engineers and Hong Kong building surveyors was signed on June 27 in Beijing, bringing the number of mutual-recognition agreements or arrangements under CEPA to 10.

Hong Kong travel agents will be allowed to set up wholly-owned or joint-venture operations in Guangdong Province to apply to operate group tours to Hong Kong and Macau for residents of Guangdong Province on a pilot basis.

Hong Kong air-transport sales agencies may set up wholly-owned agencies in the Mainland. The registered capital requirement will be the same as that for Mainland enterprises.

All these measures will take effect starting from  January 1, 2007, and the Mainland will work out the implementation rules.

Since January 1, the Mainland had granted all products of Hong Kong origin tariff-free treatment if applications by Hong Kong manufacturers met the CEPA rules of origin. Manufacturers may apply to include products that did not meet the agreed rules of origin into discussions that will be held twice a year.

Agreements on 37 product areas have now been worked out in the rules-of-origin discussions in the first half of the year, boosting the number of approved product areas from 1,370 to 1,407.

The 37 products include aquatic products, food and seasonings, chemical products, plastic and rubber products, and mechanical and electrical products. They will be eligible for zero tariffs starting from  July 1.

Intellectual property protection is another new initiative under CEPA, aimed at facilitating trade and investment. The Mainland Intellectual Property Protection Coordination Centre will be set up in Hong Kong to help in related information exchanges.

For more information on the CEPA enhancements, click here.