Mainland China achieves basic liberalization of trade in services with Hong Kong and Macao

To reach the goal announced by Chinese Premier Li Keqiang in August 2011 that the mainland should make efforts to realize basic liberalization of trade in services with Hong Kong through CEPA by the end of the Twelfth Five-Year Plan, and approved by the State Council, the service trade liberalization deal with Hong Kong under the framework of CEPA (hereinafter referred to as the agreement) and that with Macao were signed on December 18, 2014 in Hong Kong and Macao respectively, and will officially enter into effect on March 1, 2015.
This is the first free trade agreement signed in the pattern of pre-establishment national treatment plus negative list with a wide coverage and rich contents. The text of the agreement makes principal stipulations on the application range, national treatment, reserved restrictive measures, financial prudential principal, telecommunication culture chapter, cross-border service, most-favored treatment, general exceptions and safe exception, government procurement, guarantee measures and investment facilitation. The appendix of the agreement includes two parts. The first part is on the reserved restrictive measures in the pattern of negative list under commercial presence. Specific commitments are made to the 160 sectors according to WTO classification of trade in services. Except the listed specific restrictive measures, Hong Kong and Macao service providers can expect the same treatment as companies from the Chinese mainland. The second part is on the new added liberalization measures in the pattern of positive list in cross-border services, telecommunications and culture sectors. At the same time, in order to encourage Hong Kong and Macao citizens to start business in the mainland, more liberalization measures are made to individually-owned businesses.
The agreement has mainly four features. Firstly, the liberalization mode is original. Compared with the previous CEPA agreements, the newly signed agreement gives priority to the negative list, with most of the sectors promoted by the pattern of pre-establishment national treatment plus negative list and a few sensitive sectors still adopting positive list. Secondly, the liberalization covers more sectors with a high level. At least 153 sectors are liberalized, accounting for 95.6% of the total 160 sectors of WTO trade in services, 58 of which are expected to realize completely the national treatment; among the 134 sectors adopting negative list, 132 restrictive measures are reserved; 27 and 24 new liberalization measures are added to the sectors that adopt positive list by Hong Kong and Macao respectively; 84 more businesses are liberalized among individually owned businesses, totaled 130. Thirdly, the most favored treatments provided to Hong Kong and Macao are further clarified through the agreement, and in the future, all the liberalization measures that are superior to CEPA in the free trade agreements between the mainland and other countries and regions will be applicable to Hong Kong and Macao. Fourthly, market liberalization and reform deepening are promoted simultaneously. To practically implement the liberalization, related departments, together with Guangdong province, have explored establishing and optimizing related supporting systems suitable to the management mode of negative list, which will provide system guarantee to the achieving of basic liberalization of trade in services between Guangdong and Hong Kong and Macao.
After the signing of the agreement, the mainland will achieve basic liberalization of trade in services with Hong Kong and Macao in Guangdong, accumulating experience for achieving basic liberalization of trade in services between the mainland and Hong Kong and Macao, and the reproducible and generalized experience formed in Guangdong will be publicized to the whole nation steadily and orderly. The agreement will benefit Hong Kong in consolidating its central position in international finance, trade and shipping, as well as developing an emerging modern service industry, and will provide beneficial help to the diversified development of Macao’s economy. It will also bring new vitality to the economy of the mainland, benefiting the economic integration of the mainland and Hong Kong and Macao.


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