Hong Kong China Free Trade Agreement

5 As of 1 January 2004, 273 categories of hong Kong products (according to the Chinese Customs nomenclature) are no longer subject to import tariffs in mainland China. These include many products related to watchmaking, jewellery, textiles and clothing, chemicals, pharmacy, cosmetics and the electrical and electronic industries. Import duties in the PRC remain high for some of these products: 27% to 35% for jewellery, 18% to 22% for cosmetics, 14% to 23% for watches and 5% to 30% for electrical and electronic products. The agreement is expected to be extended to other product categories from 1 January 2005, as proposed by Hong Kong exporters and approved by the Hong Kong and Chinese authorities. From 1 January 2006, all exports of products originating in Hong Kong will be exempt from import duties. From 14 to 15 July 2009, Chile and Hong Kong presented the final report of the Joint Study Group to assess the feasibility of a free trade agreement. Negotiations between the two countries began with the first round of negotiations in Hong Kong, China, between January 30 and February 2, 2012. The second round of negotiations took place in Santiago, Chile, from 11 to 15 April 2012. On 2 August 2012, Chile and Hong Kong, China, concluded the free trade negotiations. 4 Technical barriers to trade include technical rules, standards and compliance assessment procedures that may have a direct or indirect impact on merchandise trade.

On 7 September 2012, the Chilean and Hong Kong governments signed a free trade agreement in China at the APEC leaders` meeting in Vladivostok. 16The preferential opening measures, which vary considerably from sector to sector, generally include a reduction in the timetable for liberalization under China`s WTO accession protocol and/or additional liberalisation measures and/or a relaxation of the criteria for access to foreign enterprises. Again, this is a largely unilateral commitment, although Hong Kong has pledged not to take further discriminatory measures against the PRC in order to gain access to the 18 sub-sectors covered by the agreement. This second clause could bring some advantages to mainland China: the growth of direct investment in Hong Kong and the acquisition of know-how before the opening of the services sector to foreign competition. 19The definition of “Hong Kong companies” has been a central theme in the negotiation of this clause of the agreement, especially since the GATT and WTO texts on this subject contain few details. The two parties finally agreed on a pragmatic and open definition based on participation in the economic activity of the RAD and not on the nationality of the capital holders. Appendix 5 of the EPA contains a definition of a company in Hong Kong with varying parameters depending on the service sector concerned, based on three criteria: 1 June 29, 2003, the Hong Kong and Mainland China Special Administrative Region signed a bilateral trade agreement known by the Acronym CEPA (Arrangement 1). This agreement has three sections: tariff reductions for 273 product categories that Hong Kong exports to the People`s Republic of China (PRC); a privileged opening of the Chinese market to Hong Kong service providers in 17 sectors (increased to 18 in September 2003); and a series of measures to facilitate bilateral trade in goods, capital and people.