Financial Secretary John Tsang (center) proposes a toast with the Minister of Trade of New Zealand Tim Groser (2nd right) and Hong Kong Secretary for Commerce and Economic Development Rita Lau (2nd left) after signing the city's first Closer Economic Partnership Agreement (CEPA) with an overseas country in Hong Kong Monday. Edmond Tang / China Daily

Agreement seen as WTO-compatible free-trade pact

Hong Kong has signed its first Closer Economic Partnership Agreement (CEPA) with an overseas country - New Zealand - Monday, as the two economies moved closer to boosting bilateral trade and economic ties.

The new deal, which followed the city's earlier CEPA arrangements with the Chinese mainland, is described as a "comprehensive and high-quality free trade agreement that is fully consistent with rules of the World Trade Organization", according to a joint statement released by the governments of Hong Kong and New Zealand.

Under the pact, which is hoped to come into force in the last quarter of this year, liberalization measures on both trade in goods and services will be introduced.

Regarding trade in goods, the agreement guarantees duty-free access for 100 percent of New Zealand's exports to Hong Kong. Without this guarantee, Hong Kong has the legal right to introduce tariffs on a range of New Zealand imports.

Hong Kong, meanwhile, will benefit from tariff elimination on 54 percent of its exports to New Zealand. The remaining 46 percent of Hong Kong's exports covered by tariffs will progressively become duty-free by 2016.

It is estimated that upon complete elimination of New Zealand's tariffs, Hong Kong's annual tariff saving will be about HK$7 million, Secretary Lau said.

On trade in services, the agreement guarantees that Hong Kong service providers will enjoy secured preferential opportunities in the New Zealand market in a variety of service sectors, including maritime transport and logistics and related services, as well as the six advantage industries identified by Chief Executive Donald Tsang in his 2009-10 Policy Address.

In terms of market access, restrictions in the form of limitations on foreign capital, number of service providers or operations, value of service transactions, number of persons employed, types of legal entity or joint venture requirements will be eliminated in a variety of service sectors in the New Zealand market.

The two sides will also work on boosting bilateral trade and economic ties by facilitating investment and movement of business persons.

Business persons of the two economies in the categories of business visitors, intra-corporate transferees, and installers or servicers in specified service sectors will be granted temporary entry into Hong Kong and New Zealand under favorable conditions.

On investment facilitation, to further enhance bilateral investment flows, the two sides have agreed to negotiate an investment protocol for the CEP Agreement, with a view to concluding the investment negotiations in two years.

The annual growth in bilateral merchandise trade between Hong Kong and New Zealand averaged 2.7 percent from 2005 to 2009, with total bilateral merchandise trade amounting to HK$6.5 billion in 2009, while the annual growth for bilateral trade in services averaged 11 percent from 2004 to 2008, with total bilateral trade in services standing at HK$ 3.7 billion in 2008.

The agreement can enhance trade and investment flows between the two places, the joint statement said.

"The agreement we sign today is comprehensive, of high quality and will take our business and economic ties to a new height. It opens not only a new chapter in our history of international trade but also doors to new opportunities," Rita Lau, Hong Kong's secretary for Commerce and Economic Development, said at the signing ceremony Monday.

"The agreement will be a new incentive to attract New Zealand enterprises to come and invest in Hong Kong, bringing with them valuable expertise and experience," she added.

"I am confident that this agreement will help foster increased linkages and ultimately result in more efficient and profitable business practices to support strengthened economic links between us," Tim Groser, minister of trade of New Zealand, said.

(HK Edition 03/30/2010 page2)