Hong Kong insurance companies can gain access to mainland China through a strategic merger with a local group as long as they meet the terms of China`s WTO membership agreement (no Hong Kong company is involved). 14 Six months after the implementation of the agreement, projects are still progressing slowly, although some interest has been shown. Neither the business community nor the authorities have been under any illusions about this. For example, in November 2003, the Hong Kong Trade Development Council, the organization that promotes Hong Kong`s foreign trade and is a strong supporter of the EPA, stated that “the creation of production activities through the EPA is likely to be limited and the impact on job creation or trade flows should be moderate.” HKGCC draws attention to the existence of projects in the fields of textiles (Ralph Lauren), biotechnology (CK Life Sciences), chemicals, Chinese medical devices, perfumes and even the steel industry. The creation of a specific cross-border zone, in which Hong Kong companies could employ Chinese workers on the mainland, would undoubtedly increase the benefits of the EPA in this area. 9 According to the Hong Kong government, 90% of Hong Kong`s exports to China will be duty-free after the agreement enters into force. Hong Kong`s domestic exports to the mainland amounted to HK 36.7 billion ($4.7 billion) in 2003; they account for 30% of Hong Kong`s total product exports, but only 2.1% of Hong Kong`s total exports, including Chinese products transiting through Hong Kong. Electricity has slowed sharply since 1997, with Hong Kong`s processing industry now almost fully sealed. The EPA is a framework agreement based on four agreements: 2 With the exception of a series of these measures (opening in the telecommunications sector, making available individual visas for tourists from parts of mainland China visiting Hong Kong…) implemented in the autumn of 2003, the agreement came into force on 1 January 2004. Both sides have pledged to continue negotiations for a further extension of the agreement.
The EPA complies with Article 24 of the GATT (General Agreement on Tariffs and Trade) on bilateral agreements and is compatible with World Trade Organization (WTO) rules, a condition essential to its implementation since both parties are separate members of the WTO. This is the first bilateral agreement signed by Hong Kong and the first signed by mainland China with a WTO member. It must carry out an essential activity, the proof of which is, through an analysis of four distinct criteria: the nature and extent of the activities carried out in Hong Kong, the responsibility for hong Kong`s income tax, at least three years of existence and commercial activity (five years in the construction and mechanical engineering sector, but no conditions imposed on real estate agencies). , and the presence of 100% or leased offices, excluding only “mailboxes” from the benefits of the agreement. The agreement clearly shows that the Chinese government intends to offer Hong Kong a preferred means of accessing the Chinese banking market by 2007. The EPA facilitates Hong Kong banks` access to the Chinese market and gives them a comparative advantage over foreign banks until the end of the WTO commitments timetable (see Appendix 3). However, it does not repeal all restrictions on the banking sector, particularly for renminbi transactions. For Hong Kong banks, the EPA: Residents of Hong Kong, a Chinese national, may practice in mainland China without prior authorization after obtaining a Chinese professional degree. 28The EPA is of great political importance. The agreement signed at the end of June 2003 on the occasion of the official visit of the new Chinese Prime Minister Wen Jiabao to the SAR shows that the maintenance of Hong Kong`s prosperity remains the essential objective of the policy of the People`s REPUBLIC of China with regard to the SAR, not least because the Chinese authorities consider it to be the main factor in maintaining political stability in Ho