ENG-2001 — Page 149

COMMERCE AND INDUSTRY

Within the context of its free trade policy, the Government aims at ensuring that Hong Kong's trading rights in overseas markets are safeguarded and its international obligations fulfilled. Hong Kong's success is reflected in the volume of its total trade and the sophistication of its exports in recent years.

Regional Trade Agreements

Notwithstanding the Government's commitment to the primacy of the multilateral trading system under the WTO, it is accepted that free trade agreements (FTAs) may contribute to multilateral trade liberalisation if they are fully WTO-consistent. The Government is therefore prepared to consider negotiating FTAs with trading partners so long as these would be in Hong Kong's interests and contribute to multilateral trade liberalisation.

Closer Economic Partnership Arrangement with the Mainland

During a duty visit to Beijing on December 19, the Chief Executive obtained the agreement in principle of the Central People's Government (CPG) to the Government's proposal to establish an arrangement similar to that of a free trade area between the Mainland and the HKSAR. The CPG has instructed the Ministry of Foreign Trade and Economic Cooperation to set up a special task force to jointly study the proposal with the HKSAR Government.

Hong Kong and New Zealand Closer Economic Partnership Agreement

In 2001, the Government began negotiations on an FTA with New Zealand. The negotiations have a wide-ranging scope with emphasis on trade and investment liberalisation and facilitation. Key issues include early elimination of tariffs on all goods of Hong Kong and New Zealand origin, liberalisation of trade in services, and liberalisation and promotion of bilateral investments. Good progress has been made in the four rounds of negotiations held during the year. Both sides are committed to concluding the negotiations as soon as possible, but without compromising the shared objective of achieving a high-quality FTA that will have real and mutual benefits for the two economies.

China's Accession to the WTO

After 15 years of negotiations, China formally acceded to the WTO on December 11. Since the Mainland is Hong Kong's largest trading partner, its extensive market opening commitments, as well as the more secure access to overseas markets for its products as provided for under the WTO Agreement, will bring about tremendous business opportunities for Hong Kong. An analysis by the HKSAR's Government Economist shows that the Mainland's WTO membership will bring about an estimated increase of 15 per cent in Hong Kong's exports involving the Mainland by 2010 (averaging 1.3 per cent per annum); and an increase of 5.5 per cent in GDP during the same period (averaging 0.5 per cent per annum). These have yet to take into account the wider impact of the expected boom in China's service sectors, as the vast market of its 1.3 billion population is open for the first time in history.

The Government is committed to facilitating businessmen's efforts in tapping opportunities in the Mainland. It maintains close contact with the Mainland authorities at different levels, including the HK/Guangdong Co-operation Joint Conference, the Mainland/HKSAR Joint Commission on Commerce and Trade, and

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