ENG-2002 — Page 150

COMMERCE AND INDUSTRY

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External Commercial Relations

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

The HKSAR Government started consultations with the Central People's Government (CPG) on a Mainland/Hong Kong Closer Economic Partnership Arrangement (CEPA) in January 2002. The proposed CEPA covers three broad areas trade in goods, trade in services, and trade and investment facilitation. The establishment of the CEPA under the framework of the WTO will further promote trade and investment flows, as well as exchanges of talent, capital and technology, between Hong Kong and the Mainland, which would be mutually beneficial and conducive to sustained economic growth.

Two rounds of High Level Consultations, led by the Financial Secretary for the HKSAR Government and Vice Minister An Min of the Ministry of Foreign Trade and Economic Cooperation for the CPG, were held in 2002. There were also frequent exchanges at the working level to take forward the consultations. The two sides have achieved good progress on a number of issues, and are working actively together with a view to reaching an arrangement on the main parts by June 2003.

Hong Kong and New Zealand Closer Economic Partnership Agreement

In 2002, Hong Kong and New Zealand continued their negotiations on a free trade agreement. The negotiations encompassed a wide-ranging scope with emphasis on trade and investment liberalisation and facilitation. The two sides have achieved good progress on many issues and are committed to concluding the negotiations as soon as possible to achieve a high-quality agreement that is beneficial to both economies.

China's Accession to the WTO

China formally acceded to the WTO on December 11, 2001. It is generally expected that China's broad market-opening commitments for accession to the WTO, as well as the enhanced accessibility to overseas markets as provided for under the WTO agreements, will boost the Mainland's overall economic growth. The Mainland is Hong Kong's largest trading partner and there is a strong economic link between the two places. The Mainland's accelerated economic growth is expected to usher in enormous business opportunities for Hong Kong. The anticipated surge in trade flow and the improvement of the investment environment in the Mainland brought about by China's accession to the WTO should help boost Hong Kong's external trade and intermediary services. According to an estimate by the HKSAR's Government Economist, Hong Kong's exports involving the Mainland will be raised by 15 per cent (averaging 1.3 per cent per annum) and its GDP by 5.5 per cent (averaging 0.5 per cent per annum) by 2010. These have yet to take into account the wider impact of the

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