A Chinese mainland official said last week that zero tariffs on all products originating from Hong Kong will be implemented from January 1 next year.

Wang Liaoping, director of the Ministry of Commerce's Taiwan, Hong Kong and Macao Affairs Department, said that under the third phase of the Closer Economic Partnership Arrangement (CEPA), an additional 300 categories of products, ranging from textile products, garments, and food to electrical products and machinery, would be covered.

Wang said both sides had reached an accord over the standards of origin of watches and clocks, a market in which Hong Kong is advanced, so that watch and clock products processed in Hong Kong would enjoy "qualified tariff-free treatment."

As for the service sector, the mainland is also to open more industries to Hong Kong investors in addition to the existing 26, such as logistics, distribution, advertising and tourism, already available.

According to a survey conducted by Hong Kong authorities, its manufacturers, taking advantage of the CEPA, are expected to double their exports to the mainland this year.

Bilateral trade volume reached a record high last year after the arrangement was launched.

The mainland's imports from Hong Kong reached US$4.0 billion in the first four months of 2005, an increase of 14.3 percent year-on-year. Exports to Hong Kong stood at US$33.7 billion, up 24.5 percent.

Since the implementation of the CEPA in January 2004, more than 3,000 certificates of origin have been issued to Hong Kong companies, covering products with a total value of US$150 million, ensuring their tariff-free treatment when entering the mainland.

The CEPA has not only facilitated trade flow but also promoted bilateral investment, experts said.

Hong Kong investors are increasing their investment in the mainland as they are allowed to tap industries ahead of foreign rivals.

During the CEPA's first 12 months, 19 Hong Kong enterprises applied to invest in mainland industries, compared to just 18 in the previous 11 years, according to the Ministry of Commerce.

(China Daily July 19, 2005)