The Closer Economic Partnership Arrangement (CEPA)

Signed by the Hong Kong Special Administrative Region Government and the Central People’s Government, CEPA marks a new era of economic co-operation between Hong Kong and the mainland of China. Becoming fully effective on 1 January 2004, CEPA further integrates Hong Kong and the Mainland, and enhances the attractiveness of the multi-jurisdictional GPRD as a place for locating a business.

In essence CEPA allows preferential access to the Mainland market and reduces tariffs for certain enterprises and individuals operating in Hong Kong. For more information, click here.

CEPA does not apply to everyone who does business in Hong Kong - certain conditions must be fulfilled. Any nationality of business that fulfils the conditions may, however, apply to enjoy the benefits of CEPA - including foreign investors! For an at-a-glance guide, click here.

CEPA is a win-win-win scenario, as individual enterprises, Hong Kong and the Mainland benefits:

- CEPA is a ‘WTO plus’ agreement since the liberalisation concessions from the Mainland under CEPA go beyond China’s WTO commitments. In entering the Mainland via Hong Kong rather than another location, enterprises enjoy a cash flow saving (through the lower tariffs) when exporting goods and have more market opportunities since the barriers to entering some service sectors are lower.

- ‘WTO early’ - enterprises that move quickly can enjoy CEPA-benefits now, ahead of the WTO effective dates.

- the closer operation of the Hong Kong and Mainland players in service sectors improves competition, quality and ultimately service delivery to consumers. This has knock-on effects directly for Hong Kong and the Mainland since they are often the consumer of the other's output.

- CEPA further strengthens Hong Kong’s position as the gateway to China and the preferred location in Asia for regional headquarters and offices.

For further information on what CEPA means for overseas companies, click here.

CEPA is being implemented in a building block approach. For the latest, click here, where the full text of CEPA is also available.