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Arguments defending Cepa are faulty, says trade expert

Chloe Lai

He says some articles of the pact with the mainland violate WTO provisions

The government has been faulted over its claim that the free-trade deal signed with the mainland does not clash with WTO rules.

Wang Guigao, chairman of the Hong Kong WTO Research Institute, yesterday said that, contrary to government claims, certain articles of the Closer Economic Partnership Arrangement (Cepa) dealing with anti-dumping, countervailing and safeguard measures were inconsistent with the rules set by the world trade body.

These three sets of measures allow countries to fend off or retaliate against the dumping of cheap imports, high tariffs, illegal subsidies and other forms of trade protectionism.

'Anti-dumping, countervailing and safeguards are cures to disease created by trade distortion; they are the guard against trade barriers and are allowed to exist [in a free-trade pact],' said Professor Wang, the chair professor of Chinese and comparative law at City University.

He was responding to a claim made by Deputy Secretary for Commerce, Industry and Technology Raymond Young Lap-moon that, under the rules of the World Trade Organisation, parties to a free-trade pact must eliminate trade barriers.

Mr Young said such barriers included anti-dumping, countervailing and safeguard regulations.

Hence, he added, 'the mutual elimination or restraint of such measures between the mainland and Hong Kong under Cepa is consistent not only with the WTO provisions, but also with the spirit of free trade'.

But Professor Wang said this mutual arrangement was questionable under WTO rules as China could not offer the same guarantees to its other trade partners.

He said this violated WTO principles of non-discrimination and could lead to challenges from other WTO members.

In defending Cepa, Mr Young also cited the free-trade pact between Australia and New Zealand.

Under the deal, the two countries have agreed not to adopt anti-dumping or retaliatory trade measures against each other - similar to the Cepa arrangement between Hong Kong and the mainland.

However, Professor Wang pointed out that Australia and New Zealand reached this agreement only after strengthening their respective laws on competition to avoid any market distortion, including dumping.

He said Australia and New Zealand also agreed to allow their judges to sit in each other's courts on trade dispute cases.

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