SAR and mainland can benefit from regional trade agreement

Naturally, there have been many ideas as to the contents of a regional trade agreement, which is allowed by the World Trade Organisation (WTO).

Such an agreement has been proposed by Tung Chee-hwa and been received positively by the mainland, so I was dismayed to read your article headlined 'Proposed pact could undermine rationale for mainland's special economic zones' (South China Morning Post Business, December 31), which confused several issues.

First of all, the free trade area in a regional trade agreement has nothing to do with China's special economic zones (SEZs). This free trade area would encompass all of China, including Hong Kong, not a sub-region of the country. Preferential treatment to foreign companies investing in China's SEZs will gradually be phased out, as this violates the WTO principle of national treatment. Free trade zones inside SEZs allow no tariff only on goods assembled in and exported out of the zone - and not to goods going into China.

Secondly, if it is okay for the US to enter into regional trade agreements acceptable to the WTO, why cannot the mainland and Hong Kong as two separate members of the WTO strike a similar deal? Why should this, as the article says, 'make Hong Kong's position as a separate member of the WTO extremely difficult to maintain?'

Thirdly, the Hong Kong General Chamber of Commerce's suggestion of accelerating market access was made after we looked at several of the 150 existing regional trade agreements, and it can be part of a long-range schedule of liberalisation which China will have to engage in anyway, now that the next round of WTO service liberalisation has been launched. A regional trade agreement should not be static and can evolve with a schedule.

Fourthly, an analyst in your article asked why Hong Kong companies should be treated like any other foreign companies when we are part of China. This is because of our status in the Basic Law as a separate customs territory and this will not change with a regional trade agreement.