WHILE BUSINESSES the world over cheered loudly when China finally entered the World Trade Organisation last year, Hong Kong businesses received a rather rude shock. They woke up to the fact that 'one country, two systems' also meant 'one country, two economies'.
Since Hong Kong is a separate Customs territory from the rest of China, under WTO rules SAR businesses are not allowed to receive preferential treatment and will have to compete with the rest of the world when doing business there.
One solution to this problem, first floated by the Hong Kong General Chamber of Commerce, was for the SAR to enter into a preferential trade agreement with the mainland. Though the idea of two regions of the same country entering into a trade agreement with each other was bizarre at first sight, there was a certain logic to it.
The idea was to use the trade agreement to allow Hong Kong businesses to enter China ahead of the competition from the rest of the world. It was argued that if Hong Kong companies got in ahead of everybody else, they would get time to strike deals and establish themselves before the large multinationals came in.
For this to work, speed had to be of the essence. In a space of three to five years, China will have to open up to the rest of the world. It was thought that if a free trade agreement could be hammered together before that, then Hong Kong companies had a real chance to win business in the mainland.
The flaw in this strategy is that speed and trade negotiations just do not go together. Negotiating a trade agreement is one of the slowest and most frustrating pursuits known to mankind. The corridors of the WTO's headquarters in Geneva are full of doddering grey-haired diplomats still negotiating deals they first began as lively young men.
While excitable voices in Hong Kong called for a trade agreement to be concluded in a matter of months, wiser heads cautioned that these things take time. A lot of time.