The British Chamber of Commerce has questioned whether the proposed Closer Economic Partnership Arrangement (CEPA) between Hong Kong and China could do more harm than good. In a document to the SAR Government obtained by the South China Morning Post, the chamber warns that an umbrella agreement such as the CEPA could serve as an administrative distraction from fixing the 'serious practical impediments to business' between Hong Kong and the Pearl River Delta. The five-page BritCham submission on CEPA stresses the value of negotiating a much more limited, targeted agreement which could render a 'fully fledged government-to-government CEPA' unnecessary. 'On the contrary, it could be argued that administrative time consumed by negotiating such an 'umbrella' agreement would actually crowd out the time needed to address such focused objectives, thus delaying progress in these materially pressing areas,' BritCham told the Government. A more limited agreement could include the mutual recognition of property conveyancing and auditing services, it said. This would help Hong Kong people buying property in the Pearl River Delta and those small and medium enterprises in Hong Kong that must use separate auditors for their mainland operations. BritCham is concerned international companies with a long presence in Hong Kong would be excluded from the definition of a 'Hong Kong company' for the purposes of the free-trade deal. It said some of the suggested definitions would require 'arbitrary distinctions that will lead to damaging and unreasonable discrimination against many BritCham members'. They could be forced to 'alter structure and staffing synthetically' to become eligible. Suggestions include requiring that a proportion of board members are Hong Kong permanent residents and that core operations are based in Hong Kong. The chamber also warns that if Beijing has the power to ultimately ratify the status of a Hong Kong company, the SAR Government would have 'gifted to Beijing the power to adjudicate the domicile of a Hong Kong company'. Like an American Chamber of Commerce document on CEPA last week, the BritCham document calls for further service liberalisation for Hong Kong companies in areas not covered by China's World Trade Organisation commitments, including air and maritime services, professional services, media and entertainment services and government procurement. BritCham and AmCham both emphasise the need for reciprocal services access to the Hong Kong market for mainland companies and professionals. Yesterday, Federation of Hong Kong Industries director-general Vicky Davies agreed with previous proposals for a zero tariff proposal on Hong Kong-made goods. Ms Davies said service liberalisation in the wholesale and retail, import and export and manufacturing sectors could also be achieved within a year under CEPA. Negotiations on more 'sensitive issues' - which she left to China to define - could be finished within two years. Federation chairman Victor Lo Chung-wing stressed a proposal to allow firms in Hong Kong and the mainland to raise capital on the Shanghai and Hong Kong stock markets under the CEPA. The federation said the definition of a Hong Kong company should be based on its contribution to the economy both in Hong Kong and the mainland. Yesterday, Reuters reported talks on Hong Kong's first CEPA with New Zealand were stuck because New Zealand refused to accept that goods finally assembled in the mainland were 'made in Hong Kong'. 'Now that they have heard it from the minister as distinct from officials, they will know that they were reaching below New Zealand's bottom line,' New Zealand Prime Minister Helen Clark said yesterday, referring to a meeting between New Zealand Trade Negotiations Minister Jim Sutton and Commerce and Industry Secretary Brian Chau Tak-hay on Friday. Last night, the SAR Government would say only progress was made in some areas 'but there were still some difficult and outstanding areas'.
