Hong Kong and Beijing officials are trying to narrow their differences over the definition of Hong Kong goods under the Closer Economic Partnership Arrangement (Cepa). Hong Kong insists that products be entitled to zero-tariff privilege under the trade pact if 25 per cent of the manufacturing process is based in Hong Kong, but the mainland authorities prefer a stricter benchmark of 30 per cent. Three days of trade talks between mainland officials and their counterparts from Hong Kong's Trade and Industry Department began in Hong Kong on Monday. The mainland taskforce was led by Liu Guangping, head of the general administration of the customs department's duty collection, along with Ministry of Commerce officials Zhu Hong and Liu Guanglong. They returned to Beijing yesterday after meeting business representatives. Tsang Yok-sing, Executive Councillor and chairman of the Democratic Alliance for Betterment of Hong Kong, said business leaders were told that the central government had to balance the interests of Hong Kong and mainland companies. 'The purpose of having Cepa is to assist Hong Kong's economic recovery. The definition of Hong Kong goods can't be too loose and be beyond the Cepa framework, otherwise it will be a World Trade Organisation agreement for everyone, including foreign companies' Mr Tsang said. He said the officials said many mainland manufactures were worried that Cepa would undermine their competitiveness but he was confident both sides would hammer out a deal on a rate between 25 per cent and 30 per cent. Cliff Sun Kai-lit, vice-chairman of the Federation of Hong Kong Industries, said a 25 per cent value-added benchmark would be difficult for many local manufacturers. Mr Sun hoped the definition would take into account whether the goods were researched, developed and designed in Hong Kong. Under the free-trade agreement signed by Hong Kong and the mainland last month, 273 products will be granted zero-tariff status when entering the mainland market, starting from January 2004. But the definition of Hong Kong goods remains unresolved, leaving the business community uncertain over which products will enjoy the concession.