Government officials from the Hong Kong Special Administrative Region and the Central People’s Government of Mainland China signed the Closer Economic Partnership Agreement (CEPA III), which will give products of Hong Kong origin tariff-free treatment when entering China. Under CEPA III, rules of origin on 261 products have already been worked out and, upon application, manufacturers in Hong Kong will be able to move those goods into China tariff free starting in January 2006.

Earlier versions of CEPA have already addressed rules of origin on 1,369 products. For those products not already covered, the rules of origin will be worked out twice a year instead of once a year.

Transportation and distribution liberalization are also covered by some of the 23 liberalization measures included in CEPA III. “Many of the measures under CEPA III have been worked out with the intention to enhance the flow of trade and investment between the two places,” said an official statement.

The exemptions currently being worked out include textiles and clothing products under Hong Kong’s Outward Processing Arrangement. This is a result of special safeguard measures established by the U.S. and European Union.