Hong Kong to Grant Foreign Firms Tariff-Free China Access via CEPA Pact Revision

Hong Kong is set to revise its key trade pact with mainland China to grant foreign companies established in the city the same preferential treatment as local firms, a move aimed at enhancing its role as a gateway for international business. The city's government also reported progress on deepening trade ties with Southeast Asian nations and its bid to join a major regional trade bloc.

CEPA to Extend Privileges

According to a September 21 statement from Hong Kong's Secretary for Commerce and Economic Development, Algernon Yau, the third version of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) is being prepared. Under the revised agreement, any foreign company that establishes a presence in Hong Kong will be treated as a Hong Kong company for the purposes of doing business on the mainland.

This means that products manufactured by these foreign-owned, Hong Kong-based companies will qualify for tariff-free access to the mainland Chinese market, provided they meet the official "Made in Hong Kong" requirements. The policy is a key part of Hong Kong's first Five-Year Plan, which aims to comprehensively upgrade the CEPA framework.

Strengthening Regional Trade Links

Beyond mainland China, Hong Kong is actively working to expand its economic integration across Asia. Yau noted that a working group will be established by the Regional Comprehensive Economic Partnership (RCEP) to review Hong Kong's application to join the trade pact. He acknowledged the process is often lengthy but affirmed the government would actively lobby member states for their support.

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Separately, Hong Kong recently signed the "First Protocol to Amend the Investment Agreement" with the Association of Southeast Asian Nations (ASEAN). This protocol ensures that Hong Kong enterprises operating in the ten ASEAN member states receive treatment no less favorable than that given to local or other foreign companies.

Hong Kong-ASEAN Economic Ties

The agreement with ASEAN underscores a significant and growing economic relationship. According to the Commerce and Economic Development Bureau:

• As of the end of 2024, ASEAN was Hong Kong's third-largest destination for outward direct investment, with a stock of HK$671.2 billion.
• During the same period, ASEAN was the sixth-largest source of foreign direct investment into Hong Kong, with an investment stock of HK$448.5 billion.