The agreement sets the conditions for trade in goods and services, cross-border investment and new rules in increasingly important areas, such as e-commerce and intellectual property. The impact on trade in manufactured goods between Asian nations will be particularly evident, analysts said. 11 In the first four months of the agreement, 869 certificates of origin were applied for under the EPA and 813 were authorised, mainly in textiles and clothing (310 licensed) and pharmaceuticals (209). In the first quarter of 2004, the decline in exports of products from Hong Kong to China continued, but at a slower pace than in 2003 (-8.4% versus -11.9%), with no change attributable to the EPA. Between January 1 and May 21, 2004, the value of duty-free products was less than HK400 million (US$50 million). Some media have called the RCEP a Chinese-led effort, but analysts say it`s inaccurate. “For a long time, it wasn`t even dominated by China, although China is the largest economy in the agreement,” says Michael Green, senior vice president for Asia at the Center for Strategic and International Studies. As a pilot, he cited Japan and ASEAN members, including Singapore. Strategy Advice With the exception of certain types of strategy consulting, Hong Kong companies have the right to set up 100% businesses in mainland China, four years before the WTO calendar. The minimum capital requirement should be the same as for Chinese companies, at 100,000 yuan (compared to the current amount, between $100,000 and $500,000 for foreign companies). The agreement does not define the legal form in which Hong Kong companies will be able to create 100% businesses in mainland China. The legal form allowed could have many implications for Hong Kong investors, including the possibility of reducing profits. In addition, the EPA is unlikely to apply to education and training consulting firms (in which Hong Kong has extensive expertise) as these sectors are heavily controlled by the Chinese authorities.

The agreement clearly shows that the Chinese government intends to offer Hong Kong a preferred means of accessing the Chinese banking market by 2007. The EPA facilitates Hong Kong banks` access to the Chinese market and gives them a comparative advantage over foreign banks until the end of the WTO commitments timetable (see Appendix 3). However, it does not repeal all restrictions on the banking sector, particularly for renminbi transactions. For Hong Kong BANKS CEPA: Switzerland (which has a customs union with Liechtenstein, is sometimes included in agreements) has bilateral agreements with the following countries and blocs:[41] Chinese Premier Li Keqiang called the agreement a “victory for multilateralism and free trade,” according to a report published Sunday by the state-run Xinhua news agency. 13More than forty applications have been submitted to extend the scope of the EPA to other products that, in most cases, are not manufactured in Hong Kong.