The Mainland and Macao Closer Economic Partnership Arrangement

In view of promoting the joint economic prosperity and development of the Mainland, China (hereinafter “Mainland”) and the Macao Special Administrative Region of China (hereinafter “Macao”); strengthening both sides’ relations with other countries and regions, the two sides decided to establish an administrative arrangement with a view to achieving closer economic and trade links – an FTA-like arrangement to the extent to which the nature is under an umbrella of two separate customs territories of a single sovereignty state. Considering the excellent background of economic ties as well as the longstanding relation between the Mainland and Macao; recognizing the necessity of advancing the level of economic cooperation between the Mainland and Macao for the purpose of promoting the stable economic development as well as the improvement of living standard for the two sides, the Mainland and Macao initiated their work on the consultations for establishing the CEPA in conformity with the WTO rules.

The CEPA consultations started on June 2003. The two sides engaged substantially in several rounds of discussion under the principle of “tackling the easy before the difficult”, by focusing sequentially on three main areas: Trade in Goods, Trade in Services, and Trade and Investment Facilitation. The two sides concluded and officially signed the General Principles of CEPA and its Six Annexes on 17 October 2003 in Macao, affirming that all commitments as stipulated in CEPA will fully enter into force on 1 January 2004.

While officially coming into effect on 1 January 2004, CEPA, as a full package covers extensive commitments, such as granting zero tariff trade for 273 product lines of Macao origin into the Mainland, classified under the Mainland 2001 version of tariff codes; lowering the market access thresholds into the Mainland for 18 service sectors for those eligible as “Macao Service Suppliers” in addition to establishing mechanisms to promote trade and investment facilitation.