The Amendments to the Agreement on Trade in Services of the Mainland and Hong Kong Closer Economic Partnership Arrangement (Amendment) which was signed on 21 November 2019 has come into force on 1 June 2020. Trade in Services is one of the four major areas covered by the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), under which Hong Kong service suppliers enjoy preferential treatment when entering certain service sectors in the Mainland. The Amendment aims to further enhance the liberalisation of Mainland’s service sectors towards Hong Kong by implementing new liberalisation measures and lowering the thresholds for Hong Kong service suppliers in gaining access to Mainland markets. For more information, please see our previous client alert – ‘The Amendments to the Agreement on Trade in Services of the Mainland and Hong Kong Closer Economic Partnership Arrangement’.

Now that the Amendment has come into force, Hong Kong service suppliers should take note of the following when formulating their business plans:

• Reserved restrictive measures on different service sectors are consolidated into Table 1 in Annex 1 of the Agreement on Trade in Services of CEPA (Negative List) and liberalisation commitments by the Mainland to Hong Kong service suppliers are consolidated into Table 2 in Annex 1 (Positive List). Suppliers should find their respective service sector on the Lists and check the relevant restrictions and commitments that are applicable to their businesses.
  
  
• The Negative List has been shortened and amended while the Positive List has been expanded with additional liberalisation measures, including the cancellation or relaxation of the restrictions on equity ratio, capital requirements, business scope etc. Suppliers should take into account the relaxed restrictions when formulating or revising their business plans.
  
  
• Other than CEPA, suppliers should be aware of the relevant Mainland rules and regulations of their respective areas and ensure their plans comply with such rules and regulations.

The implementation of the Amendment opens up a range of opportunities for Hong Kong businesses in Mainland markets. In order to enjoy the benefits under the CEPA framework, Hong Kong service suppliers should pay attention to the specific requirements stated in CEPA as well as the Amendment. In light of the comprehensiveness of the CEPA framework, suppliers are advised to seek professional advice if they have any concerns prior to implementing their business plans.