A Study On The Trade Effect Of The Implementation Of CEPA

On January 1, 2004, CEPA came into effect, marking the trade relationship between the Mainland and Hong Kong has entered a new stage. As China's first free trade bill after accession to the WTO, CEPA aims to reduce or cancel all the goods tariff and non-tariff barriers between the Mainland and Hong Kong, achieves liberalization of trade in services and promotes investment facilitation. The signing of CEPA means the cooperation has changed from the civil-driven model gradually toward the government- promotion and will play an important part on the economy of the Mainland and Hong Kong.Based on the regional economic integration theory, this thesis analysis the present status of economic and trade of Hong Kong and the Mainland and studies on the overall trade scale, the proportion of trade, trade structure and trade methods. This article from the empirical point of view, using the Balassa Model and Trade openness and other tools, analysis trade effects about goods and service and the regional differences, reasons for the analysis results. Finally, make the corresponding policy recommendations on the results.Main conclusions of the thesis are as follows:First, the qualitative analysis expresses that after CEPA established, bilateral trade between Hong Kong and Mainland continuously extend. Hong Kong's trade dependence of mainland further strengthens. Bilateral service trade has certain complementation.Second, from the effect analysis of good trade, empirical study indicates that CEPA' s establishment brings trade creation for Hong Kong, not trade diversion. And mainland has neither trade creation nor trade diversion. From the effect analysis of service trade, service export from mainland to Hong Kong basically stays the same lever. While service export from Hong Kong to mainland increases rapidly, the net export gap is larger and larger. From the regional difference of trade effect, the benefit Hong Kong obtained from different areas of mainland is different from the effect different areas received which is caused by economy development and distance reason. The region for closet bilateral trade between mainland and Hong Kong is such as Guangdong, Fujian, Shanghai, Beijing, Jiangsu and Zhejiang etc.Third, the two sides should enhance the coordination, have mutual advanta ges complimentarily, expand trade-creation effect, accelerate trade liberalism in service, and establish CEPA dispute settlement mechanism by referring the rule of WTO.