ECFA Impact on the Hong Kong Logistics Industry Pansy Yau Deputy Chief Economist ECFA signed on 29th June 2010 Takes effect on 12 Sep 2010. Within 6 months, further negotiations in: 1. Trade in goods Tariffs reduction and elimination Rules of origin Customs procedures Technical barriers to trade (TBT) & sanitary and phytosanitary measures - food safety, animal and plant health and safety (SPS) Trade remedy measures 2. Trade in services Gradual reduction or elimination of service trade barriers Enhancement of the scope and depth of trade in services Enhancement of mainland/taiwan cooperation in trade in services 3. Bilateral Investment Establishment of investment protection mechanism Enhancement of the transparency of regulatory requirements Gradual reduction of restrictions on bilateral investment Promotion of investment facilitation
Other economic co-operation to be discussed: IPR protection and cooperation Financial cooperation Trade development and facilitation Customs cooperation E-commerce cooperation Industry cooperation Cooperation of SMEs across the Strait Setting up of Taiwan economic/trade bodies on the mainland & vice versa Early harvest - trade in goods Import tariffs of the early harvest items will be lowered by 1 Jan 2011, and be eliminated completely by 1 Jan 2013. Elimination of mainland s import tariffs on Taiwan-origin products Elimination of Taiwan s import tariffs on mainland-origin products Product category 2009 tariff items Product category 2009 tariff items Petrochemicals 88 Petrochemicals 42 Machinery 107 Machinery 69 Textile products 136 Textile products 22 Transportation vehicles & parts 50 Transportation vehicles & parts 17 Others, of which: 140 Others, of which: 117 iron 22 chemicals 51 metal items 26 dye & pigment 12 hand tools 5 electronics 17 electrical machinery 14 electrical machinery 10 Agricultural products 18 TOTAL: 267 TOTAL: 539
Early harvest - trade in services Mainland s opening to Taiwan 1. Accounting, auditing and bookkeeping 2. Computer services 3. Natural science and engineering R&D services 4. Conference services 5. Professional design services 6. Taiwan films 7. Hospital services 8. Aircraft maintenance services 9. Insurance 10. Banking services 11. Securities and futures Taiwan s opening to the mainland 1. R&D services 2. Conference services 3. Exhibition services 4. Special product design services (except interior design) 5. Mainland films, including coproductions 6. Brokerage services 7. Sport and leisure services 8. Computer reservation system services for air transports 9. Banking services Likely impact on cross-strait investment Cross-Strait investment are expected to increase due to reduction of restrictions and expansion of scope in bilateral investment Taiwan Investment on the Mainland 91-00 01-05 2006 2007 2008 2009 2010 J-O Total investment (US$ million) 17,103 30,154 7,641 9,971 10,691 7,143 11,425 manufacturing (% of total) 91.6 89.4 87.0 87.9 81.9 82.5 73.5 non-manufacturing (% of total) 8.4 10.6 13.0 12.1 18.1 17.5 26.5 Mainland Investment in Taiwan (July 09 October 10) Total investment manufacturing of computers & electronics (% of total) IT & communications (% of total) wholesale & retail (% of total) US$127 million 43.8% 29.2% 13.4% (Remark: Mainland investment in Taiwan has been allowed since 30 June 2009)
Likely impact on cross-strait trade Mainland/Taiwan trade is largely related to industrial inputs for production. Bilateral trade has grown steadily except during financial tsunami in 2009 Strengthened mainland-taiwan industry cooperation US$ bn 40 30 20 23.5 (+13%) Mainland's Exports to Taiwan 25.9 (+10%) 20.5 (-21%) 23.7 (+48%) US$ bn 120 90 60 Mainland's Imports from Taiwan 101.0 (+16%) 103.3 (+2%) 85.7 (-17%) 94.9 (+40%) 10 30 0 2007 2008 2009 J-O 2010 0 2007 2008 2009 J-O 2010 But how would ECFA affect Hong Kong and Hong Kong s logistics industry?
Cross-strait trade re-exported via Hong Kong Major mainland exports to Taiwan Major mainland imports from Taiwan Total (2009), of which US$11.1 bn. Total (2009), of which US$85.7 bn. Elec./Electronic items (HS 85) 34.4% Elec./Electronic items (HS 85) 44.8% Machinery (HS 84) 16.3% Optical items (HS 90) 17.1% Optical items (HS 90) 7.1% Plastics (HS 39) 9.4% Chemical items (HS 38) 4.8% Organic chemicals (HS 29) 6.5% Organic chemicals (HS 29) 4.0% Machinery (HS 84) 5.6% Fuel & oil (HS 27) 2.4% Iron & steel (HS 72) 2.9% Vehicles (HS 87) 2.4% Copper articles (HS 74) 2.2% HK s Re-exports - mainland to Taiwan HK s Re-exports - Taiwan to mainland Total (2009), of which US$3.0 bn. Total (2009), of which US$18.0 bn. Electronics * 64.4% Electronics * 76.9% Precious stones (HS 71) 11.9% Plastics (HS 39) 8.4% Clothing (HS 61 & 62) 5.1% Iron & steel (HS 72) 1.4% Optical items (HS 90) 2.4% Copper articles (HS 74) 1.2% Footwear (HS 64) 2.0% Optical items (HS 90) 1.2% * TDC calculation Impact of the three links HKTDC survey with 130 Taiwanese companies in Dec 2008 Roles of Hong Kong as a port HK PRD YRD Will stop using Hong Kong for re-export or transshipment after three links 13.0% 15.0% 28.6% Will continue to use Hong Kong for reexport or transshipment after three links, but less in quantity 52.2% 65.0% 61.9% Roles of Hong Kong as a trade platform Increase No change Decrease Sales and marketing 30.4% 60.9% 8.7% Sourcing 13.3% 73.3% 13.3% Import/export management 27.3% 54.5% 18.2%
Hong Kong as a regional base for Taiwanese companies Regional Head Quarters Regional Offices June 2009 19 138 June 2010 30 184 Mainly to manage and coordinate businesses in the greater China region and Asia Pacific Use Hong Kong as a regional distribution centre in the global supply chain Hong Kong as a regional distribution hub Air cargo handled by Hong Kong International Airport 000 tons 400000 2010(Jan-Oct) +27.1% 350000 300000 250000 200000 150000 100000 50000 0 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 2009 2010 Source: Hong Kong International Airport
Taiwanese companies all-china strategy Direct investment in the Chinese mainland 2000 2010 (J-O) Others 6.5% Bohai 3.6% Others 15.8% Bohai 6.3% Guangdong 39.1% YRD 50.6% Guangdong 19.8% YRD 52.9% Fujian 5.2% Fujian 3.8% Rising interests in the mainland s domestic market US$ mn 800 Investment in the wholesale and retail business in the mainland by Taiwanese companies 700 600 500 400 300 200 100 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (J-O)
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