Hong Kong's existing requirements on rules of origin of products will be respected in formulating the CEPA rules.

Vice-Minister of Commerce An Min said this in clarifying details of the mainland-Hong Kong Closer Economic Partnership Arrangement.

The "principal process" rule in Hong Kong attaches importance to the location where the major production process takes place in defining the origin of a product. This rule would continue to apply for most products, An was quoted as saying yesterday by the Hong Kong General Chamber of Commerce in a statement.

The chamber concluded its two-day business mission to Beijing yesterday.

The "value content" would be used for certain products, An said. This rule requires a certain proportion of added value of a product to be generated in a place when it is defined as the origin of the product.

Under CEPA, 273 types of products made in Hong Kong will be exempted from tariffs when exported to the mainland starting from January next year. All Hong Kong products will be subject to zero tariff by January 2006. However, the definition of Hong Kong products has yet to be announced.

Hong Kong manufacturers have moved most of their production facilities to the mainland for the much lower costs there.

An said negotiators from both the mainland and Hong Kong are likely to reach a consensus on all the outstanding details regarding CEPA and to officially sign relevant annexes of the free-trade deal by the end of this month.

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