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The Customs General Administration said yesterday that it had completed preliminary work to upgrade its computer system for identification of Hong Kong-origin products before the implementation of the Closer Economic Partnership Arrangement (CEPA) next year.

The mainland customs will also link its system with Hong Kong departments to share information about certificates of origin issued to Hong Kong exports which can be exempt from mainland tariffs.

"The identification of Hong Kong origin is the biggest issue for customs when CEPA is implemented," Huang said.

He said some importers may circumvent the rule of origin to evade tariffs.

He believed the circumvention is most likely to be found in garment, toy and other light-industry products, as their origin is hard to identify.

All Hong Kong products will be subject to zero tariffs by 2006 upon application by Hong Kong manufacturers.

Huang does not expect the zero tariffs to have a major impact on total revenue.

The import value of these products totalled US$4.7 billion in 2002, with tariffs totalling only 600 million yuan (US$72.5 million) - a tiny part of the overall revenue of 259 billion yuan (US$31 billion).

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