Trade liberalization in the Post-MFA regime : the influences of CEPA and quota phasing-out on Hong Kong's textiles and clothing manufacturing industry

This paper examines the impact of both the China-Hong Kong free-trade agreement and quota phasing-out on Hong Kong's textiles and clothing manufacturing industry in the post- MFA regime. In particular, it answers the question whether CEPA benefits companies in the short term and strengthens their strategic decisions in the long run as shown by evidence from various data sources and other related studies in the literature. Findings show that the industry will continue to consolidate even in light of the zero import tariffs in China provided by the agreement. We conclude that, from strategic perspectives, the agreement can act as a test-bed to enhance China's regulatory reform and govern the trade restructuring. Some other implications for the industry will be mentioned.