Hong Kong and ASEAN sign Free Trade Agreement and Related Investment Agreement
Hong Kong and the Association of Southeast Asian Nations (ASEAN) signed a Free Trade Agreement (FTA) and a related Investment Agreement in Pasay City, the Philippines, today (November 12). The agreements will bring about legal certainty and better market access for the trade in goods and services as well as investment protection to Hong Kong. They will also help reduce the restrictions in doing business and expand business opportunities for Hong Kong enterprises, thus creating a more conducive environment for the development of Hong Kong's economy.
The Secretary for Commerce and Economic Development, Mr Edward Yau, and the economic ministers of the ASEAN member states, signed the two agreements.
"ASEAN is Hong Kong's second largest trading partner in merchandise trade and the fourth largest in services trade. The two agreements are of great importance to Hong Kong. They will not only enhance and strengthen the trade and investment flows between Hong Kong and ASEAN, but also boost economic and trade activities and greatly enhance business opportunities for Hong Kong enterprises and service providers in ASEAN markets.
"All ASEAN member states are also economies along the Belt and Road. The agreements will extend Hong Kong's FTA and Investment Agreement network to cover all major economies in Southeast Asia. The closer ties forged will enhance Hong Kong's role as a trading and investment hub and cater for our strategy to tap the business opportunities offered by the Belt and Road Initiative," Mr Yau said.
The agreements are comprehensive in scope, encompassing trade in goods, trade in services, investment, economic and technical co-operation, dispute settlement mechanisms and other related areas.
"On trade in goods, the ASEAN member states have agreed to eliminate or reduce their customs duties on goods originating from Hong Kong. It is envisaged that Hong Kong enterprises in export trade can benefit from the progressive reduction of duties, thus resulting in lower operation cost and improved market competitiveness.
"As regards trade in services, the FTA opens the doors of markets for Hong Kong's competitive service sectors. Sectors to benefit include professional services, business services, telecommunications services, construction and related engineering services, educational services, financial services, tourism and travel related services, transport services and arbitration services," Mr Yau said.
On investment protection, he said, "The Investment Agreement will provide Hong Kong enterprises investing in ASEAN markets with fair and equitable treatment. Compensation will be provided according to the agreed standard in case of expropriation of investments or investment losses owing to war, armed conflict or similar events.
"The FTA also provides facilitating arrangements in respect of the entry and stay of Hong Kong enterprises and service providers for business purposes in ASEAN member states," Mr Yau said.
"After three years of negotiations, Hong Kong and ASEAN have finally concluded these two agreements to benefit the economies of both sides. They also help expand Hong Kong's market space, in international trade and commerce and strengthen its status as the most open and business-friendly international city in the region," Mr Yau concluded.
The agreements are expected to come into force on January 1, 2019, at the earliest, subject to completion of the necessary procedures by Hong Kong and the ASEAN member states.
Hong Kong and ASEAN have close trade and economic ties. Bilateral merchandise trade between Hong Kong and ASEAN grew by an average of 3.4 per cent annually from 2012 to 2016. ASEAN was Hong Kong's second largest trading partner in merchandise trade in 2016, with the total merchandise trade amounting to HK$833 billion. The average annual growth rate for total trade in services was 3.1 per cent from 2011 to 2015. ASEAN was Hong Kong's fourth largest trading partner in services trade in 2015, with the total services trade amounting to HK$121 billion.
As at the end of 2015, ASEAN ranked sixth among Hong Kong's destinations of outward direct investment, with a stock of HK$218 billion. It also ranked sixth among Hong Kong's sources of inward direct investment, with a stock of HK$555 billion.
Hong Kong and ASEAN commenced the negotiations on the FTA and Investment Agreement in July 2014. Both sides announced the conclusion of the negotiations in September 2017.
For key features of the two agreements, please refer to the Annex. The full text of the agreements will be uploaded to the Trade and Industry Department's website (www.tid.gov.hk).
Ends/Sunday, November 12, 2017