The Australia-Hong Kong Free Trade Agreement (A-HKFTA) marks a milestone in our substantial bilateral trade and investment relationship, and represents an important and valuable addition to underpin the engagement with our 12th largest trading partner. The Agreement adds to the suite of FTAs with our North Asian neighbours. It is a statement from two committed APEC economies about the enduring value each accords the development and maintenance of contemporary trade rules.
The A-HKFTA provides a comprehensive, ambitious agreement to govern the trade and investment relationship, including:
- reciprocal elimination of barriers to trade in goods;
- guaranteed access for services suppliers and addressing impediments to trade in services;
- improved conditions for two-way investment; and
- rules to facilitate our cutting-edge relationship for trade in goods, services and investment.
With the conclusion of A-HKFTA, Australia now has FTAs with seven of its top eight export markets for goods and services. In 2017, Australia's total goods and services exports to Hong Kong were valued at A$15 billion. Hong Kong is Australia's fifth largest source of inwards investment (A$116.6 billion at the end of 2017).
The A-HKFTA will provide certainty for Australian exporters, binding tariff-free entry to Hong Kong and locking in their world class customs practices
For Goods Exporters
Tariffs will be bound at zero
Hong Kong does not currently apply any tariffs on Australian exports. However, under World Trade Organization (WTO) rules Hong Kong has left unbound 52.3 per cent of tariff lines, meaning that it could legally apply any tariff rate at all, including key goods for Australia such as coal, gold, zinc ores and liquefied natural gas. Under A-HKFTA, Australia and Hong Kong have agreed to bind all tariffs at zero from entry into force. This will provide certainty for Australian exporters that Hong Kong will continue to provide tariff-free entry. Hong Kong is an important market in which to establish brand recognition for Australian producers, given it is a gateway to the Chinese market and other parts of Asia.
Australian services exports to Hong Kong were valued at A$3 billion in 2017.
Australian services imports from Hong Kong were valued at $A3 billion in 2017.
New rules to facilitate trade in goods between Australia and Hong Kong
The A-HKFTA will lock in Hong Kong's world class customs practices and will provide regulatory certainty, as well as establish bilateral mechanisms that allow us to constantly review and improve the trading environment. Outcomes to facilitate trade in wine and fresh food will provide valuable new standards for Australian exporters.
For Services Suppliers
In 2017, Australian services exports to Hong Kong were valued at A$3 billion while imports were also valued at A$3 billion. While markets for many Hong Kong services sectors are already open for business, Hong Kong's commitments under the A-HKFTA would safeguard against this being reversed in the future.
The A-HKFTA is Hong Kong's most ambitious and comprehensive set of services commitments, locking in best commitments to date on a wide range of priority sectors for Australian providers, including:
- education services, including primary, secondary and higher education;
- professional services, including legal, architecture, engineering and accounting;
- financial services, particularly banking and insurance;
- transport services, including maritime, air, road and rail transport; and
- other priority services for Australia such as construction, business, telecommunication, tourism, and recreational services.
Hong Kong has also offered Australians its best-FTA treatment in relation to the temporary entry of professionals, including commitments on intra-corporate transferees, installers and servicers and, for the first time, a commitment to allow spouses to work in Hong Kong.
Under the A-HKFTA, Australian suppliers will have legally binding market access to Hong Kong's government procurement market based on the principle of non-discrimination. The government procurement rules will ensure transparency and facilitate participation in procurement processes.
New Trade and Investment Rules
Addressing contemporary commercial issues, including to enhance the digital economy
The A-HKFTA will establish high quality rules, building on those agreed in Australia's recent trade negotiations, including the TPP-11. These include areas that are core to Australian business interests in Hong Kong, such as e-commerce, financial services and telecommunications.
Under the A-HKFTA, Australia and Hong Kong have also made commitments on competition rules, regulatory cooperation and rules to protect intellectual property.
Updating investment rules
A-HKFTA will promote two-way investment flows, and help to attract vital capital into new and existing industries. Australia and Hong Kong will terminate the 1993 Agreement between Australia and Hong Kong for the Promotion and Protection of Investments. A new Bilateral Investment Treaty will contain modern rules to facilitate investment flows.
The updated investment rules reflect contemporary investment policy. The Investor-State Dispute Settlement mechanism includes safeguards to protect the government's ability to regulate in the public interest and pursue national security and legitimate public policy objectives such as public health and safety.