Hong Kong and the Association of Southeast Asian Nations (ASEAN) have wrapped up three years of negotiations on a multilateral free trade agreement and a related investment agreement.
The announcement was made at the 2nd ASEAN Economic Ministers-Hong Kong, China Consultations (AEM-HKC Consultations), co-chaired by Hong Kong’s Secretary for Commerce and Economic Development Edward Yau and the Philippines’ Secretary of Trade and Industry Ramon Lopez, in Pasay City, Metro Manila.
Economic ministers from other ASEAN member states – Thailand, Malaysia, Indonesia, Vietnam, Brunei, Singapore, Cambodia, Laos and Myanmar – also attended the meeting.
The ASEAN is Hong Kong’s second largest partner in merchandise trade, which reached HK$833 billion in 2016, after mainland China, and the fourth largest in services trade, which amounted to HK$121 billion in 2015.
Singapore, Thailand and Vietnam were Hong Kong’s top three trading partners among ASEAN members in 2015, representing 37 percent, 16.3 percent and 15.5 percent of Hong Kong’s total merchandise trade with the region respectively.
On investment, at the end of 2015, the ASEAN ranked sixth among Hong Kong’s destinations of outward direct investment, at HK$218 billion, and also sixth among the city’s sources of inward direct investment, at HK$555 billion.
Hong Kong also serves as a vital entrepot for trade between the mainland China and ASEAN. Re-exports of goods of ASEAN origin through Hong Kong to the mainland have risen 5 percent annually on average since 2011.
In 2015, around HK$231 billion of mainland’s import of goods from the ASEAN were routed through Hong Kong, while re-exports of mainland origin goods to the ASEAN via Hong Kong exceeded HK$183.6 billion.
ASEAN members, with a population of 634 million, recorded a collective gross domestic product of US$2.55 trillion in 2016.
“Our economy stands to benefit from the FTA and the Investment Agreement, which will bring us more and better access to the ASEAN markets, create new business opportunities and further enhance trade and investment flows,” Hong Kong’s Commerce and Economic Development Bureau said in a statement.
“The agreements are comprehensive in scope and the commitments therein are of value, encompassing trade in goods, trade in services, investment, economic and technical cooperation and dispute settlement mechanisms. The FTA will become effective after completion of the necessary procedures.”
Hong Kong and the ASEAN will sign the FTA and the Investment Agreement in November, subject to the timing of completion of respective paperwork and legislation procedures both in Hong Kong and the ten ASEAN members.
The FTA negotiations between Hong Kong and the ASEAN started in July 2014 and were completed three years later. This is ASEAN’s first FTA since 2009.
To negotiate a free trade agreement covering a wide range of issues with 10 countries at the same time is by no means a simple task, the bureau said.
Chief Executive Carrie Lam’s first overseas visits were to ASEAN nations. She called on Singapore Prime Minister Lee Hsien Loong and Thai Prime Minister Prayut Chan-o-cha and thanked them for their vital support in concluding the FTA talks early.
In July the SAR government opened in Jakarta its second economic and trade office in the ASEAN region, on top of the existing one in Singapore. The jurisdiction of the new office covers Indonesia, the largest and most populous economy in Southeast Asia, as well as Malaysia, Brunei and the Philippines.
It also represents Hong Kong in matters between the territory and the ASEAN, whose secretariat is also in Jakarta.
The SAR government is also considering setting up another economic and trade office in Bangkok, to further tap into opportunities in Thailand, currently Hong Kong’s second largest trading partner in the region.
The office is also expected to strengthen ties with other countries on the continental portion of Southeast Asia, particularly Vietnam and Cambodia, where Hong Kong businesses have been running manufacturing plants for decades.
Hong Kong has so far entered into four FTAs with mainland China, New Zealand, Chile as well as four member states of the European Free Trade Association (Iceland, Liechtenstein, Norway and Switzerland).
Four more agreements are being negotiated with Macau, Australia, Georgia and Maldives.
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