LCQ2: Free Trade Agreement between Hong Kong and the Association of Southeast Asian Nations
On November 12 last year, Hong Kong and the Association of Southeast Asian Nations (ASEAN) signed a Free Trade Agreement (FTA) and a related Investment Agreement. Upon coming into operation, the two agreements will bring about legal certainty and better market access for Hong Kong in respect of trades in goods and services as well as investment protection. The two agreements may come into operation on January 1 next year the earliest, subject to completion of the necessary procedure. In this connection, will the Government inform this Council:
(1) how the authorities will tie in with the implementation of the aforesaid two agreements, including how they will (i) strengthen its exchanges with trade associations, professional organisations and members of the industries, (ii) conduct publicity, and (iii) provide channels for enquiry, with regard to the contents of the two agreements and the business opportunities arising therefrom;
(2) of the industries and areas in Hong Kong which will benefit economically from the two agreements in their first five years of operation, as anticipated by the authorities; whether it has formulated the relevant quantifiable criteria for assessment; if so, of the details; if not, the reasons for that;
(3) of the current staff establishments of the Hong Kong Economic and Trade Offices (ETOs) in Singapore and Indonesia as well as the proposed staff establishment of the ETO to be set up in Thailand; whether the authorities will consider setting up offices in the Chinese embassies in the member states of ASEAN where no ETOs have been set up, so as to promote business and trades between Hong Kong and those member states of ASEAN; and
(4) given that under the two agreements, Hong Kong and ASEAN will conduct economic and technical co-operation activities in five priority areas, viz. customs co-operation, professional services, small and medium enterprises co-operation, trade facilitation/logistics and e-commerce co-operation, of the details and implementation timetables for such work?
My reply to the four parts of the question is as follows –
(1) Hong Kong and the Association of Southeast Asian Nations (ASEAN) forged a Free Trade Agreement (FTA) and an Investment Agreement in 2017 mid-November. The HKSAR Government has since commenced a series of work to help the trade understand and capitalise on the opportunities offered by the two Agreements. Such work included:
- organising a series of seminars to introduce the two Agreements to local and foreign chambers of commerce, professional bodies, representatives of Consulates-General and of different sectors;
- conducting a briefing for the Legislative Council Panel on Commerce and Industry;
- promoting the two Agreements to various stakeholders through exhibitions, such as the "Small and Medium Enterprise Annual Showcase and Conference" organised by the Malaysian Government and the SmartBiz Expo organised by the Hong Kong Trade and Development Council (TDC);
- launching a dedicated website to disseminate information such as the agreement texts, specific market liberalisation commitments made by all parties, frequently asked questions, etc.;
- producing and distributing promotional leaflets; and
- providing telephone and email enquiry services for the public to enquire on the two Agreements.
Moreover, the Government collaborates actively with TDC, major chambers of commerce and professional bodies to organise more business missions to ASEAN countries to further promote economic and trade exchanges between Hong Kong and ASEAN. In this regard, I will lead a delegation comprising government officials, businessmen and professionals to Cambodia and Vietnam next month to explore the two emerging markets, identify investment opportunities, and facilitate networking and co-operation between Hong Kong and local enterprises therein.
(2) The FTA and the Investment Agreement will bring about legal certainty and better market access for trade in goods and services as well as investment protection to Hong Kong investors. They will also help reduce restrictions in doing business in ASEAN and offer more business opportunities for Hong Kong enterprises and service providers.
The FTA and the Investment Agreement are comprehensive in scope, encompassing trade in goods, trade in services, investment, economic and technical co-operation, dispute settlement mechanism and other related areas. We expect that many sectors will benefit, including:
- on trade in goods, the ASEAN Member States (AMS) have agreed to eliminate or reduce their customs duties on goods originating from Hong Kong. This covers different kinds of commodities, including watches and clocks, jewellery, articles of apparel and clothing accessories, toys, electrical machinery and equipment, etc. It is envisaged that Hong Kong enterprises in the export trade will benefit from the reduction or elimination of duties. In 2016, the total tariff paid by Hong Kong enterprises to AMS was estimated at HK$570 million;
- on trade in services, the FTA opens the doors for industries in Hong Kong with competitive advantages, including professional services, business services, telecommunication services, construction and related engineering services, educational services, financial services, tourism and travel related services, transport services, and arbitration services, etc.; and
- on investment, the Investment Agreement provides Hong Kong investors with non-discriminatory treatment of investments in non-services sectors and protection of investments in all industries.
After the two Agreements come into force, the trade and economic activities between Hong Kong and ASEAN will become increasingly frequent, thereby creating a more conducive environment for the development of the Hong Kong economy. As the economic benefits brought by the two Agreements will involve a wide range of sectors and will be subject to the commercial decisions of individual stakeholders in those sectors, they are difficult to estimate and quantify. Hence, we are unable to set specific evaluation criteria for them.
(3) At present, the HKSAR Government has set up two Economic and Trade Offices (ETOs) in two AMS, namely Indonesia and Singapore. The ETO in Jakarta, Indonesia has an establishment of 14 posts, comprising five Hong Kong-based staff posts and nine locally-engaged staff posts, while the ETO in Singapore has an establishment of 11 posts, comprising four Hong Kong-based staff posts and seven locally-engaged staff posts. For the planned ETO in Bangkok, Thailand, we will work out its establishment by taking into account its scope of responsibilities, geographical coverage and operational needs, and making reference to the establishment of the existing ETOs (including the ETOs in Jakarta and Singapore).
At present, the two ETOs in Jakarta and Singapore have covered all AMS. The Jakarta ETO handles matters between Hong Kong and ASEAN as a whole, and is responsible for fostering bilateral relations between Hong Kong and Brunei Darussalam, Indonesia, Malaysia and the Philippines. The Singapore ETO is responsible for promoting bilateral relations between Hong Kong and Cambodia, Laos, Myanmar, Singapore, Thailand and Vietnam. Including the proposed new ETO in Bangkok, the HKSAR Government will have a total of three ETOs in ASEAN. We will review and work out the geographical coverage of the three ETOs after taking into account factors such as their geographical locations, trade and economic relations between individual AMS and Hong Kong. We have no plan to set up new ETOs in other places in ASEAN.
(4) Hong Kong and ASEAN agreed to include the Economic and Technical Co-operation (ECOTECH) Chapter under the FTA, pursuing ECOTECH projects in five priority areas, including customs co-operation, professional services, small and medium enterprises co-operation, trade facilitation/logistics, and e-commerce co-operation. These projects include capacity building or technical assistance programmes for an initial period of five years, which may be conducted in the form of experience sharing seminars, thematic symposiums, exhibitions and networking events, etc. We shall work out details of the projects with AMS upon the entry into force of the FTA.
Ends/Wednesday, February 28, 2018
Issued at HKT 14:30
Issued at HKT 14:30