Australia To Pursue Free Trade Agreement With Hong Kong

Trade & Policy

Australia To Pursue Free Trade Agreement With Hong Kong

Australia will pursue a free trade agreement with Hong Kong which could secure significant access for service industries to its largest offshore business base in east Asia. Such a deal could also, for the first time, allow Australian businesses to operate in the finance capital of the region without having to establish on-the-ground operations in Hong Kong.

Trade Minister Steve Ciobo will call for public submissions this week on the FTA proposal to allow relaxed regulatory barriers for Australian firms. The federal government is pushing for a guarantee that a zero tariff for Australian goods and services and exports would be retained. The proposed deal would also give Australian businesses access to Hong Kong's government procurement market for the first time. An FTA with Hong Kong - the world's ninth-largest trading zone as a special administrative region of China - would allow better access for Australian services exports.

"With Asia's emerging middle class projected to grow from 600 million today to 3 billion by 2035, the potential for services exports is significant," he said. Ciobo said a free-trade deal with Hong Kong also would integrate the Australian economy with Asia. "An FTA with Hong Kong would complement our FTA with China and further integrate the Australian economy with Asia." Hong Kong will seek a level playing field on foreign investment thresholds which apply to Australia's other FTAs with China, Japan & South Korea. It would also push for complete tariff elimination, with duties still being applied to jewellery, spectacles and footwear.

"This would be a very modern FTA, focused on services access. We're already seeing signs that services exports will be a key driver in Australia's economy, helping ensure our record-breaking 26 years of growth continues.'' With Hong Kong's tariffs already at zero, the FTA would lock in regulatory settings and openness for services to ensure certainty for Australian business. Hong Kong was Australia's eighth-largest export market and 12th largest trading partner in 2015-16, with total two-way trade in goods and services worth $15.3 billion. It is also Australia's sixth largest source of foreign investment, with a stock of $85.4bn at the end of 2015, and the eighth largest destination for Australian investment, with a stock of $50.7bn at the end of 2015.