Back on 27 March 2019 we reported on the signing of a Free Trade Agreement and Investment Agreement between Hong Kong and Australia, set to eliminate all tariffs on goods originating from each other. It is known as the A-HKFTA, and joins the free trade agreements already entered into by Australia with Japan, China and the Republic of Korea.
Australia is now following its domestic treaty-making processes to bring A-HKFTA into force. For Australia, this includes an inquiry by the Parliamentary Joint Standing Committee on Treaties (JSCOT). The JSCOT has commenced an inquiry into the A-HKFTA.
According to the Australian government, the A-HKFTA will provide greater business certainty to Australia’s bilateral trade with Hong Kong by locking in zero tariff levels for goods exported into Hong Kong and improving market access for Australian services.
In the event of uncertainty, the newly negotiated A-HKFTA and Investor Agreement allows for investors from Australia and Hong Kong to have access to an independent arbitrational tribunal to resolve disputes.
The new Investment Agreement replaces the 1993 agreement previously struck between the two parties. Significantly, the word “investor†has been redefined, making it a requirement for the investor to be an entity carrying on substantial business activities in their area of operation.Â
In the meantime, we have witnessed the Hong Kong demonstrations, and the changing economic environment – Hong Kong trade started the second half of this year on a sour note, with exports tumbling 5.7% amid the deepening US-China trade war. Their exports shrank to HK$338.6 billion while imports fell 8.7% to HK$370.8 billion, leaving a trade deficit of HK$32.2 billion in July. The HK government said July’s performance was affected by a softening of global economic growth and US-China trade tensions.
Hong Kong is Australia’s fifth largest source of foreign investment ($116.6 billion in 2017) and the tenth largest destination for Australian foreign investment abroad ($47.4 billion in 2017). Trade investment between Hong Kong and Australia is $18.8 billion (in 2017-2018), representing 2.4% of Australia’s total trade. Barring any unforeseen impediments, the agreement should be of mutual benefit in the long run.
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